Uflex Ltd. (Rs.98.20), the flagship company of the Flex group, is a flexible packaging company that manufactures multilayer laminated rolls of plastics, paper, cloth or metal foils that are used separately or in combination for various packaging applications. It also manufactures printing inks and adhesives and has four subsidiaries, Flex America Inc, Flex Middle East FZE, Flex Europe Pvt. Ltd., U Tech Developers Ltd. and Uflex Packaging Inc. Uflex reported encouraging performance for FY09 as its consolidated sales shot up to Rs.2028 cr. from Rs.1710 cr. while profit before depreciation & tax flared up to Rs.320.53 cr. from Rs.211 cr. and net profit shot up to Rs.186.5 cr. from Rs.110 cr. in FY08 yielding an attractive EPS of Rs.28.6. This profit was after providing depreciation of Rs.100.28 cr., thus cash EPS for FY09 was around Rs.44. For Q1FY10, it earned net profit of Rs.50.21 cr. on sales of Rs.506 cr. after providing for depreciation of Rs.26 cr. recording a quarterly net EPS of Rs.7.7 and cash EPS of Rs.11.7 respectively. The Indian packaging market has an average growth of 14-20% per annum, which is expected to double in coming years with the change in consumer needs and large scale retailing. Modern day packaging is different from mere 'packing' of yester years. In today's visual society, the survival of a product hinges on smart packaging. The highly visible and catalytic role of packaging is apparent by the widespread branding of products given the rapidly changing consumer preferences.
The following are the key growth drivers for future growth of the flexible packaging industry:
Increasing industrialisation and growth of the organised retail industry in the world.
Increasing number of FMCG brands that need sophisticated flexible packaging.
Increased export of ready-made garments packaged in plastic bags on relaxation of textile quotas internationally.
Uflex has 9 manufacturing units in India and 4 units abroad to encash on the increasing demand. It also has various expansion plans in advanced stages the benefit of which will reflect in coming years. At present, the Uflex stock is trading cum 40% dividend, which gives an attractive dividend yield. The company has also bought back its FCCB when the market price was low. Moreover, there is regular promoter buying in the stock from the market over the last few quarters, which indicates their confidence in its future outlook. Around 26 May 2009, the stock was trading at Rs.96 level when the Sensex was around 13700. Thus the stock has consolidated well in the last three months. Besides doing well in its core business, Uflex has good surplus land at its Noida unit. In future, if it shifts its manufacturing facility to some other place, it will gain huge amounts from the sale of this surplus land. Investors can safely accumulate this stock for long-term targets of Rs.175 over the next 6-8 months.
The following are the key growth drivers for future growth of the flexible packaging industry:
Increasing industrialisation and growth of the organised retail industry in the world.
Increasing number of FMCG brands that need sophisticated flexible packaging.
Increased export of ready-made garments packaged in plastic bags on relaxation of textile quotas internationally.
Uflex has 9 manufacturing units in India and 4 units abroad to encash on the increasing demand. It also has various expansion plans in advanced stages the benefit of which will reflect in coming years. At present, the Uflex stock is trading cum 40% dividend, which gives an attractive dividend yield. The company has also bought back its FCCB when the market price was low. Moreover, there is regular promoter buying in the stock from the market over the last few quarters, which indicates their confidence in its future outlook. Around 26 May 2009, the stock was trading at Rs.96 level when the Sensex was around 13700. Thus the stock has consolidated well in the last three months. Besides doing well in its core business, Uflex has good surplus land at its Noida unit. In future, if it shifts its manufacturing facility to some other place, it will gain huge amounts from the sale of this surplus land. Investors can safely accumulate this stock for long-term targets of Rs.175 over the next 6-8 months.
Source: Internet (Moneytimes By Kukku)
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