Plastene India Limited IPO Analysis Report

Issue Highlights

Issue Period:  9/5/12-15/5/12

Issue Type: 100 % book building

Price Range: Rs. 81-84

Face value: Rs. 10

Lot Size: 75 Shares

Maximum retail subscription:  Rs. 1,95,300 (31 lots)

Issue Size:  95,55,290 shares

Registrar : Karvy Compushare

Industry: Packaging industry

Company Profile

Plastene India limited is Gujarat based plastic packaging-products manufacturing company.

In FY 2011 Company registered 60% domestic and 40 % export sales.

Product Breakup

Major Products

Objects of the Issue

·         Expansion of the manufacturing facility and plant and machinery purchase for manufacturing of new product block bottom valve bags at Nani Chirai

·         Expansion of manufacturing facility at Rajapur

·         General corporate purposes

Financial Analysis#

    # All calculations at the upper price band

    # FY12 figures are annualized and post issue equity considered

    #consolidated results considered

Parameter	FY 12
EPS	Rs. 3.4
Book Value	Rs. 33.4
P/E	24.7
P/B	2.5
M-Cap/ Sales	.7
NPM	3%
ROE	10.2%
Current Ratio	2.1
Debt-Equity Ratio	1.6
Interest Cover	.8
Return On Capital Employed	5.9
M-Cap/ Reserve	3.03

Comparison with the Peers #

        # latest-possible peer data as per moneycontrol site

Parameter	P/E	NPM	ROE	ROCE	M-cap
Plastene India	24.7	3%	10.2%	5.9%	300.28 crore (post issue figure at upper price band)
Essel Propack	15.77	9.28 %	6.88%	11.6	526.18 crore
Karur KCP Packaging	2.5	2.51%	8.87%	11.65%	27 crore

Inference

Issue is over-stretched, post-issue price to earnings multiple of 24.7 indicates how over-priced this issue is that too for a bleak net profit margin of around 3 %.

The latest annualized net profit figure (FY 12) is only a tad higher than the same of FY 2008. Interest cover of .8 clearly indicates that company is unable to cope with burgeoning interest.

There was no need for delving deeper in this issue and this issue is a clear avoid especially in current lackadaisical scenario.