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Linc Pen & Plastics Ltd Research Report - 27th May 2016

Miscellaneous | Published on May 27th 2016

IT

For 4QFY2016, Linc Pen & Plastics Ltd (LPPL) outperformed our estimates on both the top-line and the bottom-line front. The company’s top-line for the quarter grew 13% yoy. On the operating front, the company reported margin improvement, primarily on account of lower raw material costs. Further, the net profit grew by ~65% yoy to Rs6.3cr aided by higher sales growth and a strong operating performance. Top-line grew ~13% yoy: The top-line for the quarter grew by ~13% yoy to ~Rs105cr, with the company posting good growth in the domestic (~6% yoy to Rs68cr) as well as the exports segment (~30% yoy to Rs37cr). PAT grew ~4% yoy: On the operating front, the company reported margin expansion by 268bp yoy to 10.1%, primarily on account of lower raw material costs. The reported net profit grew by ~65% yoy to Rs6.3cr 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 ~Rs416cr owing to strong domestic as well as export sales. On the bottom-line front, we expect the company to report ~9% CAGR to Rs22cr 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 a Buy rating on the stock with a target price of Rs235.

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CMP 203
Target Price 235
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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