Good results, EBIDTA growth points to better times ahead.
Plasti blends did capex of 100 crores in 2014 and 2015. Any ideas about the future plan?
nothing as such mentioned in AR.
This company came to my attention after the stock fell post the recent results. I am hoping to cross notes with you and get clarity on a couple of points, in case you are still invested in and/or tracking PIL.
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I am trying to get a sense of the operating leverage in the system. Do you know what percentage of the expanded capacity (120k MT) is currently being utilised? I have gone through the latest filings and some mgt interviews, but I couldnāt find a number or range. The asset turn of the company has declined which shows that operating leverage is getting built up, but to what extent? Given that ~70% of the cost is related to raw material, the advantage of OL in this case is likely to be relatively lower than a company with a high fixed cost base.
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I am also trying to understand the market size and the extent of the organised vs unorganised play. Some reports say that this industry is expected to be close to $1 billion in 2020. Do you have any indication of the current market size? Also, the mgt has shared varied estimates (from 35% to 50%) regarding the extent of the organized segment ā this is a very broad range for a relatively small sector like this. Do you have any inputs here?
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Free cash flow generation has been very volatile (somewhat disappointing and my biggest concern) for a company with a solid balance sheet track record? And with oil prices now higher, this volatility may resurface despite Capex being out of the way.
I am still in the middle of my research, but so far it seems that the lack of a solid moat means that good times for PIL seem to be getting pushed for some reason or another ā capex, demon, GST, maybe oil prices nowā¦Overall, the company might remain the leader in the industry, but the business economics are unlikely to improve a lot due to the commodity nature of the businessā¦meaning that operating leverage could be the only real play hereā¦your views?
It would be good to get your thoughts on the above.
Regards,
Ankit
Hi Ankit,
It was purely undervalued bet for me (Attractive Security - AS) with specific targets. Once my targets were achieved, I sold the shares. Sorry, havenāt been tracking it since.
Regards,
Rupesh
