polyplex corporation - initiating coverage

Initiating Coverage | PInitiating Coverage | PInitiating Coverage | PInitiating Coverage | PInitiating Coverage | Packagingackagingackagingackagingackaging-P-P-P-P-Polyester Folyester Folyester Folyester Folyester Filmilmilmilmilm

Please refer to important disclosures at the end of this report

Polyplex Corporation (PCL) is one of the leading manufacturers of biaxially orientedpolyester (PET) films globally with manufacturing facilities in India, Thailand andTurkey. PCL garners a major part of its revenues from the packaging industry,which is expected to register around 15% CAGR over FY2010-12E. Moreover, thecompany's foray into the BOPP segment is expected to yield good returns for it, asdemand for BOPP far exceeds supply. WWWWWe initiate coverage on the stock with a Buye initiate coverage on the stock with a Buye initiate coverage on the stock with a Buye initiate coverage on the stock with a Buye initiate coverage on the stock with a Buyrecommendation and Trecommendation and Trecommendation and Trecommendation and Trecommendation and Target Parget Parget Parget Parget Price of Rs418, valuing the stock at 0.7x FY2012Erice of Rs418, valuing the stock at 0.7x FY2012Erice of Rs418, valuing the stock at 0.7x FY2012Erice of Rs418, valuing the stock at 0.7x FY2012Erice of Rs418, valuing the stock at 0.7x FY2012EP/BP/BP/BP/BP/BV implying into an upside of 57%.V implying into an upside of 57%.V implying into an upside of 57%.V implying into an upside of 57%.V implying into an upside of 57%.

Capacity expansion to drive robust growth in revenues:Capacity expansion to drive robust growth in revenues:Capacity expansion to drive robust growth in revenues:Capacity expansion to drive robust growth in revenues:Capacity expansion to drive robust growth in revenues: PCL has recently forayedinto the lucrative, high-growth BOPP and CPP segments. In FY2010, global demandfor BOPP far exceeded supply, with an estimated BOPP production of ~6,046kilotonne/year v/s ~6,648kilo tonne/year of demand. To meet such growing demand,PCL has set up new BOPP capacity of 35,000tpa in India as well as a new 10,000tpa CPP plant in Thailand. In PET films, PCL increased capacity in India by 155% inFY2010. Overall, on the back of the company's capacity expansion moves, weexpect it to post 20% CAGR in consolidated sales over FY2010-12E.

Available at a discount to PAvailable at a discount to PAvailable at a discount to PAvailable at a discount to PAvailable at a discount to Peers: eers: eers: eers: eers: PCL holds 70% stake in its listed Thailand subsidiaryPolyplex Thailand (PTL), which has a market cap of Rs950cr and is available at1.3x P/BV. However, PCL has a market cap of Rs426cr or 0.6x FY2010E P/BV,which is at more than 55% discount to PTL's market cap and at a discount of nearly36% to PCL's 70% stake in PTL, which works out to around Rs665cr. In comparisonto its peers too, PCL is available at inexpensive valuations of 0.6x FY2010E P/BV,with Uflex, Jindal Poly and Ester trading between 0.7x-1.1x FY2010E P/BV,respectively. Over the past five years, PCL has traded in the range of 0.3-0.7x oneyear forward P/BV, considering the 46% CAGR in earnings over FY10-12E, wevalue PCL at the upper band (0.7x) FY2012E P/BV.

July 7, 2010

PPPPPolyplex Corporationolyplex Corporationolyplex Corporationolyplex Corporationolyplex Corporation BUYBUYBUYBUYBUY

A Good Package CMP Rs267Target Price Rs418

Stock Info

Shareholding Pattern (%)

Sector Packaging-Polyester Film

Market Cap (Rs cr) 426

Beta 0.4

52 Week High / Low 271/164

Avg. Daily Volume 6019

Face Value (Rs) 10

BSE Sensex 17,471

Nifty 5,241

Reuters Code PLYP.BO

Bloomberg Code PPC@IN

Promoters 46.9

MF / Banks / Indian FIs 19.2

FII / NRIs / OCBs 11.6

Indian Public / Others 22.3

Abs. (%) 3m 1yr 3yr

Sensex (2.8) 23.3 16.8

Polyplex 24.8 48.4 84.9

Investment Period 12 Months

Sharan LillaneySharan LillaneySharan LillaneySharan LillaneySharan Lillaney+91 22 4040 3800 Ext: 338

Email: [email protected]: Company, Angel Research

Key Financials (Consolidated)Y/E March (Rs cr)Y/E March (Rs cr)Y/E March (Rs cr)Y/E March (Rs cr)Y/E March (Rs cr) FY2009FY2009FY2009FY2009FY2009 FY2010EFY2010EFY2010EFY2010EFY2010E FY2011EFY2011EFY2011EFY2011EFY2011E FY2012EFY2012EFY2012EFY2012EFY2012E

Net SalesNet SalesNet SalesNet SalesNet Sales 1,1211,1211,1211,1211,121 1,2011,2011,2011,2011,201 1,5811,5811,5811,5811,581 1,7331,7331,7331,7331,733

% chg 11.9 7.1 31.7 9.6

Net PNet PNet PNet PNet Profitrofitrofitrofitrofit 110 110 110 110 110 72 72 72 72 72 129 129 129 129 129 154 154 154 154 154

% chg 10.4 (34.6) 79.4 19.0

FDEPS (Rs)FDEPS (Rs)FDEPS (Rs)FDEPS (Rs)FDEPS (Rs) 69.0 69.0 69.0 69.0 69.0 45.1 45.1 45.1 45.1 45.1 81.0 81.0 81.0 81.0 81.0 96.4 96.4 96.4 96.4 96.4

EBITDA Margin (%) 20.9 18.2 18.5 19.0

P/E (x) 3.9 5.9 3.3 2.8

RoE (%) 19.4 10.8 17.1 17.4

RoCE (%) 13.6 10.6 15.0 16.4

P/BV (x) 0.7 0.6 0.5 0.4

EV/Sales (x) 0.9 0.7 0.5 0.3

EV/EBITDA (x) 4.3 4.1 2.5 1.7

July 7, 2010 2

Polyplex Corporation | Initiating Coverage

Initiate Coverage with Buy and Target Price of Rs478

Outlook

PCL is well placed to service future demand on account of having one the largest PET

film production capacities in the world, which is complemented by its excellent

geographical reach through its plants in Thailand, Turkey and India. Pertinently, PCL

garners a major part of its revenues from the packaging industry, which is expected to

register around 15% CAGR over FY2010-12E. Moreover, the company's foray into the

biaxially oriented polypropylene (BOPP) segment is expected to yield good returns for

it, as demand for BOPP far exceeds supply. Overall, we estimate the company to

register 20% CAGR in sales over FY2010-12E. The company's profitability is also

expected to improve with the company expanding capacity of its PET film unit in India

along with the setting up of new BOPP and Cast Polypropylene (CPP) units.

