Looks interesting at first glance, adding this to my research list; will do detailed study soon unless I see an obvious red flag.
Flat topline shouldn't worry us at all, the way FY16 results have come out is similar to other players who take PE,PP as raw material and deliver intermediate products. Garware Wall ropes has had a similar FY16, muted top line but 40%+ bottom line growth
What matters most in stories like this, once again based on a cursory first level analysis -
1) Ability to hold onto margins during commodity up/down cycles, as long it stays in a healthy range it doesn't make sense to sweat over the details as to why margins went down in a particular Q or even a year sometime. As long as the margin of safety is high, the specific details shouldn't be a deal breaker
2) Product portfolio that is evolving based on customer needs, even if it is an intermediate product customers can tell a value added input from a commodity. The R&D will be low cost & application based, once something works with one customer the same can be replicated quickly across other customers at minimal incremental cost
3) Competitive structure in the industry, fewer organized players the better it is. Ideal structure will be an oligopoly where customers have a restricted vendor list
4) Some differentiation either in sourcing, location, distribution or relative scale is very important. For companies of this nature it has to be a combination of one of these along with switching cost which can keep competition at bay. Pricing power, brands, patents and network effect anyway won't work here
5) Well funded capex already in place, with 100+ Cr of cash and a market cap of 550 Cr I guess this ain't an issue. By the looks of it this appears to be conservatively managed from a capital structure point of view
6) I like promoter owned and promoter run companies. I will never allocate too much to a company that has a so called "professional management" layer who will waste time playing politics and have minimal skin in the game. More the control exerted by promoters on the day to day running of the business, the happier I will be - this to me in fact is a necessary criterion to invest!
I will deep dive into the analysis soon.