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Parekh Aluminex By Sun idhi Securities


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Parekh Aluminex By Sun idhi Securities

  1. 1. Parekh Aluminex 4th December 2009 TECHNO-FUNDA BUY REPORT Key Data Company Description: BSE Code 532606 Parekh Aluminex (PAL) is primarily engaged in production and sale of Aluminium Foil Containers (AFCs), its lids and covers and Aluminium Foil Rolls (AFRs). It NSE Code PARAL caters to the consumer food service industry and airline industry in India as well as Reuters Code PARL.BO in other countries, where it exports. The products find application in packaging of Bloomberg Code PKAL.IN food items in travel industry such as airlines, railways, fast food chains, restaurants, Sensex 17185 hotels etc and also find their application in household uses. CMP, Rs 110 Some of its clients include major airlines like Jet Airways, Indian, Air India, Target Price (Rs) 145 Kingfisher, Indian Railways Catering and Tourism Corporation, Taj Air Caterers amongst others. Its international clients include B.E. International, U.K. (Danone Face Value (Rs) 10 Group), SOP International, U.K. (Major in Food packaging industry) and major Mcap, (Rs. in Cr.) 142 airlines such as Emirates Airlines, Singapore Airlines, Thai Airways, Gulf Air, Etihad 52 week H/L 128/45 Airways, Air Asthana, Srilankan Airlines etc. 2 Wk Avg Qty 8054 PAL also undertakes job work for Hindalco, converting foil into containers (under ‘Freshpakk’ brand) and rolls (under ‘Freshwrapp’ brand) to be marketed directly by Share holding, Sep'09 % Holding Hindalco. Promoters 33.9 Investment Rationale: DIIs 0 The expansion project of Rs 240 crore is progressing steadily. The construction FIIs 11.9 work is going on in full swing and the project will be completed by March, 2010 as Foreign Corp. Bodies 1.5 scheduled. After the completion of this mega expansion the installed Bodies Corporate 12.0 capacities will be increased three times from the existing capacities and will result in higher turnover & profitability going forward. Public & Others 40.7 Total 100% The expansion is being financed through internal accruals, debt and issue of preferential warrants converted at a various price of Rs 260, Rs 225, Rs 115 and Rs Performance (%) 3M 6M 12M 105 from time to time. With its two manufacturing facilities situated strategically in the tax haven of the Union Territory of Dadra and Nagar Haveli, India, the tax outgo Stock (PAL) 0 0 85 is rather minimal. BSE 200 11 17 99 Packaging accounts for around 11% of aluminium usage in India as compared to a BSE 500 12 17 101 global share of around 20%. Given the rising middle-class and with an increasing Key Financial (Rs Crore ) disposable income, health awareness and the preference for eco-friendly packaging and serving solutions, the demand for AFCs is set to increase at a rapid pace. As Year End the Indian economy matures, this share is expected to move towards the global December H1FY10 FY09 FY10E FY11 level of 20%. Sales 267.2 421 550 825 46.9 72.7 96.3 132.0 With a CAGR of 8% during 2007-11, the consumer food service industry in India is PBIDT expected to witness one of the fastest growth rates in the Asia Pacific region. Interest 10.6 14.1 21.0 25.0 During the same period there is expected to be a quantum jump in the number of PBDT 36.3 58.6 75.3 107.0 food outlets in India, giving a fillip to the PAL’s business. IATA forecast suggests Depreciation 10.9 15.1 22.0 35.0 increase in air traffic and load factors, which augur well for PAL. Tax 4.5 5.4 9.3 15.5 PAL is likely to post an EPS of Rs 34 in FY10, which would further go up to Rs 44 in PAT 20.6 38.1 44.0 56.5 FY11. At CMP of Rs 110, the share is trading at a P/E of 3.2x on FY10E and 2.5x Equity 12.9 12.9 12.9 on FY11E. The stock is forming a sideways consolidation triangle price pattern. 252.6 296.6 353.1 The consolidation pattern is forming after a long run-up. The upside breakout from Reserves the price pattern is at Rs 120. The target for the stock after the breakout is Rs160. BV (Rs) 205.8 239.9 283.7 However, we recommend BUY with a target price of Rs 145 in the medium term. EPS (Rs) 29.5 34.1 43.8 OPM (%) 17.6 17.3 17.5 16.0 NPM (%) 7.7 9.0 8.0 6.8 P/E 3.2 2.5 Vijay Dave Ph: 91-22-6636 9669
  2. 2. Parekh Aluminex SUNIDHI SECURITIES & FINANCE LTD Member: National Stock Exchange (Capital, F&O & Debt Market) & The Stock Exchange, Mumbai SEBI Registration Numbers: NSE: INB 230676436 BSE: INB 010676436 Maker Chamber IV, 14th Floor, Nariman Point, Mumbai: 400 021 Tel: (+91-22) 6636 9669 Fax: (+91-22) 6631 8637 Web-site: Disclaimer: "This Report is published by Sunidhi Securities & Finance Ltd.("Sunidhi") for private circulation. This report is meant for informational purposes and is not be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. While utmost care has been taken in preparing this report, we claim no responsibility for its accuracy. Recipients should not regard the report as a substitute for the exercise of their own judgment. Any opinions expressed in this report are subject to change without any notice and this report is not under any obligation to update or keep current the information contained herein. Past performance is not necessarily indicative of future results. This Report accepts no liability whatsoever for any loss or damage of any kind arising out of the use of all or any part of this report. Sunidhi and its associated companies, directors, officers and employees may from time to time have a long or short position in the securities mentioned and may sell or buy such securities, or act upon information contained herein prior to the publication thereof. Sunidhi may also provide other financial services to the companies mentioned in this report." Sunidhi Research Page 2 of 2