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You are here : IndiaNotes >> Research & Analysis >> Companies >> Wim Plast Ltd. >> Research

Wim Plast: Maintain accumulate

Manu Jain | 16 Sep, 2013  | Follow Author | Add to my Favourites 
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About the company

A “Cello” Group company, Wim Plast manufactures plastic moulded furniture. By continuous Innovation and new product launches, the company has gained substantial market share in the moulded furniture market. The market that wimp last caters to is highly unorganized and herein lies an opportunity to gain mkt. share as customers move to branded Furniture. The company mainly caters to Tier II and Tier III cities. The company has set up 3 new plants at Daman, Chennai and Hardwar. In this expansion drive it is expanding into southern and S-Western markets in addition to its traditional forte of North and West. The Co pays a royalty to the Promoters for use of the cello brand name. With addition of a new facility at Kolkata, the Analyst expects further increase in Mkt. Share.

Balance sheet


A debt free balance sheet holds the Co. in good stead. FY14E Int. coverage Ratio stands at 265x. The Company has traditionally funded capex through internal accruals.

P&L


EBITDA Margins are expected to increase from~17.5% in FY14E to ~18% in FY15E. PAT Margins are expected to increase from ~11.5% in FY14E to ~12% in FY15E. Top line is expected to Post a CAGR of 23.44 % during FY13-15E. Bottom line is expected to post a CAGR of 28.08% during FY13-15E. PAT Margins are expected to remain in the teens.

Dividend

At CMP of Rs 323 the stock trades at a dividend yield of 3.4%(FY15E DPS=11). Dividend Payout Ratio stands at 14.37%.

Industry scenario

The moulded plastic furniture industry is a 2000 Cr industry. Plastic Furniture is used in lawns, restaurants and even Indoors all over the world. It is more economical than wooden furniture. Literally speaking Nilkamal is the closest competitor to the company along with Supreme Industries. The Analyst likes Wim Plast over Supreme due to relatively inexpensive valuations and over Nilkamal due to superior return Ratio’s. (ROE and ROA’s in excess of 22%).Polypropylene is the predominant input that goes into Manufacture of Plastic moulded furniture, which is increasingly replacing Wooden and Iron made furniture among the lower strata of the Society. In India per capita consumption of plastic is three times lower than the West. Thus there exists a huge market for such furniture in India. The Analyst has built in slight Margin Improvement in FY15E over FY14E for Wim Plast Ltd. The Co has doubled capacity in the last 2 years, in the process incurring a capex of 600 cr Rs from internal accruals only. There was no debt raised nor was there any equity Dilution. A huge +VE as far as the Analyst is concerned. In 2006 Wim Plast started Manufacturing Bubble guard sheet the revenues for which started accruing 2008 onwards.

Valuations


The stock trades at a P/E of ~5.4x and 4.2x FY14E and FY15E respectively. The Analyst conservatively values the stock at 6.42x FY15 E EPS of 76.55 to arrive at a price Target of ~Rs 492 implying ~51% upsides from CMP in 18 Months. Accumulate.

FY14E And FY15E Earnings Estimates (Consensus)

In Rs Crs

FY14E

FY15E

Sales

311.51

384.01

OPEX

255.91

315.22

EBITDA

55.6

68.79

Dep

7.9

8.55

EBIT

47.7

60.24

OI

2.2

2.88

Interest

0.18

0

EBT

49.72

63.12

Tax

13.72

17.19

PAT

36

45.93

No o Shrs

0.6

0.6

EPS

60

76.55

DPS

9

11

Networth

155.6

190.07

BVPS

259.29

316.75

ROE(%)

25.5

26.57

T Assets

160.51

195.03

ROCE(%)

     '-

35.51

E Growth

31.87

27.58

Debt

0.1

0.1

EV

193.9

193.9



Valuation Methods

Wim Plast

FY15E

 

 

 

Debt

0.1

t rate

0.2723

 

 

Networth

190.07

Beta

0.9

 

 

D+E

190.17

D/(D+E)

0.000526

 

 

ROE

26.57

E/(D+E)

0.999474

 

 

TGR

4

Interest

0

RFR

 

WACC

15.19201

Risk Prem

8

8

 

Cost of Debt

0

WACD

0

 

Cost of Equity

15.2

WACE

15.19201

 

 

 

 

 

 

 

TGR/WACC-TGR

0.357398

 

 

 

ROE-WACC

11.37799

 

 

 

