UFLEX Ltd 16 December 2016
BSE: 500148 | Sector: Packaging
vScore : 60 | Gain%: 22.26%
Buy Date: 16-Dec-2016 | Buy Price : Rs. 265.00
Exit Date: 25-Apr-2017 | Exit Price : 324.00
BUSINESS BACKGROUND KEY DATA
SHAREHOLDING PATTERN
KEY FUNDAMENTALS
vScore: vScore (Value Score) is our proprietary company rating system f
Niveza India Pvt. Ltd,Office - A203, Teerth Technospace, Baner, Pune 45 Sebi registration no: INH000002558
Consistent steady business over the years :
For year FY 2011, the company posted revenues of INR 3,496 Cr and since then it has given steady growth and
revenue size in FY16 became INR 6,105 Cr. The EBITDA of the company in FY 2012 was INR 636 Cr which has
increased to INR 790 Cr in FY 2016. The net profit has grown from INR 252 Cr in FY12 to INR 312 Cr in FY 16.
The EBITDA margins have improved from 10-11% to close to 12% in FY16. On all parameters the company has
posted steady growth over the years.
Presence across verticals of value chain of Packaging with strong distribution and clients makes it
attractive:
The company is engaged in providing end to end flexible packaging solutions to customers viz. Packaging design &
colour scheme, packaging structure, packaging products, and filling machines. It is one of the most integrated
player to have presence in all verticals of packaging in its value chain.
It is largest flexible packaging company in India and one of the emerging player in the world. The company has its
world class manufacturing facilities for packaging films in India, Dubai, Mexico, Egypt, Poland and USA. The
current capacity of the company is 337,000 TPA and for packaging products at multiple locations in India with
current capacity of 90,000 TPA.
The company offers technologically superior packaging solutions for variety of products such as snack foods,
candy & confectionery, sugar, rice and other cereals, beverages, tea & coffee, noodles, wheat flour, soaps and
detergents, shampoos, veg oils, spices, dairy products, frozen food and also to pharmaceuticals, garden fertilizers,
motor oil and lubricants, other auto components etc.The company enjoys strong distribution network globally and
its clients include names such as Nestle, P&G Britannia, Tata, Cadbury etc. The company is technology oriented
and believes in R&D at various levels to improve the efficiency in the organization.
Domestic packaging industry is expected to do well going ahead with global demand being stable:
Indian flexible packaging industry is growing at around 15-17% annually. The increasing demand flexible packaging
domain gives advantage to organized players such as Uflex. Overall industry structure is changing due to rising
income levels and consumption patterns in FMCG and other related industries. The company being a major player
and supplier to FMCG holds certain advantage due to it. Consumption of branded products and increase in
demand of quality products in increasing. All other developments such as pay hikes in India, GST boost to
economy will further improve the demand for FMCG and other industries which will be very positive for the Uflex.
Looking at globally, the industry is growing at 5-6% rate annually and is expected to grow at similar rate in future as
well. The company due to its global outreach and continuous efforts to reach different markets can outperform this
growth rate in coming few years.
Niveza India Pvt. Ltd,Office - A203, Teerth Technospace, Baner, Pune 45 Sebi registration no: INH000002558
Business Outlook and Valuation :
At the moment at current price of 265 the stock is trading at (TTM) P/E of 6. Going ahead we expect revenue
growth of 7-8% for FY17 and FY18. Hence our expectations for revenue for FY17 and FY18 are INR 6,533 Cr and
INR 7,055 Cr respectively.
We expect company to maintain EBITDA margin around 12-13% for next two years. Going ahead we expect PAT
margins of 5% for next two years. Our PAT expectations for FY17 and FY18 are INR 346 Cr, INR 377 Cr
respectively. Our EPS expectations for FY17 and 18 are INR 47.5, INR 51.8 respectively.
We believe Uflex Ltd at PE of 6 with ROCE above 12% is attractively valued. For FY 18 EPS expectations of 51.8,
we expect target price of 320 with a stop loss at 180.
FINANCIALS:
For the Year Ended March (INR) FY15A FY16A FY17E FY18E
Net Sales (Cr) 6,180 6,105 6.533 7,055
EBIDTA (Cr) 745 790 842 878
EBIDTA % 12 12.9 12.9 12.5
Profit Before Tax (Cr) 282 375 417 454
Interest (Cr) 186 177 156 137
Depreciation (Cr) 279 285 302 321
Tax (Cr) 31 63 71 77
Profit After Tax (Cr) 251 312 346 377
PAT% 4.1 5 5.2 5.3
Diluted EPS (INR) 35.3 43.3 47.5 51.8
Shareholder's Funds (Cr) 3,007 3,343 3,661 4,008
Borrowings (Cr) 1,812 1,772 1,642 1,532
Gross Block (Cr) 4,978 5,268 5,594 5,848
Niveza India Pvt. Ltd,Office - A203, Teerth Technospace, Baner, Pune 45 Sebi registration no: INH000002558
Key Risks and Concerns:
● Any downturn in the global demand for packaging materials can impact company’s financials.
● Competitor's product can create margin and sales pressure and hence impact company negatively.
● Domestic demand is crucial for growth and can affect the growth rate of the business and create problems
for revenue growth if slowdown happens in the industry.
● Any adverse policies introduced by government can affect the overall sector and hence a company.
vScore: Value Score is our proprietary company rating system based on last 5 years of historical data and value investing
philosophy at its core. v360 combined with Macroeconomic indicators, projections, fundamental and technical trigger makes it
a 360 degree view.
Disclaimer: The information and opinions in this report have been prepared by Niveza Research Desk and are subject to change without any notice. This
report is for personal information of the authorized recipients. It should not be considered to be taken as an offer to sell or a solicitation to buy any security.
This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its
accuracy or completeness guaranteed. The securities discussed and opinions expressed in this report may not be suitable for all investors and published with
presumption that the investors must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific
recipient. A comprehensive due diligence effort is recommended.
Source: Niveza Research Desk
Niveza India Pvt. Ltd,Office - A203, Teerth Technospace, Baner, Pune 45 Sebi registration no: INH000002558
