Neo Corp-Growth Machine in Technical Textiles(CAGR 45%)!

Hello All,
Neo Corp International is a Technical Textile Company and it’s the leader in this Industry in India, which worth looking for the below reasons. Company is ISO 9001:2008 , ISO 22000:2005 & BRC/IOP certified.

  1. It has very high CAGR growth rate of 38% for last 3 years and 34% for last 5 years which is huge and this attracts attention for this single reason.
  2. NP CAGR is also good, which is 22% for last 3 years and 27% for last 5 years.
    3)Although the promoter holding is less (24.11%) but Promoters have bought the shares from open market and increased their stake from 19 to 24% in last few quarters and pledged shares % came down in last few quarters.
  3. Consolidated P/E is only 2.5, which is very much cheaper. A good holding company “VLS Finance Limited” (who has discovered gems like “Relaxo”) is silently accumulating the shares in this company and increased their holding from about 3% to 9-10% in last 1year. And it is still accumulating the shares from open market (please refer to the latest SAST updates in BSE)
  4. OPM is about 11% and NPM is about 4 %( which would increase dramatically once debt is reduced).
  5. ROCE is 20.58%, which is good considering the Textiles industry.
  6. Company’s immediate future growth is very much visible with the company’s entrance to South America and overall demand outlook in world and India. The textiles business is going to be of big size in the world and going to have market share of 60% of overall textiles Industry.
    Please refer to the well written Annual Report for further details on the business outlook and company’s operation (Company has installed SAP ERP for the better business operation maintenance which will show result in long term and also the innovative approach has started paying off with new and innovative products being made, company recognized as “Export house” by govt. of India for huge contribution in exports).


  1. Promoter/management quality is not so good, not shareholder friendly, they declare dividend but never gets credited to the bank account (probably they send cheques but do not reach shareholders’ home)-any further details on promoter/management is welcome.
  2. Historically IT dept raided them twice the most recent being in Feb 2015. Although the company mentioned that nothing incriminating docs/money found during raid but the IT raid itself a bad thing for shareholders. Most probably they will come clean and Tax pay % looks okay.
  3. Recently Swiss govt. published name of Neo in the black money account holders’ list, however company clearly informed BSE that the account was opened for GDR but closed a long time ago. So this is not a problem but again these kinds of news hurt investors’ sentiment.

Future Outlook:
With good capacity, innovation power and growth initiative taken in South America and good demand of Technical textiles makes sure that company’s revenue is all set to grow at least CAGR 25% in next 2-3 years. If the reduce debt then NPM will also increase. So overall it looks like a growth machine.
Business operation wise it is all set to improve day by day , however company needs to improve financially and debt reduction should happen in near future.
As far as stock price movement is concerned, its fair value is around INR 70-80 , it is trading around INR 40 , so soon or later the stock price is going to increase to get its fair value and with big players like “VLS Finance” increasing their stake consistently , stock should get fair value sooner.

Immediate triggers:
1)Company is going to issue Convertible Warrants on preferential basis soon(actually it was approved by shareholder to issue them at INR 65 around Feb-March but for technical reason it got postponed and that should be done in this FY and is around the corner.
2) As the company’s revenue is growing at brisk pace, “Q2” result should be very good and that should help stock price moving higher.
3) Stock was trading on NSE via MPSE(Madhyapradesh Stock Exchange) but as per new rule of NSE, it is not allowed now. This has caused several companies to stop the trading on NSE. Our Neo has submitted the necessary documents to NSE and it should start trading on NSE as well which will increase the liquidity and bug players comfortable to enter this stock to unlock the value.
4) The stock got hammered recently to its name in the Swiss govt.’s list for black money , however the company has cleared the air and the account has been closed long time ago and also company has not file any case against Swiss govt. for disclosing the information so that Indian IT dept can access all information and Neo can come clean. This proves that nothing wrong in Neo with respect to black money and official announcement of this by IT dept should help stock getting strength.
5)Technicals: Although I do not have much knowledge on technical but high deliver % and high volume from this week suggests that any of the good news(may be Warrant issue) is around the corner and some big guys has taken informed decision and accumulating the shares of this company(could be “VLS Finance” again), so technically it should look good(technical experts here please give more input on technicals so that we can estimate immediate trend of this stock).
Company website:
Neo Corp’s Official blog:
Chartered Accountant blog covering Neo Corp:” (not allowing to post more than 2 links, so putting it within quote)

My sincere request to all the senior ValuePickrs(specially Hemant sir, Donald sir and others) to please check this company, study this company, understand their business and take this discussion go forward with healthy discussion so that we can understand the future potential of this company. Any healthy discussion/argument is welcome.

