1 Oct 28 th , 2010 Stock Data Sector Plastic Face Value(Rs) 10.00 52 wk. High/Low (Rs.) 441.65/128.00 Volume (2 wk. Avg.) 8380 BSE Code 523385 Market Cap(Rs in Mn) 5692.38 Financials (Rs.in.mn) FY10 FY11E FY12E Net Sales 10319.51 12383.41 14240.92 EBIDTA 1227.59 1376.95 1484.54 PAT 472.39 570.62 623.78 EPS 36.96 38.24 41.80 P/E 10.32 9.98 9.13 NILKAMAL LTD BUY F I R S T C A L L R E S E A R C H SYNOPSIS Nilkamal was incorporated on December 5 th , 1985 under the name of creamer plastic, which was converted into creamer plastic on July 18, 1990. The company is promoted by the Parekh Family of Nilkamal Group. The company's name was changed to Nilkamal Plastic on August 23, 1990. Nilkamal is engaged in four key businesses that include (i) material handling crates, containers and bins, (ii) moulded furniture such as chairs, tables and cabinets, (iii) custom mouldings & OEM supplies for specific customers and (iv) @home, the mega home store retail chain. The Company has entered into a Joint Venture agreement with Cambro Manufacturing Company ("Cambro"), USA. Cambro has currently manufacturing operation at USA, Germany, Turkey & China and sells its products globally through dealers and distributors network all over the world. Net Sales and PAT of the company are expected to grow at a CAGR of 17% and 117% over 2009 to 2012E respectively. 1 Year Comparative Graph Nilkamal Ltd BSE SENSEX V.S.R. Sastry Equity Research Desk [email protected]Dr. V.V.L.N. Sastry Ph.D. Chief Research Officer [email protected]C.M.P: Target Price: Rs.381.45 Rs.450.00 Share Holding Pattern
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Oct 28th, 2010
Stock Data
Sector Plastic
Face Value(Rs) 10.00
52 wk. High/Low (Rs.) 441.65/128.00
Volume (2 wk. Avg.) 8380
BSE Code 523385
Market Cap(Rs in Mn) 5692.38
Financials (Rs.in.mn) FY10 FY11E FY12E
Net Sales 10319.51 12383.41 14240.92
EBIDTA 1227.59 1376.95 1484.54
PAT 472.39 570.62 623.78
EPS 36.96 38.24 41.80
P/E 10.32 9.98 9.13
NILKAMAL LTD BUY F
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SYNOPSIS
Nilkamal was incorporated on December 5th, 1985 under the name of creamer plastic, which was converted into creamer plastic on July 18, 1990. The company is promoted by the Parekh Family of Nilkamal Group. The company's name was changed to Nilkamal Plastic on August 23, 1990.
Nilkamal is engaged in four key businesses that include (i) material handling crates, containers and bins, (ii) moulded furniture such as chairs, tables and cabinets, (iii) custom mouldings & OEM supplies for specific customers and (iv) @home, the mega home store retail chain.
The Company has entered into a Joint Venture agreement with Cambro Manufacturing Company ("Cambro"), USA. Cambro has currently manufacturing operation at USA, Germany, Turkey & China and sells its products globally through dealers and distributors network all over the world.
At the current market price of Rs.381.45, the stock is trading at 9.98 x FY11E
and 9.13 x FY12E respectively.
Price to Book Value of the stock is expected to be at 1.83 x and 1.53 x respectively for FY11E and FY12E.
Earning per share (EPS) of the company for the earnings for FY11E and FY12E is seen at Rs.38.24 and Rs.41.80 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 17% and 117% over 2009 to 2012E respectively.
The Company has entered into a Joint Venture agreement with Cambro Manufacturing Company ("Cambro"), USA. Cambro has currently manufacturing operation at USA, Germany, Turkey & China and sells its products globally through dealers and distributors network all over the world.
On the basis of EV/EBITDA, the stock trades at 4.13 x for FY11E and 3.83 x for FY12E.
We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs.450.00 for Medium to Long term investment.
Industry Overview
The Plastics Industry in India has made significant achievements ever since it made a
modest but promising beginning by commencing production of Polystyrene in 1957.
The chronology of manufacture of polymers in India is summarized as under:-
- 1957-Polystyrene
- 1959-LDPE
- 1961-PVC
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- 1968- HDPE
- 1978-Polypropylene
The potential Indian market has motivated Indian entrepreneurs to acquire technical
expertise, achieve high quality standards and build capacities in various facets of the
booming plastic industry.
The plastic processing sector comprises of over 30,000 units involved in producing a
variety of items through injection moulding, blow moulding, extrusion and
calendaring. The capacities built in most segments of this industry coupled with
inherent capabilities have made us capable of servicing the overseas markets.
The economic reforms launched in India since 1991, have added further fillip to the
Indian plastic industry. Joint ventures, foreign investments, easier access to
technology from developed countries etc have opened up new vistas to further
facilitate the growth of this industry.
India ranks 8th in the world with per capita consumption of 4.1 kgs. which is likely to
increase to 7.9 kgs in 2006. The world average is around 20 kgs. Polymer demand in
India to touch 8.3 million tons 2007-2008 and 12.4 million tons by 2010- 2011. India
is expected to be the 3rd largest consumer of plastics after US and china by 2010.
Growth rate between 12% - 15%. Consistently outperforming GDP. There is an
estimated 15,000 units engaged in the manufacturing of various plastic products in
the country. The industry has an average growth of 15% and employs 3000,000 people
directly.
Growth of plastic
� The sector has an employment potential of 6.7 million man years (excluding
services sector).
� Finished products from the industry are exported to over 140 countries,
including highly quality-conscious ones including the US, and European and
the Middle East.
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� India is a net exporter of LLDPE / HDPE / PP / PS forms of plastic materials.
For the plastic industry, the US is the largest trading partner of India. However,
India’s export of plastic is less than 1 per cent of the total imports of the US.
� In 2007, the global plastics export market stood at US$ 375 billion, of which
India had a less than 1 per cent share with exports worth US$ 3.187 billion.
� According to a Plast India Foundation report, the industry exported products
and machinery worth around US$ 4.1 billion during 2007-08, up from US$ 3.1
billion last fiscal.
� Hampering the growth of the sector are factors such as high prices of polymer,
which according to the Indian Plastic Federation, have risen by 50 per cent,
while prices of PVC – another important raw material – have risen by 30 per
cent.
� Irregular supply of polymers is another issue. Exporters of plastic goods want
the government to ease supplies through a series of fiscal measures.
� SMEs face shortage of skilled manpower, finances and advanced technology, all