Plastiblends India Limited ( INE083C01022) FV Rs:2 : A value pick at Rs115-120 One year target Rs180

Plastiblends India Limited is India's largest manufacturer and exporter of Colour & Additive Master Batches and Thermoplastic Compounds for the Plastic Processing Industry.

Masterbatch is a solid additive for plastic used for coloring plastics or imparting other properties to plastics.

Plastiblends is headquartered in Mumbai, India, It has world class manufacturing, product development and application facilities located in Daman (Western India). Two more manufacturing units in Roorkee, Uttarakhand (Northern India) , Palsana (Gujarat) with an annual manufacturing capacity of more than 1,10,000 MT per annum. Plastiblends produces master batches for Polyolefin's including BOPP, PET, PBT, ABS, HIPS, EVA. It exports to more than 40 countries worldwide and have a strong foot hold in the global market. Approximately 25% revenue comes from export. 

	2020(E)	2019	2018	2017	2016	2015
Revenue	610	626.85	579.93	571.98	518.16	494.35
Other Income	1.5	1.19	2.39	1.84	2.36	1.86
Total Income	611.5	628.04	582.32	573.82	520.52	496.21
Expenditure	-532	-574.69	-532.67	-516.39	-458.87	-443.56
Interest	-4	-8.14	-7.61	-7.98	-3.55	-3.6
PBDT	75.5	53.35	49.65	57.86	58.1	49.05
Depreciation	-16	-11.74	-11.65	-10.35	-6.24	-6.24
PBT	59.5	41.61	38	47.51	51.87	42.81
Tax	-16	-10.44	-10.68	-14.48	-14.2	-13.67
Net Profit	43.5	31.17	27.32	33.03	37.67	30.05
Equity	13	13	13	6.5	6.5	6.5
EPS	16.5	11.99	10.51	25.42	28.99	23.13
OPM %	12	8.51	8.56	10.04	11.9	10.65
NPM %	7.1	4.97	4.71	5.77	7.27	6.08

Key positive factors

1. Consistent H2(19-20) performance already achieved revenue of 465 crores with net profit of 32crores

2. ROE > 15

3. Market cap only 310 crores against annual revenue of more than 600 crores

4. Promoters Holding 63.37%

5. At CMP of Rs115 available at PE multiple of 7.2 cheap valuation

6. Consistent dividend paying company last year dividend 75%

7. No pledged shares and almost debt free.

8. Low crude oil prices and higher dollar should help company to improve margins and revenue.

9. Promoters have been buying stocks from market between 12th march o 19th March in range from 120 to 155 which show promoter’s confidence in future of the company.

Risk factors:

1. High crude oil price may affect the profit margin

2. Recession in industrial output and increase in raw material cost could affect the profitability due to lower profit margins.

3. Lower global and local demand due to COVID affect could affect the demand.

Investment Rational: 

Technically Stock after making low of 105 is looking to go up.

Fundamentally strong company available at cheap valuation at PE multiple of approx 7. FY19-20 nine months results are excellent and FY results are expected to be on expected lines. Margin improvements could result in increase in EPS of 16-17 in FY 19-20. PE expansion as the market goes up this stock can touch 180 in years time .Investors may accumulate this stock with a target price of 180.