Disclosure: Invested.

[quote=“hafizul88, post:1, topic:3121”]
(who has discovered gems like “Relaxo”)
[/quote] VLS didn’t discover relaxo, they were part of relaxo IPO process, and held shares during IPO when takers were not enough.

Hello Vikas ji,
Thanks for pointing this and yes they did the IPO but when some Institution does some IPO(of another company), it of course does checks the details of the company, potential of the company and most importantly valuation of the company through detailed process and scrutiny and if they are not satisfied they rejects the company------as there is every chance of under subscription and in that case the underwriter(VLS in this case) will have to absorb the remaining shares-----so in this case VLS must have realized the potential and valuation of “Relaxo” and that is why they went ahead with the IPO------so the skill and effort VLS had put and selected “Relaxo” , that itself proves VLS’s has good investing strategy-------and also apart from Relaxo , VLS has some other good stocks in the portfolio as well-------so overall VLS is doing well-----now the decision here is instead of buying a holding company VLS , we can select the company directly(in this case its Neo)----------basically its equal credit to find a good company from primary market(IPO) and find a good company from secondary market…

I request all again to give their valuable inputs so that we can evaluate this company-----with the demand of Technical textiles increasing hugely in India as well as other countries like USA, Latin America and other countries, I think this Technical textiles sector should perform well in near future-----and with good capacity of Neo, we can investigate this company further!!!

Updated based on the consolidated figure:
Revenue CAGR(5 year & 3 year) : 45%
NP CAGR(5 year) = 32% , 3 year: 24%.

For convenience of all, pasting the details from different sites:
1)From Company’ official blog:
**a)**Neo Corp Offers Avant-Garde Packaging Solutions

Across the country renowned leader in Packtech industry, Neo Corp International Limited has been delivering the best packaging solutions since its inception. Led by Mr. Sunil Trivedi, the company is holds an expertise in the field and this is aided with its use of ultra-modern technology. Neo Corp provides the most superior and cost effective solutions for storage, carriage and protection.

Neo Corp provides textile based temporary containment, carriage, storage and protection of industrial, agricultural and other goods. Mr. Sunil Trivedi, Chief Managing Director of Neo Corp International Limited, believes that packaging is an ideal application for textiles. From heavy weight woven fabrics which can be used for bags, sacks, FIBCs, wrappings for textile bales and carpets to lightweight woven fabrics used as Leno bags and other food and industrial product wrappings, Neo Corp deals in a variety of products.

Neo Corp produces three varieties of products under its Packtech industry:

Low GSM Products: Neo Corp presently manufactures PP/HDPE woven fabric which can be converted into Sacks/Bags, Wool Packs, Box Bags and Custom Design Bags. It is made of Polypropylene and the product range includes fabrics, box bags, sand bags, valve bags, bale wraps, wool packs, woven sacks, etc.

Leno Bags: Leno bags are permeable which allow air to pass and helps in keeping the product fresh. They are very flexible, efficient and can carry loads of over fifty kilograms. They are used for packing onions, potatoes, garlic, ground nuts, fruits and vegetables, flowers, etc. They are safe and remain fresh for longer durations. They can be easily re-used and washed. They have superior aesthetics, are chemically inert, cost effective and recyclable and have excellent mechanical properties.

