Saturday, April 5, 2014

Plastiblends India - Merging Ideas And Surging Ahead


Plastiblends India Limited is India’s largest manufacturer and exporter of Colour & Additive Master Batches and Thermoplastic Compounds for the Plastic Processing Industry.
Masterbatch is a solid or liquid additive for plastic used for coloring plastics (color masterbatch) or imparting other properties to plastics (additive masterbatch)

Plastiblends is headquartered in Mumbai. The company's world class manufacturing facilities are located at Daman, Gujarat & Roorkee, Uttarakhand with an annual manufacturing capacity over 75,000 MT. The company produces masterbatches for Polyolefins including BOPP, PET, PBT, ABS, HIPS & EVA.

The company exports to more than 40 countries worldwide and have a strong foot hold in the global market.
The company's production capacity has grown more than 10 times since the year 2000.

Serving Markets:
1) Agriculture
2) Household Appliances
3) Automation & Transportation Industry
4) Electrical, Electronics & Telecommunication
5) Healthcare & Pharma
6) Packaging
7) Textiles
8) Wire & Cables

The Masterbatch market in India is expected to grow at a CAGR of 23% till 2018, which means, the good performers in the sector have plenty of scope to improve their growth.
Link: Click Here

The company is looking to double its capacity by 2015. Along with some nominal expansions that will take place at its existing plants that are situated in Daman and Roorkee, the company is looking forward to set up a new manufacturing unit.
Link: Click Here

Speaking of numbers, the company has been growing steadily over the years, and this year, has not been an exception. The company has grown with a CAGR of 20% in sales, from 2009 to 2013. The profits growth has been varying because of instability of production cost over the past few years. The situation is getting better off-late.
For the first nine-months ended Dec'13, the company has shown,
Sales growth of 16% and Net Profit growth of 84%.
The company has consistently paid good dividend, and is expected to continue the trend.

My Views:
Again historically, March quarters have been good for the company, and considering a moderate growth of 16% again for this quarter, the company should post a total sales of 132 Cr, which will take their annual sales to 475 Cr, from 408 Cr last year. We might see a big jump in net profit for the full year, where I am expecting the company to end the year, with net profit figure of 26 Cr Vs 15 Cr posted last year. That will take their full year EPS to 20. Taking that figure into mind, the company is trading at a P/E multiple of 6 as against industry P/E of 22. Historically, if you see, the stock has never traded above P/E multiple of 8. So, even if we consider the P/E of 8, then stock should be around 160 levels.
Important thing to note here is that, since Aug'13, the stock has already jumped more than 100%, hence one can expect sub-dued stock performance for some time, or even mild downside, we don't know, but again, taking all above factors into consideration, stock is looking very good for long term right now.

Note:
As we all know, General Election 2014 is about to commence from 7th April, and results are expected to be announced on 16th May. The outcome of elections may have hazardous impact on stock markets, if results don't turn out to be favorable. So, if you are a very safe player, its better advised to enter post result declaration, in any of the recent stocks discussed here. If you have some risk appetite, you can invest in these testing times, and wait for things to settle down after elections, if something favorable doesn't happen.
All the best!!!!

66 comments:

  1. Granules India Bets on its PFI Formula

    Bridging the gap between formulation and tablet manufacturing, pharmaceutical formulation intermediate (PFI) outsourcing promises sponsors time and cost reduction

    Link: http://www.contractpharma.com/issues/2014-04-01/view_india-report/granules-india-bets-on-its-pfi-formula/#sthash.D08ZvNXw.dpuf

    ReplyDelete
  2. http://www.pratibhuti.com/Admin/researchpdf/Granules_Pratibhuti_%2025March%2014.pdf

    ReplyDelete
    Replies
    1. Promoter holding is 48.86% not 51.04% as stated in the report.

      Delete
  3. Dhanuka Agritech trades higher on the bourses

    Link: http://www.moneyworks4me.com/company/news/index/id/99412

    ReplyDelete
  4. Thanks for regular updates and new look!!

