Shilp Gravures Ltd

Money Times - - NEWS -

(BSE Code: 513709) (CMP: Rs.122.10) (FV: Rs.10) By Pratit Nayan Pa­tel

Com­pany Back­ground: In­cor­po­rated in 1989, Ahmedabad based Shilp Gravures Ltd (SGL) man­u­fac­tures and sells en­graved cop­per rollers. It op­er­ates through two seg­ments: En­graved Cop­per Roller and Wind Mill. It of­fers gravure cylin­ders as well as flexo plate pro­cess­ing, base shell, pre-press and em­boss­ing prod­ucts for use in flex­i­ble pack­ag­ing, anilox rollers, PVC (polyvinyl chlo­ride) floor­ing, dec­o­ra­tive lam­i­nates, spe­cial­ity coat­ings, ar­ti­fi­cial leather, gift wrap­pers, se­cu­rity and trans­fer print­ing, fine text, la­bel, ce­ramic anilox roller, em­boss­ing and flexo co­lage ap­pli­ca­tions. It also gen­er­ates en­ergy through wind mills.

Fi­nan­cials: SGL has an eq­uity cap­i­tal of Rs.6.15 crore sup­ported by re­serves of Rs.53.53 crore. Its debt:eq­uity ra­tio has de­clined from 0.77 to 0.37 in the last six years. The pro­mot­ers hold 60.52% of the eq­uity cap­i­tal, which leaves 39.48% stake with the in­vest­ing pub­lic. With a share book value of Rs.76.17, its P/BV ra­tio works out to just 1.60x.

Per­for­mance Re­view: For FY18, SGL re­ported PAT of

Rs.7 crore on sales of Rs.69.04 crore and an EPS of Rs.11.38. Dur­ing Q1FY19, it re­ported 35% higher PAT of Rs.3.41 crore on higher sales of Rs.19.6 crore and an

EPS of Rs.5.54. It paid 15% div­i­dend for FY18.

In­dus­try Over­view: Gravure is an ad­vanced, high-tech print­ing process that has em­ployed a com­plete dig­i­tal en­vi­ron­ment.

It op­er­ates the fastest print­ing presses in the world and holds a promi­nent place in the print­ing in­dus­try with its ef­fi­cient, long run, high speed and con­sis­tently high-qual­ity print­ing method. Gravure is used for la­bels, car­tons, pack­ag­ing, gift-wrap, wall and floor cov­er­ings and a va­ri­ety of pre­ci­sion coat­ing ap­pli­ca­tions.

In the cur­rent un­cer­tain eco­nomic sce­nario, the gravure mar­ket is striv­ing to main­tain mar­gins and mar­ket share while fo­cus­ing on tech­no­log­i­cal ad­vances to drive growth. How­ever, gravure plays an im­por­tant role in flex­i­ble pack­ag­ing. The ris­ing ur­ban trend and brand con­scious­ness in In­dia has im­proved the prospects of the gravure in­dus­try led by higher de­mand for so­phis­ti­cated pack­ag­ing. The flex­i­ble pack­ag­ing in­dus­try is grow­ing rapidly since flex­i­ble pack­ag­ing is more cost-ef­fec­tive and easy to han­dle with bet­ter pro­tec­tion. Fur­ther, the govern­ment’s de­ci­sion to per­mit 100% FDI in multi-brand re­tail is also ex­pected to sup­port the sec­tor.

With devel­op­ment across con­sumer and in­dus­trial mar­kets, im­prove­ment in man­u­fac­tur­ing prac­tices and con­tin­ued tech­no­log­i­cal in­no­va­tions, the pack­ag­ing mar­ket is evolv­ing. Ease of pack­ag­ing has made flex­i­ble pack­ag­ing a per­fect

al­ter­na­tive for dis­play and brand­ing of re­tail goods. Backed by in­vest­ments in tech­nol­ogy and in­dus­try equip­ment, the in­dus­try is ex­pected to en­joy a high growth rate in the com­ing years.

Con­clu­sion: At the CMP, the stock trades at a P/E of just 9.5x and is avail­able at 32% dis­count to its 52-week high of Rs.180 recorded in Oc­to­ber 2017. Based on its per­for­mance pa­ram­e­ters, the stock looks quite at­trac­tive at the cur­rent level. In­vestors can ac­cu­mu­late the stock with a stop loss of Rs.105 for a price tar­get of Rs.180-200 in the next 12-15 months. The stock’s 52-week high/low is Rs.180/103. Its mar­ket cap stands at Rs.75.09 crore.

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