FIBC: Neo Corp also provides a variety of filling and discharge options. Various kinds of filling options are available at Neo Corp which varies according to the difference in products. For example, tops are not required for cheap products, duffel top provides easy access whereas draw cord permits air flow but still confines the product. Neo Corp also helps people choose the right discharge options which saves both time and money. It also provides lifting options and liners and accessories.

b)An international Leader of Packtech, Neo Corp diversifying:

One of the international leaders in Packtech industry, Neo Corp International Limited (NCIL) has been expanding significantly. The company has a range of growth initiatives which have led to its diversification into Geotech and Agrotech segments also, adding to Packtech. With the company’s healthy financial past and its profits, it has made its place into National and Bombay Stock Exchanges as well as Luxembourg Stock Exchange. Neo Corp has had an excellent export performance and an equity base of 38.02 million shares. This has helped the company enjoy Government-recognized Star Export House Status. A planned capital investment and constructive management culture has helped NCIL encash all the opportunities that have come with easing down of trade norms.

NCIL’s two main subsidiaries are:
:black_medium_small_square:Europlast Limited

A UK-based company, Europlast Limited sources, stocks and distributes technical textiles to wholesalers and retailers of the product throughout Europe. The company has its headquarters in London, UK and was incepted in the year 1998. NCIL has been offering better returns by virtue of this subsidiary. NCIL has also been able to keep proximity to end users wherein the fidelity is higher, owing to Europlast.

NCIL has benefitted in more than one way through this subsidiary. It has also been providing better customer service and has a minimized credit risk due to debt insurance cover availability in UK for supply in whole of Europe.

:black_medium_small_square:IPC Packaging Company Pvt. Ltd.

IPC is a Bangalore-based manufacturer of PP / HDPE woven FIBC, jumbo bags, sacks, tarpaulins, box bags, PE liner etc. NCIL acquired the company in November 2014.

Spread over an area of 2.62 lac sq ft and a built up area of 2.04 lac sq ft, IPC is a hi-tech production plant and is situated very close to the industrial sector. NICL’s acquisition of IPC has advantaged the company in many ways.

Other subsidiaries of NICL include:
:black_medium_small_square:Sacos Indigo Private Limited
:black_medium_small_square:Netflex Infracon Limited
:black_medium_small_square:Polybase (HK) Limited
:black_medium_small_square:Polylogic International Private Limited

2)Chartered Accountant blog:


NCIL is a Public Listed Company with an equity base of 38.02 million shares.

NCIL since its inception was dedicated towards making tailor made products under Packtech and now it has the status of one of the best and reliable suppliers in Packtech products internationally.

It has also entered two more segments of technical textiles namely Geotech and Agrotech.

It is listed only on BSE as of now. It was trading on NSE through Madhya Pradesh Stock Exchange (MPSE).MPSE is in the course of decognitiion hence NCIL permission to trade on NSE was withdrawn since 30th January 2015. The company has filed an application for relisting and should be traded on NSE soon.

NCIL is also listed on Bourse de Luxembourg(Luxembourg Stock Exchange).


Technical textile sector is one of the most innovative branch of the industry in the world, ranking as one of the five high tech sectors with the greatest potential for development. The success of technical textiles is primarily due to the creativity, innovation and versatility in fibers, yarns and woven/ knitted/ nonwoven fabrics with applications spanning an enormous range of users. The ability of technical textiles to combine with each other and with others to create new functional products offer unlimited opportunities for growth.

Traditionally, North America and Europe have been the major markets for technical textiles in the past but in recent years, the sheer volume of demand from Asia Pacific has outpaced demand from North America and Europe. With better technology capabilities, ever increasing demand from different end user industries, technical textiles are expected have a huge market to cater to globally.

India’s export of technical textiles has grown from US$ 624.95 million during 2007-08 to US$ 1355.04 million in year 2012-13 with a CAGR of 17% indicates encouraging global demand for India’s technical textile products. Furthermore, the import of technical textiles has grown from US$ 835.82 million during 2007-08 to US$ 1434.97 million in year 2012-13 with a CAGR of 11% shows that Indian consumers have significant demand for technical textiles products.

These statistics highlight not only concerted domestic needs, but also India’s potential to address global demands, for technical textiles products. With advancing technology, higher integration with global markets and greater sensitization to market needs, the Indian technical textiles industry demonstrates significant potential, for the development of local industry and prospective entrepreneurs.

Technical textiles are an important part of the textile industry and its potential is still largely untapped in India.


