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A Detailed Equity Research Report on Pakka LImited
A Detailed Equity Research Report on Pakka Limited with a tagline Packaging with a Soul.
PAKKA LIMITED
Recommendation: Buy
CMP: Rs. 217/- TARGET: Rs. 328/-
SENSEX: 66079/- NIFTY: 19689/-
KEY STOCK STATISTICS:
Market Capitalization (crs): 850/-
Book Value: Rs. 57.80/-
Face Value: Rs.10 /-
52 week High/Low: 197/88
P/E Ratio: 16.50
P/BV: 3.80/-
Dividend Yield: 1.11/-
Company Background:
ü Incorporated in 1981, Yash Pakka Limited, is engaged in the business of specialty packaging products manufacturing and trading in specialty papers and Moulded (Tableware) products.
ü The Company’s product offerings comprise Packaging materials and solutions - low grammage MG industrial bleached and unbleached paper grades ranging between 30-80 GSM and specialised grades for wrapping, packaging and interleaving for food and pharmaceutical uses, etc.
ü Compostable moulded products made from bagasse, under brand ‘Chuk’, to cater to the food industry - compostable disposables for food services and egg trays for food transportation and storage.
ü The Company commenced trading activities for creating a platform for upcoming glassine and grease-proof paper grades and launched new plate designs under Chuk for meeting the diverse food portion preferences of customers.
SHAREHOLDING PATTERN(%):
Source: Company, KFO Research
RETURNS(%):
| 3 MONTHS | 6 MONTHS | 12 MONTHS | |
| SENSEX | -1.04 | -10.42 | 2.8 |
| PAKKA | -5.93 | 2.93 | 19.43 |
Source: Company, KFO Research
INDUSTRY OUTLOOK:
As part of the global bio-economy, Yash Pakka is a leading provider of renewable and regenerative products in packaging and paper.
Sustainability and responsible business practices are deeply embedded in our strategy, and our low-carbon, fiber-based products are renewable and recyclable.
They offer solutions to climate change and promote positive impacts on the environment, thus enabling our customers to become more eco-friendly.
We have a sharp and singular focus on the food market through utilising our inherent strengths in sugarcane pulping and utilisation of innovation to build superior quality offerings, thus enabling a shift towards sustainability at scale.
We employ 450+ people and our shares are listed on the Bombay and National stock exchanges.
FUTURE OUTLOOK:
Although uncertainties remain as new challenges continue to surface, including the Russia-Ukraine war, geopolitical issues such as tension between China and the US, the year carried many positives. Externally, India is much better placed to recover from the COVID shock and achieve high GDP growth rates which, together with the government’s focus on Atmanirbhar Bharat, Make in India, PLI scheme, etc., bode well for the future of the industry.
Source: Company, KFO Research
BUSINESS HIGHLIGHT & ANALYSIS:
PROS
CONS
Growth Drivers:
ü The Company is focusing on the commercial launch of two products during FY22 - Spill-proof containers and meal trays and High-strength bags.
ü As part of the innovation agenda, the Company is focusing on various domains and products to be introduced in FY22, like - stronger and more effective solutions for grocery bags, compostable flexible packaging solutions for specific applications, delivery solutions for moulded products and value-added products from its by-product streams.
ü The Company is planning expansion of capacity in moulded products business by about 25% to 14 TPD through the installation of 8 new lines and growth in its integrated pulp mill capacity by about a fifth to 160-TPD to ensure inhouse pulp production for meeting the increased paper and moulded products capacities.
ü The Company has planned 50 TPD Pulp Drying, 50 TPD Franchised Moulded production and 100 TPD Flexi pack base with an investment of Rs 200 Cr by FY23.
It is also planning to establish an Innovation hub in Bangalore and first moulded products franchise in FY22.
VALUATIONS:
ü On the basis of EPS Multiple Method, we are recommending ‘Buy’ for the stock. Since the stock offers good opportunity, we initiate a ‘BUY’ signal on the stock with 12-month price target of Rs 238/- share an upside of 9.68 % from current levels.