ROE*WACC

403.6516

 

 

 

((TGR/WACC-TGR)*((ROE-WACC)/(ROE*WACC))

1.007421

1/WACC*100

 

 

 

6.582409

JUSTIFIABLE P/E

 

 

 

7.58983

PT

 

 

 

 

581.0015

 

 

 

 

 

 

Method 2

 

 

 

 

 

g

0.04

 

 

 

 

1+g

1.04

 

 

 

 

DPS

11

 

 

 

 

EPS

76.55

 

 

 

 

1-D Payout

0.856303

 

 

 

 

r

0.15192

 

 

 

 

Justifiable PE

7.957064

 

 

 

TP

609.1133

 

 

 

 

 

 

 

 

 

 

Method 3

 

 

 

 

 

Div Payout Ratio

0.143697

 

 

 

COE

 

0.152

 

 

 

Ret Rate

 

0.856303

 

 

 

Exp Growth in Div

0.130158

 

 

 

Justfiable P/E

6.578947

 

 

 

PT

 

503.6184

 

 

 

Avg Justifiable P/E

7.37528

 

 

 

PT

 

564.5777

 

 

 

Justifiable P/BV

 

 

 

 

 

 

 

 

 

 

ROE

26.57

 

 

 

 

TGR

4

 

 

 

 

ROE-TGR

22.57

 

 

 

 

COE

15.2

 

 

 

 

COE-TGR

11.2

 

 

 

 

Justifiable P/BV

2.015179

 

 

 

P/BV

1.02

 

 

 

 

CMP

323

 

 

 

 

PT

638.1399

 

 

 

 

VCI

1.337413

 

1

IF B50=1 Excellent Company if B50=-1 Good Company

v=100*(E/I)*SQRT((R+G)/(I+F))

 

 

 

 

 

 

 

 

 

E=EPS

 

 

 

 

 

I=RFR

on corp. Bonds

10.25

 

 

ROCE

35.51

 

 

 

 

SQRT(ROCE/I)

 

1.861287

 

 

R

 

 

19.07819

 

 

G

 

 

27.58

 

 

F

CPI

 

9.52

 

 

100*(E/I)

 

 

746.8293

 

 

(R+G)/(I+F)

 

2.36005

 

 

 

 

 

1.536246

 

 

v

 

 

1147.313

 

 

 

 

 

 

 

 

Fundamental PE

 

6.415042

 

 

PT

 

 

491.0714

 

 

Fundamental P/BV

 

1.704477

 

 

PT

 

 

539.7509

 

 

Sales

 

 

384.01

 

 

No of Shares

 

0.6

 

 

P/Sales

 

 

0.504674

 

 

Fundamental P/sales

0.767239

 

 

PATM

 

 

11.96

 

 

PT

 

 

491.0457

 

 



Valuation Matrix


Valuation Matrix CMP: 323

Year

Sales

EBITDA

EV/EBITDA

PAT

EPS

P/E

P/BV

PEG

FY14E

311.51

55.6

3.48741

36

60

5.383333

1.245709

0.168915

FY15E

384.01

68.79

2.818724

45.93

76.55

4.219464

1.019732

0.15299


Altmans Z-Score


Wim Plast

FY13A

In crs.

EBIT

38.7

 

 

Total Asset

125

 

 

EBIT/TA*3.3

1.02168

 

 

 

 

 

WC

54.42

 

 

WC/TA*1.2

0.522432

 

 

 

 

 

Net Sales

285.95

 

 

NS/TA*0.9

2.05884

 

 

 

 

 

Retained

 

 

 

Earnings

118.72

 

 

RE/TA*1.4

1.329664

 

 

 

 

 

M.Cap

193.8

 

 

CMP

323

 

 

No of Sh

0.6

 

 

 

 

 

 

M.cap/TL*0.6

0.93024

 

 

 

 

 

Z score

 

5.862856

 


Disclosure: The Author Holds Shares of Wim Plast. He May or May not hold them at a future Date.

Disclaimer: The author has taken due care and caution to compile and analyze the data. The recommendations are his/her personal views. He/she shall not accept any liability whatsoever arising from the use of any of the above content.

Sources have been mentioned at relevant places in the article. In spite of this, the author does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.





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About Manu Jain

Manu Jain is a Market/Investment Analyst based in Delhi. He can be contacted at [email protected] or his blog http://talkmanujain.blogspot.com/


For more information please write in to [email protected]


Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.



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