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Linc Pen & Plastics Ltd Research Report - 11th Aug 2016

Miscellaneous | Published on Aug 11th 2016

IT

For 1QFY2017, Linc Pen & Plastics Ltd (LPPL)’ results have come in in line of our estimates on the top-line as well as the bottom-line front. Its top-line grew 10% yoy while on the operating front, the company reported margin improvement, primarily on account of lower raw material costs. Further, the net profit grew by ~17% yoy to Rs4.4cr aided by higher sales growth and a strong operating performance. Top-line grew 10% yoy: The top-line grew by ~10% yoy to Rs87cr on the back of good growth in the domestic as well as the exports segment. PAT grew ~17% yoy: On the operating front, the company reported margin expansion by 149bp yoy to 9.6%, primarily on account of lower raw material costs. The reported net profit grew by ~17% yoy to Rs4.4cr aided by higher sales growth and a strong operating performance. Outlook and valuation: Going ahead, we expect LPPL to report a top-line CAGR of ~10% over FY2016-18E to ~Rs420cr owing to strong domestic as well as export sales. On the bottom-line front, we expect the company to report ~13% CAGR to Rs23cr over FY2016-18E. 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). We recommend an Accumulate rating on the stock with a target price of Rs283.

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Accumulate

CMP 260
Target Price 283
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)360.51
MCAP NSE (Rs in Cr)360.51
P/E (x)19.93050
EPS (Rs.)12.23
BV (Rs.)74.13
Div Yield (%)1.23
FV (Rs.)10.00
P/BV (x)3.29
EV/Sales (x)1.14
EV/EBITDA (x)15.49

Shareholding Pattern (%)

Promoter60.0
Public & Others20.0
Foreign14.0
Corporate4.0
Institution2.0
Grand Total100.0

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