    ReplyDelete
  5. Dewan Housing Finance: Board to consider Final Dividend

    Link: http://www.bseindia.com/corporates/anndet_new.aspx?newsid=f8549b62-33f0-4cf7-a2e8-d0bde768ff0c

    ReplyDelete
    Replies
    1. They havent yet declared dividends. It says "if any"
      here is excerpt from the notification;

      "Recommendation of final dividend, if any, for the financial year ended 2013-14."

      Delete
    2. Yes of course, it is as mentioned, "Board to consider Dividend."

      When its actually declared, the news is like "Board Recommends Dividend."

      DHFL has already paid dividend once in Feb, but the way their numbers are panning out, it seems like, we will have final dividend declared with this qtr result, and probably paid around Jun-Jul, as usual.

      Delete
  6. Kunal, what would be the impact of Rs appreciation on Cravatex? and how much would b the impact? I mean how do you see it at current valuations?
    - Amit

    ReplyDelete
    Replies
    1. Hi Amit,

      Sorry for the delayed response.

      If the Rs appreciation continues after the election outcome, which means, a strong govt is formed, then you can expect a good turnaround in Cravatex, both in terms of sales and margins.
      The reason is, Rs appreciation will help them improve margins but not sales. For sales to improve, its necessary that lifestyle of common man in india improves, which is again, an indirect implication of strong govt formation.

      This is the best case, but still, on valuation basis, it is cheaper at current market price, with market cap at 68 Cr and sales at 200 Cr.
      I would say based on current valuation, that it is cheap.

      Regards.

      Delete
  7. Hi Kunal,
    Gulshan Polyols is slowly turning out to be "Phool khile hain Gulshan Gulshan" !!!! Decent volumes and good deliveries and multiple trades !!! For the first time it has started quoting in three figures in present leg of trading in 2012-2014 !!! However, looking to it's pedigree, I mean it has traded in the range of 400+ in the past on a much smaller business operations and profitability, it has a long way to go !!! Based on two quarterly results of FY2014-15 one may consider keeping it as a core holding if one is comfortable with small caps !!!! For the present a clear hold and accumulate at every dip !!!!

    ReplyDelete
    Replies
    1. Fully agree!!!!!

      The main reason in improvement right now is Rs appreciation, as it will highly reduce their input cost, which has been the reason for downfall in profits when compared with last year, so far this year.

      But as you said, it has long way to go. The minimum, based on current numbers, I am expecting, is a P/E multiple of 6, which when considered takes the price to 180 or so.
      Imagine the situation when profitability also improves with sales... :-)

      Delete
    2. Hi Kunal,
      You have mentioned that improvement is right now because of Rupee appreciation as it will reduce the input cost. However, there are no direct imports of inputs which will improve the margins. On the contrary in 2012-13 there was export income to the tune of Rs.26 crores. However, it's quite possible that there may be certain input costs which are imported by suppliers or prices are quoted based on import parity. Would request you to elaborate further on this point after digging a little deep :). New Rice based processing unit at Muzaffarnagar, UP and bottling plant at Chhindwara, MP are likely to go into production this quarter itself and the turnover expected from these lines of business is around Rs.50 crores in 2014-15 besides having the benefit of higher depreciation and lower taxes !!!!!

      Delete
    3. Hi totalview,

      I will try to dig in that, but it seems, import cost as you mentioned.
      Also, the higher interest rate, will affect their margins, as seen in report by IndiaNotes, which again, can be controlled in case we have strong govt formation.

      Delete
  8. Dhanuka Agritech to ramp up pesticide capacity

    Link: http://www.thehindubusinessline.com/markets/commodities/dhanuka-agritech-to-ramp-up-pesticide-capacity/article5883688.ece

    ReplyDelete
  9. So Kunal, which is more of risk n rewards kinda bet - Cravatex or Dhanuka agritech? I can invest in only one :)
    Pls advise.
    -Amit

    ReplyDelete
    Replies
    1. Cravatex is excellent when you are ready to take risk, as it is undervalued.

