I am new to this forum and very happy to be here to get an opportunity to interact with some of the best value investors. From last few weeks I am analyzing Jindal poly and finding it very interesting. Please let me know your views
Jindal Polyfilms is part of B.C Jindal group and is one of the largest manufacturer of BOPET and BOPP films in India. These films have many applications but the main use is in packaging (food, snacks, Other FMCG products) .
BOPP films are mainly sold in India whereas BOPET films are partly exported to Europe.
The main customers are packaging converters who in turn process these films for end customer (FMCG companies for example).
Key competitors are UFLEX, Garware Poly, Polyplex etc.
Jindal Poly has the following competitive advantages (moats)
- It is one of the biggest manufacturers of BOPET and BOPP films (economies of scale)
- No anti dumping duty in Europe. Most other competitors have to pay anti dumping duty. That may be the reason why it is also one of the biggest exporter to Europe
CMP - Rs. 198.2
Market Cap - 912 cr
Reserves and Surplus - 1648 cr
Quoted and Unquoted Investments of 572 cr
D/E - 0.3
Sales (FY 2010) - 1700 cr
PAT (FY 2010) -208 cr
Net Cash flow from Operations(FY 2010) - 267 cr
Now PAT for FY 2011 was 592 cr but it is not representative as film prices increased sharply and came back to normal this year.
The company is looking extremely cheap. Its available just for 340 cr if we remove the investments and cash. Company can generate this much cash in just 1-2 years. Company has approved a buy back up to Rs 350 with a budget of 140 cr (not yet started).
Why is it selling cheap?
I think Mr. market is over reacting due to the following reasons
- The film prices came to normal levels after doubling for few months last year
- SC banned use of plastics for Gutka use recently
- Europe seems to be in trouble