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Friday, March 28, 2014

Wim Plast Ltd: Our 3-Bagger Stock - ROI @ 219% in 30 Months

Dear Reader,

Our equity analysts published Hidden Gem - Aug 2011 research report and shared it with all Hidden Gems members.  Research report was published 2.5 years back on 30th Aug'11. Hidden Gem stock of Aug'11 was Wim Plast Ltd and was recommended at average price of Rs. 185. In last 30 months, stock has treble the investment of Hidden Gems members giving absolute returns of  219% at current market price of 589.
Wim Plast hit upper circuit of 20% on 26th march and price was frozen at 574.10. Today, it made a new high of 617 and closed at Rs. 589. Company declared its 3rd quarter results on 12th Feb'14 which were in line with our expectations. Net profit of Wim Plast rose 9.16% to Rs 8.34 crore in the quarter ended December 2013 as against Rs 7.64 crore during the previous quarter ended December 2012. Sales rose 14.56% to Rs 73.16 crore in the quarter ended December 2013 as against Rs 63.86 crore during the previous quarter ended December 2012. 

Wim Plast has delivered EPS of Rs. 38.9 for first nine months of financial year 2013-14. We expect company to deliver EPS of Rs. 52 for full financial year. At CMP of 589, Wim Plast is trading at estimated PE of 10 for FY14-15 which make it reasonably valued for medium to long term investors. With debt free status and good demand of its products, we believe Wim Plast Ltd will continue to deliver robust growth like that of last quarters.

We advice all our members to hold Wim Plast in their portfolio. Since our recommendation, stock price has already appreciated by more than 200% but we are not suggesting partial or full profit booking as we find that stock is not expensive considering growth potential of the company and future earning visibility, stock can continue to make new highs in months to come.
Below is the summary of Wim Plast Ltd published in our Hidden Gem research report - Aug'11.

Company Background

Wim Plast Limited incorporated on 7th October, 1988, and listed in the year 1994 at the Bombay Stock Exchange Ltd. (BSE) and the Ahemedabad Stock Exchange Ltd. (ASE).

In the year 1994 company setup manufacturing unit of plastic moulded furniture at Daman in which company got grand success in the business. In the process of diversification in 2005 company has setup plants at Baddi, Himachal Pradesh for processing of bubbleguard extrusion sheets and also moulded furniture which a new innovation in India in the field of extrusion technology.

Presently the company has manufacturing units at Daman, Baddi and Chennai also have Depots in Gujrat, Rajasthan, Andhra Pradesh, Haryana and Punjab and have strong consumer base through out the country.

Cello is the undisputed leader in plastic finished goods. Since 1975, the group has been shaping plastics into high quality convenience products for homes and industries making life better & easier. Ceaselessly endeavoring to set new bench marks in quality and constantly innovating to blaze new trails in the marketplace. Today Cello offers larger range of products than any other manufacturer in India.

All surpassing the highest international standards in quality Cell's R&D, manufacturing technology, production processes, materials, quality standards and the high skilled workforce of 5000 people are among the best in the world making Cello the no. 1 brand of plastic products in India.

Product Range: 

1.Plastic Moulded Furniture 2. Material Handling 3. Cello Bubble Guard Board  

False Ceiling

Stronger and Lifelong Revolutionary False Ceiling Panels (first time in Asia), a perfect product to fulfill all your needs of false ceiling.

Ideal for Offices, Warehouses, Stores, Industrial sheds, Textile Industries, Chemical Industries, Pharma Companies, Hospitals, Hotels, Docks, Ports & Commercial Complexes.

Inherent Advantage
  • Light Weight Strong & Durable
  • Moisture & Water Proof
  • Termite, Insect & Bacteria Proof
Wall Panels

Cello Bubble Guard Wall Panel has various advantages over other material namely, moisture & termite proof, Fire retardant, Economical, Maintenance free. Available in various designs.

Wall Panels can be directly pasted on the solid surface with the adhesive recommended (SG 1000 of 3 M / SP5 of Pidilite) and joints can be finished with sealants, tapes or decorative beadings.

The panels offers high tensile strength, resists stress cracking, retains stiffness & flex. These wall panels are also available in seamless appearance, clad with tongue & grove system offer permanent utility / decorative paneling designed to provide flexibility, durability & beauty.

