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Linc Pen & Plastics Ltd Research Report - 08th Feb 2016

Miscellaneous | Published on Feb 08th 2016

IT

Linc Pen & Plastics Ltd (LPPL)’s 3QFY2016 results have come in below our estimates. The company’s top-line for the quarter grew 5% yoy. On the operating front, the company reported margin improvement, primarily on account of lower raw material costs. Further, on the bottom-line front, the company reported a soft ~4% yoy growth on account of lower sales growth. Top-line grew ~5% yoy: The company’s top-line grew by ~5% yoy to ~`72cr (which is below our estimate of ~`75cr), mainly due to a poor sales performance on the export front (8.3% yoy de-growth due to geographical instability and currency volatility). However, domestic sales grew by ~11.5% yoy. PAT grew ~4% yoy: Despite margin expansion, the reported net profit grew by a soft ~4% yoy to ~`3.3cr (which is below our estimates of ~`3.6cr) on account of lower sales growth and higher tax rate. Outlook and valuation: Going ahead, we expect LPPL to report a top-line CAGR of ~8% over FY2015-17E to ~`371cr owing to strong domestic as well as export sales. On the bottom-line front, we expect the company to report ~17% CAGR over FY2015-17E. This would be on account of expansion in operating margin on the back of lower material prices and higher exports, which is a high margin business. Further, the company has reduced its debt significantly, which will lead to cost saving for the company. We have a NEUTRAL rating on the stock since all the positives are factored in the stock price.

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CMP 201
Target Price
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)346.60
MCAP NSE (Rs in Cr)345.94
P/E (x)19.16
EPS (Rs.)12.23
BV (Rs.)74.13
Div Yield (%)1.28
FV (Rs.)10.00
P/BV (x)3.16
EV/Sales (x)1.10
EV/EBITDA (x)14.91

Shareholding Pattern (%)

Promoter60.0
Public & Others38.0
Institution2.0
Corporate0.0
Foreign0.0
Grand Total100.0

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