ICI Pakistan Limited (PSX: ICI) reported its financial results for the first quarter of FY17. The earnings per share (EPS) of the company clocked in at 6.96 rupees up 33 percent compared to previous year. ICI showed improvements across the board.

The shareholders of the company have also enjoyed a very good ride over the past six months as the stock price has gone up more than 70 percent from its lows in April 2016.

The top line of the company surged by 9 percent on account of double digit growth in its Life Sciences, Animal health and Agri divisions. The gross margin of the company also increased by a healthy 1.70 percent as energy cost went down due to the coal plant.

The polyester division which was contributing negatively towards the bottom line showed improvement during this quarter as reported by the company.

In addition to the financial results, ICI Pakistan also announced that its board of directors have approved 100 percent acquisition of Cirin Pharmaceuticals (Private) Limited at an enterprise value of 1.075 billion rupees.

Rumours of an acquisition were already afloat in the market and a much bigger acquisition was expected. Nevertheless, Cirin seems to be a decent acquisition as well. With this transaction ICI would be able to expand its pharmaceutical manufacturing base.

Cirin already has a portfolio of generic drugs which it sells locally and also internationally. ICI with its top quality management and know-how would be able to generate maximum benefit out of this acquisition. Although there is not much data available on Cirin but industry sources cite that Cirin would be able to add 2-3 rupees to ICI's earnings per share by 2018.

ICI made another big announcement during this quarter. The company wants to set up a manufacturing facility for infant milk in partnership with Morinaga Milk Industry of Japan and Unibrands Private Limited.

ICI will have a controlling stake of 51 percent in this venture which is expected to cost around 4.8 billion rupees. Infant nutrition is one of the fastest growing segments in Pakistan currently.

The future outlook for ICI looks exciting. The announcements made during this quarter reflect the serious intent of company in growing and increasing its footprint. ICI brand name is already very strong and any new product launched by them would have the trust of customers.

Shareholders can expect further new projects and acquisitions as ICI and YBG group cash-flow position is very good.

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ICI Pakistan Limited


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Rs. (Million)                    Q1FY17    Q1FY16          YoY


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Net Turnover                      9,255     8,502           9%


Cost of Sales                     7,544     7,070           7%


Gross Profit                      1,711     1,432          20%


Selling & Distribution Cost         581       499          16%


Admin Expense                       242       220          10%


Other income                       18.6      15.1          23%


Exchange losses                     1.6        48         -97%


Other charges                      10.1      11.8         -14%


Finance Cost                        101        82          23%


Share of profit from associate      129        76          70%


Profit Before Tax                   860       616          40%


Taxation                            218       132          64%


Net Profit                          643       484          33%


EPS (basic and diluted)            6.96      5.24          33%


GP Margin                         18.5%     16.8%   up 170 bps


NP Margin                         6.94%     5.69%   up 125 bps


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