Innovative tech pack
-Manufacturer of PET bottles and jars supplied to fmcg and beverage industry. good growth prospects. competitors are Munjushree tecnopack, Moldtek packaging, both are trading at high valuations
-BIFR rehabilitation scheme approved and under final stages of implementation. Under the plan all the debt will be settled and co will be debt free, existing equity base will be reduced to 1/10th, the new equity base would be 2.2mn shares with promoters owning 68% of new equity.(promoters infuse 1.5crs at 10rs per share)
-co is planning for plant modernization and capacity expansion.(more capex-more debt!)
-co generated 33 cr sales and 5,2cr ebitda for FY10. June qtr was dismal with 70% fall in EBIT on account of increase in RM costs, one positive thing is that sales were up 16%. Co is trading at 3.6x ebitda. (Mcap of 15.3 cr on new equity base of 2.2mn shares at consolidated share price of 70 rs per share). ROCE is at 22%.
RISKS:
-Stock wld be suspended from BSE for capital reduction (record date 17 Sep, 2010). Time-line for re-listing is not known, it may take 3 or more months for cancellation of old equity shares and issuing new shares. MONEY INVESTED NOW WILL BE LOCKED FOR MORE THAN 3 MTHS AND RELISTING PRICE WILL BE EFFECTED BY THEN PREVAILING MKT CONDITIONS.
-Stock will be bit illiquid post capital reduction.
-operating risks include, customer concentration, competition, volatile RM prices, capital and Wcap intensive biz
-FY-10 extended up to Sep-10, so it will take more time for mkt to get hold of latest balance sheet and effects of BIFR plan.Value realization takes more time.
posted by jagadish @ 6:40 PM
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