We are pleased to inform you that our Hidden Gem stock of Dec 2016 - Shaily Engineering Plastics Ltd (BSE Code: 501423) which was released on 29th Jan'17 is giving as on date returns of 97% to our Hidden Gems members within period of 12 months. Our team suggested Buy on Shaily Engineering Plastics Ltd at price of Rs. 529.60 on 29th January 2017 with a target price of Rs. 1050. We are glad to inform our readers that stock has achieved its target price and we advise our members to continue to hold the stock.
Shaily Engineering Plastics Ltd has made its 52 week high of Rs. 1069.90 recently and closed at Rs. 1040.50 today giving absolute returns of 97% to our Hidden Gems members within period of 12 months.
Below is the summary of Shaily Engineering Plastics Ltd shared by us under Hidden Gem stock - Dec'16 released on 29th January 2017.
1. Company Background:
Currently, SEPL has five manufacturing facilities - four in Savli (Gujarat) and one in Halol (Gujarat). One facility in Savli is an Export Oriented Unit (EOU) which was set up around nine years back while others cater to both domestic and export markets. During FYl5, SEPL had set up a Pharmaceutical packaging plant for manufacturing of Child Resistant (CR) caps & bottles for packaging of drugs for regulated markets.
SEPL has reputed domestic and international clients across wide range of industries which have been its customers since long. This includes FMCG sector customers like Ikea Trading (I) Pvt. ltd. (IKEA), Hindustan Unilever ltd. (HUL), Procter & Gamble (P&G), Switchgear customers like Lucy Electric, ASS, L&T, Siemens, Electrical appliance customers like GE appliance, Pharmaceutical customers like Wockhardt, Sun Pharma, Sanofi-Aventis, etc. SEPL manufactures insulin pen for Sanofi which is a global leader in its field and SEPL is the sole supplier of these pens to Sanofi globally. SEPL is catering to fortune 100 companies and has long standing relationship with these clients and gets repeat orders from them.
1. Switchgears - SEPL is one of the few companies which specializes in processing diverse, difficult and exotic Thermoplastic & Thermoset polymers. 1st company in India to introduce Thermoset injection molding technology in early 90’s; set a benchmark for processing tight tolerances Thermoset injection molded components particularly for the Switchgear industry serving the needs of demanding customers like ABB, Siemens, Schneider, Emerson Group companies etc.
2. Home Appliances - SEPL is a supplier partner to GE Appliances USA since past more than 18 years catering to their needs of various kinds of knob assemblies and critical components for different appliances. Each knob assembly is unique to its specification which involves molding, pad printing, heat stacking, inlay fixing, Spring Clip fixing and unique packaging. SEPL has been the sole supplier of these components since past so many years.
2. Recent Developments: (as on 29 Jan'17)
Above development will augur well for SEPL in coming years as the company generates almost 50% of its revenue from client IKEA.
3. Financial Performance:
Shaily Engineering Plastics standalone net profit declines 3.14% in the Sept 2016 quarter
Currently company generates majority of its revenue from IKEA in home and furnishing segment. If we look at revenue contribution, 45-50% is from IKEA, 25% is from pharma and 25-30% is from appliances, FMCG and high end engineering put together.
4. Peer Group Comparison: (as on 29 Jan'17)
5. Key Concerns & Risks:
i) SEPL uses plastic granules as its major raw material. Plastic granules are derivatives of crude, whose price has reduced over the past one year. Volatility in prices of polymer, a key raw material for SEPL, may impact realizations of the company.
ii) As the company generate 65-70% of its revenue from exports, any slowdown in the global demand will have an impact on company’s growth.
6. Saral Gyan Recommendation: (as on 29 Jan'17)
i) Shaily Engineering Plastics is into a business of manufacturing high precision injection mould and plastic component assemblies for various industries, including medical devices, pharma, FMCG, home and personal care. IKEA is the company’s largest customer. SEPL continue to derive strength from its long and established track record in plastic injection moulding business. Experienced promoters, reputed clientele across diverse end use industries, growing demand for plastic with its increased application in various industries, healthy profitability along with moderate leverage give ample growth opportunities to the company.
- 80% at current market price of 529.60
- 20% at price range of 440 - 460 (in case of correction in stock price in near term)
To Read / Download Saral Gyan Hidden Gem - Dec'16 Research Report on Shaily Engineering Plastics Ltd - Click Here
Add power to your equity portfolio by investing in best of small and mid cap stocks - Hidden Gems and Value Picks. Its our mission to ensure that you reap the best returns on your investment, our objective is not only to grow your investments at a healthy rate but also to protect your capital during market downturns. Avail attractive discounts by subscribing out our combo packs, click here for details