STOCK RECOMMENDATION - PG FOILS

 P G Foils  Code: 526747  CMP:  Rs.79.80

The share price of P G Foils is hitting new lows on the back of the bearish sentiment and its subdued Q3FY12 performance. However for the first nine months of FY12, it has registered 40% jump in sales to Rs.144 crore and PAT has almost doubled to Rs.10.60 crore. Hence it has already posted an EPS of Rs.13 till date in the current fiscal. Belonging to the Rajasthan based Prem Group, the company is one of the leading names in the manufacture of aluminum foils and its laminates in India. It produces plain and printed aluminum foils, foil laminates and flexible packaging material for various uses in the packaging for pharma, FMCG and other products. It specializes in multilayer laminated and multicolour printed flexible packaging materials. It offers a range of products made with the combination of aluminium foil, paper, PET, PE, BOPP etc. of varied thickness, width and different coatings. Besides catering to the domestic market, the company also exports its products to countries like Bangladesh, Iran, Kenya, Mexico, Nepal, Nigeria, Russia, Sudan, Thailand & UAE. Presently, its manufacturing facility is in Pali, Rajasthan, having an installed capacity of 10,500 MTPA of aluminium foil and 1200 MTPA of flexible packaging. However, the capacity utilization is quite low and stood at 50% in FY11. The plant is equipped with the most modern aluminum foil producing machinery with technical knowhow sourced from UK. It has the capability to laminate two substrate through any polymer, water based adhesive, solvent based adhesive and providing sealant layers of any combination of polymers like PVC, PP, PS and Glass surfaces. The company has also installed a windmill at Jaisalmer for captive consumption. Fundamentally, the company is expected to clock a turnover of Rs.190 crore with PAT of Rs.15 crore for FY12. Last year, it took the Board’s approval to issue around 20 lakh warrants to promoters and non-promoters, which can be converted into equity shares at not less than Rs.150 per share. At the current market cap of Rs.55 crore, the share is trading cheap at a P/E of less than 4 times. Buy now and add more at declines.