Neo Corp is run by learned and highly experienced people from the related fields. Few of them are:

  1. Mr. Shrawan Kumar Patodi : Eminent Lawyer having vast experience in the field of low and 10 years of experience as export executive. Educational qualification - B. Com. M.A., LL.B. and D.H.B.

  2. Mr. Ladharam Patel : 40 years of experience in the manufacturing business.

  3. Mr. Rollande Coderre : An entrepreneur from Canada having experience in vast number of fields like packaging, construction, etc. Educational qualification - Degree in Business Administration and business accounts & finance


Let us have a look at the financial results of past years.
Neo Annual consolidated numbers from screener : Last year EPS 12.84

The numbers speak a lot about its performance. The return on the capital employed in to company over a period of 3 years is above 16%. Also the cash flow has been improving. At current levels, NCIL is trading at 2.5 PE which is very much lower as compared to the industry PE of 22. Also the business has huge potential to grow. Trading at 60% of its book value provides huge ground for upmove.


The company has hired world class professionals for proper control over the business activities. This has helped to improve productivity, provide better services, reduced cost and increased returns especially on human capital. The company’s internal control systems are commensurate with the nature of its business and the size and complexity of its operations.


· NCIL products are of ISO quality standards and the BRC & Astho will enable NCIL to enter rich e markets.

· Worldwide ever increasing demand.

· It is also into business of Geotech and Packteck. Thus agricultural and infrastructural activities will give impetus to the growth.

· It has a large domestic market which helps to spread the risk.

· New acquisitions will add further to increase in proximity and develop new and better customer relations.

· NCIL has the highest production capacity of technical textiles in India.


· The market is price sensitive and thus is susceptible to pricing pressure.

· Competition from other countries.

With a view to take on the competitors in the global markets, NCIL has been increasing its business and developing client relations. It had its business spread across 20+ nations and has been serving 550+ clients.

It has 6 subsidies namely

  1. Europlast Ltd

  2. Sacos Indigo Pvt Ltd

  3. Netflex Infracon Ltd

  4. Polybase Ltd

  5. Polylogic International Pvt Ltd

  6. IPC Packaging Co Ltd

Europlast Ltd was incorporated in UK in 1988 and was engaged in sourcing and distribution technical textiles. The acquisition of Europlast was very crucial. Europlast Ltd was operating for over a decade and established itself as the leading player in its business in Europe. Acquisition of Europlast has proved to be very much advantageous in the form of better customer services, reduction of risk on account of credit sales and also reaching out to more clients.

In the previous financial year NCIL made a big strategic more by acquiring IPC Packaging Co Pvt Ltd. IPC was acquired in November 2014. IPC Packaging Co. Pvt Ltd is based in Bangalore, the IT hub of India for the past 6 years and leading manufacturer of PP / HDPE woven FIBC, Jumbo Bags, sacks, Tarpaulins, Box Bags, PE Liner etc… IPC has a huge hi-tech production plant spread over 2.6 million sq ft which is located very close to the Industrial sector. IPC was and is being run by veterans with experience of over two decades. This acquisition puts NCIL at the top in its business with highest production capacity in india.

In addition to the technical textile business, Neo Corp also represents Indian Oil Corporation Ltd as Del Credre Associate cum stockiest for the state of Madhya Pradesh. There are two production lines of 300 KTA each for Polypropylene (PP) with Spheripol technology license from Basell, Italy. The product portfolio includes entire range of Homopolymers, Block Copolymers and Random Copolymers.

There is a dedicated HDPE plant of 300 KTA using Basell (Hostalen) slurry process. The product portfolio includes Unimodal as well as Bimodal HDPE grades for various application segments such as Film, Blow Moulding and Pressure Pipes.

The low petroleum prices will benefit to a great extent the company’s polymer business.


· Neo Corp enjoys the Star Export House status recognized by the Government of India for the Company’s excellent export performance.

· It has a Trading House Certificate which is valid for a period of 5 years which ends in 2019. A trading house is an exporter, importer and also a trader that purchases and sells products for other businesses.

· On 22nd September 2014 its Inhouse R&D Units recognization was renewed upto 31st March 2017.

· NCIL is also a member of the Flexible Intermediate Bulk Container Association(FIBCA).

