Pudum­jee Pa­per Prod­ucts Ltd

Money Times - - Stock Buzz Techno Funda - By Nayan Pa­tel

(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.

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