Jindal Poly Film - Looks like a very good bargain

I am currently trying to study the packaging industry dynamics. But what baffles me is that in spite of comparatively good financial performance of packaging companies since last 3-5 yrs, most of them are available at extremely low valuation (PE less than 7) as compared to financial performance. Only EPL and Mold-Teck seems to be exception.

So can anyone please explain this low valuation reason?

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@Patel_Bhai From what I know, lot of new capacity coming up in this space. This will mean margins will revert to mean and earnings could potentially drop off a cliff. Hence the market’s apathy towards cos in this sector. You may want to go through concalls / transcripts of other cos from the same sector to get a clearer picture.

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This is a cyclical business. In my opinion we have seen peak earnings and peak margins and at the peak of the cycle the p/e ratio fools us. As low single digit makes us think it is cheap. You can see marketcap to sales or price to book and compare it with median. Those are the better metrics quantitavely to look at.

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Disc: not invested

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Induced by the low valuations (specifically low price to book), I had at one point dug into promoter integrity and shareholder orientation and so many red flags popped out that I decided to strike JINDALPOLY off my watchlist completely. Others have already pointed out some red flags in this thread but here are a couple of my notes.

  1. The company seems to have effectively cheated minority shareholders by making a (effectively preferential) rights issue in a valuable subsidiary at a very discounted price. See this ET report for example and other follow up reports on ET.

  2. In Oct22, the CFO and whole-time director resigned suddenly citing personal reasons… a bit fishy perhaps?

  3. The company has had a paltry dividend payout ratio of 1%-2% over FYe20 to FYe22 despite having bumper earnings and relatively low debt.

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CFO resignation from another group Company…
15 Dec - Mr. Vinay Jain, Chief Financial Officer has given notice of resignation from services of the Company. He will continue in his current position upto 16th …
](https://www.bseindia.com/xml-data/corpfiling/AttachHis/d78878ee-4a39-4b54-8e10-6b626f8162cf.pdf)

The Company is not at all retail investor friendly and that is the reason for its cheap valuations.

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