Source: Company, Angel Research

Exhibit 1: Segment-wise capacity and revenue break-up

SegmentSegmentSegmentSegmentSegment CapacityCapacityCapacityCapacityCapacity Revenues Revenues Revenues Revenues Revenues Capacity Capacity Capacity Capacity Capacity Revenues Revenues Revenues Revenues Revenues

(tpa) (tpa) (tpa) (tpa) (tpa) (Rs cr) (Rs cr) (Rs cr) (Rs cr) (Rs cr) (tpa) (tpa) (tpa) (tpa) (tpa) (Rs cr) (Rs cr) (Rs cr) (Rs cr) (Rs cr)

PET filmPET filmPET filmPET filmPET film

India 22,900 242 51,000 499

Thailand 42,000 310 42,000 348

Turkey 58,000 344 58,000 382

TTTTTotalotalotalotalotal 122,900 122,900 122,900 122,900 122,900 896 896 896 896 896 151,000 151,000 151,000 151,000 151,000 1,229 1,229 1,229 1,229 1,229

Metallised filmMetallised filmMetallised filmMetallised filmMetallised film

Thailand 11,000 89 11,000 100

Turkey 11,000 90 11,000 101

TTTTTotalotalotalotalotal 22,000 22,000 22,000 22,000 22,000 179 179 179 179 179 22,000 22,000 22,000 22,000 22,000 202 202 202 202 202

Extrusion Coating filmExtrusion Coating filmExtrusion Coating filmExtrusion Coating filmExtrusion Coating film

Thailand 9,000 43 9,000 48

BOPP filmBOPP filmBOPP filmBOPP filmBOPP film

India - - 35,000 186

CPP filmCPP filmCPP filmCPP filmCPP film

Thailand 10,000 2 10,000 62

Others 80 5

TTTTTotal revenuesotal revenuesotal revenuesotal revenuesotal revenues 1,201 1,201 1,201 1,201 1,201 1,733 1,733 1,733 1,733 1,733

FY2010EFY2010EFY2010EFY2010EFY2010E FY2012EFY2012EFY2012EFY2012EFY2012E

July 7, 2010 3


Exhibit 3: One year forward P/BV band


Price 0.2x 0.4x 0.6x 0.8x 1x

0

100

200

300

400

500

600

Jun

-04

Dec

-04

Jun

-05

Dec

-05

Jun

-06

Dec

-06

Jun

-07

Dec

-07

Jun

-08

Dec

-08

Jun

-09

Dec

-09

Jun

-10


Exhibit 2: Comparative valuation FY2010CompanyCompanyCompanyCompanyCompany P/BP/BP/BP/BP/BV (x)V (x)V (x)V (x)V (x)

Polyplex 0.6

Uflex 0.7

Jindal Poly 0.9

Ester Industries 1.1

Valuation - Available at discount to subsidiary (PTL) and peers

PCL holds 70% stake in its listed Thailand subsidiary PTL, which has a market cap of

Rs950cr and is available at 1.3x P/BV. However, PCL has a market cap of Rs426cr or

0.6x FY2010E P/BV, which is at more than 55% discount to PTL's market cap and at a

discount of nearly 36% to PCL's 70% stake in PTL, which works out to around Rs665cr.

In comparison to its peers too, PCL is available at inexpensive valuations of 0.6x

FY2010E P/BV, with Uflex, Jindal Poly and Ester trading at 0.7x, 0.9x and 1.1x FY2010E

P/BV, respectively. Over the past five years, PCL has traded in the range of 0.3-0.7x

one year forward P/BV. Thus, on the back of high growth potential and inexpensive

valuations, we expect the PCL stock to get rerated going ahead. WWWWWe initiate coveragee initiate coveragee initiate coveragee initiate coveragee initiate coverage

on the stock with a Buy recommendation and Ton the stock with a Buy recommendation and Ton the stock with a Buy recommendation and Ton the stock with a Buy recommendation and Ton the stock with a Buy recommendation and Target Parget Parget Parget Parget Price of Rs418, valuing the stockrice of Rs418, valuing the stockrice of Rs418, valuing the stockrice of Rs418, valuing the stockrice of Rs418, valuing the stock

at 0.7x FY2012E P/Bat 0.7x FY2012E P/Bat 0.7x FY2012E P/Bat 0.7x FY2012E P/Bat 0.7x FY2012E P/BV implying aV implying aV implying aV implying aV implying a into an upside of 57%. into an upside of 57%. into an upside of 57%. into an upside of 57%. into an upside of 57%.

July 7, 2010 4


Investment Arguments

Capacity expansions to drive robust growth in revenues

PCL has recently forayed into the lucrative, high-growth biaxially oriented polypropylene(BOPP) and CPP segments. In FY2010, global demand for BOPP far exceeded supply,with an estimated BOPP production of ~6,046kilo tonne/year v/s ~6,648kilotonne/yr of demand. To meet such growing demand, PCL set up new BOPP capacityof 35,000tonne/year in India as well as enhanced capacity of its CPP plant in Thailand.In PET films, PCL expanded capacity in India by 155% in FY2010.

Overall, on the back of the company's capacity expansion moves, we expect it to post20% CAGR in consolidated sales over FY2010-12E. In absolute terms, the company isexpected to increase their consolidated revenues from Rs1201cr in FY2010E toRs1,581cr and Rs1733cr in FY2011E and FY2012E respectively. This inturn is expectedto boost their bottom line with an expected increase from Rs72cr in FY2010E to Rs154crin FY2012.

BOPP films - Global demand outstrips supply

Over FY2008-10 there was scarce supply of BOPP films the world over. In the last twoyears particularly due to the economic meltdown, the BOPP market faced a setbackwith many manufacturers shutting down plants aggravating the situation. In FY2010,BOPP demand was estimated at 6,648,000 tonnes per annum (tpa), while supply wasonly 6,046,000tpa, a shortfall of nearly 10%. Going ahead, the demand for BOPP isexpected to be strong and grow by 8% pa globally and around 15% in developingnations such as China, India, Indonesia, etc.

On the back of the company's capacityexpansion moves, we expect it to post20% CAGR in consolidated sales overFY2010-12E

Exhibit 4: BOPP supply constrained (kilo tonnes)

Source: Bruckner, Angel Research

Supply Demand

5,000

5,7226,046

5,7006,156

6,648

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

FY2008 FY2009 FY2010E

Supply Demand

BOPP - Growth drivers

Increasing per capita consumption in developing countries due to higher standardof living in countries like China, India, South America and etc.

Substitution to other plastic films ie. PE film, LDPE film, Cellophane film, PVC filmand paper. In terms of yield and price per sq. meter, BOPP film is a better alternative.

Higher consumer demand for better sanitation and environment-friendly issues.

In FY2010, BOPP demand was estimatedat 6,648,000tpa, while supply was only6,046,000tpa, a shortfall of nearly 10%

July 7, 2010 5


PCL’s BOPP plant started production in 4QFY2010 and is expected to generate revenues

of around Rs219cr at full capacity. We expect the company to achieve 60% utilisation

in its first year operations on back of strong BOPP demand world over. We estimate

the segment to register Revenues of around Rs175cr and Rs197cr in FY2011E and

FY2012E, respectively.