      Dhanuka Agritech is fairly valued at this stage, and you can expect moderate returns, as now, the valuations will be more based on future performance. It was excellent when posted here around 170 levels.

      Based on govt formation ahead, downside risk is limited in Dhanuka, while it is more in Cravatex, as it is a very small cap company right now.

      In my opinion, Cravatex is risky bet and Dhanuka is safe bet.

      Choice is yours.. :-)

      Btw, you are comparing stocks in 2 different sectors, so its difficult to do such comparisons.

      Delete
  10. Suven Life secures (2) Product Patents for their NCEs in Canada and Hong Kong

    Link: http://www.bseindia.com/xml-data/corpfiling/AttachLive/Suven_Life_Sciences_Ltd_100414.pdf

    ReplyDelete
  11. Granules India - Board to consider Dividend

    Granules India Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 24, 2014, inter alia, to consider and approve the Audited Annual Accounts of the Company for the year ended March 31, 2014 and for the recommendation of dividend for the year 13-14, if any.

    ReplyDelete
  12. Camlin Fine Sciences hit new high of 46.5 today, giving an appreciation of almost 100% since its recommendation here:
    http://fundamentalstockideas.blogspot.in/2014/02/camlin-fine-sciences-hidden-player-in.html

    With market cap going above 200 Cr, most of undervaluedness in the stock price seems to have been dealt with. Now its upto the company, to live up to the expectations, and continue to deliver good numbers.

    There is nothing wrong in booking 25% profit at this moment, as you will still be holding 150% of your initial investment, if you would have invested at recommended price.
    For long term, you can continue to hold remaining shares, and enjoy dividend.
    Not sure on how much upside is still left in the counter.

    ReplyDelete
  13. Sarath RamakrishnanApril 10, 2014 at 11:07 PM

    Hi Kunal,

    Do you think arrow coated products Ltd is a bit overpriced at current MCap of 71 Cr ?
    At what price range it can be accumulated for holding long term?

    Thanks

    ReplyDelete
    Replies
    1. If you genuinely mean long term, then every dip is a buying opportunity...

      With stock price jumping 9 times this year, there is always a risk, but don't think the price is too high considering the recent news flow surrounding the company. 71 Cr market cap may seem higher now, but it won't, 2-3 years down the line, if the growth trajectory of the company continues...

      Would advise to buy in parts only, if one has missed the rally so far, and then, use every dips to buy more...

      Delete
  14. Manjushree Technopack hits new all time high of 180....

    ReplyDelete
  15. And Gulshan Polyols has hit a 52-week's high of 109.30 with robust volumes !!!!!

    ReplyDelete
    Replies
    1. :-)

      Since last few days, its almost hitting new 52 week's high everyday... Hence didn't bother to post on daily basis....
      Similar to Camlin Fine Sciences... :-)

      Delete
  16. Managing Director of Camlin Fine Sciences bought 2 Lakh shares from open market at around 44 Rs per share...
    http://www.bseindia.com/xml-data/corpfiling/AttachLive/Camlin_Fine_Sciences_Ltd_110414_SAST1.pdf

    ReplyDelete
  17. 4th page of SHP report submitted by Manjushree shows Dolly Khanna holding 1.02% shares of the company...

    http://www.bseindia.com/xml-data/corpfiling/AttachLive/Manjushree_Technopack_Ltd_SHP_M14.pdf

    Investment in small cap by such a renowned investor, makes it even more interesting....

    ReplyDelete
  18. Your view on Paushak chemicals (alembic group) looking promising,moreover all gujarat based companies are getting up due to NAMO effect.and also JBM AUTO components both are looking promising in their sector.

    ReplyDelete
    Replies
    1. Paushak was already discussed here...
      http://fundamentalstockideas.blogspot.in/2013/11/few-interesting-micro-caps-that-may.html

      It definitely looked good then, but the latest Dec Qtr numbers were disappointing slightly. So, if you are already holding, then continue to hold, as it is definitely looking promising in future, but if you are looking for fresh entry, then you can wait for 1-2 more quarters, to see if numbers gets back on track, to avoid downside risk...

