In a special edition of SIP Stock Strong Investment Portfolio, Zee Business Managing Editor and Market Guru Anil Singhvi in his seven-pointer reasoning explains why Polyplex Corporation is an Indian MNC (Multi-National Company), along with Zee Business Senior Research Analyst Varun Dubey.
Polyplex Corp is in the plastic films making business for over 33 years, operational in 75 countries and the fifth-largest PET films manufacturer in the world, says Dubey adding further, this is a vertically integrated company, sourcing raw material on its own.
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The senior research analyst said, the company has been increasing its capex for the expansion, as its raw material resin has been increased to 4.6 from 3.8 MTPA. He added, the overall capex of Rs 1300 crore is planned, of which 70 per cent would be met through its internal flows.
In the last three years, the company has garnered cash flows of Rs 551 crore in FY19, Rs 731 crore in FY20 and Rs1102 crore in FY21, says Dubey. He further added, Polyplex is improving its balance sheet by reducing its debt and reducing capex, it reduced debt to Rs 595 crore from Rs 863 crore.
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Zee Business (@ZeeBusiness) June 7, 2021
The company has also reported 78 per cent profit CAGR in the last five years, said Dubey adding further, the promoter has also increased its stake to 51 from 50 per cent, similarly, Foreign Institutional Investors too have increased their stake to 8.5 from 4 per cent.
The company is available at PE 7x, price to book at 1.2x, EV/EBITDA at 2.6x with cheap valuations pointed out the senior research analyst. He mentioned, cheap valuations, strong cash flows, huge profit and Capex makes this stock a perfect investment opportunity.
Terming it as real SIP stock, Singhvi mentions that the company almost every financial year has made an expansion. It has increased its working profit to Rs 1200 crore from Rs 100 crore, and also has a debt of Rs 500 crore as against Rs 900-950 crore cash flows.
The market guru said, Polyplex Corp is one of the international companies of India, in a true sense, the company has 6 plants, of which five are in foreign countries. Thailand plant generates 75 per cent of the companys revenue, Singhvi added.
Mentioning that EPS in FY21 is at 160, Singhvi expects the EPS would grow conservatively each financial year: 175-180 in FY22, 210-215 in FY23, and 250-275 in FY24. He pointed out, the company would be doubled from its current level, he sets a target of Rs 1400, 1650, 1875, 2000 per share.
Choice Broking Executive Director Sumeet Bagadia said, there is a continuous rally in this stock with a strong upside move and it has been consolidated. He further added, the market will see more upside breakout today as compared to Friday closing Rs 1148-1150 per share.
Bagadia said, there would be a fresh breakout in the stock if it surges above Rs 1220 per share a closing basis, and there could be an immediate upside of Rs 150-200 points to 1350-1400 per share levels soon.