PET films demand in India to remain strong

The estimated demand for PET films in India stood at ~2,20,000tpa in FY2009, which

is expected to grow by ~16% pa to 346,000tpa by FY2012. To cater to this growing

demand, PCL increased capacity from 20,000tpa in FY2009 to 51,000tpa in FY2010.

Due to the growing demand for PET films especially in the developing nations, all

major players have planned strategic increase in their capacity, which is estimated to

go on-stream over FY2011-12E. In FY2009, the production capacity in India was

around 290,000tpa, which is expected to grow to ~434,000tpa in FY2012.

With the demand expected to reach around 346,000tpa by FY2012, PET film exports

will remain under pressure due to capacity constraints and is expected to reduce from

the 93,000tpa in FY2007 to 66,000tpa in FY2012E. However, if exports do not reduce

as expected, we believe that there will be an acute shortage of PET films in India,

which will in turn result in prices spurting which inturn help PCL to record better

profitability by taking advantage of the situation.

BOPP plant to generate revenues of

around Rs219cr at full capacity

Demand for PET films in India is stood at~2,20,000tpa in FY2009, which isexpected to grow by ~15% pa to346,000tpa by FY2012E

Source: PCI Films Consulting, Angel Research

Exhibit 6: India PET utilisation on risePPPPParticulars (kilo tonnes)articulars (kilo tonnes)articulars (kilo tonnes)articulars (kilo tonnes)articulars (kilo tonnes) 20022002200220022002 20072007200720072007 2012E2012E2012E2012E2012E

Capacity 159 294 434

Production 142 261 403

Exports 71 93 66

Imports 1 2 9

Demand 72 170 346

Capacity Utilisation (%) 89 89 93

Exhibit 5: World BOPP demand by application

Source: Bruckner, Angel Research

Tape Pasta/Noodle Other Dried Food Confectionery

Other Foods Biscuits/Bakery Tobacco Others

20%

11%

20%6%

20%

15%

4%4%

July 7, 2010 6


In case of Polyplex Thailand (PTL), currently it has capacity of 42,000tpa of PET filmsand 11,000tpa of metalised films. Going ahead, we expect the company to generatearound Rs466cr and Rs492cr in FY2011E and FY2012E respectively from these lines.

PTL is also starting a 10,000tpa CPP line in Thailand, which is estimated to generatearound Rs89cr of revenues at full capacity. In CPP, we estimate the company to achievecapacity utilisation of 50% in FY2011E and register revenues of around Rs45cr in thesame year. In FY2012E, we expect capacity utilisation to increase to 70% and generatearound Rs62cr revenues from the CPP line.

PTL meets the requirements of both the domestic and overseas markets with a focuson exports, which constitutes around 80% of its standalone sales revenues.

Exports account for 80% of PTL’sstandalone sales revenues

High capacity utilisation to hold prices

Average capacity utilisation of Indian companies is expected to be around 90-93% on

the back of growing demand over FY2010-12E. We expect PCL's PET Films segment

to attain 85% capacity utilisation in FY2011E, which is expected to move up to 90% in

FY2012E. Thus, with utilisation levels expected to be high, we expect PET film prices to

remain firm. As a result, we estimate PCL's PET segment to clock revenues of around

Rs471cr and Rs499cr in FY2011E and FY2012E, respectively.

Thailand, Turkey subsidiaries major contributors to revenues

PCL's subsidiaries in Thailand and Turkey are major contributors to its overall revenues.

Currently, PCL is the largest producer of PET films in these countries. In FY2010, PCL

generated 80% of its consolidated revenues from these units.

Thailand

Benign demand-supply scenario for PET films

The demand-supply scenario for PET films in Thailand is unlikely to witness any major

changes in the near term, as demand is expected to grow in line with supply till

FY2012E. For the companies in Thailand engaged in this business, capacity utilisation

is expected to be around 78-80% till FY2012E. Thus, we believe that the PET film

prices are unlikely to fluctuate due to demand-supply mismatch on the back of which

we expect the companies to maintain their profitability.

We estimate PCL's PET segment to clock

revenues of around Rs471cr and Rs499cr

in FY2011E and FY2012E, respectively

In FY2010, PCL generated 80% of its

consolidated revenues from its units in

Thailand and Turkey

Source: PCI Films Consulting Ltd.; Angel Research

Exhibit 7: Thailand - Capacity utilisation to remain stablePPPPParticulars (kilo tonnes)articulars (kilo tonnes)articulars (kilo tonnes)articulars (kilo tonnes)articulars (kilo tonnes) 20022002200220022002 20072007200720072007 2012E2012E2012E2012E2012E

Capacity 16 73 108

Production 14 57 85

Exports 6 32 45

Imports 15 8 4

Demand 23 33 44

Capacity utilisation (%) 90 79 79

July 7, 2010 7


Imports on the rise

In the US, the manufacturers of PET films had filed an anti-dumping petition against

PET imports from China, Brazil, Thailand and UAE. However, the International Trade

Commission's (ITC) final ruling on the matter favoured Thailand, while the following

anti-dumping duty rates were notified against imports from China (3.5 - 76.7%),

Brazil (28.7 - 44.4%) and UAE (4.8%). Thus, going ahead, we expect PTL to increase

its share in the US market on account of being exempt from pay anti-dumping duties

v/s the other players.


Exhibit 8: PTL - Revenue break-up (Standalone)PPPPParticularsarticularsarticularsarticularsarticulars 2008-09 2008-09 2008-09 2008-09 2008-09

MarketMarketMarketMarketMarket (%) (%) (%) (%) (%)

Asia 42

North America 20

Europe 10

Others 9

TTTTTotal Exportsotal Exportsotal Exportsotal Exportsotal Exports 80 80 80 80 80

Domestic Sales 20

TTTTTotal Salesotal Salesotal Salesotal Salesotal Sales 100 100 100 100 100

Source: PCI Films Consulting; Angel Research

Exhibit 9: USA - Imports to increasePPPPParticulars (kilo tonnes)articulars (kilo tonnes)articulars (kilo tonnes)articulars (kilo tonnes)articulars (kilo tonnes) 20022002200220022002 20072007200720072007 2012E2012E2012E2012E2012E

Capacity 346 333 347

Production 304 286 290

Exports 30 22 14

Imports 53 80 105

Demand 327 344 381

Capacity utilisation (%) 88 86 84

Imports (as a % to demand) 16 23 28

Going ahead, we expect the PTL’s standalone operations to register revenues of around

Rs511cr and Rs554cr in FY2011E and FY2012E, respectively.

