The document provides an analysis of Arrow Coated Products Ltd for the quarter and fiscal year ending March 2015. Key highlights include net profit jumping 161% in Q4 FY15 compared to the same period last year. Sales increased 4% in Q4. EPS for the quarter was Rs. 0.97 compared to Rs. 0.37 last year. The company is expected to see 28% sales and 50% profit CAGR from 2014-2017. The document recommends buying the stock with a target price of Rs. 530.

1. CMP 453.30
Target Price 530.00
ISIN: INE570D01018
JUNE 2nd
2015
ARROW COATED PRODUCTS LIMITED
Result Update (PARENT BASIS): Q4 FY15
BUYBUYBUYBUY
Index Details
Stock Data
Sector Plastic Products
BSE Code 516064
Face Value 10.00
52wk. High / Low (Rs.) 590.00/77.60
Volume (2wk. Avg. Q.) 12000
Market Cap (Rs. in mn.) 5321.74
Annual Estimated Results (A*: Actual / E*: Estimated)
YEARS FY15A FY16E FY17E
Net Sales 198.88 230.70 260.69
EBITDA 102.68 117.81 131.69
Net Profit 65.50 72.78 83.71
EPS 5.58 6.20 7.13
P/E 81.25 73.12 63.58
Shareholding Pattern (%)
1 Year Comparative Graph
ARROW COATED PRODUCTS LTD BSE SENSEX
SYNOPSIS
Arrow Coated Products Ltd, is one of the leading
manufacturers of cast water soluble film in the
world, having world class manufacturing facilities in
Ankleshwar, Gujarat .
In Q4 FY15, Net profit jumps to Rs. 11.44 million an
increase of 161.19% against Rs. 4.38 million in the
corresponding quarter of previous year.
The company’s net sales registered 4.05% increase
in Q4 FY15 and stood Rs. 52.89 million from Rs.
50.83 million over the corresponding quarter of
previous year.
During the quarter, operating profit is Rs. 29.29
million as against Rs. 5.75 million in the
corresponding period of the previous year, grew by
409.39%.
Profit before tax (PBT) at Rs. 23.41 million in Q4
FY15 compared to Rs. 4.77 million in Q4 FY14,
registered a growth of 390.78%.
Total income of the company stood at Rs. 56.54
million in Q4 FY15 as against Rs. 59.06 million over
the corresponding quarter of previous year.
The company has reported an EPS of Rs. 0.97 for the
4th quarter as against an EPS of Rs. 0.37 in the
corresponding quarter of the previous year.
The company has recommended dividend @ 25%
on Equity Shares of the face value of Rs. 10/- each
for the financial year 2014-2015.
Net Sales and PAT of the company are expected to
grow at a CAGR of 28% and 50% over 2014 to
2017E respectively.
PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND
Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)
Arrow Coated Products Limited 453.30 5321.74 5.58 81.25 24.20 25.00
Sintex Industries Ltd 110.60 47955.30 10.55 10.48 1.58 70.00
Astral Poly Technik Ltd 384.05 45458.10 5.82 65.99 14.47 37.50
Finolex Industries Ltd 274.10 34014.50 3.85 71.19 4.31 20.00

2. QUARTERLY HIGHLIGHTS (PARENT BASIS)
Results updates- Q4 FY15,
The company has achieved a turnover of Rs. 52.89 million for the 4th quarter of the current year 2014-15 as
against Rs. 50.83 million in the corresponding quarter of the previous year. EBITDA of Rs. 29.29 million in Q4
FY15 an increase of 409.39% against the corresponding period of last year. In Q4 FY15, net profit of Rs. 11.44
million against Rs. 4.38 million in the corresponding quarter of the previous year. The company has reported an
EPS of Rs. 0.97 for the 4th quarter as against an EPS of Rs. 0.37 in the corresponding quarter of the previous year.
Break up of Expenditure
Rs. In million Mar-15 Mar-14 % Change
Net Sales 52.89 50.83 4.05%
PAT 11.44 4.38 161.19%
EPS 0.97 0.37 161.19%
EBITDA 29.29 5.75 409.39%
Break up of Expenditure
(Rs in millions)
Q4 FY15 Q4 FY14
%
CHNG
Consumption of Raw
Material
3.05 2.60 17%
Manufacturing Expenses 2.67 3.22 -17%
Employees Cost 6.56 3.17 107%
Depreciation 5.44 0.97 461%
Other Expenditure 7.47 14.62 -49%
Patent expenses 1.75 0.70 150%
Bad Debts 0.60 0.28 114%

