Prima Plastics


(Amit) #43

I am bit confuse about EPS part. In last q4, they show consolidated EPS : 6.09 and standalone 3.13.
http://corporates.bseindia.com/xml-data/corpfiling/AttachHis/8DEE0225_D75C_4DF1_8E64_D6DF8CD8C106_193154.pdf

But in current qtr result, there is no mention about consolidated number.

So, Which one I should take as consideration. 3.13 or 6.09.There is huge difference in EPS & p/e either become 11 or 22.

Please suggest.


(J2EE Professional) #44

actually, domestic operations is just one part of the business and the bigger one is the overseas business which has performed exceedingly well since inception. Now they are going to expand the domestic business and also enter a new international territory. This is going to be a strong kicker in the long term and is commendable especially since this is coming from internal accurals… I would suggest you to go through the history of the company. The company has been increasing its RoE,RoCE and its dividend payout so obviously i on positive on it.


(Amit) #45

So what should I take in consideration as EPS ? Standalone or consolidated ? So can I assume that current valuation is 22 p/e


(J2EE Professional) #46

for any business it is always consolidated until and unless there’s a special case.


(Amit) #47

That is true but where can I find Qtrly consolidated number as in bse they only put standalone result.


(Aksh) #48

You should look at both the nos to understand how parent and its subsidiaries are doing. But may be Prima has opted for providing only standalone quarterly nos so you don’t see consol nos in this quarter.

Consol nos can be found here or better in annual report.
http://www.bseindia.com/corporates/results.aspx?Code=530589&Company=PRIMA%20PLASTICS%20LTD.&qtr=85.50&RType=c


(J2EE Professional) #49

@jats16 and @cool_aksh i think its gross oversimplification of our investing process to just look at one quarter results. Please look at last 10 yrs financials and compare the margins of their plastic divisions… nilkamal does not compare well against prima. Prima’s margins are next only to wimplast and even in 10 yr comparison there have been couple of yrs when the returns have been better for prima viz-a-viz wimplast. ofcourse we are talking about consolidated plastic division. And let’s not forget its improving RoE,RoCE and dividend payout.


(J2EE Professional) #50

that’s because consolidated is announced only annually as its cameroon JV has a jan-dec FY. I guess, you could read the ARs of the company to get an idea of what’s going on.


(Aksh) #51

Screener data doesn’t show good financial nos. even for last 10 years,In fact it’s worst. Is screener data not good?
https://www.screener.in/company/?q=530589&con=1#pl

Also whatever little improvement there is, is because of shutting down of loss making ACP unit and lower interest outgo. Without any significant improvement in core business I doubt if it is sustainable. Also IMHO Nilkamal and Wimplast are not easily comparable due to different size.


(Amit) #52

Got It.

Logically consolidated number should be declared by company in each qtr to get better feel of company’s performance and growth but Prima So far doing at annual result level and due to that reason the P/E valuation is in guess mode. I optimistic that after 1-2 yrs, they start publishing both the result as qtrly basis.

Disc : I am holding some chunk of prima and wanted to add more for 3-5 yrs prospect.


(Aksh) #53

And what is basis for this optimism?


(Amit) #54

I am more focus on growth and size of opportunity. I like the company which has 50%+ exposure in export, which indicates the sociability of the business.

I don’t like domestic player who only concentrate on domestic side and once it’s scale up, the growth become moderate. which mostly happens in past with few fmcg company like GSK Cons, Colget, Wim,AP.

Current valuation looks 10 times on FY16 EPS basis. If company growth 10-15%, the stock price grow by 20-25% or more as valuation is cheaper than peers and Nifty P/E (24) . So risk reward is in favor.


(J2EE Professional) #55

@cool_aksh you dont have to depend on screenr for this data. all this is available in ARs. Also, the unit was closed in last quarter so it cannot obviously influence last 10 yrs financial data. also i was talking about just plastic division. AS i said, if you compare all this data from AR you would realize that Prima is actually second best in the industry, second only to Wimplast. By the way the company is essentially debt free. Also, one should see how well, they have managed to grow their overseas business.


(J2EE Professional) #56

i dont think that on a consolidated earnings the EPS for this year will be anything less than 10rs, as last year the overseas business had some big inventory losses in last quarter, which is not expected to repeat this time. Let’s see if we can get more clarity on this during the AGM.