Going ahead, we expect PTL’s standalone

operations to register revenues of around

Rs511cr and Rs554cr in FY2011E and

FY2012E, respectively

July 7, 2010 8


Source: PCI Films Consulting; Angel Research

Exhibit 10: Turkey - Demand-supply scenario of PET filmsPPPPParticulars (kilo tonnes)articulars (kilo tonnes)articulars (kilo tonnes)articulars (kilo tonnes)articulars (kilo tonnes) 20022002200220022002 20072007200720072007 2012E2012E2012E2012E2012E

Capacity - 49 78

Production - 39 63

Exports - 23 42

Imports 13 2 2

Demand 13 18 24

Capacity Utilisation (%) - 80 81

In Turkey, the major growth drivers in terms of consumption are expected to comefrom the Packaging sector, which accounts for nearly two-thirds of the demand. ThePackaging sector is expected to grow by around 8% pa till FY2012E, while demandfor PET films is expected to register 7% CAGR over FY2007-12E. Thus, given thehealthy demand- supply scenario we expect the average capacity utilisation levels toremain high at around 81% till FY2012E. Polyplex Europa being the largest producercoupled with its excellent geographical reach is expected to enhance its capacityutilisation gradually from 90% in FY2010E to 100% in FY2012E.

The company currently has capacity of 58,000tpa of PET films and is estimated togenerate around Rs434cr in FY2010E. We expect revenues to post 6% CAGR overFY2010-12E. In absolute terms, the company is expected to generate around Rs460crand Rs483cr in FY2011E and FY2012E, respectively.

The company's exports account for 80% of its total production, with 40% accounted byits Western Europe customers, 25% by Russia and CIS countries, 15% by the US andthe remainder is exported to the Middle East and Eastern Europe. Polyplex Europasupplies films for signs, labels and tape release liners to five or six overseas companies.

Global demand for PET films to remain firm

Prior to the economic crisis, the PET film industry faced significant overcapacity issuesin FY2006 and FY2007 globally. Due to over capacity, companies across the globeregistered a drastic decline in profit due to stiff competition in turn denting profitmargins. The global meltdown thereafter aggravated the situation with demand fallingon further reduction in inventory.

PCL too faced tough competition along with falling demand leading to decline inprofit margins from 12.2% in FY2005 to 7.2% and 4.2% in FY2006 and FY2007,respectively. In 2007, average capacity utilisation for the Thin PET producers globallystood at around 80%.

Turkey

PCL has a presence in Turkey through Polyplex Europa, a subsidiary of PTL. The company

is currently the largest producer of PET films in Turkey. The company has built a strong

position in Western Europe due to lack of capacity in the region along with getting

around the dumping issues and other duties imposed on India-produced films.

In Turkey, Polyplex Europa being the

largest producer of PET films coupled with

its excellent geographical reach is

expected to enhance its capacity

utilisation gradually from 90% in FY2010E

to 100% in FY2012E

The packaging sector is expected to growby around 8% pa till FY2012E, whiledemand for PET films is expected toregister 7% CAGR over FY2007-12E

July 7, 2010 9


With the ongoing revival in the economy, demand has picked up with the developingnations registering the highest growth (expected to record 15% growth pa). Goingahead, the demand and supply situation is expected to move in sync resulting inaverage capacity utilisation of 85% for thin films and 80% for thick films in FY2012Eglobally leading to better profitability and pricing power for the PET manufacturers.

RegionRegionRegionRegionRegion 20022002200220022002 20072007200720072007 2012E2012E2012E2012E2012E 20022002200220022002 20072007200720072007 2012E2012E2012E2012E2012E

Western Europe Thin 159.0 203.0 218.0 203.7 200.5 232.5

Thick 143.0 99.0 97.0 101.5 92.5 96.5

TTTTTotalotalotalotalotal 302.0 302.0 302.0 302.0 302.0 302.0 302.0 302.0 302.0 302.0 315.0 315.0 315.0 315.0 315.0 305.2 305.2 305.2 305.2 305.2 293.0 293.0 293.0 293.0 293.0 329.0 329.0 329.0 329.0 329.0

Eastern Europe Thin 12.7 16.7 28.7 20.8 33.9 44.9

Thick 10.5 2.5 2.5 3.1 2.6 3.8


North America Thin 181.0 188.0 244.0 236.9 273.6 314.6

Thick 165.0 145.0 159.0 137.6 136.4 152.8


Central & South America Thin 17.0 31.0 31.0 28.3 43.1 59.1

Thick 1.0 1.0 1.0 6.1 5.5 5.4


Centra & East Asia Thin 582.0 1,007.0 1,135.5 445.5 657.6 836.0

Thick 253.0 380.0 527.0 229.5 295.9 413.5

TTTTTotalotalotalotalotal 835.0 835.0 835.0 835.0 835.0 1,387.0 1,387.0 1,387.0 1,387.0 1,387.0 1,662.5 1,662.5 1,662.5 1,662.5 1,662.5 675.0 675.0 675.0 675.0 675.0 953.5 953.5 953.5 953.5 953.5 1,249.5 1,249.5 1,249.5 1,249.5 1,249.5

South East Asia & Oceanic Thin 235.0 455.0 610.0 152.6 293.9 490.7

Thick 44.0 63.5 83.5 13.0 25.6 36.0


Middle East & Africa Thin - 35.0 156.0 35.9 55.8 79.4

Thick - - 18.0 1.1 1.2 1.6

TTTTTotalotalotalotalotal - - - - - 35.0 35.0 35.0 35.0 35.0 174.0 174.0 174.0 174.0 174.0 37.0 37.0 37.0 37.0 37.0 57.0 57.0 57.0 57.0 57.0 81.0 81.0 81.0 81.0 81.0

Total World Thin 1,186.7 1,935.7 2,423.2 1,123.7 1,558.4 2,057.2

Thick 616.5 691.0 888.0 491.9 559.7 709.6

TTTTTotalotalotalotalotal 1,803.2 1,803.2 1,803.2 1,803.2 1,803.2 2,626.7 2,626.7 2,626.7 2,626.7 2,626.7 3,311.2 3,311.2 3,311.2 3,311.2 3,311.2 1,615.6 1,615.6 1,615.6 1,615.6 1,615.6 2,118.1 2,118.1 2,118.1 2,118.1 2,118.1 2,766.8 2,766.8 2,766.8 2,766.8 2,766.8

Capacity utilisation (%) Thin 94.7 80.5 84.9

Thick 79.8 81.0 79.9

Total 89.6 80.6 83.6

Exhibit 11: Global capacity utilisation on increasing trend (kilo tonnes)

T T T T Total Wotal Wotal Wotal Wotal World Supplyorld Supplyorld Supplyorld Supplyorld Supply T T T T Total Wotal Wotal Wotal Wotal World Demandorld Demandorld Demandorld Demandorld Demand

Source: PCI Films Consulting, Angel Research

July 7, 2010 10


PET films demand growing on back of burgeoning Packaging sector

PCL is currently present in the Thin Films segment with around 76% of its revenues are

derived from the Packaging and Metalising segment and 15% of the revenues derived

from the Industrial segment. Going ahead, the Packaging segment is set to witness

highest demand worldwide with the developing nations leading the pack in terms of

growth. The global Packaging and Metalising segment is expected to register a CAGR

of 9% over FY2007-12E.

