Expect FY17 margins to grow in double digits: Linc Pens

Linc Pen & Plastics reported stable fourth quarter earnings with total income rising 13.4 percent to Rs 105.4 crore and margins improving to 10.1 percent. The profit after tax (PAT) for the company rose 65.8 percent to Rs 6.3 crore in the quarter gone-by. Fourth quarter growth was aided by lower crude prices in January and February, said Deepak Jalan, Managing Director of the company. For FY17, Jalan is expecting margins to keep growing in double-digits. He expects revenue growth of 10 percent and more. Below is the verbatim transcript of Deepak Jalan’s interview with Latha Venkatesh and Reema Tendulkar on CNBC-TV18.Latha: That is a fairly strong EBITDA growth that you have posted, 53 percent higher for Q4 itself. What can be the run rate in Fy17, can you maintain such a good growth in terms of EBITDA? A: We have always mentioned that we always target at least double digit EBITDA. So, this year in Q4 as you can see that the EBITDA has been more than 11 percent; for the whole year it is still less than 10 percent. So, I believe that FY16-17 we aim to have at least double digit EBITDA for all the four quarters.Reema: Did you get the benefit of the crude price decline that we saw in January and February in your margins and if yes if you could quantify that because crude prices since then have gone up? A: The polymer prices were softer in that quarter so we benefitted slightly out of that also. Although you can understand that the benefit has to be passed on to the trade or to the consumer but still some benefit has accrued because of the polymer prices. The polymer prices have gone up a little bit after that but still we believe that it is quite possible to achieve double digit EBITDA.Latha: Your total income growth has been 8.1 percent for FY16. What is a reasonable expectation for FY17? A: I can’t exactly give you the figure, but as I said, we will maintain or improve our EBITDA margins. Latha: I meant total income, revenue, volume; will you be able to do 10 percent? A: Yes, of course, that is what we look at minimum. Latha: Some Rs 380 crore or Rs 375 crore of revenues is possible? A: Yes, I don’t want to quote that but that is the minimum any good company would look at. We are looking at more than that.