In July 2014, when Prima Plastics, a micro-cap with a market capitalisation of Rs. 222 crore, was languishing at the throwaway price of Rs. 19.20, Chetan Phalke of Alphainvesco recommended a buy. His logic was that there is a humongous demand for plastic furniture in India and abroad and that Prima Plastics has a great future ahead. He explained that the stock had an average ROIC of 20%, low P/E (3.10x), low debt, CAGR sales growth of 16%, CAGR profit growth of 39%, high dividend yield (5%) and other virtues which make it a sound investment candidate. “Fundamentally, company appears strong at the current levels” Chetan Phalke confidently said.
| PRIMA PLASTICS LTD – KEY FUNDAMENTALS | |||
| PARAMETER | VALUES | ||
| MARKET CAP | (Rs. CR) | 222 | |
| EPS – TTM | (Rs.) | [*C] | 11.16 |
| P/E RATIO | (X) | [*C] | 18.10 |
| FACE VALUE | (Rs.) | 10 | |
| LATEST DIVIDEND | (%) | 10.00 | |
| LATEST DIVIDEND DATE | 22 MAR 2016 | ||
| DIVIDEND YIELD | (%) | 0.99 | |
| BOOK VALUE / SHARE | (Rs.) | [*C] | 58.48 |
| P/B RATIO | (Rs.) | [*C] | 3.45 |
[*C] Consolidated [*S] Standalone
| PRIMA PLASTICS LTD – FINANCIAL RESULTS | |||
| PARTICULARS (Rs CR) | MAR 2016 | MAR 2015 | % CHG |
| NET SALES | 27.41 | 25.61 | 7.03 |
| OTHER INCOME | 2.59 | -0.09 | 2977.78 |
| TOTAL INCOME | 30 | 25.51 | 17.6 |
| TOTAL EXPENSES | 23.95 | 22.91 | 4.54 |
| OPERATING PROFIT | 6.05 | 2.61 | 131.8 |
| NET PROFIT | 4.05 | 1.72 | 135.47 |
| EQUITY CAPITAL | 11 | 11 | – |
(Source: Business Standard)
A similar opinion was expressed by an anonymous blogger called ‘aceinvestortrader’.
In a post of November 2014, the blogger dramatically called Prima Plastics a “Mega Multibagger in Making” and said that he was “awe struck the moment I realized what a great brand I was missing in my core portfolio”. After some number crunching and facts assimilation, the blogger concluded that Prima Plastics had broken out of a 9 year long consolidation and that “it will not just double or triple and stop. It will go wayyyy beyond”. He exhorted all his followers to “grab the opportunity while the big guys are busy analyzing messed up big businesses”.
Well, the analysis and buy recommendations by Chetan Phalke and aceinvestortrader were brilliant because the stock has taken off into the stratosphere like a rocket.
When Chetan Phalke recommended Prima Plastics, it was quoting at Rs. 19. Today, it is at Rs. 202. This means that in just about 24 months, the stock has notched up mind-boggling gains of 810%. Even from the time of aceinvestor’s recommendation, the stock is up nearly 400%.
The best part is that all the virtues referred to by the experts are still intact in Prima Plastics. In fact, they may have got better.
IDBI Capital has issued an initiating coverage report in which Prima Plastics is recommended to be bought on the logic that the company is “riding on the fast track”. The rationale is very sound:
“Prima Plastics (Prima) is the fourth largest moulded plastic furniture player in India, operating in Western & Southern area through strong distribution (425) and dealers network (5000+). It also exports (16% of Consolidated revenues) to US, Africa and Middle East (ME). During FY12-15, it reported revenues and earnings CAGR of 19% and 22%, respectively while debt level brought down to negligible level (from 0.4x in FY12) and ROE improved from 9% (FY12) to 12.4% (FY15). Going forward, the company would be on a fast growth track due to (1) Shut down of its loss making Aluminium Composite Panel (ACP) business in FY15 (2) Capacity expansion in India and African JV (3) Entry in Central America (JV; 4,000MT capacity) (4) Improving working capital cycle. Given its strong future prospect led by robust earnings growth & uptick in return ratios, FCF generation capability and robust balance-sheet, we assign a P/E multiple of 12x on FY18E EPS (v/s 1 year forward industry average P/E of 16x), translating a price target of Rs235 (63% upside). Initiate with a BUY.”
These sentiments have been echoed by Ekansh Mittal of Katalyst Wealth in his research report.
Ekansh Mittal has explained the nuts and bolts of Prima Plastics and emphasized that its consistent growth track record, proven business model and reasonable valuations make it a good bet for investment.
Ekansh also got his timing right because the stock has notched up handsome gains of nearly 83% since his recommendation six months ago.
Prima Plastics has also issued an investors presentation where the future plans of the Company are explained in detail. It is inter alia pointed out that the African (Cameroon) JV operation is adding capacity by approx 50% in both the segment in this year which will be funded by internal accruals and that a new plant is being added in Central America (Guatemala) (under a 90:10 JV) which will be commissioned in November 2016.
So, in the light of the consensus of eminent expert opinion, we will have to keep a close eye on Prima Plastics to see whether it is able to delight its shareholders with more mega gains!
http://hemanghigandhi.blogspot.in/2016/07/pearl-polymers-ltd-2450-bse523260.html
Prudent Equity recommended this stock in July, 2015 and the stock is up almost 3 times in one year.
This is the best paid advisory service. You should subscribe.
The said blogger mentioned Prima initially and its been 5x from then , well ahead thats why he is been mentioned here . I think no one asked here if PE recommended it and at what price . Same blogger mentioned Cupid at 28 which touched 500 and now its at sub 300 level.
I wonder why some one is subscribing to PE when such good stocks been recommended freely . Infact Arjun itself is providing so many updates of fundamentally good stocks that one can research and make lot of money .
Thanks,
Prashant
People subscribe to the service because track record and success rate of 95% is fantastic. Carefully chosen stocks are recommended. If you are going for free services, there are 200 bloggers writing about 1000 stocks. How do you choose which one will make it? There is no accountability with free lunches.
Thanks,
Raj
Dear Raj,
In free blog you get 100 Nos of Stocks. Take all 100 Stocks, start your own analysis, filter to 10 and take gut feeling ( as peter lynch tells ) and then buy 3 to 5 stocks to get better returns/blogger.
We should not waste the money on paid service.
More money in markets has been lost on gut feelings of amateur investors. If I am sick, I go to the doctor, not Google search and take medicines on my own.
Dear Raj,
I know the moment some one talks about PE there are always aggressive defender for it .
To earn money one need to study well, it gives you confidence and lifetime knowledge(skills) .
By the way there is no accountability for paid lunches too 🙂 .
My suggestion is, lets earn skills and learn preparing lunch for our-self, we are on our own for lifetime 🙂 .
Thanks,
Prashant
#Niveza #Review ::
Looking at the fundamentals of Prima Plastics Ltd. revenue growth is better throughout. Earnings are improving as well. Debt is on reducing side. Other ratios are favoring as well. Company expansion plans are worth. Stock is under valued. One can go long with the stock. Really could serve better returns in coming years.
Visit for more @ Long Term Investing
Prudent Equity recommendation service is expensive, they charge 25K per year. Their record seems good no doubt.
And now the stock is at 212 wich is very much near to target price of 235.