Excise, Corporate Tax Exemption benefits

Polyplex Thailand enjoys 100% corporate tax exemptions till FY2012. PCL's new capacity

expansion (PET and BOPP) will also avail 100% corporate tax exemptions till FY2015.

As a result of these exemptions, the company's tax rate would further reduce which will

inturn boost its bottom-line.

Concerns

Higher crude oil prices

PCL's two major raw materials include PTA and MED, which are derivatives of crude

oil. Pertinently, raw material costs account for nearly 55% of the company's total

expenditure. In the short term, prices of PTA and MEG would depend on the demand

and supply of the final products. In the long run however, they would move in line with

the crude price. Thus, an increase in crude oil prices will lead to an increase in the raw

material price. Depending on the demand- supply scenario, PCL may or may not be

able to pass on such increase in prices in turn impacting profitability.

Changes in Anti-Dumping duties

Any change in the Anti-Dumping duties will have a direct impact on PCL as most of

the company's products are exported. A negative change could impact sales and hit

profitability.

July 7, 2010 11


Financial Analysis

Top-line to ramp up in FY2011E on capacity expansion, new lines

Even amidst the economic downturn, PCL on a consolidated basis registered a moderate

11.9% yoy growth in sales in FY2009. For 9MFY2010, net sales grew 5.4% yoy to

Rs898cr from Rs852cr in the corresponding period of the previous year. Going ahead,

for in 4QFY2010 we expect sales to come in flat with no capacity addition done

during the year. For FY2010, we expect sales to increase by a modest 7.1% to Rs1,201cr

(Rs1,121cr). However, for FY2011E we expect revenues to grow by a robust 32% yoy

on the back of expansion in the PET films capacity and the company's foray into the

BOPP and CPP films segments. For FY2012E, we expect growth to taper down to a

modest 9.6%. Thus, we expect the company to increase its revenues from Rs1,201cr in

FY2010E to Rs1,581cr and 1,733cr in FY2011E and FY2012E, respectively. After

FY2010E volume growth will be mainly driven by the new PET film capacity and BOPP

line in India as well as the CPP line in Thailand. Overall, we expect top-line to register

20% CAGR over FY2010-12E.

Overall, we expect PCL to register 20%

CAGR in top-line over FY2010-12E

Operating margins

Operating profit margins (OPM) improved by 4.2% yoy to 21% in FY2009 largely due

to the decline in raw material costs. Total manufacturing expenses in FY2009 fell by

8% yoy to 61% of net sales v/s 69% in FY2008. For 9MFY2010, OPM fell by a marginal

4% yoy to 18% on the back of increase in stock adjustments and other expenses. For

4QFY2010E, we expect margins to remain flat on a qoq basis. Overall, for FY2010E

we expect PCL to register OPM of around 18.2%. Going ahead, we expect the company

to register modest increase in margins to 18.5% and 19.0% in FY2011E and FY2012E

respectively, on the back of better demand and increasing utilisation. We estimate the

company to record EBITDA of around Rs219cr (Rs235cr) in FY2010E, which is expected

to increase to Rs293cr and Rs330cr in FY2011E and FY2012E respectively, mainly

owing to increase in revenues.

We expect PCL to register modest increase

in OPM to 18.5% and 19.0% in FY2011E

and FY2012E respectively, on the back

of better demand and increasing

utilisation

Exhibit 12: Strong growth in revenues in FY2011E


531

767

1,0011,121

1,201

1,581

1,733

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

FY2006 FY2007 FY2008 FY2009 FY2010E FY2011E FY2012E

32%

(Rs

cr)

July 7, 2010 12


Net profit to register secular growth

In FY2009, increase in OPM was offset by higher depreciation, interest and tax costs

during the year. Depreciation increased by 157% yoy to Rs54cr (Rs21cr) in FY2009,

while interest cost spiked by 82% yoy to Rs35cr (Rs19cr) mainly due to higher gross

block and debt resulting from capacity expansion. Hence, net profit remained flat at

at Rs110cr in FY2009, with net profit margin at a mere 10%. For 9MFY2010, net

profit fell by 56.3% yoy largely because of the increase in overall expenditure and tax

expenses, which increased by 146% to Rs25cr (Rs10cr). For FY2010E, we expect net

profit margin to be around 6.0% at Rs72cr after minority interest. For FY2011E and

FY2012E, we expect a gradual increase in net profit margin to around 8.2% and 9.0%

respectively, on the back of lower interest cost and increasing OPM. In absolute terms,

we estimate net profit of around Rs129cr and Rs154cr in FY2011E and FY2012E,

respectively.

Exhibit 14: Net profit to improve


3832

100110

72

129

154

0

2

4

6

8

10

12

-

20

40

60

80

100

120

140

160

180


Net Profit Margin

(Rs

cr)

(%)

We estimate net profit of around Rs129cr

and Rs155cr in FY2011E and FY2012E,

respectively

Exhibit 13: OPM to remain stable


86 93

168

235219

293

330

0

5

10

15

20

25

-

50

100

150

200

250

300

350


Operating Profit Margin

(Rs

cr)

(%)

July 7, 2010 13


Company Background

PCL, headquarter located in Nodia in Uttar Pardesh, is the world's fourth largest

manufacturer of thin polyester (PET) films. The company has three manufacturing

facilities one located at Khatima in Uttarakhand, another at Rayong province in Thailand

owned and operated by subsidiary PTL and the recent facility at Çorlu in Turkey, which

is owned and operated by Polyplex Europa Polyester Film San. ve Tic. A.S. (PE), a

wholly-owned subsidiary of PTL.

PCL has established itself as one of the most profitable producers of PET films globally

on account of having cost-efficient operations resulting from high productivity and

low overheads. The company's products have gained wide acceptance in the global

markets such as USA, Europe, South-East Asia, South America and Australia. The

company has a dynamic workforce of more than 347 employees in India, more than

295 employees in Thailand and more than 228 employees in Turkey. With its planned

expansion in India, Polyplex capacity has reached 147,000tpa of PET film; 187,700tpa

of PET chips; 42,500tpa of metalliser; 35,000tpa of BOPP; 10,000tpa of CPP and

310mn sqm of coating. With its planned capacity expansion of PET films in Thailand

by 2010, PCL is set to emerge the third largest PET producer in the world.

Subsidiary background

Polyplex (Asia) Pte. Ltd. (PAPL)

PAPL was established as a 100% subsidiary of PCL in July, 2004 and is now a major

shareholder of PTL. PAPL was incorporated as an investment vehicle of PCL for its

overseas investments (including PTL). The issued and paid up capital of PAPL as of

March 31, 2009 stands at USD 1.59 million.

