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Research
Parekh Aluminex - Sunidhi
Posted On : 2012-05-21 11:08:21( TIMEZONE : IST )
Q4FY12 & FY12 Results:
During Q4FY12, net profit surged by 82.4% to Rs.25.9 crore (Rs.14.2 crore) on 76.5% higher sales of Rs.416.1 crore (Rs.235.9 crore). OP and NP margin stood at 17.1% and 6.2% as against 18.5% and 6.0% respectively in Q4FY11. (YoY)
During FY12, net profit advanced by 27.8% to Rs.85.9 crore on 51.8% higher sales of Rs.1369.3 crore. OP and NP margin stood at 17.7% and 6.3% Vs 17.9% and 7.4% respectively in FY11. FY12 EPS works out to Rs.66.6 Vs Rs.52.1 in FY11.
With a business model to become a Global Customised Manufacturing Company, PAL aims at being a preferred supplier of all conceivable types of AFC products. PAL wants to develop various types of moulds, which are the basic building blocks of AFC production. This will augment PAL's robust knowledge base in the production capabilities of AFC products and offer extensive product variants in global markets. It aims at making PAL the global leader of AFC products. The boosted financial capability shall also enable PAL to search for acquisition and merger opportunities in the future to further drive its growth plans.
Valuation & Recommendation
PAL enjoys healthy position in the international market with the quality of the products best and comparable to any other products of World Class suppliers. The expansion now enables to capture the export market and the ever expanding retail market. Considering all these factors PAL is very much optimistic about times to come.
India is the world's eleventh largest packaging consumer, with a market size of US$550-billion that is expected to grow 18-20% (presently 15%). Evidently, it is projected that increased incomes will translate into higher industry growth.
The large manufacturing base, long term supply contracts with leading clients, almost zero inward freight cost, zero excise, octroi and sales tax benefits, strong brand, huge replacement market, the potentially large addressable market coupled with major expansion give strong revenue & profitability visibility for PAL going forward.
At the CMP of Rs.300, the share of PAL is trading at a P/E of 3.5x on FY13E and 2.8x on FY14E. We reiterate BUY with a target price of Rs.390 in the medium-to-long term.