      Not tracking JBM Auto. Just taking a brief look on data, makes it look good. Will surely dig in further..

      Regards

      Delete
  19. Can Fin Homes is on fire... hits new high of 246...

    ReplyDelete
  20. Cera Sanitaryware - Board to consider Dividend

    Cera Sanitaryware Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 25, 2014, inter alia, for considering the following matters:

    1. To adopt Audited Annual Accounts for the year ended March 31, 2014.

    2. To recommend dividend on Equity Shares for the year 2013-2014.

    3. To consider re-appointment of Shri Vikram Somany as Chairman and Managing Director.

    ReplyDelete
  21. Even Plastiblends was on fire today...BTW what price you recommended it? is it still a buy?
    One more question that you mentioned about entry of Dolly Khanna in majushree, so would like to know is there any way to find out what price and date she entered into script? As we already know person holding more that 1% stake appears under public shareholding but where to look for price and date of purchase?
    Any idea?
    - Mayur

    ReplyDelete
    Replies
    1. Mayur,

      Don't have much idea about how to find out at what price did she enter, but will try to see if I get anything.
      But at least, we can calculate the range in which she did her buying, because if you see Dec'13 data, you don't see her name, in public holding more than 1% shares, and now in Mar'14, she is there on that list.

      It is also possible, that she might be holding few shares earlier, which was less than 1%, and hence not seen in Dec'13 data, but for sure, she did some buying in this quarter (i.e. Jan-Mar'14) to make her holding go above 1%.

      Dec'13: http://www.bseindia.com/corporates/shpperent.aspx?scripcd=532950&qtrid=80&CompName=MANJUSHREE%20TECHNOPACK%20LTD%20&QtrName=December%202013

      Mar'14: http://www.bseindia.com/corporates/shpperent.aspx?scripcd=532950&qtrid=81&CompName=MANJUSHREE%20TECHNOPACK%20LTD%20&QtrName=March%202014

      Regarding Plastiblends, its not long since I recommended, and if I am not wrong, the price was above what it is quoting today, may be around 117.
      In the post itself, I mentioned that, stock has seen more than 100% appreciation in past 7-8 months, hence, we have to be very confident, while entering it, or can wait for dips, if not convinced with recent price rise.

      In my opinion, its a buy at this price, purely on basis of valuation, but as you know, small caps, have their own way of running in stock markets, so, you never know. Take decision based on your belief...

      Regards.

      Delete
  22. Hi Kunal,

    Camlin Fine Sciences is at 60 now. Can we buy more stocks at this price for long term.?
    Should we hold it or sell for now?

    Thanks
    Anshul

    ReplyDelete
    Replies
    1. It depends on your belief in the company...
      Frankly speaking, I didn't expected this much appreciation, even in my dreams, within such a short span...
      Now, it is important to see, whether the company is able to deliver the numbers that justifies the rise..

      I personally, would suggest you to wait for results before entering, just to mitigate the risk, if results don't turn out to be as good as expected....

      Delete
  23. Hi Kunal,

    Now we finally know why Camlin Fine Sciences has been on fire.

    Camlin Fine surges 11% on US based DuPont takeover talks

    http://economictimes.indiatimes.com/markets/stocks/stocks-in-news/camlin-fine-surges-11-on-us-based-dupont-takeover-talks/articleshow/33834967.cms


    Also do share your thoughts on any infra related stock you are tracking.

    Regards.

    Sameer

    ReplyDelete
    Replies
    1. Thanks for that update, Sameer.

      But seems like that is just a speculation. No surety on that.

      Will not be tracking Infra stocks, unless NDA govt is formed. Once that happens, then we will start looking into sectors concerned with development.
      But, as I said someday earlier also, that I like IRB Infra, as a company, when compared with its peers. No recommendation though right now.