3. COMPANY PROFILE
Arrow Coated Products Ltd. Incorporated on 30th October 1992 is a customer centric company, provides
solution that serves the need of society leading to enhanced stakeholder value. Arrow’s manufacturing unit at
Ankleshwar is engaged in manufacturing of Biodegradable water-soluble film, Security Thread. Arrow Coated
Products Ltd. is the only manufacturer of Water Soluble Films in India, (World wide only three including Arrow)
Preferred Providers of Innovative Eco-friendly Solutions.
The company has won India Star Packaging Award in 2000 from Indian Institute of Packaging (IIP) and has also
been nominated for World Star Packaging Award for Water Soluble Bags. The company is Pioneer supplier of all
the equipments and consumables related to the Signage/Outdoor Advertisement Industry.
Subsidiaries
• Avery Bio-Tech Pvt. Ltd.
• Nagra Id Arrow Secure Cards Pvt Ltd.
• Sp- Arrow Bioplast Pvt Ltd.

4. FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)
Balance Sheet as at March 31, 2014 -2017E
FY14A FY15A FY16E FY17E
I. EQUITY AND LIABILITIES:
A. Shareholders’ Funds
a) Share Capital 117.40 117.40 117.40 117.40
b) Reserves and Surplus 72.30 102.48 138.35 178.47
Sub-Total-Net worth 189.70 219.88 255.75 295.87
B. Non-Current Liabilities:
a) Long-term borrowings 0.90 0.00 0.00 0.00
b) Deferred Tax Liabilities [Net] 1.24 3.04 3.50 3.57
c) Other Long Term Liabilities 2.06 1.52 1.79 2.01
d) Long Term Provisions 0.56 0.58 0.64 0.69
Sub-Total-Long term liabilities 4.76 5.14 5.93 6.26
C. Current Liabilities:
a) Short-term borrowings 0.35 0.00 0.00 0.00
b) Trade Payables 19.81 16.63 19.12 21.04
c) Other Current Liabilities 5.23 4.19 4.69 5.07
d) Short Term Provisions 37.24 64.64 78.21 87.60
Sub-Total-Current Liabilities 62.63 85.46 102.03 113.71
TOTAL-EQUITY AND LIABILITIES (A+B+C) 257.09 310.48 363.71 415.84
II. ASSETS:
D. Non-Current Assets:
Fixed Assets
i. Tangible Assets 22.15 46.84 54.34 59.22
ii. Intangible Assets 8.27 7.74 7.35 7.06
iii. Intangible Asset under Development 8.90 11.07 12.84 14.64
a) Sub-Total-Fixed Assets 39.32 65.65 74.53 80.92
b) Other non-current assets 1.40 1.23 1.37 1.49
c) Non Current Investments 74.28 154.49 185.58 219.91
d) Long Term Loans and Advances 29.41 35.29 41.64 47.06
Sub-Total-Non-Current Assets 144.41 256.66 303.12 349.37
E. Current Assets:
a) Inventories 31.21 7.02 8.28 9.28
b) Trade Receivables 4.41 4.99 5.49 5.93
c) Cash and Bank Balances 53.13 23.66 27.21 30.47
d) Short Term Loans and Advances 23.85 17.99 19.43 20.59
e) Other Current Assets 0.08 0.16 0.18 0.19
Sub-Total-Current Assets 112.68 53.82 60.59 66.46
TOTAL-ASSETS (D+E) 257.09 310.48 363.71 415.84

