Pudumjee Paper Products Ltd
(BSE Code: 539785) (CMP: Rs.29.55) (FV: Re.1)
We had recommended this stock at Rs.21.17 on 24 October 2016, where- after it hit a high of Rs.31.10.
Pudumjee Pulp & Paper Mills Ltd (PPPML) started business in 1964 with the manufacture of high quality paper for the packaging of food and oily products. Pudumjee Paper Products Ltd (PPPL) was incorporated on 14 January 2015 as a public limited company. Pursuant to a Scheme of Arrangement and Reconstruction (Demerger) between PPPML, Pudumjee Industries Ltd (PIL), Pudumjee Hygiene Products Ltd (PHPL), PPPL and their respective shareholders and creditors, the ‘paper manufacturing’ businesses of PPPML and PIL and the ‘hygiene products’ business of PHPL were transferred to PPPL with effect from 1 April 2014.
PPPL’s manufacturing capacity of 60,000 TPA comprises 2 state-of-the-art fourdrinier speciality paper machines purchased from VoithSulzer of Germany, which is upgraded from time to time to the current capacity of 38,000 TPA and 2 Yankee machines with a combined capacity of 22,000 TPA for the production of crepe tissue products, M.G. Papers and other speciality products. The Company has pan India presence and an effective reach in Europe, South-East Asia, UAE and Iran amongst others.
With an equity capital of Rs.9.5 crore and reserves of Rs.215.45 crore, PPPL’s share book value works out to Rs.23.69. The stock trades around 1.3 P/BV. The promoters hold 66.89% of the equity capital, which leaves 33.11% stake with the investing public.
For FY17, the Company posted 96% higher PAT of Rs.19.87 crore on 9% higher sales of Rs.513.84 crore fetching an EPS of Rs.2.09. During Q4FY17, its net profit soared 51% to Rs.5.93 crore on 37% higher sales of Rs.149.51 crore fetching an EPS of Rs.0.62. It paid
15% dividend for FY17. Currently, the stock trades at a P/E of just 14.4x and looks attractive for investment at this level. Investors can buy this stock with a stop loss of Rs.24.5. On the upper side, it could zoom to Rs.38-40 in the short-to-medium term and further to Rs.50+ in the long-term.