Download - 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
UFLLTD BILCAR PAPPRO
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
UFLLTD BILCAR PAPPRO
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
UFLLTD BILCAR PAPPRO
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
UFLLTD BILCAR PAPPRO
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
UFLLTD BILCAR PAPPRO
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
UFLLTD BILCAR PAPPRO
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
Aug 26, 2010 Dividend Dividend 50% - FV:10
Sep 03, 2009 Dividend Dividend 40% - FV:10
Aug 13, 2008 Dividend Dividend 40% - FV:10
Sep 04, 2007 Dividend Dividend 20% - FV:10
DIVIDEND PAYOUT
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DATA SOURCED FROM