Buy Uflex; target of Rs 214: Sunidhi Securities

Sunidhi Securities research report on Uflex“Founded in 1983, as Flex Industries by the Flex Group to manufacture multilayer laminated rolls of plastics, paper, cloth or metal foils that are used separately or in combination for various packaging applications, Uflex is India's largest flexible packaging major with a large manufacturing capacities of plastic film and packaging products providing end-to-end solutions to clients across more than 140 countries. It has vast capacities for production of Polyester Chips, Biaxially Oriented Polyethylene Teraphthalate (BOPET) and Biaxially Oriented Poly Propylene (BOPP). After having established a leadership position in India, Uflex set up its first overseas operation in 2005 at Dubai, UAE. This was followed by expansion there and new facilities at Mexico, Egypt and Poland that were commissioned in 2009, 2010 and 2012 respectively. Today, Uflex has 15 state-of-the-art film lines located in 6 countries that run 24x7.""During Q1FY15, Uflex registered 9.5% increased sales of Rs1530.1 crore. Net profit, however rose 48% to Rs64 crore mainly due to higher margins. OPM and NPM stood at 12.8% and 4.2% Vs 12.3% and 3.1% in FY13. The higher revenue growth is attributed to increased uptake of innovative flexible packaging solutions offered by the company across sectors globally. Q1FY15 is EPS Rs8.9. During FY14, net profit rose 5.9% to Rs201.6 crore on 13.6% higher sales of Rs5863.3 crore. OPM and NPM stood at 12.1% and 3.4% Vs 13.1% and 3.7% in FY13. FY14 consolidated EPS was Rs27.9.The blended tax experience for the consolidated entity is lower because of lower tax regime in overseas locations-Dubai: zero tax rate; Egypt: 20% and Mexico: 30%.Today, Uflex has 15 state-of-the-art film lines located in 6 countries that run 24x7. Uflex’s strong manufacturing base in India, Mexico, Dubai, Egypt, Poland and US caters to global markets  spanning US, Canada, South America, UK, Europe, Russia, CIS countries, South Africa and other African countries, the Middle East and the South Asian countries. Uflex offers its flexible packaging products and solutions globally to blue chip clients including Unilever, Pepsi, Wrigley, Procter & Gamble, Colgate, Palmolive, Nestle, Gillette, Ranbaxy, PerFetti, Joyco, Monsanto, ITC, Godrej Pillsbury, Tata Tea, Hindustan Petroleum, Indian Oil, Britannia, Dabur, Haldiram, Wockhardt, HUL, Parle Biscuit, 3M, among others. The demand for flexible packaging is mainly derived from the demand of the user industries like processed food, personal products, beverages, lubricants, pesticides and pharmaceuticals etc. Approximately 80% of Uflex’s production is consumed by Food & FMCG industry, which gives strong revenue visibility.""At the CMP of Rs139, the share is trading  at a P/E of 3.6x on FY15E & 2.7x on FY16E. We recommend BUY with a target price of Rs214 at which, the share will trade  at a P/E of 5.5x on FY15E,” says Sunidhi Securities research report.  

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