(Aksh) #57

@j2eeprofession_ You seem to be missing my point here. If screener data looks interesting or are wrong then one would dig further otherwise one can’t go on looking for 10 year data just like that. It’s simply not efficient way of going about looking for potential winners. Even this quarter’s nos, which is seemingly improved one, doesn’t look impressive let alone 10 year nos which is in fact worst. And as I said before, this quarter’s improvement is largely due to closing down of loss making unit and lower interest outgo. I never claimed that last 10 years data are influenced by closure of unit.


(J2EE Professional) #58

@cool_aksh ofcourse this quarter’s results are good because of closure of ACP unit which was loss making and that’s logical. I dont think 10yr data is worse, probably that’s worse for you on some account which i dont understand. for screenr all that one has to do is look for companies with improve roe and roce and you will get a list of promising companies which would also have a name of prima included. I was just trying to counter your agrument saying nilkamal is good just because it has shown a single quarter of better margins and anyways, i like to rely on AR for digging deep. Nilkamal on 10 yrs basis is worse than prima and that’s a fact. Anyways, this is just my point and dont think i need to add anything more. Obviously this stock is not for everyone it looks but i am happy with my investment. I am sure you have your own points and i agree to disagree.


(mukul aggarwal) #59

Hi Everyone,

Hope you all are well.

I am doing a deep dive into Prima. Although the story looks interesting but I have some queries which I would like all of you (with deep understanding/knowledge of the business) to clarify:

  1. Domestic Expansion: The co. currently has 6% market share by value (as per the ICCI report) and mainly present in northern and eastern parts. Is there a scope for the co. to expand in western and southern parts and grab some market share from the top two? Or this is very difficult? What are the drivers of their 12% growth projections in the next 3-5 years in domestic business?

  2. Product Quality: Are their products at par with Nilkamal and Wimplast? or are they inferior? What I am trying to understand is whether the reason of low market share of 6% is just because of the less geographical reach?

  3. Management Quality: I tried to search any management interviews or con call transcripts but unable to find any. Does anyone has talked to the management and tried to assess their growth mindset, ethics, focus on profitability?

Please take sometime out to answer the above queries.

Thanks


(Ank_vi) #60

“We have been conferred the Top Export Award since the year 1996 from PLEXCONCIL India in the in the “Moulded Furniture Category” with an annual turnover of more than USD $15 million dollars.”… at their website.
Also their fundamentals are improving. Promoter holding is maintained.
We have to focus on their expansion…domestic as well as export oriented.
Economic expansion will certainly benefit brands.


(J2EE Professional) #61
  1. the drivers of growth as same as before. They have done approx. 12% growth in the past and that’s what they have projected. NO big deal to be honest. I believe they can overshoot it easily in a couple of yrs.
  2. Product quality is very good and actually there’s nothing to choose between these top 3…all are same quality stuff. I have used all three so basically talking from experience.
  3. Have got feedback from super stockists that the management is conservative and sincere. Overall they have been sharing fruits of their work with minority investors, replying to queries etc, so no overall flag, though this is the max we can gauge of any management.
    overall the people running the company are good and competent though conservative and therefore, they have never gone for big bang expansion. Therefore, for the first time overseas expansion they went for a JV from which they have reaped great benefit and therefore now they plan to go solo for their next overseas venture and in sync with their conservative behavior they have sought a country where the competition could be minimal. Hopefully the story would unfold favorably.

(Rajat Setiya) #62

Hi,

In every market there are few branded pan india players as well as local players, and a retailer always has limited space to stock (multi-brand) SKUs. It becomes very difficult for a company to enter a new geography and break into the existing distribution network that too when financial muscles to advertise and market the brand are very limited.

Got to speak to few plastic furniture retailers, they all said quality is at par with others when compared to similar category of chairs (entry level, premium etc). In terms of pricing Supreme, Nilkamal and Cello sell at higher prices which might range from ~10% to ~30% depending on the category.

Had sent a questionnaire to Prima management, received very curt replies. Tried reaching out to promoter but never get through. I’m forced to believe management is not very communicative.

best
Rajat