      Delete
  24. With reference to the news item appearing in a leading financial daily titled "Camlin Fine Surges 11% on DuPont Takeover Talk”, Camlin Fine Sciences Ltd has Clarified to BSE as under:

    "1. The Company was not and also is not in negotiation with anyone including DuPont as reported in the newspaper for takeover of the majority shareholding.

    2. Our Company was not and also is not aware of any information that has not been disclosed to the stock exchanges which could explain recent movement in the trading of Company’s shares."

    ReplyDelete
  25. Eye incremental revenue of Rs 500 cr from new unit: Dhanuka

    The company continues to be debt free and the capex would be funded via internal accruals, MD MK Dhanuka said.

    Read more at: http://www.moneycontrol.com/news/business/eye-incremental-revenuers-500-crnew-unit-dhanuka_1071003.html?utm_source=ref_article

    ReplyDelete
  26. dear kunal,

    do you track ybrant digital,it is in niche segment and looking promising.

    Regards
    Ramesh arjun

    ReplyDelete
    Replies
    1. Not tracking it, but looks like it is worth taking a deeper look, when I saw this today...
      will let you know soon....

      Delete
  27. Hi Kunal,

    Any estimates for PAT of Granules? Could it post 30 crores of PAT or 21-22cr more likely?

    Regards

    Sameer.

    ReplyDelete
    Replies
    1. If you ask me, I would say that I am expecting
      Revenues of 310 Cr, and
      Net Profit of 26 Cr on consolidated basis...

      On standalone basis, they might just fall short of 30 Cr..

      And I am expecting a jump in dividend this time to 4 Rs per share...

      Lets see, 6 days to go..

      Delete
  28. Hi, Whats your take on Nilkamal - Dolly Khanna has entered in it with more than 1% holdings. she might have had entered at much below price compared to cmp 200.
    Pls share your opinion, if its buy at cmp? if you closely track it.
    - Amit

    ReplyDelete
    Replies
    1. Amit,

      The undervaluation of NIlkamal can provide some good returns to investors, but the slowdown in growth in still a worry..
      Being the largest company in the sector, it definitely doesn't deserve to be sitting at a market cap lower than Wimplast..
      The positive with Wimplast is the same fact that their growth is still superb, both in terms of sales and margin...

      Before entering Nilkamal, I would rather wait for company to get back to steady growth, but if one wants to enter the script, based on sheer undervaluation, one can do so, based on his/her judgement.

      Its a classic case similar to HSIL and Cera, where HSIL recently is getting re-rated because of undervaluation, but if you see the returns on investment in past 2 to 3 years, it has been negative in case of HSIL and 300-500% in case of Cera. The ratios are similar in case of Wimplast and Nilkamal.. :)

      All the best!!!!

      Regards.

      Delete
  29. HDFC Mid-cap Opportunity Fund bought 899,200 shares or 1.8% of the paid-up equity capital of Dhanuka Agritech for Rs 231 per equity share.

    This might be indications of good things to come in future....

    ReplyDelete
  30. Good news for Manjushree Technopack:
    Link: http://www.menafn.com/1093811686/The-global-plastics-industry-is-observing-a-continuous-shift-of-production-bases-to-lowcost-Asian-countries

    Challenging News for Manjushree Technopack:
    Link: http://articles.economictimes.indiatimes.com/2014-04-19/news/49252174_1_packaging-coca-cola-india-weights

    ReplyDelete
  31. So finally after lots of consolidation, Granules India and Dynemic Products were able to hit new high today....
    Lets see if they are able to sustain those levels...

    ReplyDelete
    Replies
    1. And why do you forget Gulshan Polyols !!!!!! :D

      Delete
    2. I haven't forgotten... as I said earlier also, it has been making new highs everyday off-late...
      It has been on a tremendous run-up since March, results will be very interesting to watch...
      Expecting a dividend of 3-3.5 Rs per share along with good results this time...

      Granules and Dynemic struggled for about a month or more, before crossing the previous highs, hence a special mention... :)

      Delete
    3. Some how I have a gut feeling that on Gulshan Polyols it will be a repeat of last year's numbers as far as PAT is concerned. In other words margins may be under pressure. But next year's prospects are promising and bright keeping in view new ventures, expansion programmes going on stream.

