packaging sector final

7/31/2019 Packaging Sector Final

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Packaging Sector

Laminations/Processors Industry


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INDUSTRY STRUCTURE

Packaging industry is a multi-technology, multiproduct, multi process

industry encompassing various materials like polymers, chemicals,

metals, paper etc.

The packaging industry can be classified into rigid packaging(comprises of tins, metal boxes, glass packing, wooden boxes

corrugated boxes etc) and flexible packaging (BOPP films, BOPET,

polyester films and laminated tubes). Apart from these two there also

exists Jute, which finds major usage in food grains packaging.

Over the years flexible packaging has become the preferred choice for

packaging consumer articles including food and clothing as flexible

packaging offers more eco-friendly and innovative packaging solutions.


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WHAT AFFECTS THE INDUSTRY.??

Demand In India, increasing penetration of organized retail

(including foreign players who are large consumers of flexible

packaging solutions) and increasing preference for branded

products is expected to fuel the demand for flexible packaging

solutions. The large growing middle class, increasing liberalizationof the organized retail sector are the catalysts to growth in

packaging products/materials. Fast changing food habits are also

likely to give boost to the flexible packaging market, especially the

pouch and microwave friendly products.

Supply Demand exceeds supply in flexible packaging segment. The

polyester films (BOPP & BOPET) segment cycle is on an uptrend and

is witnessing strong demand due to improved economic condition

globally and also due to shortage of additional capacities.


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WHAT AFFECTS THE INDUSTRY.??

Expenses Packaging is a raw material intensive industry. Raw

materials cost as a percentage to sales is approximately 55%

in packaging industry. Hence any adverse movement in raw

material prices impact profitability of the packaging industry.


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HOW TO VALUE PACKAGING SECTOR

One can value packaging companies same as

FMCG companies due to same nature of

demand & supply constituents.


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SECTOR CONSTITUENTS

CompanyMarket Cap

( ` in Cr.)

Uflex 986

Bilcare 555

Glory Polyfilms 21

Orient Press 66

JMDE Packaging 4

Paper Products 438

Jalpac India 5

Ras Extrusions 5

Only Uflex Ltd, Bilcare Ltd and Paper Products Ltd have a

reasonable/quantifiable market cap from the given industry

constituents. Hence we have considered only these 3 companies for

our analysis.


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FUNDAMENTALSCOMPARISON

Values are based on consolidated data as on December

2011


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VALUATION

UFLLTD BILCAR PAPPRO

PE (x) 2.56 3.70 8.81

Price to Book Value (x) 0.54 0.52 1.34

EV to Sales (x) 0.62 0.70 0.62

EV to EBITDA (x) 1.87 4.23 4.76

Dividend Yield (%) 5.49 1.27 3.15

Valuations are the most important element of arriving at the decision ofwhether the shares of a particular company should be purchased or not.

Higher growth companies deserve higher valuations.

Values denoted in green depict the best stock within the peer set for a particular ratio.

Similarly, the worst stock for that particular ratio is shown in red.


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GROWTHPOSITION


3 Yr CAGR Sales (%) 28.35 52.03 10.59

3 Yr CAGR Profit (%) 83.01 21.63 6.93

1 Yr Sales Growth % 51.26 118.22 21.96

1 Yr EBITDA Growth (%) 139.54 45.01 15.55

1 Yr Net Profit Growth (%) 274.50 25.75 -2.60

Growth figures of companies, viz. Sales, Operating Profits and Profits after Tax are very

important numbers reflecting the quality of a company's business. Growing businesses

deserve better valuations and are often sought by investors.


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MANAGEMENTEFFECTIVENESS


Return on Capital Employed

(%)34.79 15.50 15.69

Return on Equity (%) 47.62 15.04 12.97

Asset Turnover Ratio (x) 1.19 1.20 2.41

Inventory Turnover Ratio(x) 13.30 7.56 9.33

Debtor Turnover Ratio (x) 5.34 3.89 7.13

The management effectiveness as suggested by the ROCE and ROE reflect the return

the company makes on every Rs. 100 invested. Higher return ratios reflect higher

strength in the company's business model.


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SOLVENCY&MARGINS


Debt to Equity Ratio (x) 0.98 0.92 0.08

Interest Coverage(x) 6.14 3.17 77.93

Current Ratio (x) 1.55 2.22 1.46

EBITDA Margin (%) 32.98 16.48 13.04

Net Profit Margin (%) 20.14 6.45 6.63

Solvency ratios are extremely important metrics for analyzing the risk involved in

investing in the company's shares. Higher debt to equity and low interest coverage are

reflective of pressure in the company's business and hence investment should be

avoided in such companies.


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SHAREHOLDINGPATTERN


Promoter Shareholding (%) 43.47 32.61 63.70

FII Shareholding (%) 9.71 7.55 1.34

DII Shareholding (%) 0.44 6.57 5.71

Public Shareholding (%) 24.19 28.49 19.73

Promoter Shg. Pledged (%) 75.67 95.30 0.00

Shareholding Pattern reflects the pattern of ownership in the company.

A higher shareholding by promoters, FIIs signifies greater confidence in the

company.


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BALANCE SHEETSTATUS


Total Assets (Rs. in Cr) 3,300.49 2,334.27 316.19

Net Worth (Rs.in Cr.) 1,888.51 1,065.87 293.66

Total Debt (Rs. in Cr.) 1,411.25 1,219.60 22.53

Enterprise Value (Rs. in Cr) 2,133.08 1,593.72 450.28

Book Value Per Share (Rs.) 251.20 452.79 52.00

Balance Sheet Status shows the financial status of the company at the financial yearend . These cannot be analyzed in isolation and are basically useful to gauge size of

companies.


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INCOME STATEMENTSTATUS


Sales (Rs. in Cr.) 3,465.41 2,286.58 725.34

EBITDA (Rs.in Cr.) 1,142.91 376.91 94.60

Net Profit (Rs. in Cr.) 693.95 146.77 35.65

Revenue / Employee (Lacs) 103.88 0.00 49.24

Profit / Employee (Lacs) 20.80 0.00 2.42

Income Statement Status shows the financial performance of the company during thefinancial year. These cannot be analyzed in isolation and are basically useful to gauge

size of companies and profitability through margins.


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STOCK SELECTED

Analysis of the above fundamental parameters suggests us

that Uflex Ltd is the best buy in this industry at this point of

time as compared to its peers.

It has out beaten its peers on valuation, growth, management

effectiveness, revenue and profitability.


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UFLEXLTD


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STOCKSNAPSHOT


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STOCKSNAPSHOT


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STOCKSNAPSHOT


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STOCKSNAPSHOT

Date Corporate Action Description

Aug 30, 2011 Dividend Dividend 75% - FV:10


Sep 03, 2009 Dividend Dividend 40% - FV:10


Sep 04, 2007 Dividend Dividend 20% - FV:10

DIVIDEND PAYOUT


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DATA SOURCED FROM

packaging sector final

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