SKP Securities is bullish on Wim Plast and has recommended buy rating on the stock with a target of Rs 468 in its April 5, 2013 research report.
“Wim Plast Ltd, incorporated in 1988, is a leading Indian plastic moulded furniture manufacturer with a wide range of household plastic moulded products with the brand name “Cello”. It later on diversified into Bubble Guard Extrusion Sheets in 2005 with a unit at Baddi, Himachal Pradesh which is the first innovation in the field in India. It is the third largest player in manufacturing of moulded plastic furniture with a market share of 10 percent.”
“In last five years, Wim plast have shown healthy CAGR growth of 31 percent and 69 percent in Revenue and PAT, respectively. Its EBITDA margins also expanded from 11 percent in FY07 to 18 percent in FY12 due to economies of scale and increase in share of value added products. We expect EBITDA margins to remain strong at 17.5 percent in coming years. Wim Plast has been consistently improving its ROAE & ROACE from 15.6 percent and 20.7 percent in FY09 to 24.5 percent and 33 percent in FY12, respectively due to zero debt, improvement in fixed asset turnover ratio and strong operating margins. Going further, we expect RoAE and RoACE to increse to 27.5 percent and 36 percent, respectively, in FY15E on account of better working capital management and optimal utilization of assets.”
“At CMP, the stock trades 6.6x its FY13E earning of Rs.47.9, 5.3x its FY14E earnings of Rs.50.5 and 4.1x its FY15E earnings of Rs.78. Hence, we initiate coverage on the stock with ‘BUY’ recommendation and a target price of Rs.468 (6x FY15E EPS), at 48 percent upside over the period of 12 months,” says SKP Securities research report.
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