Watch the interview of SP Tulsian of sptulsian.com with Latha Venkatesh and Surabhi Upadhyay on CNBC-TV18, in which he shared his readings and outlook on fundamentals of market and specific stocks.
Below is the verbatim transcript of the interview.
Q: What is the bet today?
A: Today’s stock is Kanpur Plastipack and in fact this is the company which is making Flexible Intermediate Bulk packaging for the food grade This was the first company in India to get these kinds of approvals. If I just call FIBC or may be jumbo bags or may be woven sacks kind of I think this was the first company to get the approval in India in 2008. If you take their performance 70 percent of their sales come from their exports which they are catering to 40 countries all over the world and 30 percent is catered to the Indian consumer market, largely to the food grades and maybe to cement and all sorts of products. Company is presently having two plants in Kanpur with a total capacity of FIBC or may be the jumbo bags at 14,600 tonne per annum with a backward integration of making multi filament yarn of 3,350.
Let me just give you the background that in 2017 that is last year company carried out this backward integration of making multi filament yarn and that has seen the increase in the EBITDA margin of the company from 8.6 percent in FY16 to 13.6 percent. So, FY17 was the best year for the company and presently they are operating at 97 percent capacity utilisation and because of that the company is now undertaking another expansion in their main products of FIBC by setting up a new capacity of 8,400 tonne. The Greenfield project in the Kanpur only where they have their two plants located but at a different location with a capacity of 8,400 tonnes and that will go stream may be in about 8 to 10 months.
If I really take the financial performance of the company, they had a topline of about Rs 135 crore with a profit after tax (PAT) of Rs 3.64 crore which was at Rs 14.6 crore for whole of FY17. As I said that FY17 has given a very good growth and very good performance taking that into consideration maybe FY18 will be more or less seen on the lines of FY17 but the valuations are still looking quite cheap for the reason that if you take a call equity is at about Rs 12 crore with face value of Rs 10. Promoter’s stake is at 69 percent it is a virtually debt free company, present debt of about Rs 10 crore and market cap of Rs 175 crore only. So, taking all this into consideration share now ruling at 145 can move to a level of about Rs 175 in next 6 months or so.
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