Polyplex Thailand (PTL)

Polyplex (Thailand) Plc. (PTL) was incorporated as a private company on March 26,

2002 with an initial registered capital of Bt. 400,000 to manufacture and distribute

PET film (polyethylene terephthalate film or PET film). The Company was promoted by

Polyplex Corporation Limited (PCL). The registered capital of the Company was

subsequently increased to Bt. 400 million in April/May, 2002. In August 2004, the

Company was transformed into a Public Company and the IPO was subsequently

made in December 2004. As on date, PCL has 70%stake in the Company through

both direct and indirect shareholding and the balance 30% is with the general public.

Polyplex (Singapore) Pte. Ltd. (PSPL)

As Thailand and Turkey did not have an effective Double Taxation Avoidance Agreement

(DTAA), PTL decided to set up its wholly owned investment holding company in

Singapore to invest in the PET film manufacturing factory in Turkey so as to serve the

demand in European and other proximate markets. During the financial year 2008-

09, PTL has invested USD 3.5 million in the Preference Shares of PSPL. The issued and

paid up capital of PSPL as of March 31, 2009 stands at Euro 44.85 million.

July 7, 2010 14


Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Srketi (PE)

PSPL had incorporated a 100% owned subsidiary company, PE in Turkey for operation

of Greenfield polyester film plant for export to European and other proximate markets.

The commercial operations had started in December, 2005 with the start up of the

first thin PET film line. The first Metallizer plant had started production in March,

2006. The PET resin plant commenced commercial production from December, 2006.

The second thin PET film line and Metallized Film line commenced commercial

production in May2008.The issued and paid up capital of PE as of March 31, 2009

stands at Euro 4.04 million.

Polyplex (Americas) Inc.

PTL had acquired 80.24% equity stake in Spectrum Marketing Inc. (since renamed as

Polyplex (Americas) Inc) with effect from January 1, 2006 to enhance its distribution

network in the North American market. PCL, PTL's parent company also has a 9.88%

stake while the balance 9.88% is held by a foreign US-based shareholder. During the

financial year 2008-09, PTL invested USD 4 million in PA's Redeemable Preference

Shares, in order to finance PA's working capital requirement. The issued and paid up

capital of PA as of March 31, 2009 stands at USD 5.425 million.

Applications: CPP films and packaging

CPP films are used in household paper packing, stationery packaging, portfolios and

food packaging. In stationery industry, they are used for photo albums and page

protectors. They are used as a lamination layer, both as sealant and as heat resistant

layer and in the pressure sensitive industry for adhesive coating and diaper closures.

Also used as anti-leak layer for diapers, material for automatic packing of electrical

and hardware products and covering films for audio and video cassettes, CDs and

DVD cases. Ideal for textile industry for packaging of hosiery, socks, shirts; for floral

wraps as sleeves and sheets for cut flowers, pots, dried flowers; food industry for

packaging of bread, vegetables, and candies. Various packaging products made from

these films are:

Packaging rolls

Packaging pouch

Packaging bags

Food packaging laminates

Dairy packaging

Cosmetic packaging

Pharma packaging materials

July 7, 2010 15


Profit & Loss Statement (Consolidated) Rs croreY/E MarchY/E MarchY/E MarchY/E MarchY/E March FY2007FY2007FY2007FY2007FY2007 FY2008FY2008FY2008FY2008FY2008 FY2009FY2009FY2009FY2009FY2009 FY2010FY2010FY2010FY2010FY2010 FY2011EFY2011EFY2011EFY2011EFY2011E FY2012EFY2012EFY2012EFY2012EFY2012E

Net SalesNet SalesNet SalesNet SalesNet Sales 767 767 767 767 767 1,001 1,001 1,001 1,001 1,001 1,121 1,121 1,121 1,121 1,121 1,201 1,201 1,201 1,201 1,201 1,581 1,581 1,581 1,581 1,581 1,733 1,733 1,733 1,733 1,733

% chg 44.4 30.5 11.9 7.1 31.7 9.6

Total Expenditure 674 834 886 982 1,288 1,403

Net Raw Materials 550 691 681 792 1,039 1,130

Other Mfg costs 127 145 199 196 258 283

Personnel - - - - - -

Other (3) (2) 6 (7) (9) (10)

EBITDEBITDEBITDEBITDEBITDAAAAA 93 93 93 93 93 168 168 168 168 168 235 235 235 235 235 219 219 219 219 219 293 293 293 293 293 330 330 330 330 330

% chg 7.8 80.6 39.9 (6.7) 33.8 12.6

(% of Net Sales) 12.1 16.7 20.9 18.2 18.5 19.0

Depreciation& Amortisation 35 21 54 59 65 72

EBITEBITEBITEBITEBIT 58 58 58 58 58 146 146 146 146 146 181 181 181 181 181 159 159 159 159 159 227 227 227 227 227 258 258 258 258 258

% chg (3.2) 153.8 23.3 (11.8) 42.7 13.3

(% of Net Sales) 7.5 14.6 16.1 13.3 14.4 14.9

Interest & other Charges 20 19 35 37 30 22

Other Income 11 10 21 6 8 9

(% of PBT) 22.2 7.2 12.4 4.4 3.9 3.8

Share in profit of Associates - - - - - -

Recurring PBTRecurring PBTRecurring PBTRecurring PBTRecurring PBT 48 48 48 48 48 137 137 137 137 137 166 166 166 166 166 128 128 128 128 128 206 206 206 206 206 245 245 245 245 245

% chg (16.6) 181.9 22.4 (22.9) 60.6 19.0

Extraordinary Expense/(Inc.) - - - - - -

PBT (reported)PBT (reported)PBT (reported)PBT (reported)PBT (reported) 48 48 48 48 48 137 137 137 137 137 166 166 166 166 166 128 128 128 128 128 206 206 206 206 206 245 245 245 245 245

Tax 3 5 12 25 21 24

(% of PBT) 7.3 3.7 7.1 19.4 10.0 10.0

PPPPPAAAAAT (reported)T (reported)T (reported)T (reported)T (reported) 45 45 45 45 45 132 132 132 132 132 154 154 154 154 154 103 103 103 103 103 185 185 185 185 185 220 220 220 220 220

Add: Share of earnings of associate - - - - - -

Less: Minority interest (MI) 13 30 44 31 55 66

Prior period items - - - - - -

PPPPPAAAAAT after MI (reported)T after MI (reported)T after MI (reported)T after MI (reported)T after MI (reported) 32 32 32 32 32 102 102 102 102 102 110 110 110 110 110 72 72 72 72 72 129 129 129 129 129 154 154 154 154 154

ADJADJADJADJADJ. P. P. P. P. PAAAAATTTTT 32 32 32 32 32 102 102 102 102 102 110 110 110 110 110 72 72 72 72 72 129 129 129 129 129 154 154 154 154 154

% chg (16.6) 213.6 10.4 (34.6) 79.4 19.0

(% of Net Sales) 4.2 10.1 9.9 6.0 8.2 8.9

Basic EPS (Rs)Basic EPS (Rs)Basic EPS (Rs)Basic EPS (Rs)Basic EPS (Rs) 22 22 22 22 22 63 63 63 63 63 69 69 69 69 69 45 45 45 45 45 81 81 81 81 81 96 96 96 96 96