All the above discussions depict Neo Corp has a huge potential for a great up move and will prove its mettle in the coming times.

Firstcall Research has given “BUY” call on Neo Corp with target 64:

Some Technical textiles industry related links :

took a look. The promoters have pledged 61% of their holding and it translates to 14% of total holding. Given that the promoters hold only 24% and have pledged 61% of that, IMHO - the valuations won’t be a runaway…
PS - not invested

the debt level is high.
the rise in debt is more than the rise in sales which is a clear negative for me.
also as per @hafizul88 the promoter quality is not good.
low promoter holding. high pledging.

issue of warrants is a negative for me. I don’t like warrants.

My question is - if the business is doing well and the profits are real then the debt is increasing.

Because of the equity dilution in 2012 (from 14cr to 38cr paid up capital), the FY15 consol EPS of 12 is close to the FY2011 EPS of 11.

If you look at it from that angle, not much wealth has been created. Profits have increased but as @manishinlucknow has said, the debt is growing faster than sales and profits. And EPS is back to square one. :slight_smile:

Hello @KS16 : Yes, promoters has 61% pledge but that is coming down gradually, actually it was more than that------same thing with promoter holding, it has increased from 19% to 24.11%, promoters have bought this 5% shares from open market-------so no doubt the past was not great but looks like it is improving------that’s the point here.

Hello @manishinlucknow : Yes current debt level is high, current long term debt is around 190cr…actually company had reduced the debt in 2nd Q of FY2014-2014 but they have recently acquired Bangalore based IPC packaging Pvt. Limited and that is why taken additional debt again--------

Regarding : “the rise in debt is more than the rise in sales which is a clear negative for me.”------as u know that the company’s sales are growing at more than 35%(its 45% on consolidated level) whereas the long term debt has risen by 18% last year(from 160cr. to 190 cr). But yes, I agree that increasing debt is not good in all situation…

Regarding issue of warrants: the main fact to see here is what will be the floor price of warrants—as per the shareholder approval , last time it was (INR 65, although it got postponed later due to technical reason)-----so for a stock trading at 40, why some big institution will buy the warrants at almost doubled price than market price(at that time the stock price was around 33-35)------two positives from here—

1)This premium says that company’s intrinsic value is more than the CMP which will give confidence to the shareholders.
2)With 70L warrants at 65 , it will be around 45 cr., if company reduces the debt with that, then profitability will increase heavily.

Regarding “My question is - if the business is doing well and the profits are real then the debt is increasing.”--------This is mainly happening due to the growth aspirations of the company, company is growing at brisk pace and recently entered to the South America and made a good base there-----so constant capital expenditure for new expansion, recent acquisition and delay in getting the payment from customers etc.

So what we can do is that, keep tracking this company and if they reduce the debt(which I expect if no more acquisition) and Promoters increases the holding and releases the shares(if the reduce debt and stock price goes up, % pledge will come down automatically) , then we can that the company is improving---------

Actually I am also monitoring the company closely, I have invested in this company does not mean I will have to hold the share if the company does not improve its business operations, financials.

Thanks all for the views.

Hello @roysavio: As EPS has increased even after the number of shares gone up by equity dilution then that’s good right(company earned more net profit as it is divided by more no. of shares outstanding)—anyway, equity dilution is not good actually but as we know the textiles sectors is very capital intensive sectors, many companies have high equity and also debt is more compared to other sectors like Pharma/Auto.

In past competition from China was huge in this sector as they had cheaper labor than India but as we know the labor cost has gone up in China and that is one of the reason China’s product price has gone up and India is getting advantage-----this is sector is set to do well specially the packaging area where our Neo has great innovative solution in Geotech, Packtech etc…this is a big proxy for India’s growth story and these products are eco friendly and well accepted by players worldwide.

Discussed regarding sales growth and debt growth rate in above post, please have a look.

