Key Highlights
Paper Products Ltd. reported its Q1CY13 results recently. Net sales rose by 13.2%
and operating margins remaining stable.
Net sales increased by13. 2 % YOY to `235.2 crs. in Q1. Volumes growth
for the quarter was at 9.5% YOY & 7.8% QOQ. On a consolidated basis
(including its newly acquired Webtech Lables Pvt. Ltd.) grew by 12%
sequentially `254.7 crs. Consolidated topline stood at `254.7 crs. The
topline growth was supported by healthy demand from clients as well as
the phased expansion coming on stream. PPL’s topline growth strategy is
two pronged - growing business from existing clients as while as adding
new clients. The company is witnessing strong demand growth for
packaging coming in from beverages, food processing & personal care
manufacturers. Operating profit was up from `24 crs. to `27.3 crs.
EBIDTA margins were flat YOY at 11.6%. Raw material prices continued
to move up. RM cost was up by 19% vs. a 13% topline growth in implying
inability to pass on full cost escalation. Margins were maintained as new
capacities supported topline growth and kicking in of operating leverage.
On a consolidated basis operating profit was at `31.4 crs. Margins for
the subsidiary improve by 100 bps QOQ to 20.8%. Consolidated OPMs
were at 12.3%.
Net profit for the quarter was up by 16.8% YOY at `15.1crs. in Q1.
PAT margins expanded by 50 bps YOY to 6.4%. Consolidated PAT after
minority interest was at `15.6 crs in Q1 with margins at 6.1%.
Valuation:
We believe PPL’s business model provides a steady growth &
business visibility for investment in such times. At the CMP of
`62.8/- the stock trades at 7.2x its estimated EPS of `8.8 for
CY13E. With overall GDP growth for the economy slowing
down, we believe PPL to be a good value buy in such times and
hence recommend investors to HOLD the stock. A high cash
generating business will enable the company to fund its future
growth plans.
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