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Nov 21, 2012, 01.20 PM IST | Source: Moneycontrol.com

Buy Parekh Aluminex; target of Rs 357: Firstcall Research

Firstcall Research is bullish on Parekh Aluminex and has recommended buy rating on the stock with a target of Rs 357 in its November 16, 2012 research report.

Firstcall Research is bullish on Parekh Aluminex and has recommended buy rating on the stock with a target of Rs 357 in its November 16, 2012 research report.

“Parekh Aluminex Ltd a Mumbai based company established in 1994, headed by Mr. Amitabh Parekh (Chairman and Managing Director). The Company engaged in the manufacture and sells aluminium foil containers (AFC), aluminium lids and aluminium foil rolls of various sizes, shapes and thicknesses as per customer requirements and rolls essentially for packaging of food items. Its main products include aluminum foil containers, trays, lids and rolls. The company markets its products in India and the U.K. The Company’s products are used in households, travel and hospitality sectors (airlines, railways, fast food chains, restaurants, hotels, among others). An increasing number of people prefer to use aluminium food packaging containers today and eight out of ten aluminium packaging containers used in India are manufactured by Parekh Aluminex. As a result is that in the span of only five years, Parekh Aluminex more than five folded its cash profit to 1,114.37 million and emerged as the largest aluminium container packaging company in Asia. The Company’s products are sold in domestic and international markets more than 30 countries across continents. Around 11 percent of the Company’s revenues were derived from exports.”

“In India, the Company supplies products to wholesalers, airlines, Indian Railways, bakeries, retail outlets and catering companies, among others. The Company provides customised products through a bank of more than 180 multicavity moulds. This enhanced acceptance of the Company’s products in Indian and international markets especially in an environment of limited mould supply. Company has established good manufacturing practices in accordance with international standards. APL accredited with certification from BRC (British Retail Consortium) implying compliance with Global Standards for packaging & packaging Materials. The first company in its category to receive the prestigious ISO 9001:2000 certification from BVQI, UK and the only company from India to break into the highly quality conscious European markets, we have, and continue to break through to newer markets and higher growth standards. With one of the largest manufacturers of aluminium in the world, to market its products in Germany. Further, Parekh Aluminex Limited has acquired a Singapore based company by taking over its plant & machinery for making Aluminium Foil Containers, along with its customer base. As a result business of South East Asian Airlines such as Emirates Airlines, Singapore Airlines, and Thai Airways amongst others have been added to the company’s kitty.”

“Parekh Aluminex Ltd engaged, manufacture & sells aluminium foil containers (AFC), aluminium lids and aluminium foil rolls of various sizes, shapes and thicknesses as per customer requirements and rolls essentially for packaging of food items, reported its financial results for the quarter ended 30 Sep, 2012. The Second quarter witnesses a healthy increase in overall sales as well as profitability on account of focusing towards retail business, product brand building, develop custom made products for food chains. The company’s net profit jumps to Rs.288.88 million against Rs.199.37 million in the corresponding quarter ending of previous year, an increase of 44.90%. Revenue for the quarter rose by 58.40% to Rs.5154.12 million from Rs.3253.87 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.22.32 a share during the quarter, registering at 44.90% increase over previous year period. Profit before interest, depreciation and tax is Rs.874.74 millions as against Rs.582.20 millions in the corresponding period of the previous year.”

“At the current market price of Rs.315.95, the stock P/E ratio is at 3.86 x FY13E and 3.27 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.81.92 and Rs.96.77 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 42% and 23% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 4.14 x for FY13E and 3.28 x for FY14E. Price to Book Value of the stock is expected to be at 0.73 x and 0.60 x respectively for FY13E and FY14E. The second quarter witnesses a healthy increase in overall sales as well as profitability on account of powerful combination of exciting products, an enhanced store network and robust infrastructural Support system. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 357 for medium to long term investment,” says Firstcall Research report.

Institutional holding more than 40% in Indian cos

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