Shilp Gravures - Leader in electro-mechanical engraving

Shilp Gravures is India’s pioneering and undisputed leader in electro-mechanical engraving, with a substantial market share in the flexible packaging industry. The company approaches its work practices from the creative end and this is what distinguishes it from all the other gravure cylinder suppliers in the field.

Product range of the company includes:

  • Engraved Screen
  • Engraved Gravures Cylinders- Electromechanical Engraved rollers, Mechanically Engraved rollers, Chemically Etched rollers, Laser Engraved rollers.
  • Flexo Plate Procession
  • Base Shell

Serves complete cross-section of the gravure industry such as:

  • Flexible Packaging
  • Anilox Rollers
  • PVC Flooring
  • Decorative Laminates
  • Specialty Coatings
  • Artificial Leather
  • Gift Wrapper
  • Fine Text
  • more

Clientele includes:
Amul, HUL, Britannia, Nestle, Cadbury, Colgate, ITC, etc.

Market Cap.: ₹ 68.27 Cr.
Current Price: ₹ 111.00
Book Value: ₹ 87.10
Stock P/E: 10.14
Dividend Yield: 1.08%
Face Value: ₹ 10.00
Current ratio: 1.89
Debt to equity: 0.24
OPM: 25.26%
ROIC: 16.23%
Promoter holding: 60.52%
Interest Coverage Ratio: 10.50
Cash Conversion Cycle: 60.68

+Niche business and high entry barrier in the industry
+Only listed player in this industry (Similar ones: Mold-Tek Packaging, TCPL Packaging)

-Raw Material costs
-New substitute technology

Inviting VPs closely monitoring the company or industry to contribute with more insights or feedback.

Disclosure: Not invested yet

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Mold-tek Packaging & TCPL packaging are not similar ones to Shilp Gravures. They are in-turn customers for Shilp Gravures.

I think Shilp Gravures is the only listed company in this category, Uflex has a cylinder unit in the name of Afflatus Gravures.

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  1. What is the present capacity of the company?

  2. What are growth plans and potential of the company? Any future projections of revenue of the company.

  3. What is market size for the line of business of the company? From your write-up it is difficult to understand what does the company do?

  4. Who are the competitors of the company?

Hi - On glancing through the 5 year financials (from screenr),

  1. Sales growth is low, grown from 57 Cr. (2012) to 60 Cr (2016). What could be the growth rate for next 5 years, is there any capacity expansion or any other triggers which could spur growth?

  2. Margins are good, for a Small Cap. OPM is slowly coming down, it was 26.28% in 2012, 23.87% in 2016 FY. Not alarming, just an observation.

  3. I was checking BSE for 2017 #s, believe they have cleared off their debts. For comparison purposes it was 1.7 Cr. in 2016. Better to wait for the AR and confirm the exact # .

  4. Deprecation, same as # 3. It’s 0 in 2017 whereas it was 6 Cr. in 2016. This is a significant %. In past years, this has been consistently around 6 Cr mark. Need to understand this better. [I dont understand this well, so experienced folks can correct if am factually incorrect]

With the sudden increase in price yesterday (124.8), the P/E is now 13.9 (2016 EPS of 8.98).

Right now, it’s not exciting me due to tipid sales growth in past. We should understand the triggers for future, project out the sales growth at least for 2-3 years to understand what’s going to be different.



