Buy Uflex Ltd; target of Rs 504: Nirmal Bang

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.

Outlook

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. For all recommendations report, click here

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