Door Panel/Partition

Cello Bubble Guard Part ions / Door Panels are versatile to use available in various attractive designs, which don’t need paint or polish.

They are easy to install and easy to cut, can be fixed by any unskilled laborer. The panels are light weight, water proof, termite proof & non-toxic. The panel offers high tensile strength, resists stress cracking, retain stiffness & flex. These panels are used as filler of aluminium, PVC, Wood & other frame. They are non-staining. The panels are insured of better durability, longer functional life & also effective cost.

Floor Protector

In the under construction sites, the floor tiles are laid prior to the finishing of the buildings. All the electrical and other fittings are done after the flooring is completed. Portable scaffoldings, tools and other equipments move on the floor, to complete the remaining work.

To avoid the damage to the tiles, Plaster of Paris (POP) is laid on the Flooring and removed after the completion of the job. POP has many disadvantage as it is cumbersome to lay & remove, Skilled labour is required, Time Consuming , Disposition of debris after completion is the major problem, while removing / scrapping operation chances of getting scratches to the tiles. Construction site becomes shabby, uncomfortable, dusty, and unhygienic.

Recent Developments  (as on 30 Aug'11)

Business Expansion Plans, 24 August 2011

Wim Plast Ltd has informed BSE that the Company has initiated following expansion projects:

1. The Company has acquired land of 8092 sqmt. at Haridwar, for setting up of manufacturing unit of Plastic Moulded Products. The commercial production of the Unit will start by the end of last quarter of current financial year.

2. The Company is in the process of setting up of new extrusion plant at Daman for manufacturing of Flutted & S-flutted polypropylene sheets. The sheets will mainly used for packaging and advertisement. The Commercial production of the unit will start by the end of the second quarter of current financial year.

Total cost of the above projects will be funded by internal accruals of the Company.

Investment Rationale

1. Earnings Visibility: Wim Plast revenues are expected to improve significantly on the basis of manufacturing unit at Daman getting operational by the end of 2nd quarter of current financial year.

2. Innovative Product Launches: Management is focusing on innovative products like Cello Bubble guard board offering unique benefits to its consumers. Company has the advantage of early entrant in this segment with minimum competition and wide distribution network across the country.

3. Open Market Purchase of Shares by Promoters: Promoters share holding is 72.96%. Promoters have been continuously making open market purchase since last one year. During last one year, promoters have increased their stake by almost 1%. (as on date, promoters holding is maximum at 75%)
Saral Gyan Recommendation (as on 30 Aug'11)

i) Management has been conservative in past but now with new developments with expansion plans for their existing facilities and set up of new plants at new locations give visibility for revenue growth in coming years. New facilities at new location will also give opportunities to company to move into new regions expanding their customer reach.

ii) The Management holds 72.96% equity in the company and has been continuously increasing its stake at current valuations (increased holding by 1% during last one year) which gives confidence of growth prospects in coming quarters.

iii) The stock is available at low valuations, existing P/E ratio of 6.5 make the stock valuations attractive while comparing it with peer stocks like Nilkamal and Supreme Industries.

iv) The operating margins and net profit has grown significantly. Since last 2 years, company has improved its margin and profit margins of 11-13% seems sustainable even after expansion due to less dependence on debt, currently cash balance is in excess of total debt of the company. No equity dilution since last many years is another positive.

v) At current market price of Rs 204.55, dividend yield works out to be more than 2% (Company has announced Rs. 4.50 dividend per share). On equity of Rs. 6 crore the estimated annualized EPS for FY 2011-12 works out to Rs. 38 and the Book value per share is Rs. 139.16. At a CMP of Rs. 204.55, stock price to book value is 1.47. Currently, the scrip is trading at 6X FY 2011-12 estimated earnings which make it an attractive buy at a price range of 175-180.

Saral Gyan Team recommends “BUY” for Wim Plast Ltd for a target price of Rs. 430 over a period of 12-18 months.

Buying Strategy:
  • 20% at current market price of 204.65
  • 80% at price range of 175-180
To Read/Download Hidden Gem Aug'11 Research Report - Click Here 

There are 11 more Hidden Gems out of 31 published by our equity analysts in last 3 years which have given more than than 100% returns to our members. We suggested partial profit booking in few of these stocks and our members registered more than 100% returns and now hold remaining quantity for free in their portfolio.

Also Read:
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Team - Saral Gyan
Saral Gyan Capital Services.