Shilp Grauvres is engaged in the business of Roto-Gravure printing mainly used in flexible packaging, PVC floor printing and other speciality coating/printing works. It was established by a group of technocrats (Patel’s family) from Ahmedabad in 1989. The factory is in Rakanpur in the district of Gandhinagar, Gujrat and it has four offices in Ahmedabad, Delhi, Mumbai and Chennai. It is an undisputed leader in the electro-mechanical engraving with more than 40% marketshare in the Indian flexible packaging industry. Electro-Mechanical engraving is a precision technology and its plant has the world’s best equipment with Dupont Cyrel 2001P plate processor capable of producing 42X60 inch plates and other infrastructure as necessary. The technology for pre-processing is provided by ESKO and AGFADOTRIX, which helps creating rapid repeats and matching designs.
Its clientele base includes all giant FMCG companies like HUL, Britania, Colgate, Proctor & Gamble, ITC, Tata-tea, Amul, Pepsi, Haldiram, Lehar Foods, Reliance and Mcdowell’s etc., a total 300 plus clients.
Food packaging industry is India’s 5th largest business sector. India’s flexible packaging industry is currently worth around $40 billion annually. With the current BJP Govt’s strategy of Make-In-India and easing of inflation, packaged food finds more use by the young generation and therefore this value is going to be doubled by the year 2025. Per capita use of flexible packaging in India is currently around 24Kg, which is 5th in the world and 2nd in Asia. With the new Food-Safety Standard Regulations in vogue, quality packaging is the demand of the hours and is set to boost the sales of this company. Accordingly the future of this Company seems to be very bright.
Promoter’s stake is presently 60.52%. The most important point to note is that in Q4 FY-17 promoters have picked up shares from open market raising its stake from 60.39% to 60.52%. It is a very small cap company with a total of 61,49,800 shares. Foating stock is very low and hence trading volume is very scanty. Most of the shareholders from the public are seemed to be long term holders.
As on today, market cap is Rs.73.77 Crores against FY17 sales of Rs.64.64 Crores. FY17 net profit is 6.738 Crores, NP Margin is 10.42% and EPS is 10.96.

Comparison of last six years financials:

FY17	FY16	FY15	FY14	FY13	FY12

Sales 64.64 60.83 57.32 53.93 54.53 55.88
EPS 10.96 8.98 7.38 6.88 8.93 8.57
NPM 10.42 8.74 7.92 7.84 10.07 9.43
Dividend (%) 15 N/A 12 12 15 15
N/A: Record not available
Currently, company’s reserve is roughly Rs.41 Crores and debt is around Rs19 Crores.
Point to be noted is the steady increase in NPM from FY14 to FY17. Considering the increase in demand, a major expansion in the near future can be expected. Current market price of the shares is around 120/-, which discounts the FY17 earnings by 11 times (P/E 11) and as such it is considered as undervalued.

Disclosure: I have 5000 shares bought at slightly above 119/-

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Another point I have noticed in this company is a steady increase in the promoter’s stake as below:

March/11 - 56.17%, March/12 - 57.39%, March/13 - 58.54%, March/14 - 59.37%, March/15 - 60.12%, March/16 - 60.16%, March/17 - 60.52%.

Out of the promoters, there are two NRIs. In these years NRI promoters have slightly decreased their stake from 29.08% to 28.79% but the resident Indians have increased stake from 27.08% to 31.73%. The increase of stake by the resident Indian promoters steadily every year assures the future of the company.

Another interesting observation is the importance the management is giving to corporate governance. It is very rare to see a nano market cap company appoint a high quality auditor. Deloitte Haskins & Sells being the auditors of the company definitely brings in much needed credibility to the financial statement.

Current year dividend of Rs.1.5 makes the dividend yield of more than 1%.

Considering the net cash of little above 7 Crore, the business is available at little above 65 Crore net cash(which is less than PE of 10 times). If we can build a business case for CAGR in excess of 15% - then we should just close our eyes and enter.

Disclaimer: Not invested.

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While creating the topic I forgot to disclose my holding in the company. I have 5000 shares bought recently at an average of Rs.119.75

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Psarma sir thank you for your disclosure , but I feel that your entry point is quite expensive ? Is it a good price to enter ?
My view.can be of 1 year !

My attention has gone to this stock only after recent Q4 results, that too because the stock has gone down even on good results. Technically, there was a strong support at Rs.118.10, I thought it will not go down below the support and so accumulated between 120/- to 118/-. But it has gone down up-to 105.05, which was the second support level. Anyways, as per famous experts of technical studies, once it reverses immediately within one or two sessions, then it should be bought immediately looking forward for a big jump. On last Thursday itself it has opened at 105.05 and closed at 114.40, which was slightly higher than Wednesday’s close. Volume on Thursday was also higher than Wednesday. This was a very bullish indication and is proved on Friday as during the last hour of the market the stock was steady near the day’s high. I think on Monday it should open above Friday’s high and go further higher. I think on the recent dips the stock is accumulated by intelligent investors.

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