BUY Paper Products Ltd - Latin Manharlal Securities Pvt. Ltd

COMPANY PROFILE

Incorporated in 1950, Paper Products Ltd. (PPL) is India's leading manufacturer of primary consumer packaging and a subsidiary of the global packaging major Huhtamaki Oyj, Finland. The company's packaging service portfolio range from designing to labeling of the product. PPL is a pioneer and the technology and market leader in flexible packaging in India and meets the packaging needs of almost the entire range of FMCG segments.

PPL principally produces packaging for products such as shampoos, noodles, biscuits, baby foods, chocolates, coffee, tea, milk powder, juices and many such products.

INVESTMENT POSITIVES

- Strong Parent company – amongst top 10 consumer packaging MNCs
- Meets the packaging needs of the entire range of the FMCG sector
- Favourable growth prospects – consumer goods industry > premium packaging
- Strong Financials and enjoys Debt free status
- High Dividend Yield stock – paying dividend consistently since the past ~60 years
- Rich Clientele – top 10 clients contribute ~80% of revenue

OUTLOOK AND VALUATION

We believe the stock is available at fair valuation given that it's a cash rich, dividend paying company with steady business exposure to a defensive sector like consumer goods packaging.

At the CMP of Rs.66.45, the stock is trading at 7.5x its CY12E EPS of Rs.10.46. We recommend BUY on the stock with a 12¬18 months target price of Rs.83.70, providing an upside of 25.9% from the current levels.

Source : Equity Bulls

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