Prima Plastics


(J2EE Professional) #1

Taken from https://aceinvestortrader.wordpress.com/2014/11/02/prima-plastics-mega-multibagger-in-making/

The company is basically into plastic moulding furniture business like nilkamal and supreme and its furniture goes with the “prima” brand. The company is debt free and what increased my interest in it was this -> http://www.bseindia.com/corporates/anndet_new.aspx?newsid=a6b8d8b3-a77e-40a4-9c01-a7015aba8938

They have closed their loss making ACP division and are now going to concentrate solely into plastic moulding. With the loss making unit going (which i assume they would sell of some 1.5cr - machinery), the bottomline would get a fillip as the cash burning unit is gone. Prima has a cameroon based JV which is a very profitable venture for them. I believe it was started few years back and as per their AR they were expecting this JV to start paying dividends in future. This year they have declared their maiden dividend to Prima which is 1.6r. This could embark the start of dividends from this company as this JV is doing very well.

http://www.bseindia.com/xml-data/corpfiling/AttachHis/Prima_Plastics_Ltd_060115.pdf

Their last five years financial performance has been impressive which is mentioned here:

http://www.screener.in/company/?q=530589&con=1#pl

The stock is generating positive cash flows and has a good and consistent dividend payout. What’s more that its available at single digit PE of around 8 (that too trailing).

Disc- Slightly invested. These are my personal thoughts on the business and not a recommendation to buy or sell.

Views Invited.


(Karan Maroo) #2

Not seen it in detailed - but a quick look tells me that the TTM PE is 18.46x rather than the 8x you’ve mentioned.


(Karan Maroo) #3

Not seen it in detailed - but a quick look tells me that the TTM PE is 18.46x rather than the 8x you’ve mentioned.


(Sunil) #4

J2EE,

Your post contains very less details about business.

Can you please throw light on how much of revenue contribution is through exports?

What makes investment philosophy better than nilkamal?

This industry has numerous competetors nilkamal, national and many local players. So would be company be able to have pricing power and are their products better than others.

The last year price run up is because of overall market sentiments. How can it sustain in bad markets? Also there seems to be no margin of safety here.

Suggest you to please go through guidelines before initiating a thread.


(J2EE Professional) #5

thanks sunil. could you kindly point out to the guidelines. I was not aware there are certain guidelines for initiating a thread.

Nevertheless, nilkamal’s business is bogged down by their retail adventure. In any case even if we compare the growth of plastic business since FY 06, nilkamal has grown sales at 14% CAGR and profits at 22% CAGR whereas prima (consolidated plastic business) has grown at 15% CAGR and profits more than 50% CAGR (borrowed from Ace’s comment). Also, prima is debt free. By the way in clusters, even prima is considered one of the better brands in plastic chairs

Price wise lets not concentrate for the moment, but businesswise the growth has been really well especially since they started their overseas subsidiary. Please look at the screener link for details.


(J2EE Professional) #6

No, the consolidated EPS is 6.9rs so TTM is 8X not 18X.


(Sunil) #7

Thanks J2EE.

Link for initiating thread http://www.valuepickr.com/forum/site-navigation-some-pointers/626565665


(J2EE Professional) #8

today prima gave a strong breakout after more than a couple of months of consolidation on strong volumes. Could probably post new highs in coming few days.


(HG) #9

Hi J2ee,

No offense intended - but are you affiliated with aceinvestor? I read his blog and I actually had this thought a while back when I came across it and wondered if he was you. Reason being some of his picks had been brought up by you earlier here and I remember him saying he used some proprietary or self-developed s/w (like you). Now you brought up prima plastics here and I could not resist asking. Again no offense intended.


(J2EE Professional) #10

offense? no man, i would take it as a compliment. but yes, i am a regular at his blog. my and his risk profile might be same but man… no i not him :slight_smile: … infact its not just you from this great forum who have asked me this question but a lot of people have emailed me. I have a s/w yes, but unfortunately, difference between my platform and his is like a toy car against a aceinvestortrader’s red-hot-ferrari … how i know this is because as you rightly pointed out, i also mailed him the same thing and he was gracious enough to share AI areas. Man that guy is a baap of AI and Maths. Most of the things i have never heard of, but then again he’s much older and experienced in this than i am. Even in stock markets i am hardly decade old, but aceinvestortrader has been into markets for decades (not sure how many though)…

I hope it clears the air. I borrow ideas from his blog and thats all.


(HG) #11

Hey, that’s good to know - thanks for responding.


(Dhiraj Dave) #13

Sandeep,

It is not fair to share your mobile number on this forum. I have seen same comment on some other discussion threads.


(J2EE Professional) #14

i agree, this is very sadistic behavior and admin should remove this comment.


(Sandeep Roy) #15

Prima plastics is having good products. I have seen the products. They are not anyway less than cello wimplast. Cello wimplast by the way is trading at 800 crores+ market cap.

Prima can catch up. Safe play i can say. downside in this market is less.


(J2EE Professional) #16

yes, and from this quarter onwards (not dec, but mar 15 quarter onwards), there would be 4-6 quarters for tremendous bottonline growth. its one of the most interesting and cheaply valued stock


(Sandeep Roy) #17

But these kind of companies must not form part of core holdings


(J2EE Professional) #18

why not?


(Sandeep Roy) #19

Here are the reasons:

  1. Still the company has to prove itself. All companies are not Wimplast. Wimplast has other good group businesses. Shows that they are good business minded. Cannot equate it to prima.

  2. The oppertunity size is limited. The basket of consumer spending wont increase due to economic growth.


(J2EE Professional) #20

1). the company is doing all the right things so far and by the time investors are convinced about the company the company would not be available so cheap. not sure why are we comparing with wimplast but sure wimplast is wonderful but so far, prima looks very good as well.

2). do not agree. opportunity size is great and why wont the consumer spending grow due to economic growth?


(Sandeep Roy) #21

the people sitting on plastic chairs wont increase with increase in economic activity. it will be the same whether its recession or no recession.