Prima Plastics

Stock Opportunities Untested - but worth a good look
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Key Points:

  1. Focus on premium products
  2. 50% capacity addition in existing JV
  3. New plant in Cameroon (with Prima having 90% share)
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i think these points are nothing but a summary of the presentation as posted by prima on bse. I think everyone should look at this

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Yes, i have summarized the points from the presentation only. Above link has the option to download the presentation.

Didn’t check if the presentation was uploaded on bse also.

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oh ok. i thought those points were a summary that was available on the link that you posted. Had not seen the link.

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Highlights of the meeting with the management of Prima Plastics:-

  1. Cameroon JV – Have 2 plants in Cameroon – One for plastics and one for woven sacks. Current capacity of 4000 T, 2400T in plastics and 1600T in woven is running close to 100% utilization at 70cr revenue. On course of adding 3000 MT (in such a manner that woven and Plastics will be 3500 T each after expansion) and the production will commence August onwards. At peak utilization 30-50cr can be added with 25%+ EBITDA margins and capex incurred will be close to 15 cr… Working capital is also lesser in Cameroon (30 days) vs 60 days in India. Company believes that it will now expand to tier 2 and tier 3 cities in Cameron. Competition is there but not easy to displace the number 1 player (them).

  2. South American Expansion- Will be completed by Oct-Nov 2016. Capacity will be 3000 MT. Its 90:10 JV. Unlike Cameroon Will also be targeting nearby countries/markets. Margins will be lower than Cameroon but higher than India.

  3. Indian Operations – Current capacity is 10000MT with 80% utilization (will be replacing some old machines to increase utilization). 1500MT added in Vijayawada (AP) and it will started production from this or conservatively next month. Company had no presence in Andhra region as the freight cost of 10% was making their product uncompetitive in the market. Now they can cater to that market and slowly expand in adjacent markets like Orissa, Bihar as well. Company also plans to supply crates from Vizag plant. Out of 90 crore sales in 2016, 20cr from export while domestic is 70 odd crore. Company is strong in western and southern markets (even number 1 or 2 in states like Gujarat, J&K- does contract manufacturing). The company believes the industry is moving towards premium products which has better margins. Chairs constitute almost 90% of their business.

  4. Competitors - Price difference between top players is not much [3-5%]. Customer acquisition is more dependent on availability and design followed by price. In terms of turnover from PMF (Plastic moulded furniture) Nilkamal 500 crore, Supreme 300cr, Wimplast 200-300cr followed by them. Industry size is 2500 cr out of which organised is close to 1500cr. Nilkamal has 7-8 plants while other players like Supreme and Wimplast has 4-5 plants so over the long term company wants to widen their presence by putting more plants.

  5. Guidance and Vision – Targeting 160cr sales in FY17 and 210cr in FY18. Want to became a global player as well as expand domestically.

  6. Government order- Company has already supplied 44 Lakh dustbins to the government. Company expects similar orders in coming years because of govt’s focus on Swatch Bharat

  7. Hedging policy- Company doesn’t hedge as their currency is pegged to Euros. They had incurred a loss of 10% due to Euro depreciation last year.

  8. On realisation and units sold- Company was not ready to share the data

@sowrabh1818 @Leading_Nowhere @j2eeprofession_ @sammy11 @Amitdarji @Value_Seeker @sanjay_agarwal

Disclaimer I have tried to represent the data as it is but there might be some errors on my part in terms of retention of data. Do check the investor presentation. No investments in Prima Plastics.

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this is really informative. Thanks for sharing. So this year’s consolidated results would also include revenue from their south american operations, right? Also,any idea if the accounting year of their south american JV is Apr-Mar or Jan-Dec? Last year’s euro depreciation led loss was news to me. I guess this year also that could be a problem.

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Thanks for sharing the information. The story is unfolding on the expected lines.

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Thanks for the update

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Many thanks for the update!

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Thanks a lot Aman for the inputs. Story seems to be playing out pretty well. The only concern seem to be their hedging policy due to its pegging to Euros.

Disc: Invested

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Thanks For information

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Q1 results out:

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/796CF2F8_4B8E_4F5B_BCCA_DFF701A18389_193519.pdf

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any idea why the topline was down QoQ?

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For prima the 4th quarter is the best

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Topline has increased from 19.11 to 20.44 Cr

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oh yes fourth is the best…my bad…

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prima has been names in the five potential 100 bagger stocks stocks by motilal oswal.

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Can u share what was published by Motilal Oswal

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this is all i have …http://rakesh-jhunjhunwala.in/after-100-bagger-gain-raamdeo-agrawal-reveals-secrets-to-finding-multibagger-stocks/

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This is not the report of Motilal Oswal. Instead this is the result of query which was developed by the qualities given by Raamdeo Agarwal.

RJ blog runs mainly on euphoria. To put it in the words of Daniel Kahneman, its our System 1 is in work along with Endowment effect.

For example:

Few months back, Motilal Oswal came up with Mid to Mega report (which is mainly contributed by the ideas of Raamdeo). During the same time, Mr. Motilal in an another interview in ET Now said we are looking at Lincoln Pharma.

Now people started attributing (including RJ blog) saying that, Motilal Oswal recommend Lincoln as their Mid to Mega recommendations.

Few flaws to be observed here:

  1. Unlike the previous report on 100 baggers, Mr. Raamdeo didn’t recommended any stock in this latest Mid to Mega report.

  2. Motilal never said that they are recommending it as part of Mid to Mega. He just said that they are looking into this company. People attributed both - Because both happened at same point of time.

  3. And most important one - Lincoln Pharma isn’t even a Mid cap company. It was sub 300 Cr company at that time. People forgot to question (even RJ blog) that, How come a Small Cap company can be recommended in a Mid to Mega example.

All I am saying is, lets not get into first conclusion bias and also not get carried away by this big institutions and popular blogs. They all have their own vested interest there.

Disclosure: Invested from past 8 months and did partial exit recently.

Regards,
Krishna

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