Promising Micro Cap and Small Cap Companies- Pil Italica Lifestyle Ltd

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I want to share report on Promising Micro Cap and Small Cap Companies.

Your constructive criticism is solicited.

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1. Pil Italica Lifestyle Ltd
The company is engaged in the manufacture of Plastic Moulded, Household, Industrial Articles, Material handling products, Waste management products and Moulded Furniture. Its product range includes Chairs with Arms, Baby Chairs, Sun loungers, Round Center Table (5 wheels), Baby Tables, Stools and Dome Stools.

Product Portfolio

Its products include plastic chairs, tables, trolleys, sun loungers, crates, storage bins, waste bins, etc.

It is also engaged in the business of financing activities to third parties.

Brand

Its brand - ITALICA, is one of the leading brands in the plastic furniture market in India.

The company has arm chairs namely OXY Series and PLASTEEL Series based on the requirements of the customers. Oxy Series is India’s 1st fully ventilated stackable chair.

New product launch

In FY22, the company launched various new and innovative products in its table series, oxy series, luxury series, stool and patla series, storage series. Further, it plans to launch wooden products, innovative new products in its plastic molded furniture division and the material handling product division in the coming months.

Manufacturing Facilities

The manufacturing facility of the company is located at Udaipur, Rajasthan.

Clientele

The company supplies material handling products to a number of e-commerce companies namely Grofers, Big Basket, Ninja cart, Super Daily, Uddan, Delivery, Kamla Pasand group etc.

Presence

The company mainly supplies its plastic molded furniture in Rajasthan, Haryana, Uttar Pradesh, Madhya Pradesh, Gujarat and Jammu & Kashmir thus catering to the North Indian market through a chain of dealers and distributors.

MOU with Kisan Mouldings Ltd. (KML)

The company has entered into an MoU with Kisan Mouldings Ltd., Mumbai for exclusive marketing rights of ‘Kisan’ brand for a molded furniture business, acquiring key marketing personnel and dealer/ distributor network to cater to the southern states. It has also leased KML’s manufacturing plant at Silvassa which started operations in October 2021.

Strengths

  1. The stock passes majority of CANSLIM Investment criteria. (CANSLIM is a system for selecting growth stocks by using a combination of fundamental and technical analysis techniques.)

  2. Strong Momentum: Price is above short, medium and long-term moving averages

  3. A company with high TTM EPS growth

  4. A company with Low Debt

  5. Strong cash generating ability from core business - Improving Cash Flow from operations since last 2 years

  6. Company able to generate Net Cash - Improving Net Cash Flow for last 2 years

  7. Book Value per share Improving for last 2 years

  8. Company with Zero Promoter Pledge

  9. FIIs / FPIs or Institutions increasing their shareholdings

  10. Company has reduced debt.

Weakness

  1. Decline in Net Profit with falling Profit Margin (QoQ)

  2. Stock with good financial performance alongside good to expensive valuation, but lacks price momentum as suggested by technical indicators

  3. Stock is trading at 3.37 times its book value

  4. Though the company is reporting repeated profits, it has not paid dividend

  5. Company has a low return on equity of 4.67% over last 3 years.

  6. Promoter holding has decreased over last 3 years: -16.0%

Opportunities

  1. Experienced management with established marketing network for past 3 decades

  2. The company aims to become the market leader in the plastic furniture, material handling and waste management products in the next 5 years

Threats

  1. The primary raw material required for manufacturing of Polypropylene (PP) granules, is a crude oil derivative. The prices and timing difference arising in procurement of raw material and realization of sales, exposes the company’s operating margins to fluctuations.

Disclaimer

I am not a SEBI registered advisor and this report is solely for educational purposes. The information provided does not constitute any form of recommendation. Therefore, please conduct your own analysis before engaging in any trades or consult your financial advisor. I holds no responsibility for your intended decisions and any resulting financial losses.

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Particular 10 Yrs 7 Yrs 5 Yrs 3 Yrs
RoE (%) 7 6.56 3.96 4.67
RoCE (%) 7.27 7.27 6.28 6.28
Sales Growth (%) 11.79 11.15 3.39 21.4
Profit Growth (%) 17.77 33.61 19.85 56.7
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This stock has 27 cr shares, dig it and find out negatives.

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They are currently expanding to East Zone, will be interesting to see the impact on revenue and margins.