Jindal poly film ltd the packaging sector turn around story

JPFL is a market leader in the BOPP and biaxially oriented polyethylene terephthalate (BOPET) segments. In the BOPET segment, the company is the largest player in India with capacity of 127,000 tonnes per annum (tpa). In the BOPP segment too, the company is the largest player in India, with an operational capacity of 210,000 tpa. With the acquisition of ExxonMobil's BOPP business, JPFL has become a leading producer of BOPP films in the world with total capacity of 445,000 tpa. Moreover, the company has a strong position in the high-value-added metalised films market, with a capacity of 63,360 tpa. The acquisition of ExxonMobil's BOPP business is likely to strengthen JPFL's foothold in the US and European markets as the company will leverage ExxonMobil's existing customer base to expand its reach.

JPFL has healthy operating efficiencies in its domestic operations because of its economies of scale and single-location manufacturing capacity, which is the largest in the world. The company also has the highest width processing machines leading to better distribution of fixed costs resulting in low per-unit cost of production. JPFL's operating efficiency is also supported by its presence in the metallised films segment. Such films have high demand in India. Moreover, as the market leader, the company has complete pricing flexibility in raw material procurement because of its ability to choose between foreign and local suppliers, depending on the price quoted. JPFL will be able to maintain better operating efficiencies than its peers over the medium term on the back of efficient operations and economies of scale. Moreover, the operating efficiencies in the overseas operations are improving with cost rationalisation measures and increasing realisations undertaken by the new management. JPFL is also likely to realise synergistic benefits from the acquisition of ExxonMobil's BOPP business and benefit from capabilities to manufacture high-margin specialised products which will continue to support its business risk profile over the medium term.

Moreover, JPFL's profitability remains vulnerable to volatility in raw material prices and changes in the demand-supply environment in the BOPET and BOPP segments. Raw material prices comprise 65 to 75 per cent of net sales. Also, product realisations have fluctuated in the past, depending on the demand-supply gap, and pressure on realisations may lead to decline in profitability. JPFL's operating margin will remain relatively stable supported by its strong market position. JPFL will continue to benefit over the medium term from its market leadership in the domestic market, healthy operating efficiencies in its domestic operations, and improving operating efficiencies in the overseas operations



JPFL, a part of the BC Jindal group, was incorporated in 1974 to manufacture partially oriented yarn (POY). In 1996, the company diversified into the packaging films segment by manufacturing BOPET. The company currently manufactures polyester chips, and the complete range of packaging films, comprising BOPET and BOPP. JPFL stopped manufacturing POY in 2005-06 to focus on its packaging films division. The company has capacities of 127,000 tpa and 445,000 tpa for BOPET and BOPP, respectively. JPFL acquired 60.45 per cent stake in GNL in February 2014. GNL is setting up a unit for the production of non-woven product for hygiene and medical applications at a cost of around Rs.4.1 billion, funded in a debt-to-equity mix of 7:3. Currently, India imports non-woven product for hygiene and medical applications, and GNL will be the first unit in India to start manufacturing this product.
As far this first qtr there is huge improvement in both the top line and bottom line and also the cash flow has steadily increased for financial refer BSE site
Presently quoting at 380 at less than 5 EVEBITA
Can this be a turn around story or the pricing pressure of BOPP segment and oil prices will effect the company future profitability please do share
IF growth is assumed at his qtr rate we are talking about an eps more than 70/100 levels very soon

 

With an excellent quarterly result and debt reduction this going to be a Multibagger from here no doubt it has shown good resilience even in this volatile market

 

Now the morning star also has come out with an excellent report for the growth prospects of they have listed only three companies which has very good growth potential two madcap Jindal poly films Cosmo filma and one small cap Nahar poly films all are looking extremely attractive with good quarterly results think we can expect a RERATING of the stocks very soon because there is some huge volumes in this counter nowadays