PEER COMPARISON:
| # | Company | CMP | M Cap | 52W High | 52W Low | PE | PB | ROCE Last Yr | ROE Last Yr | PAT TTM | Div Yield |
| 1 | JK Paper Ltd. | 387.7 | 6568 | 452.5 | 306.6 | 5.3 | 1.6 | 29.1 | 34.4 | 1257 | 2.1 |
| 2 | West Coast Paper Mills Ltd. | 719.2 | 4750 | 748.2 | 461.6 | 4.7 | 1.8 | 61.5 | 51 | 1156 | 1.9 |
| 3 | Andhra Paper Ltd. | 597.2 | 2375 | 621.2 | 371.4 | 4.3 | 1.5 | 51.1 | 39 | 556 | 3 |
| 4 | Seshasayee Paper and Boards Ltd. | 365 | 2306 | 421.8 | 220.1 | 5.4 | 1.3 | 35.8 | 26.7 | 395 | 2.5 |
| 5 | Tamil Nadu Newsprint & Papers Ltd. | 257.1 | 1779 | 294 | 200 | 4.4 | 0.9 | 20.6 | 22 | 404 | 2.3 |
| 6 | Kuantum Papers Ltd. | 187.7 | 1638 | 225.4 | 112 | 11 | 1.7 | 17.9 | 15.2 | 149 | 2.5 |
| 7 | Satia Industries Ltd. | 129.9 | 1299 | 164.4 | 101 | 5.3 | 1.8 | 20.6 | 30.1 | 246 | 0.4 |
| 8 | Orient Paper & Industries Ltd. | 48.9 | 1038 | 59.8 | 33.2 | 13.5 | 0.7 | 8.9 | 6.5 | 77 | 2.7 |
| 9 | Pakka Ltd. | 217 | 850 | 244 | 88 | 16.5 | 4.1 | 27 | 25 | 50 | 2.5 |
| 10 | Emami Paper Mills Ltd. | 129.2 | 782 | 183.3 | 100.8 | 47.4 | 1.7 | 10.5 | 16 | 16 | 1.4 |
Source: www.sharescart.com
BALANCE SHEET (RS. IN CRS):
| #(Fig in Cr.) | Mar-22 | Mar-23 |
| Shareholder's Funds | 165 | 206 |
| Minority's Interest | 0 | 0 |
| Borrowings | 29 | 22 |
| Other Non-Current Liabilities | 25 | 29 |
| Total Current Liabilities | 105 | 117 |
| Total Liabilities | 324 | 373 |
| Fixed Assets | 177 | 199 |
| Other Non-Current Assets | 22 | 24 |
| Total Current Assets | 125 | 150 |
| Total Assets | 324 | 373 |
CASHFLOW SHEET (RS. IN CRS)
| #(Fig in Cr.) | Mar-22 | Mar-23 |
| Opening Cash & Cash Equivalents | 0 | 5 |
| Cash Flow from Operating Activities | 32 | 51 |
| Cash Flow from Investing Activities | -29 | -38 |
| Cash Flow from Financing Activities | 2 | -17 |
| Net Cash Inflow / Outflow | 5 | -4 |
| Closing Cash & Cash Equivalent | 5 | 1 |
PROFIT AND LOSS ACCOUNT (RS. IN CRS):
| #(Fig in Cr.) | Mar-22 | Mar-23 |
| Net Sales | 291 | 408 |
| Other Income | 8 | 12 |
| Total Income | 299 | 420 |
| Total Expenditure | 228 | 329 |
| Operating Profit | 71 | 91 |
| Interest | 9 | 11 |
| Depreciation | 10 | 13 |
| Exceptional Income / Expenses | 0 | 0 |
| Profit Before Tax | 51 | 67 |
| Provision for Tax | 15 | 21 |
| Profit After Tax | 36 | 46 |
| Adjustments | 0 | 0 |
| Profit After Adjustments | 36 | 46 |
| Adjusted Earnings Per Share | 9.4 | 12.1 |
Source: www.sharescart.com
I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Stocx Research Club). I have no business relationship with any company whose stock is mentioned in this article.
I am not a SEBI Registered individual/entity and the above research article is only for educational purpose and is never intended as trading/investment advice.
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