INNOVATIVE TECH PACK LTD
DATE: 14/05/2018
  • COMPANY NAME : INNOVATIVE TECH PACK LTD
  • Description :

     

    Recommendation - Buy

    Hold for 3 years

    Target: 142 Rs.

     

    • CMP: 70 Rs
    • BSE Code: 523840
    • Market Capital: 155 Cr.
    • Face Value: 1
    • 52 Week Low / High: 64/115
    • Book Value: 17.85
    • Price/Book Value: 3.97
    • Promoter Share Pledge – Nil
    • TTM EPS – 4.3
    • P/E – 16.6
    • Industry P/E – 42.66

     

     

    • Before knowing details about company, better to know some basic details about PET (Polyethylene Terephthalate) including PP – Polypropylene and HDPE - High-density polyethylene as this the main raw materials for the company to make the final products.
    • PET - in its natural state is a colorless, semi-crystalline resin. PET is suitable for making containers of all shapes, sizes, neck finishes, designs and colors. It bears superior barrier properties.
    • PET (including PP, HDPE) is rapidly becoming the dominant packaging material due to several superior qualities.
    • Safety point of view PET bottles are considered safe for packaging medicines and food materials being free from heavy metals like bisphenol, lead, arsenic and mercury.
    • PET is Recyclable and Eco-friendly

     

    Part – 1 Company’s Information:

     

    • Established in 1989
    • Pioneers in the Indian plastics industry having market cap of 155 Cr.
    • Innovative Tech Pack Ltd. (ITPL) is one of the pioneers in the Indian plastic packaging industry
    • Involved in manufacturing and marketing of PET,PP and HDPE plastic products
    • ITPL now has four state-of-the-art manufacturing plants in Northern and Eastern India with a branch office in Hyderabad.
    • The Company is engaged in the business of Manufacturing & Reselling of Plastic Bottles, Jars, Containers, and Pre-forms & its Caps
    • The company is having very good client based portfolio includes top tier companies like Dabur, Perfetti Van Melle, Heinz India, Wipro Consumer,Bajaj Sevashram, Patanjali, Cadilla etc… 

     

    Part – 2 Company’s Manufacturing Details:

     

    • The Company has One Associate Company i.e. Jauss Polymers Limited
    • Company is having manufacturing locations at Rudrapur (Uttaranchal), Baddi (Himachal Pradesh), Guwahti and Tejpur (Assam), Varoda (Gujarat).

     

    Machinery

     

    • Three imported, Japanese machines from Nissei – 70DPW for very high repetitive production, 70DPH for big Jars and 50 MB for small bottles.

     

     

    • With the cutting-edge machine from Ferromatik Milacron India, company ventured into EBM recently.
    • The machine is capable of producing various possible sizes and shapes of HDPE/PP containers, equipped with a 300 point comparison control for producing well-distributed, high-quality containers.

     

     

    • Three powerful, Ferromatic machines of Italian make offer different capacities to produce PP caps for jars and bottles.

     

    Part – 3 Company’s Products and Exports Details

     

    Food & Beverages

     

     

    Dairy

     

     

     

    Pharmaceuticals

     

     

     

    Consumer Goods

     

     

     

    Cosmetics

     

     

     

    Confectionary

     

     

     

    Registered Design

     

     

     

    Part – 4 Company’s Clients Details

     

     

     

    Part – 5 Company’s Products

     

     

     

    Part – 6 Company’s - Shareholding Pattern:

     

     

     

    Part – 7 Company’s – Dividend History:

     

     

    Part – 8 Financial Focus:

     

    Focus on - Financial Results March 2017:

     

     

     

    • Company witnessed a growth of 15% as compared to last year and operating margin improved from 18.25% to 24.72% is mainly due to economic of scale, efficiencies in terms of productivity, power and labour cost.
    • The projects implemented recently will give its full results in coming year and hence shall improve the profitability.

     

    Focus on - Financial Results December quarter 2017:

    • For the quarter ended 31-12-2017, the company has reported a Standalone sales of Rs 32.87 Crore, up 23.04 % from last quarter Sales of Rs 26.71 Crore and up 18.38 % from last year same quarter Sales of Rs 27.77 Crore
    • Company has reported net profit after tax of Rs 1.80 Crore in latest quarter.

     

     

    Part – 9 Chart

     

     

     

    Part – 10 Peer Comparison

     

     

     

     

     

    Investment Rational:

    1. Pioneer in manufacturing of PET based products as PET industry is growing and PET-based packaging is one of the most economical media for packaging FMCG products
    2. Available at low P/E 16 compare to Industry P/E – 42.66
    3. Robust top line 5 years CAGR growth > 15%
    4. Robust bottom line 5 years CAGR growth > 12%
    5. India has emerged as a largest plastic consumer globally, as it is growing on a fast track basis. This is substantiated by a report of Boston Consultancy Group which states that Indian FMCG Market is of 185 USD Millions and shall be growing at the rate of 14% per annum. Accordingly the PET industry is expected to grow at similar level and also benefits due to GST implementation
    6. GST regime due to Tax rationalization should make Innovative more cost competitive
    7. Addition of new customers in Pesonal Hygeine, Food and Beverages, Confectionaries sector
    8. The company recently established another state-of-the-art plant in Rudrapur, Uttaranchal which will make growth in top and bottom line in coming years

     

     

    Recommendation:

    • Stock CMP is 70 Rs. and stock is trading at P/E 16 & TTM EPS 4.3, based on all above investment points, stock may touch 142 Rs. Within 3 years’ time horizon.

     

     

    Please note:

     

    • Note: The articles are not research reports but assimilation of information available on public domain and it should not be treated as a research report. Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations” Disclosure: It is safe to assume that I might have the discussed companies in my portfolio and hence my point of view can be biased. Readers should consult registered consultants before making any investments. The report has been prepared based on publicly available information filed by the company to the respective stock exchanges.

     

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