      Delete
  32. Hi Kunal,

    Is it the right time to invest in Manjushree Technopack(around 205) as it has already been appreciated a lot.
    What is the ideal price to book profits or sell stocks for granules according to you.

    Thanks
    Anshul

    ReplyDelete
    Replies
    1. Anshul,

      If you have patience, you can still invest in Manjushree...

      Profit booking in any company is dependent on your buying price, rather than considering only the fundamentals of the company. That's my way..
      Even if it is a very good company, I always prefer to start booking profit, once it appreciates more than 100%. The quantity of shares sold depends on fundamentals and future prospects of the company..

      Here in case of Granules, you can wait 3 more days for results, and then take a decision, if you are brave-hearted, else you can go for partial profit booking now, if you have already got more than 100% returns... :)

      Regards.

      Delete
  33. Ajanta Pharma - Board to consider Dividend

    Ajanta Pharma Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on May 05, 2014, inter alia, to:

    1. Consider and approve the audited Financial Results of the Company for the year ended March 31, 2014; and

    2. Recommend dividend, if any, on equity shares of the Company for the Financial year 2013-14.

    ReplyDelete
  34. Cheers Kunal ! I'm holding Granules since a year a now and entered into Dynemic after came across your post.
    Reg. Manjushree, missed a entry price you recommended, however, based on above updates would you still suggest me to enter into Manjushree or should i wait for some correction. Pls let me know.
    -Mayur

    ReplyDelete
    Replies
    1. Mayur,

      There a difference in case of Manjushree, when compared with something like Dynemic or Plastiblends..
      Based on respective sectors, undervaluation in Manjushree is least among all the others, considering the recent price rise.
      So, if you are planning to enter now, the entry will be more based on future performances, rather than undervaluation.
      If you believe in company's prospect, then I don't see anything wrong in investing at current price, except that returns might not be multi-fold, but for sure, its a good investment.
      Take your decision wisely...
      All the best!!!!

      Delete
    2. So Kunal, according to you, which is more undervalued Manjushree or Plastiblends? I can afford only one, so wants your opinion. OR any other stock?
      - Mayur

      Delete
    3. Difficult to answer that, because last time, I was asked whether Dynemic or Camlin is more undervalued, when Dynemic and Camlin both were at 28 Rs per share, and I said, according to numbers, Dynemic is more undervalued, but see the price difference today... :-D
      So, its absolutely not in my hands...

      Again, based on numbers, I would say, right now, Plastiblends is more undervalued, but no surety on immediate returns, it might go either way..
      For long term, both are looking good right now..

      Take decision based on your belief and gut feel... :)

      Delete
  35. Promoters are buying Dynemic from open markets....and its hitting UC since last couple of days...something good on the cards :)
    - Mayur

    ReplyDelete
    Replies
    1. That's a good sign, but the buying is off-market.... not from open market...
      But in any case, if they are transferring shares to their name, then its any day good... :-)

      Delete
  36. Granules India came out with strong set of numbers, and a dividend of 3.5 Rs per share.
    I would recommend a hold for now, as management is expecting continuous outperformance going ahead also....

    ReplyDelete
  37. Ya its a hold now. But my expectations for consolidated were around 25 cr as you also said. Anyway overall performance is satisfactory.
    You expect the most from the one you trust the most.

    ReplyDelete
    Replies
    1. They have delivered 26 Cr net profit on standalone basis.. which is great.... it is just that their subsidiaries are not able to turn profitable for nw....
      Hope to see net profit on consolidated basis higher than standalone basis....

      Delete
  38. Photoquip India looks very attractive at CMP provided you have the faith in the management and your patience limit is to the infinity !!!!!!

    ReplyDelete
    Replies
    1. Haven't had a chat with management for quite some time now. Will try to get in touch around result time, and get their views on progress with sales of CORVI products.
      Patience can pay you heavily here, if things go as per expectations.

      Delete