Uflex ltd

The recent company which I came through was uflex ltd. This company is into packaging sector and is a market leader in packaging.this type of business can be called as recession free business since people are gonna eat everyday . The business is expanding into International destinations. I saw some of the chocalates which they have packaged in the place I live. Those candies are selling very good . Also in india they are pakaging for big companies like nestle, hul and other big companies. Famous products like maggi noodles , tide, netscafe coffee and lays are made by them. This company is a top leader in packaing . They are also doint printing for cylinders . As you all know all these products would be used by pople regularly as well as in future. New product are gonna come and this company is gonna benifit obviously as they already have good relationship with these big companies. The company top line has jumped from 3000 to 6000 crores (around) in past 5 years. Their EBITA is standing around 500 crores while their debt level is around 1800 crores. Their debt level has almost doubled in past 5 years whilethe ntworth of the ccompany has trippled. The company market cap is around 1200 crores and Ebita is around 465 crores. Its just selling so cheap. The promoter stake holding decreased to 13% before 5 years but right now back on track with 43% making the investors comfortable. This is one company where we can see valuations growing In coming years .

Feedbacks are welcome

 

Great company to invest because its really undervalued! I am spread thin in my other investments otherwise I would have definitely invested in it.

 

well yea thats true , this often happens with investors , getting locked on other investment but its a very undervalued company and you will see price jumping soon . We can even expect 4x to 5x jump from here.

 

very useful info. may i know, from where you got above information?

 

Read the annual reports and check the company website

 

Thanks for sharing that. Uflex seems to have low profit margin and low sales growth. How much EBIT growth do you see from here in next 5 years.

 

The packaging industry is going to see good growth in the near future I think. Because of packaged foods, beverages and even e-commerce. Also, I feel the co. has good amount of cash on books and is expanding its capacity. It is luring because of its valuations itself. I have seen the share rally already from 120 levels within a month. It has the potential to go much higher in short to medium term.

 

well according to me getting double the sales in 5 years is a difficult task for any company !!! But uflex is already showing those results . I saw Max India and Essel Pro pack , they did not even double their sales . Can you please say me why do you say there is a low sales growth ? If you say about EBITA i agree that their EBITA is low and is not growing in past 3 years . I am not sure about that why ( Am still researching) . But even with this EBITA i feel the company is worth the price you pay . If they are gonna grow their EBITA in next 5 years ( The Price you buy would be dead cheap) . If you want to wait till the EBITA grow i bet you wont get this price again .

 

By low sales growth, I mean last year their sales growth was only 5%. I agree with you that they are able to double their sales in last 5 years approximately. But does it bother you that their OPM is decreasing continuously. May be they are able to increase their sales by decreasing their prices. But they cannot continue doing that for ever. According to my mind, if we have these questions answered in a positive way, we have a multi-beggar at hand.

By the way I am a big fan of your in-depth analysis of stocks. Recently finished reading all your posts..

 

Good analysis

 

I understand that they are increasing sales by may be reducing their margins . However lets say that they are expanding into international destinations . Where you will able to see their top line growing in dollars and obviously if someone is exporting from India to abroad you can see their margins and return ratio would be on dollars . I think they can improve their margins if they can bring more sales from other countries .

 

Nice analysis @Investor2008 . I have two questions. First one is on the competition. As you said the company is a top leader in packagaing. Do they have any serious competiton from any of the listed/unlisted companies in India. Secondly, I want to know the debt status of the company. Do they have too much of debt in their books. Is the debt level comfortable?

 

I think Max India and Essel Propack are two companies which would be on their catergory . Well regarding the debt which is around 1800 crores , i think their EBITA is around 500 crores . Plus their debt to equity ratio is around 0.60 . I dont feel its a major issue at all .

@ this price i think we should just see what kinda value we get for the price .

 

Check UFlex here https://goo.gl/2qgV0c and an article from Business Standard

 

Essel propack is a packaging company but Max India is a giant and it is into many businesses. @MoneyWorks4ME Regarding your link to business standard, I am not sure whether this would apply to Uflex because based on the description that @Investor2008 posted, I think they are more into packaging of food stuff rather than medicines.

 

Moneyworks4me is just trying to do forum positing in order to get visits to their website . Hope moderators will take some action.

 

I had this share about foyr years back and there was some case of some land fraud the promoter of uflex was involved with. The markets are smarter than us and one of the main prerequisites for good investment is the quality of the promoter. Corporate governance is such an issue in India. Be safe with your money.

 

land fraud happens in india often . seen many companies like that . DLF is also stuck . But everything gets normal one day. you cant ignore just because of one criteria.

 

Well choosing stocks finally comes down to personal choice and risk taking abilities. Good luck to all. At the end of it , if you make money it's a trade on ....

 

I agree the quality of management is of utmost important. It is them who would be handling the business and money on our behalf. This is probably the first thing to check while investing into a stock.