Buy Wimplast - Microsec

WIM Plast Ltd is one of the groups company of "Cello" Group, which has strong consumer base throughout the country and is one of the leading market players of Plastic Industry. With its rapid expansion, new product innovation, strong consumer base, increased plastic consumption and accelerated growth in plastic industry, the company is poised to grow in near future.

Revenue at CAGR of 22.72%; PAT at CAGR of 49.55%: The Company's revenue has been growing at a CAGR of 22.72% for the last 5 years on back of new innovative products, increased use of plastic products amongst the households and industrial users and strong consumer base throughout the country. Whereas, the net profit has increased multifold and grown at a CAGR of 49.22%, with negligible interest costs and increased other income. We expect the company to maintain the growth in FY13 as well.

Rapid business expansions to help company yield better results: The Company has set up 3 new manufacturing units at Chennai, Haridwar and Daman in FY12, with total project cost of INR28.84 crores. In addition to these, the project of manufacturing unit of Plastic moulded Furniture at Kolkata, West Bengal is in process and is expected to complete shortly. We expect, going ahead the Company is well equipped with strategic plans for the years to come, which will in return help the company yield better results.

New Products to aid future growth; margins to bottom out: In FY12, the Company has come out with 25 new range of products with multiple applications. We expect, this product mix which depicts different varieties including the premium products and industrial applications will boost up the volumes and class of consumers to serve in national as well as regional segment.

Zero debt balance sheet; steady cash flow: Despite continuous expansions, the company has retained its debt free financial standings and has improved its cash flow from operations.

Valutaion

At the CMP of INR328.15 per share, Wimplast is quoting at P/E of 7.17x its FY13E. On the basis of EV/EBITDA, the stock trades at 3.74x for FY13E.

Key Risks & Concerns

- Constant fluctuations in raw material prices which can result in margin pressure.

- Foreign currency fluctuation (i.e. Rs/$) which can cause for the rise in cost of Raw materials.

- Changes in Technology.

- Changes in demand pattern i.e. consumer demand which is unpredictable.

Source : Equity Bulls

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