Accumulate Linc Pen; target of Rs 185: Angel Broking

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26 Aug, 2025 12:21

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Angel Broking’s research report on Linc Pen & Plastics Linc Pen & Plastics (LPPL)’s 2QFY2016 results outperformed our estimates on the bottom-line front. The company’s top-line for the quarter grew 5% yoy. On the operating front, the company reported margin improvement, primarily on account of lower raw material costs. Further, on the bottom-line front, the company reported a strong growth on account of a favorable operating performance and lower interest costs. Top-line grew ~5%: The company’s top-line grew by ~5% yoy to ~Rs.88cr (which is below our estimates of ~Rs.89cr), mainly due to lower growth in Domestic (5.0% yoy growth to ~Rs.64cr) and Export sales (4.6% yoy growth to ~Rs.24cr). Exports have recovered considering the segment posted a decline of 5% in FY2015. PAT grew ~23% yoy: The reported net profit grew by ~23% yoy to ~Rs.5cr (our estimate was of ~Rs.4cr) on account of falling material prices and lower interest costs with the company having repaid a significant amount of its debt in FY2015.Outlook and valuation Going ahead, we expect LPPL to report a top-line CAGR of ~8% over FY2015-17E to ~Rs.371cr owing to strong domestic as well as export sales. On the bottom-line front, we expect the company to report ~17% CAGR over FY2015-17E. This would be on account of expansion in operating margin on the back of lower material prices and higher exports, which is a high margin business. Further, the company has reduced its debt significantly, which will lead to cost saving for the company. At the current market price, LPPL trades at a P/E of 12.5x its FY2017E EPS. We recommend an Accumulate rating on the stock, with a target price of Rs.185.

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