KPL started its journey as a manufacturer of flat raffia tapes and HDPE
woven sacks. KPL marked its turnaround in 1999 when it began
manufacturing FIBCs and bulk bags. KPL has an annual capacity to manufacture 14600 tonne and 3350
tonne of FIBC and MFY, respectively. With FIBC sales volumes at
13627 tonne in FY16 (90%+ utilisation levels), KPL is witnessing
capacity constraints with largely flat sales in FY15-17E. Sensing the same, the management is now
gearing itself for a massive expansion amounting to | 85 crore, which involves restructuring of current
operations and incremental capacity addition of ~8500 tonne. It is expected to be financed with a mix of
debt (~60%) & equity (~40%). This is expected to be commissioned in H2FY19, thereby ushering in a
volume led growth from FY19E onwards. At peak utilisation levels, it will
generate sales of ~| 120 crore, with intended RoCE of ~16-18% . This expansion will take around 15 -18 months.
- High forex exposure
- Delay in capacity expansion execution.
1.if we remove the interest factor then Ebitda is 14-16%.
2.the ROE ratio is good.
3.dividend paying stock.
4.co is able to convert its net profit into cash.
Disclosure: small tracking quantity purchased