Shree ajit paper & pulp ltd a packing play

.Shree Ajit Pulp And Paper Limited was incorporated under the Companies Act, 1956 as M/S. Ajit Pulp And Paper Private Limited on 23/03/1995 with the Registrar of Companies, Gujarat and was subsequently converted into a Public Limited Company on 13/11/1995 and the name was changed to Shree Ajit Pulp And Paper Limited. The company started its operation of Kraft paper mill with an installed capacity of 50 tons per day or 16500 tones p.a. at village Salvav, Tal. Pardi, Dist. Valsad. The capacity was considered at 50 T.P.D. Production for 330 days in a year. By this way the production capacity has increased from 16500 TPA to 42000 TPA. The company is a profit-making unit since inception and financials of the company are very strong. The company has recently completed renovation & modernization of Land & Building and Plant & machinery. The customers of the company are in the different varieties of Kraft Paper of 120-220 GSM and Bursting Factor (BF) ranging from 16 to 28. The company develops 35 BF paper in 80 GSM and Golden Yellow paper ranging from 20 BF to 28 BF. The product is in reels form and is used for making Corrugated Boxes, Liners, Textile Tubes, Duplex Cartons etc. the main consumption is thus in packaging. The Company’s subsidiary Shree Samrudhi Industrial Papers Pvt ltd. has not yet commenced the business.” “Shree Ajit Pulp & Paper Ltd expected to achieve a turnover of Rs. 230 cr For the year 2015/16 . With demand for Kraft paper growing the OPM is expected to be in the region of 13/14 (sept qtr opm 13.67) EBITDA of Rs. 30 cr and a net profit of Rs. 15 cr looks possible. The company has reported an EPS of Rs. 12.5 for the Healy year 2015/16 as against an EPS of Rs. 13.5 of the previous year.” “At the current market price of Rs.120 the stock P/E ratio is at 4* 30 FY16 E and the current book value is 160.
Net Sales of the company has grown at a CAGR of 15 percent and 8 percent over 5 and 3 yr respectively. Profit growth is seen this year at above 50%
The promoter mr Gautam shah has very good experience in paper industry and promoter holding is around 48% the negative is they have pledged 15% of the holding. There dividend payout is low in the region of 3/4 but if see the holding we can understand the floating stock is very less nearly 33% of the public holding is with less than 10 people.
The debt is around 32 cr and net block is around 95 cr the ROE has been a above 18% leaving the previous yr the ROCE 3 yr avg above 20%
As mentioned the negative are pledge and low dividend and the pace of growth in the last two yrs has been slacking but with packing industry looking up and with there capacity expansion can they achieve the scalability and maintain profit growth. With other companies in this sector having printing paper also this is a pure packing play as of now.
Invite senior comment as regards to long term prospects and valuation

DISC. invested a tracking quantity

 

Tilak just go thru this report it gives details can u find the latest

https://www.transgraph.com/FreeReports/Bi-WeeklyPaperandPaperboardsMarketIntelligence-TransGraph_031915.pdf1
Tilak I think the market should see it as packing company Kraft paper prices around 30000 per ton in western region and Ajit is only major supplier of recycled Kraft paper in Gujarat area they are running full capacity at around 90000 tons per year which should give a revenue of 230/240 cr and Opm around 12% can give ebita of 30 cr debt reduced to 28 cr present market cap around 50 cr so quoting around less than3 EVEBITA and cash flow is 15 cr for fy 15 and eps fy 16 above 25 looks like undervalued but what about the scalability but other than that looks with less downside risk and potential upside
Have the promoters real