An analyst strongly recommends investment in Polyplex Corporation Ltd. (PCL) (Code: 524051) (Rs.171) based on its encouraging Q3FY09 results and expansion plans.
PCL is the world's fifth largest producer of thin polyester film with manufacturing facilities in India and Thailand to meet the PET film needs of its global customers. It is one of India’s leading manufacturer and exporter of Biaxially Oriented Polyester (BOPET) Film for packaging, electrical and other industrial applications.
The company’s geographically diversified manufacturing locations, enhanced servicing capabilities and access to regional trading blocs backed by strong global and domestic demand, high operating rates, low overheads, its strong customer relationships, focus on high growth segments and future expansion has give clear visibility to its revenue & profitability in coming years.
For FY09, sales are expected to go up to Rs.1200 cr. with a net profit after minority interest increasing to Rs.105 cr. The EPS would work out to Rs.59 on its enhanced equity of Rs.17.7 cr. The EPS would further go up to Rs.85 in FY10 on completion of expansion.
At CMP of Rs.171, the PCL share is trading at a P/E of 2.9 on its FY09 estimated EPS of Rs.59.
The share of Jindal Poly Films, its immediate competitor, is currently quoting at Rs.277 at a P/E of 4.7 on its FY09 earnings. The industry P/E of the packaging industry currently rules at a staggering 15, which leaves substantial scope for the PCL share to rise smartly in the near future.
Applying a reasonable P/E of 4 will take its share price to Rs.236 in the medium-term and Rs.340 in the long-term. The 52-week high/low of the share has been Rs.195/95.
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