FFFFFully Diluted EPS (Rs)ully Diluted EPS (Rs)ully Diluted EPS (Rs)ully Diluted EPS (Rs)ully Diluted EPS (Rs) 22 22 22 22 22 63 63 63 63 63 69 69 69 69 69 45 45 45 45 45 81 81 81 81 81 96 96 96 96 96

% chg (16.6) 187.2 10.4 (34.6) 79.4 19.0

July 7, 2010 16


Balance Sheet (Consolidated) Rs crore

Y/E MarchY/E MarchY/E MarchY/E MarchY/E March FY2007FY2007FY2007FY2007FY2007 FY2008FY2008FY2008FY2008FY2008 FY2009FY2009FY2009FY2009FY2009 FY2010FY2010FY2010FY2010FY2010 FY2011EFY2011EFY2011EFY2011EFY2011E FY2012EFY2012EFY2012EFY2012EFY2012E

SOURCES OF FUNDSSOURCES OF FUNDSSOURCES OF FUNDSSOURCES OF FUNDSSOURCES OF FUNDS

Equity Share Capital 15 19 19 19 19 19

Preference Capital - - - - - -

Reserves& Surplus 392 481 620 679 795 936

Shareholders FShareholders FShareholders FShareholders FShareholders Fundsundsundsundsunds 407 407 407 407 407 500 500 500 500 500 639 639 639 639 639 698 698 698 698 698 814 814 814 814 814 955 955 955 955 955

Minority Interest 138 158 198 229 285 351

Total Loans 335 455 681 549 449 294

Deferred Tax Liability 16 14 15 - - -

TTTTTotal Liabilitiesotal Liabilitiesotal Liabilitiesotal Liabilitiesotal Liabilities 897 897 897 897 897 1,127 1,127 1,127 1,127 1,127 1,533 1,533 1,533 1,533 1,533 1,476 1,476 1,476 1,476 1,476 1,547 1,547 1,547 1,547 1,547 1,600 1,600 1,600 1,600 1,600

APPLICAAPPLICAAPPLICAAPPLICAAPPLICATION OF FUNDSTION OF FUNDSTION OF FUNDSTION OF FUNDSTION OF FUNDS

Gross Block 827 825 1,205 1,351 1,423 1,494

Less: Acc. Depreciation 191 227 293 352 417 489

Net BlockNet BlockNet BlockNet BlockNet Block 636 636 636 636 636 598 598 598 598 598 912 912 912 912 912 998 998 998 998 998 1,005 1,005 1,005 1,005 1,005 1,004 1,004 1,004 1,004 1,004

Capital Work-in-Progress 26 264 218 72 - -

Goodwill 1 0 1 1 1 1

InvestmentsInvestmentsInvestmentsInvestmentsInvestments 52 52 52 52 52 15 15 15 15 15 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50

Current Assets 291 390 503 521 702 776

Cash 29 20 93 80 134 153

Loans & Advances 28 43 52 57 63 69

Inventories 106 122 160 171 225 247

Debtors 128 205 198 212 279 306

Other - - - - - -

Current liabilities 110 150 153 165 210 231

Net Current AssetsNet Current AssetsNet Current AssetsNet Current AssetsNet Current Assets 181 181 181 181 181 241 241 241 241 241 350 350 350 350 350 355 355 355 355 355 492 492 492 492 492 545 545 545 545 545

Mis. Exp. not written off 8 3 - - -

TTTTTotal Assetsotal Assetsotal Assetsotal Assetsotal Assets 897 897 897 897 897 1,127 1,127 1,127 1,127 1,127 1,533 1,533 1,533 1,533 1,533 1,476 1,476 1,476 1,476 1,476 1,547 1,547 1,547 1,547 1,547 1,600 1,600 1,600 1,600 1,600

July 7, 2010 17


Cash Flow Statement (Consolidated) Rs crore


Profit before tax 37 126 145 122 197 235

Depreciation 35 21 54 59 65 72

Change in Working Capital 5 (68) (36) (17) (80) (32)

Other income 11 10 21 6 8 9

Direct taxes paid 6 1 3 5 12 25

Cash Flow from OperationsCash Flow from OperationsCash Flow from OperationsCash Flow from OperationsCash Flow from Operations 83 83 83 83 83 88 88 88 88 88 181 181 181 181 181 166 166 166 166 166 179 179 179 179 179 260 260 260 260 260

(Inc)./ Dec. in Fixed Assets (159) (236) (333) - - (71)

(Inc)./ Dec. in Investments (23) 37 (35) - - -

(Inc)./ Dec. in loans and advances 15 (16) (9) (5) (6) (6)

Other income

Cash Flow from InvestingCash Flow from InvestingCash Flow from InvestingCash Flow from InvestingCash Flow from Investing (167) (167) (167) (167) (167) (215) (215) (215) (215) (215) (377) (377) (377) (377) (377) (5) (5) (5) (5) (5) (6) (6) (6) (6) (6) (77) (77) (77) (77) (77)

Issue of Equity - - - - - -

Inc./(Dec.) in loans 37 120 226 (132) (101) (154)

Dividend Paid (Incl. Tax) (7) (11) (13) (13) (13) (13)

Others 60 10 56 (29) (5) 4

Cash Flow from FCash Flow from FCash Flow from FCash Flow from FCash Flow from Financinginancinginancinginancinginancing 91 91 91 91 91 118 118 118 118 118 269 269 269 269 269 (174) (174) (174) (174) (174) (119) (119) (119) (119) (119) (163) (163) (163) (163) (163)

Inc./(Dec.) in Cash 6 (9) 73 (13) 54 19

Opening Cash balancesOpening Cash balancesOpening Cash balancesOpening Cash balancesOpening Cash balances 23 23 23 23 23 29 29 29 29 29 20 20 20 20 20 93 93 93 93 93 80 80 80 80 80 134 134 134 134 134

Closing Cash balancesClosing Cash balancesClosing Cash balancesClosing Cash balancesClosing Cash balances 29 29 29 29 29 20 20 20 20 20 93 93 93 93 93 80 80 80 80 80 134 134 134 134 134 153 153 153 153 153

July 7, 2010 18


Key Ratios


VVVVValuation Ratios (x)aluation Ratios (x)aluation Ratios (x)aluation Ratios (x)aluation Ratios (x)

P/E (on FDEPS) 12.3 4.3 3.9 5.9 3.3 2.8

P/E (on basic, reported EPS) 12.3 4.3 3.9 5.9 3.3 2.8

P/CEPS 5.8 3.5 2.6 3.2 2.2 1.9

P/BV 1.0 0.9 0.7 0.6 0.5 0.4

Dividend yield (%) 1.5 2.2 2.6 2.6 2.6 2.6

Market cap. / Sales 0.5 0.4 0.4 0.4 0.3 0.2

EV/Sales 0.9 0.9 0.9 0.7 0.5 0.3

EV/EBITDA 7.5 5.1 4.3 4.1 2.5 1.7

EV / Total Assets 0.8 0.8 0.7 0.6 0.5 0.4

PPPPPer Share Data (Rs)er Share Data (Rs)er Share Data (Rs)er Share Data (Rs)er Share Data (Rs)

