PG Foils
PG Foils has got the third largest aluminum foil capacity in India. This company has a total capacity of about 11,000 tonne per annum. The major customers for the product are pharmaceuticals and food industry. Besides pharmaceutical and food industry, this company also gives its product to various other industry segments, though in smaller quantities, but the major customer is pharmaceuticals and food.If you look at the financials of the company closely for the last two financial years, for FY09, this company reported a loss of about Rs 1.5 crore. In this loss this company had provided for an exceptional item of close to Rs 13 crore, the company had about Rs 8.5 crore of loss on forex hedging and this company provided for about Rs 4.5 crore on account of payment of premium for Keyman Insurance Policy which means total exceptional items of close to Rs 13 crore.Again for FY10, there are exceptional items for Rs 13 crore, which includes payment of Keyman Insurance Policy of Rs 4.5 crore and loss investment of close to Rs 8 crore after providing for these two items, this company reported a profit after tax of Rs 4 crore. Now if you compare the valuation of this company with the peer group namely Essdee Aluminum, you will find that even though the capacity of Essdee Aluminum is about 3.5 times that of PG Foils, the revenues of Essdee Aluminum are 3.5 times, operating margins are double that of PG Foils but the marketcap of Essdee Aluminum is roughly 38 times the marketcap of PG Foils. There I find a huge differential in valuation of these two companies.
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