{"id":4183,"date":"2024-04-22T19:17:38","date_gmt":"2024-04-22T14:17:38","guid":{"rendered":"https:\/\/ksestocks.com\/blog\/?p=4183"},"modified":"2024-04-22T19:55:19","modified_gmt":"2024-04-22T14:55:19","slug":"reasons-why-epcl-reported-a-loss-in-q1-2024","status":"publish","type":"post","link":"https:\/\/ksestocks.com\/blog\/reasons-why-epcl-reported-a-loss-in-q1-2024\/","title":{"rendered":"5 Reasons why EPCL reported a loss in Q1 2024"},"content":{"rendered":"\n

Engro Polymer & Chemicals Limited (EPCL<\/strong>) reported a loss in the first quarter of 2024, with its EPS clocking in at -1.21<\/strong>. The company’s gross margins fell to 6.4%<\/strong> and it skipped<\/strong> the dividend. The NIL dividend and loss per share were both a surprise for investors, who were expecting the company to post a moderate EPS with most of it paid out in the form of dividends.<\/p>\n\n\n\n

So what went wrong?<\/strong><\/p>\n\n\n\n

A lot of things have gone wrong for the company in the last year or two. But what made them post a loss? There are multiple reasons. Let’s look at each of them in detail.<\/p>\n\n\n\n

1. Lower Revenue<\/h2>\n\n\n\n

To start with, the company reported reduced sales. This was down to both a lack of demand and low PVC prices. This trend has been going on for some time now and is unlikely to change anytime soon.<\/p>\n\n\n\n

Item<\/th>Q1 2024<\/th>Q4 2023<\/th>Q3 2023<\/th>Q2 2023<\/th>Q1 2023<\/th>Q3 2022<\/th><\/tr><\/thead>
Sales<\/td>16572<\/td>19195<\/td>25,011<\/td>19,041<\/td>17,977<\/td>16,904<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

2. International margins<\/h2>\n\n\n\n

International PVC margins drive the profitability of the company. Just like the local industry, the international PVC-Ethylene margins are also under pressure. During the first quarter of 2023, the average margin stood at $433\/ton<\/strong> whereas in the first quarter of this year, it went further down to $303\/ton<\/strong>.<\/p>\n\n\n\n

The EPCL management does not expect the margins to go down a lot further. But the upside is also not expected anytime soon, especially with elevated crude oil prices keeping Ethylene prices high.<\/p>\n\n\n\n

3. Gas price increase<\/h2>\n\n\n\n

Gas prices have been increased twice in the last 6 months. This was one variable that analysts were not so sure about the impact of. The cost of gas for EPCL stood at Rs. 3000\/MMBTU<\/strong> this quarter. During the same period last year, it was Rs. 2500\/MMBTU<\/strong>.<\/p>\n\n\n\n

This increase in gas prices has put a lot of pressure on gross margins.<\/p>\n\n\n\n

4. Other Income<\/h2>\n\n\n\n

EPCL’s other income fell by 37% YoY<\/strong>. Its cash positions and short-term investments went down by 57% YoY<\/strong>. This means the company has not been able to benefit from high interest rates like before.<\/p>\n\n\n\n

5. Finance cost<\/h2>\n\n\n\n

Finally, the finance cost rose 42% YoY<\/strong>. The company’s borrowing went up by 28% YoY<\/strong> which inflated the finance cost at a time of high interest rates.<\/p>\n\n\n\n

Analysts continue to have a negative outlook on the stock, with Foundation Securities’ Dec 24 target price of Rs. 42.1\/share<\/strong> reflecting how bad things are for the company at the moment.<\/p>\n","protected":false},"excerpt":{"rendered":"

Engro Polymer & Chemicals Limited (EPCL) reported a loss in the first quarter of 2024,<\/p>\n","protected":false},"author":2,"featured_media":4189,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[155],"tags":[44],"class_list":["post-4183","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-fundamental-analysis","tag-epcl"],"featured_image_src":{"landsacpe":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/04\/EPCL-Fundamental-Analysis-1140x445.png",1140,445,true],"list":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/04\/EPCL-Fundamental-Analysis-463x348.png",463,348,true],"medium":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/04\/EPCL-Fundamental-Analysis-300x188.png",300,188,true],"full":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/04\/EPCL-Fundamental-Analysis.png",1920,1200,false]},"_links":{"self":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/4183","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/comments?post=4183"}],"version-history":[{"count":0,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/4183\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/media\/4189"}],"wp:attachment":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/media?parent=4183"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/categories?post=4183"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/tags?post=4183"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}