EPS (Basic) 22 63 69 45 81 96

EPS (fully diluted) 22 63 69 45 81 96

Cash EPS 56 115 144 109 170 199

DPS 4.0 6.0 7.0 7.0 7.0 7.0

Book Value 278 313 399 436 509 597

Dupont Analysis (%)Dupont Analysis (%)Dupont Analysis (%)Dupont Analysis (%)Dupont Analysis (%)

EBIT margin 7.5 14.6 16.1 13.3 14.4 14.9

Tax retention ratio 92.7 96.3 92.9 80.6 90.0 90.0

Asset turnover (x) 0.9 0.9 0.8 0.9 1.2 1.2

ROIC (Post-tax) 6.6 12.9 12.1 9.5 15.0 16.6

Cost of Debt (Post Tax) 6.0 4.7 5.8 4.8 5.4 5.4

Leverage (x) 0.6 0.7 0.7 0.7 0.4 0.2

Operating RoE 6.9 18.4 16.8 12.8 19.1 18.7

Returns (%)Returns (%)Returns (%)Returns (%)Returns (%)

RoCE (Pre-tax) 6.9 14.5 13.6 10.6 15.0 16.4

Angel RoIC (Pre-tax) 7.3 17.7 15.4 12.5 16.7 18.5

RoE 8.5 22.4 19.4 10.8 17.1 17.4

TTTTTurnover ratios (x)urnover ratios (x)urnover ratios (x)urnover ratios (x)urnover ratios (x)

Asset Turnover (Gross Block) 1.0 1.2 1.1 0.9 1.1 1.2

Asset Turnover (Net Block) 1.3 1.6 1.5 1.3 1.6 1.7

Asset Turnover (Total Assets) 0.9 1.0 0.8 0.8 1.0 1.1

Operating Income / Invested Capital 0.9 1.1 0.9 0.9 1.2 1.3

Inventory / Sales (days) 53 41 46 50 46 50

Receivables (days) 54 61 66 62 57 62

Payables (days) 43 42 41 39 35 38

Working capital cycle (ex-cash) (days) 78 68 78 81 73 79

Solvency ratios (x)Solvency ratios (x)Solvency ratios (x)Solvency ratios (x)Solvency ratios (x)

Gross debt to equity 0.8 0.9 1.1 0.8 0.6 0.3

Net debt to equity 0.6 0.8 0.8 0.6 0.3 0.1

Net debt to EBITDA 2.7 2.5 2.3 1.9 0.9 0.3

Interest Coverage (EBIT / Interest) 2.8 7.5 5.1 4.3 7.6 11.6

Polyplex Corporation

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Angel Securities Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investmentdecisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document arethose of the analyst, and the company may or may not subscribe to all the views expressed within.

Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and tradingvolume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals.

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Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section).

Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to -15%) Sell (< -15%)

Ratings (Returns) :

Disclosure of Interest StatementDisclosure of Interest StatementDisclosure of Interest StatementDisclosure of Interest StatementDisclosure of Interest Statement PPPPPolyplex Corporationolyplex Corporationolyplex Corporationolyplex Corporationolyplex Corporation

1. Analyst ownership of the stock No

2. Angel and its Group companies ownership of the stock Yes

3. Angel and its Group companies' Directors ownership of the stock No

4. Broking relationship with company covered No

Note: We have not considered any Exposure below Rs 1 lakh for Angel, its Group companies and Directors.

Polyplex Corporation

Address: Acme Plaza, ‘A’ Wing, 3rd Floor, M.V. Road, Opp. Sangam Cinema, Andheri (E), Mumbai - 400 059.Tel : (022) 3952 4568 / 4040 3800

Angel Broking Ltd: BSE Sebi Regn No : INB 010996539 / CDSL Regn No: IN - DP - CDSL - 234 - 2004 / PMS Regn Code: PM/INP000001546 Angel Securities Ltd:BSE: INB010994639/INF010994639 NSE: INB230994635/INF230994635 Membership numbers: BSE 028/NSE:09946Angel Capital & Debt Market Ltd: INB 231279838 / NSE FNO: INF 231279838 / NSE Member code -12798 Angel Commodities Broking (P) Ltd: MCX Member ID: 12685 / FMC Regn No: MCX / TCM / CORP / 0037 NCDEX : Member ID 00220 / FMC Regn No: NCDEX / TCM / CORP / 0302

Research Team

Fundamental:

Sarabjit Kour Nangra VP-Research, Pharmaceutical [email protected]

Vaibhav Agrawal VP-Research, Banking [email protected]

Vaishali Jajoo Automobile [email protected]

Shailesh Kanani Infrastructure, Real Estate [email protected]

Anand Shah FMCG , Media [email protected]

Deepak Pareek Oil & Gas [email protected]

Sushant Dalmia Pharmaceutical [email protected]

Rupesh Sankhe Cement, Power [email protected]

Param Desai Real Estate, Logistics, Shipping [email protected]

Sageraj Bariya Fertiliser, Mid-cap [email protected]

Viraj Nadkarni Retail, Hotels, Mid-cap [email protected]

Paresh Jain Metals & Mining [email protected]

Amit Rane Banking [email protected]

Jai Sharda Mid-cap [email protected]

Sharan Lillaney Mid-cap [email protected]

Amit Vora Research Associate (Oil & Gas) [email protected]

V Srinivasan Research Associate (Cement, Power) [email protected]

Aniruddha Mate Research Associate (Infra, Real Estate) [email protected]

Mihir Salot Research Associate (Logistics, Shipping) [email protected]

Chitrangda Kapur Research Associate (FMCG, Media) [email protected]

Vibha Salvi Research Associate (IT, Telecom) [email protected]

Pooja Jain Research Associate (Metals & Mining) [email protected]

Technicals:

Shardul Kulkarni Sr. Technical Analyst [email protected]

Mileen Vasudeo Technical Analyst [email protected]

Derivatives:

Siddarth Bhamre Head - Derivatives [email protected]

Jaya Agarwal Derivative Analyst [email protected]

Sandeep Patil Jr. Derivative Analyst [email protected]

Institutional Sales Team:

Mayuresh Joshi VP - Institutional Sales [email protected]

Abhimanyu Sofat AVP - Institutional Sales [email protected]

Nitesh Jalan Sr. Manager [email protected]

Pranav Modi Sr. Manager [email protected]

Sandeep Jangir Sr. Manager [email protected]

Ganesh Iyer Sr. Manager [email protected]

Jay Harsora Sr. Dealer [email protected]

Meenakshi Chavan Dealer [email protected]

Gaurang Tisani Dealer [email protected]

Production Team:

Bharathi Shetty Research Editor [email protected]

Bharat Patil Production [email protected]

Dilip Patel Production [email protected]

polyplex corporation - initiating coverage

Economy & Finance