Buy Uflex Ltd; target of Rs 504: Nirmal Bang
Nirmal Bang is bullish on Uflex Ltd has recommended buy rating on the stock with a target price of Rs 504 in its research report dated April 11, 2018.
April 11, 2018 / 08:01 PM IST
Nirmal Bang's research report on Uflex Ltd
Aseptic packaging is a growing industry at high margins (~ 16-20%) with only one player in India (i.e. Tetra Pak). Uflex’s Aseptic revenues are expected to start from 2HFY19. However, it will catch up fast once the customer approves the product. The initial year’s margins are likely to be subdued due to higher initial fixed costs, but would be spread out as sales grow.
We have valued Packaging business including Aseptic at 6x EV/EBITDA on FY19E EBITDA. For Film business, we have assigned an EV/EBITDA multiple of 4.8x on FY19E earnings and arrived at a target of INR 504, which implies 45% upside from current levels. We recommend a “BUY” on the stock.
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