Hello @manishinlucknow : Forgot to mention about promoter issues-------I said it is not so good that does not mean they are bad/very bad. Actually the books are clean(as the biggest IT dept officers did not get any issues in the books during the inspection in the latest IT raids----so actually the raid has indirectly helped retails/small investors to know that the books are okay , otherwise IT dept could have lodged case in High Court if they have got any major issue in company’s books)------so the promoters are not fraud for sure and no major/proved crime/money laundering etc…but then also I said not so good as I did not get reply of my email which I sent to them(however this is not the only company from where I did not get reply, some good management also did not reply of emails) and they do not share their future growth plan(we are getting to know the 45% CAGR growth from result, but good companies give future earning estimate way before and shares the rough estimates, plans etc…which itself gives strength to the stock even before reporting the actual results----that’s how market works, market discounts the future growth potential way before that happens actually)—but as Neo managements are not doing that, the stock does not get strength and investors are not clear about the future growth potentials----------------and also I don’t like their process of paying dividend via cheques in today NEFT era—these the reasons why I did say they are not good--------not sure if promoters are doing it deliberately to keep price low and buying time to save money to buy the shares at low price------seeing the growth and books clean, every promoter will try to add more----------actually the Trivedi family has increased the stake in the company by about 3 % but then that they have bought from other small promoter group entity that’s why no change in total promoter holding-------so this is also a positive that the founder Trivedi family has increased the stake and Son of MD Sunil Trivedi is also a director in the board , so successor plan is there and their son will takeover from father sometime in future------------so the bottom line is lets keep tracking this company and if debt are reduced, profitability improves, growth continues, promoter increases stake then we will get more confidence in the company------waiting for the SHP of Q2, hopefully we will see some positives(if not promoters then VLS finance must be increasing their holding)-----

hi, thanks for your explanation.
i haven’t done any research on this. you know better since you have gone thru the details.
will wait for some debt reduction or improvement in Debt / sales ratio.

1 Like

Hello @manishinlucknow: Sure, please go through the details because my personal views says that this company should be researched in detail and we need to know everything about the company’s Business operations, Financials all-----the reason I say it is the business has very high prospect with the huge demand of eco friendly packaging solutions using technical textiles—and this company is providing the innovative solutions in this area and that is the primary reason more new clients bases have been added and such a growth is being shown on revenue front------today company’s revenue is around 1000cr. which is very good------EBIDTA is also good at around 170 cr…but huge interest cost(around 50-60cr. yearly which is more than NP yearly) is eating all the profit-----and also the operational cost is high but this will be reduced gradually as company has invested a lot to install the SAP(Systems, Applications & Products for Data processing—its a top ERP surpassing Oracle and the leader in ERP area—I know SAP very well and all of my IT Career of 6 years , I have worked in SAP only, still continues)—and this SAP installation and customization is quite costly so it will hamper the NP for some years BUT once the data size of the company increases(which is the case with Neo with 1000cr. revenue and big operations related data is being generated everyday) then this SAP will bring fruits with more optimization in the overall supply chain(Procure raw material to sale products) and speeding up the whole process with SAP’s high speed technology------so SAP will improve the operational performance in a big way and that should improve the OPM further which will be very good--------

All in all what I can say is that the company’s business operation and future potential is HUGE(but movement of stock price is not still sure because of Debt, low NP etc.) , so we should closely monitor this company and if these things improve in coming 2-3 quarters then it will definitely be a good investing idea.

Hello All,
Pleasant SURPRISE from the Q2 SHP. FII has entered this stock with 0.21% holding they have added in Q2----which gives us more confidence on the company as FII has invested only after checking the company books with highly professionals/analysts/CAs, and also they have contacted the Neo management directly to know the company in detail and future plans------so everything looks fine now and if FII increased the stake in coming days, this stock might give very good return in less time-------hoping for the best------Happy Investing----Cheers!!!

Stock is going down day by day. Seniors, can you shed some light on how the results are going to be and future outlook on Neo Corp.

Disc: - Not Invested.

1 Like

Hello All,
The business potential is good as always however as mentioned in the stock story/initial post “Promoter/management quality is not so good, not shareholder friendly,”, I had exited the stock. But this is fully my personal decision. Others please analyse all details and then only take the decision. As i am not tracking this stock anymore , please do not expect any further analysis/input/comment/post from me on this.

Can anyone provide me latest annual report for Neo corp. Company has sent to email of shareholders but not uploaded on their website.