KabraExtrusiontechnik Ltd (NSE : KABRAEXTRU BSE Code: 524109) (CMP: Rs. 159) (FV: Rs.5)

KabraExtrusiontechnik Ltd (NSE : KABRAEXTRU BSE Code: 524109) (CMP: Rs. 159) (FV: Rs.5)

Kabra Extrustiontechnik Ltd (KET), the flagship company of the Kolsite group, specializes in providing plastic extrusion machinery for manufacturing pipes and films. It is one of the largest players in this space and present across 85+ countries in the Americas, Middle East, Asia and Africa. It has two manufacturing locations in Daman. It has completed more than 14,000 installations worldwide since 1962.

KET enjoys a leadership position in the extrusion market and is a ‘Two Star Export House’ status. It has set benchmarks in the plastics extrusion industry for its modern R&D techniques and processes to meet the market requirements for low power consumption, high output, maintenance-free and user-friendly plastic extrusion plants. It received two consecutive National Awards for Technology Innovation in 2015 and 2016. Through constant R&D and innovation, it has pioneered over 57 products and solutions in the plastic extrusion industry since 1970.

Collaborations: KET has collaborations with leading companies in the plastic industry such as Battenfeld-Cincinnati (Germany-Austria-USA), PentaS.r.l. (Italy), Greiner (Austria), Unicor (Germany) and ExtronMecanor (Finland).

KET offers market solutions to the following:

Agriculture (Plasticulture): Plasticulture represents application of plastics in Agriculture, Horticulture, Water management and related areas. A variety of plastic materials and end-products are deployed in Plasticulture applications for water conservation, irrigation efficiency, crop and environment protection as well as end-product storage and transportation.

Infrastructure: Plastics pipes and profiles play a major role in the fields of Housing, Industrial and Public Infrastructure, Sanitation, Water Reticulation, Irrigation, Desalination and Effluent Treatment, Micro-ducts (Fibre optics) and conduits.

Packaging: Flexible packaging offers solutions for diverse applications in various user sectors including staples and food products, beverages, pharmaceuticals, personal care and household products, cigarettes and tobacco products as well as a wide range of industrial applications.

Telecom: In telecommunications, the ducts in which the fibre optic cables are installed are usually made of polyethylene. KET manufactures high-speed telecom micro-duct lines and high performance bundled sheathing lines to produce micro-duct for 3G and 4G data communication.



Valuation: KET is a closely-held, investor-friendly company that has consistently paid dividends since the last 10 years. The Indian promoters hold 56% equity stake (zero pledged) while Battenfeld Extrusion (Germany and USA) hold 14% stake. For FY17, the Company posted sales of Rs.276 crore with net profit of Rs.28 crore and an EPS of Rs.8.7. At a market cap of Rs.500 crore, the stock trades at a P/E of just 18x as against the Industry P/E of 29.76x. Its share book value is Rs.57.72. For FY18 and FY19, the Company may record a top-line and bottom-line growth of 10% and 15% respectively, notching an EPS of Rs.10 and Rs.11.5 respectively. At the CMP, the stock is available at an attractive forward P/E of just 11x thus providing an investment opportunity for long-term gains.

 

Thank you for the detailed analysis. Could you please suggest what could be the expected return in 6 months and 1+ years?

Thanks and Regards,
Viswa