Plastiblends India Ltd - Research Report

 

Private Client Research

Rating

Buy

Sector

Plastic Products

Company

Plastiblends India Ltd

Reco Price
Rs. 222
Price Target (12 Months)
Rs. 400
Upside
80.18%

Date

22 July 2014
Sensex
26025.8
CNX Nifty
7767.85

Exchange

Code

NSE
PLASTIBLEN
BSE
523648

Volume growth and addition in value added products will drive the future growth.

Largest Player:
Plastiblends India Ltd is India’s largest Manufacturer and exporter of color and Additive Master Batches and Thermoplastic Compounds for the plastic processing Industry. They produce masterbatches for polyolefin’s including BOPP, PET, PBT, ABS, HIPS, EVA .They have manufacturing capacity above 75000 MT annually. They have extensive world class manufacturing facilities include two manufacturing units in the Daman and new unit in Roorkee.

Agriculture:
The agriculture Industry is a major consumer of plastic with a very diverse array of applications. These applications cover the entire value chain from, for instance, soil conditioning to packaging of foodstuffs. Company has variety of products catering to this industry like Anti Fog masterbatches, Polycolor Master Batches, Polyultra stabilizers and quenchers, Antioxidant Master Batches & Polymer processing Aids. Hence company is poised for strong growth due to contribution from Agriculture sector.

Automotive Sector:
Plastic materials are very essential requirement for Automotive Industry. On the exterior of vehicle , components such as bumper fascias , claddings , rocker panels , body side .also in interior of vehicle , plastic parts such as door trim , instrument panels , seat belts, consoles, armrests , grip handles , seat backs , public transport seats, dashboards , upholstery and knee bolsters are required. Company has variety of products to deal with demand of this industry like Anti Microbial master batches, Anti static master batches, Flame retardants master batches etc. Hence company has a balanced portfolio of products post stable growth in sales for next few years.

Specialist in Electronic & Telecommunication:
Company is a leading supplier of specialized polymer materials with expertise in thermoplastic compounds and color and performance additives. Electrical devices like TV sets, computer, home appliances and many other electronic devices consist of many plastic components that need masterbatches to achieve the right functionality. Hence there is lots of scope for company to grow by meeting consumer sector demand in next few years.

Stable Crude Prices:
Since last few months crude prices are trading at fairly lower levels which is big positive for company like plastiblends as their major raw material is polymer. Polymer is a major raw material to manufacture plastic and its prices are directly co related with international crude prices. Company’s raw material cost is 72.3 % as a % of total sales. Hence these will help company to improve on margins for next few years.

Volume Growth:
Company has been steadily increasing its volume since last few years. Company has grown in terms of their export which is 30% of total sales. Also company has increased its capacity from 52000 in 2011 to 75000 in 2014.Hence company is looking to grow in terms of volumes to meet increase in demand of organized sector. Company is also looking at add value added products in its portfolio to improve its product mix in next 2 years.

Stock Data

CMP (Rs)
218.45
Face value (Rs)
5
52 Week Range (Rs)
229.90 - 50.76
Market cap (Rs Crores)
285.75
Price To Book Value (x)
1.99
P/E Ratio (x)
10.42
EV/EBIDTA (x)
6.07

One Year indexed Stock Performance

Plastiblends India LtdSensex
Plastiblends India Ltd
Performance (%)
1m
6m
12m
Absolute
26.86
112.24
246.94
Sensex
3.97
25.06
29.10

Shareholders

(in %)
30-Jun
Promoter
61.69
FII
1.77
DII
0.03
Others
36.51
Total
100

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Industry

The Masterbatch market is growing with increasing consumption of plastic products by enduser in the Indian and international markets. Plastics are rapidly replacing items like wood, steel, rubber etc. The per capita consumption of plastics in India is expected to rise to 20 Kg by the year 2020 from its present level of 8 kg. Industry is witnessing a rising demand for high performance plastics in major enduser industries like agriculture, packaging, automobile, consumer durables, telecom etc.

Masterbatch Industry is highly fragmented with few major players and large number of small and medium players who account for majority of the market share. Plastiblends India Limited a leading manufacturer of masterbatches in organized sector, produces a wide variety of specialty and high performance masterbatches and compounds. Masterbatches constitute a highly successful and an essential segment of the global plastics industry.

Profile

Plastiblends India Ltd is India’s largest Manufacturer and exporter of color and Additive Master Batches and Thermoplastic Compounds for the plastic processing Industry. They produce masterbatches for polyolefin’s including BOPP, PET, PBT, ABS, HIPS, EVA .They have manufacturing capacity above 75000 MT annually. They have extensive world class manufacturing facilities include two manufacturing units in the Daman and new unit in Roorkee.

Company has strong presence in export markets like European, African, South American, & Asian Markets. They export in more than 40 countries with 30% of sales generating as export sales.

Profit & Loss Statement:- (Standalone)
(Rs Crores)
Particulars
Mar-12
Mar-13
Mar-14
Mar-15E
Mar-16E
Income:-
  • Net Sales & Other Operating Income
  • Growth (%)
  • Total Expenditure
  • EBITDA
  • EBITDA Margin (%)
  • Other Income
  • Operating Profit
  • Interest
  • Exceptional Items
  • PBDT
  • Depreciation
  • PBT
  • Tax
  • Tax Rate (%)
  • Profit After Tax
  • PAT Margin (%)
  • Adj Calculated EPS (Unit.Curr.)
  • 341.13
  • 23.20
  • 308.96
  • 32.17
  • 9.43
  • 0.30
  • 32.46
  • 4.48
  • 0.00
  • 27.99
  • 4.01
  • 23.98
  • 7.26
  • 30.28
  • 16.71
  • 4.90
  • 12.86
  • 408.99
  • 19.89
  • 377.61
  • 31.38
  • 7.67
  • 1.51
  • 32.89
  • 5.78
  • 0.00
  • 27.11
  • 4.08
  • 23.03
  • 7.67
  • 33.30
  • 15.37
  • 3.76
  • 11.82
  • 465.84
  • 13.90
  • 418.62
  • 47.22
  • 10.14
  • 3.46
  • 50.68
  • 5.79
  • 0.00
  • 44.89
  • 4.31
  • 40.59
  • 13.35
  • 32.89
  • 27.24
  • 5.85
  • 20.96
  • 530.00
  • 13.77
  • 475.05
  • 54.95
  • 10.37
  • 5.50
  • 60.45
  • 5.85
  • 0.00
  • 54.60
  • 4.65
  • 49.95
  • 18.50
  • 37.04
  • 31.45
  • 5.93
  • 24.20
  • 617.50
  • 16.51
  • 548.80
  • 68.70
  • 11.13
  • 6.50
  • 75.20
  • 5.85
  • 0.00
  • 69.35
  • 4.95
  • 64.40
  • 23.50
  • 36.49
  • 40.90
  • 6.62
  • 31.47
Source: Stockaxis Research, Company Data

Valuation

Being market leader in organized market company enjoys strong position to cater its clients with number of product it has in its portfolio. Also company is in plans to drive its volume growth with the introduction of new value added products in its portfolio.

At the CMP of Rs 218 stock is trading at very reasonable valuation of 6.92x to FY 2016E. We assign the valuation of 12.71x to FY 2016E indicating the target price of Rs 400 which is a fair valuation of stock in long term.

 

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