Dolly Khanna’s portfolio of super-duper multibagger stocks tells you that this is an investor endowed with special ability. Whether it is Avanti Feeds (609% YOY), RS Software (400% YOY), Liberty Shoes (268% YOY), Cera Sanitaryware (225% YOY) etc, each stock sings paeans in favour of Dolly Khanna’s magic wand, which has catapulted them to stratospheric heights.
Prashant Jain, CIO of HDFC Mutual Fund, needs no introduction for us. We are familiar with his wizardry as well in picking winning stocks. Wonderla Holidays is a recent example, with 100%+ gains in just a few weeks.
Huhtamaki PPL has the unique privilege of being backed by both of these super-savvy investors. While Dolly Khanna holds 949,887 shares (she is the single largest individual shareholder), HDFC Mutual Fund holds 33,30,525 shares.
Now, to our good fortune, Mehernosh Panthaki of HDFC Sec has put the spotlight on Huhtamaki PPL (HPPL). In a crisp analysis, Mehernosh Panthaki has explained that a lot of great things are going on at HPPL.
Firstly, Huhtamaki’s consolidated net sales are expected to grow by 41.8% on CAGR basis over CY13-16 on account of the consolidation of PPIL, capacity expansion & improving demand for flexible packaging (due to revival in FMCG industry). The capacity expansion, NASP initiatives would enable HPPL to improve its volume growth and boost its revenues & profits.
Secondly, the acquisition of PPIL (Positive Packaging) would almost double HPPL’s turnover and is likely to be EPS accretive. It would enable HPPL gain further bargaining power with its customers, to extend its customer network and would also help synergies in sourcing of inputs and up-gradation in technology.
Thirdly, the structure of the deal seems to be positive for the minority shareholders of HPPL and that the acquisition reflects the parent company’s increasing interest in Indian operations.
Fourthly, HPPL could be a delisting candidate given that Huhtamaki has hiked its holding in HPPL since Feb 2014 from 60.8% to 68.8% (till date) and changed the name of the company from Paper Products to Huhtamaki PPL. The fact that Huhtamaki has complete control over almost all its other subsidiaries point towards HPPL being a probable candidate for de-listing over the medium to long term, Mehernosh adds.
At the end, Mehernosh advises a buy on the basis that HPPL is capable of trading at 13xCY16E EPS, which gives a price target of Rs. 245. Given, the CMP is Rs. 189, we are talking about a 30% upside.
Of course, if Dolly Khanna’s magic wand gets to work, then only the sky is the target for Huhtamaki PPL!!