Manjushree Technopack - Packing The FMCG, Food & Pharma World

One Of The Better Company In One Of The Worse Sector!!!!!!

Founded in 1977 by Vimal Kedia, Manjushree started as a small umbrella manufacturing unit in Guwahati, Assam and thereafter in 1984 forayed into manufacturing of flexible plastic packaging. Manjushree came up with its first IPO in 1995 in order to raise funds for establishing its PET bottle manufacturing unit in Bangalore.  Today, Manjushree is the largest converter of PET and Preforms in India with an installed capacity of 80,000 MTPA and caters to the packaging needs of a large section of the FMCG fraternity. Besides PET, Manjushree also manufactures Oxygen Barrier Retortable Multilayer and Stretch Blow Moulded bottles - both of which were brought into India for the first time by Manjushree.

Manjushree has built expertise in all kinds of rigid plastic packaging solutions, including – PET, PP, Multilayer-
barrier containers and PET preforms that utilize European, Japanese and Canadian technologies. In the last year,
it has commissioned two more state of the art Husky System for PET Preforms and four ASB blows moulding machines to manufacture PET bottles for the beverage and bottled water industry.

Products:
1) PET - Jars and Bottles
2) PP (Poly Propelene) - Jars and Bottles
3) Multilayer Barrier Containers
4) Hot Fill PET Bottles
5) Other Moulded Products

Industries Served By Manjushree Technopack:
- Tea & Coffee - Pharmaceuticals - Confectionery - Fruit juices - Aerated Beverages
- Liquor - Sauces & Ketchups - Household cleaners - Pickles - Health Supplements
- Mineral water - Promotional items - Spices

The Packaging Industry is considered to be one of the world’s largest diversified sector and is ranked 9th
amongst the top 10 industry sectors in the world. The total size of the Indian packaging industry is about $25 billion with an annual growth rate of about 13-15% per annum.

Manjushree has forayed into new segments to diversify like liquor, personal care, dairy and edible oils. Companies such as United Spirits, Reckitt Benckiser, Bacardi, Diageo and Big cola for PET bottles and PET Preforms business have been added to the company’s portfolio in the past few quarters.

Find entire list of clients here:
Link: Click Here

According to management, the company stepped up promotional activities in international markets through active participation in various international exhibitions and conferences. The latest manufacturing facility in Bidadi that is set up with an investment of Rs. 150 crore has boosted Manjushree’s current production capacity to 80,000 million tonne per annum. It is a LEEDs certified eco-friednly manufacturing plant with cutting-edge automation and modernization.
Going strong in line with company’s expansion plans, the construction of the fourth unit, which is a green-field project in Harohall Industrial Area in Bangalore is underway and is expected to be completed by March 2014.
Moving beyond FMCG and liquor, Manjushree has made significant inroads into sectors such as dairy, agro-chemicals and specialized pharma segment - nutracenticals.

Moving onto numbers now,
Over the past 5 years, company has been growing at a CAGR of 27.5% in sales, and 26.3% in net profit.
For the first 9 months ending Dec '13,
The Revenues have grown by 22% YoY, and Net Profit has declined by 14% YoY.
The numbers are muted mainly because of higher input cost aided by Rs depreciation.
The good thing is that the exports are growing significantly over last 1 year, and the company is taking steps to improve it further.
In times to come, I think the profits will go back to normal, and sales, on the other side, will continue to impress, hence future looks bright. But that can take its own time.

Major Risks:
The company debt levels are a bit on the higher side, but that is because of the business model of the company, justified by CRISIL below. Finance cost is very high off-late.

According to CRISIL, Manjushree will maintain steady revenue growth, supported by healthy demand from its end-user segments, and its established position in the plastic packaging industry, over the medium term. Manjushree's operating profitability is expected to be sustained at healthy levels of 19-21% over the same period. The company's financial risk profile is also expected to remain adequate, supported by steady cash generation; however its gearing levels, will continue to remain at average levels despite some moderation (from levels of 1.8 times at March 31, 2013), due to continuing partly debt funded capital expenditure (capex) and working capital intensive nature of operations.

My Views:
At CMP of 155, the stock is trading at P/E ratio of 8.7 based on Mar '13 numbers. The ratio is expected to be around 9 after results of Mar '14, as the profitability is expected to be slightly lower than Mar '13. The ratio makes Manjushree much cheaper than its peers. The revenues for FY14 is expected to be around 430 Cr, and profit is expected to be around 22 Cr. Off-late, we have seen good amount of promoter buying also in the counter, which raises hopes of company performing much better in quarters to come.
The company has paid dividends regularly, thought not a very high one.
Do enough research work before making investment in the company, as suggested every time.

Dynemic Products - The Name Behind Colors Of Modern Life

Dynemic Products Ltd. is an ISO 9001:2000 & HACCP Certified Company. The company is one of the major manufacturer and exporter in India, offering complete range of Food Colors, Lake Colors, Blended Colors, FD&C Colors & Dye Intermediates.
Dynemic believes in continuous development by incorporating the latest technology to achieve better quality. Dynemic's colours are 100 % safe for human consumption and as per international standards.
Manufacturing facilities include two well equipped plants spread over 50000 Sq Mt of area. Plants are HACCP (Hazardous Analytical Critical Control Point) & ISO 9001:2000, ISO 14001 (Environment Management System) certified.
From inception, The company has laid emphasis on eco-friendly process development for food color and lake colors etc., with high yield and minimum waste & emission levels.

The food colors manufactured by Dynemic Products have variety of Applications such as:
1) Confectionary
2) Beverages
3) Proceed Food
4) Bakery Products
5) Dairy Product
6) Pet Foods
7) Pharmaceuticals
8) Cosmetic & Personal Care Products
The detailed product level application can be found here:
http://www.dynemic.com/application.html#

Moving onto fundamentals now. The stock has been able to grow steadily in highly competitive markets.
This year has been a revelation so far. This year, so far, i.e. for first nine months of FY14,
Sales have grown by 28% over last year.
Net Profit have grown by 151% over last year.
Sales have grown on both, domestic and exports front, for all 3 quarters this year, which is great.
Major R&D expense last year, was one of the responsible factors for good increase in sales and profit, which was expected by the company as per the annual report of FY13.
Last year, for the first time, Company got its Credit Rating through CRISIL, where they assigned BBB/stable on long term and short term bank facilities.

The industry is pollution prone, hence company had installed MEE for treating the effluent generated by both the units as per GPCB norms. This was the major reason, why company saw a decline in net profit last year. But that is past now. They will get benefited going ahead, as there are plenty of companies in their competition, who have not yet installed the same.

Major Risk:
1) Highly competitive market
2) Increase in manufacturing cost on account of higher power and gas prices
3) Strict Pollution norms
4) Exchange Rate Fluctuations

The company has been consistently paying good dividend. Even at current market price, the dividend paid last year makes the dividend yield stand at 4.6%, which is excellent. With good profit this year, the company might pay even better dividend.

Also, recently, the company has been allotted a plot in Dahej - III Industrial Estate having plot area of 80000 sq.mt. Company is planning to start Unit III for manufacturing Dye Intermediates and other Allied chemicals.
This could further boost the development plans of the company.

My Views:
The company is expected to end the FY14 with sales figure of 110 Cr and net profit of 10 Cr, which will take their full year EPS to 9.5. So at current market price, the stock is trading at a P/E ratio of 3, which suggests the undervaluedness of the stock. The stock might face some pressure as stock has already jumped 50% from its result day this quarter, but that should not be a worry for long term investor.