Hold Linc Pen & Plastics; target of Rs 480: ICICI Direct
ICICI Direct has recommended Hold rating on Linc Pen & Plastics with a target price of Rs 480 in its research report dated January 16, 2018.
January 24, 2018 / 11:50 AM IST
ICICI Direct' research report on Linc Pen & Plastics
Linc Pen & Plastics (Linc) witnessed stellar price appreciation in the recent past with the stock up 100% from lows in September 2017. A part of the journey is explained by the scarcity of profitable name s in the writing instrument category in the listed space and reference to last M&A activity involving Cello Pens (acquired by BIC Pens, France) However, Linc ’s financial performance has been weak with H1FY18 sales at RS 146 crore, down 16% YoY, EBITDA at RS 9.9 crore with corresponding E B ITDA margins at 6.8%, down 280 bps YoY. PAT in H1FY18 was at RS 2.1 crore, down 75% YoY
We expect Linc to clock sales and PAT CAGR of 9.1% and 34.7%, respectively , in FY18 E - 20E. We now value Linc at RS 480 i.e. 1.8x MCap /sales on FY19E & 20E average sales of RS 394 crore with a HOLD rating on the stock.
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