I am not worried about the low PE. Infact it allows us to claim over larger share of cash generated by Polyplex at lower price .
2013 to 2014 there was a drop in margin because of excessive global supply.
To me this becomes a cyclical play. Capacity addition by all the players whenever there is good margin until there isn’t.
With most of the cost coming to be raw material cost there isn’t any competitive advantage a player can have over others.
The geographical diversification sure helps but it isn’t unique to Polyplex.
Having said that, I don’t expect sudden drop in the margins unless crude jumps sharply.
Disc: Invested
I am surprised that there is almost zero communication from company’s side with the investors. I don’t see any concall, no interviews, or any other communication. Can anyone please shed some light on how you get updates about company’s plans?
Looks like Polyplex promoters are looking for an exit given its good time to liquidate their stake… Would this be a good or a bad thing for the company?
I think it may also because, none from next generation has taken part in this business. Most of the management staff in the company are long timers, also Sanjiv Saraf must be 60+ now, not an age for retirement in the business but … as seen by others … high valuation, right time to explore for disinvestment!
If a bigger co or better management is buying then that would be a good thing.
Sanjiv Saraf’s board attendance was low and both Sanjiv Saraf and Pranay Kothari had multiple other board directorship. Change in management might be a good thing in such a case?
mint
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Home >Companies >News >Warburg acquires controlling stake in Parksons Packaging
Warburg acquires controlling stake in Parksons Packaging
The deal highlights a growing PE interest in packaging biz driven by demand for packaging of household, medical, edible and lifestyle products.
The deal highlights a growing PE interest in packaging biz driven by demand for packaging of household, medical, edible and lifestyle products.
2 min read . 27 Apr 2021
Swaraj Singh Dhanjal
American private equity (PE) firm Warburg Pincus on Monday said its affiliate Green Fin Investments BV has acquired a majority stake in Parksons Packaging Ltd, it said in a statement.
As part of the transaction, existing PE investors Kedaara Capital AIF 1 and Olza Holdings Ltd and IIFL have fully exited their investment in Parksons and the promoter Kejriwal family has sold a partial stake, Warburg said. Family members Ramesh Kejriwal, Siddharth Kejriwal and Chaitanya Kejriwal will continue to retain their current positions of chairman, managing director and joint managing director, respectively, and will drive the business going forward, it added.
Financial details of the transaction were not disclosed. However, a banker aware of the details told Mint on condition of anonymity that Warburg has acquired around 80% stake in the company at an enterprise value of around ₹2,200 crore.
The company recorded revenue of around ₹1,000 crore last fiscal, he added. Parksons revenues have grown at a compound annual growth rate of 15.5% over the last five fiscals through FY20 while maintaining a healthy double-digit operating margin, rating agency Crisil Ltd said in a September report.
I have gone through the investor presentation and here are my quick observations
Capacity expansion across the geographies
All the units are strategically located to serve the regions APAC, EUROPE, NA
One key observation is their investment in recyclable plastic project Eco Blue, this material received USFDA approval to use in packaging that contacts with food
I have quickly checked the nearest competitors based in indian Jindal and Uflex, none found in Jindal related to recycling , some what in Uflex, but UFlex is just breaking it down and using the pieces in surfacing the roads etc… not converting it into virgin raw material
based on my understanding the company is ideally positioned to re-rate inline with EPL but that hasnt been happening despite good performances over past few qtrs. Is there anything specific that the forum believes that the company is missing to achieve the re-rating. also is the promoter stake sale news keeping the stock under pressure? any views will be helpful. I have been invested for sometime but evaluating hold strategy now.
Stake sale news are generally good. Below is my reasoning for the 2 possible cases:
If the business is doing bad: Stake sale gets new management and the market hopes that the new management would handle things better.
If the business is doing good: Then the stake sale would only happen at a premium and only a larger company which has real interest in the business and can synergize would want to a stake.
Polyplex falls in the second case and if the stake sale doesn’t happen then the prices may even fall, who knows.
They two companies have different market and can’t be directly compared.
I second you on EPL comparison, a better comparison will be Jindal Polyfilms, Cosmo etc. & all trade at comparable valuations. So not sure wat the re-rating trigger will be, if any
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