5. Annual Profit & Loss Statement for the period of 2014 to 2017E
Value(Rs.in.mn) FY14A FY15A FY16E FY17E
Description 12m 12m 12m 12m
Net Sales 174.41 198.88 230.70 260.69
Other Income 15.15 11.67 13.07 14.38
Total Income 189.56 210.55 243.77 275.07
Expenditure -124.23 -107.87 -125.96 -143.38
Operating Profit 65.33 102.68 117.81 131.69
Interest 0.00 0.00 0.00 0.00
Gross profit 65.33 102.68 117.81 131.69
Depreciation -3.64 -8.43 -10.96 -13.04
Exceptional Items -0.09 -0.28 -0.29 -0.25
Profit Before Tax 61.60 93.97 106.56 118.40
Tax -15.99 -28.47 -33.78 -34.69
Net Profit 45.61 65.50 72.78 83.71
Equity capital 117.40 117.40 117.40 117.40
Reserves 72.30 102.48 138.35 178.47
Face value 10.00 10.00 10.00 10.00
EPS 3.89 5.58 6.20 7.13
Quarterly Profit & Loss Statement for the period of 30 Sep, 2014 to 30 Jun, 2015E
Value(Rs.in.mn) 30-Sep-14 31-Dec-14 31-Mar-15 30-Jun-15E
Description 3m 3m 3m 3m
Net sales 58.60 60.34 52.89 58.18
Other income 3.37 2.42 3.65 3.94
Total Income 61.97 62.76 56.54 62.12
Expenditure -33.74 -35.72 -27.25 -30.89
Operating profit 28.23 27.04 29.29 31.23
Interest 0.00 0.00 0.00 0.00
Gross profit 28.23 27.04 29.29 31.23
Depreciation -0.93 -1.30 -5.44 -5.77
Exceptional Items -0.06 -0.04 -0.44 -0.06
Profit Before Tax 27.24 25.70 23.41 25.40
Tax -7.50 -4.50 -11.97 -7.75
Net Profit 19.74 21.20 11.44 17.65
Equity capital 117.40 117.40 117.40 117.40
Face value 10.00 10.00 10.00 10.00
EPS 1.68 1.81 0.97 1.50

6. Ratio Analysis
Particulars FY14A FY15A FY16E FY17E
EPS (Rs.) 3.89 5.58 6.20 7.13
EBITDA Margin (%) 37.46 51.63 51.07 50.52
PBT Margin (%) 35.32 47.25 46.19 45.42
PAT Margin (%) 26.15 32.93 31.55 32.11
P/E Ratio (x) 116.68 81.25 73.12 63.58
ROE (%) 24.04 29.79 28.46 28.29
ROCE (%) 36.12 50.53 50.35 48.92
Debt Equity Ratio 0.01 0.00 0.00 0.00
EV/EBITDA (x) 80.67 51.60 44.94 40.18
Book Value (Rs.) 16.16 18.73 21.78 25.20
P/BV 28.05 24.20 20.81 17.99
Charts

7. OUTLOOK AND CONCLUSION
At the current market price of Rs. 453.30, the stock P/E ratio is at 73.12 x FY16E and 63.58 x FY17E
respectively.
Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs.6.20 and Rs.7.13
respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 28% and 50% over 2014 to 2017E
respectively.
On the basis of EV/EBITDA, the stock trades at 44.94 x for FY16E and 40.18 x for FY17E.
Price to Book Value of the stock is expected to be at 20.81 x and 17.99 x for FY16E and FY17E respectively.
We expect that the company surplus scenario is likely to continue for the next three years, will keep its
growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of
Rs.530.00 for Medium to Long term investment.
INDUSTRY OVERVIEW
The Indian plastics industry made a promising beginning in 1957 with the production of polystyrene. Thereafter,
significant progress has been made and the industry has grown and diversified rapidly. Currently, the Indian
plastics industry is spread across the country, employing about 4 million people and over 2,000 exporters. It
operates more than 30,000 processing units, of which 85 per cent to 90 per cent are small and medium
enterprises (SMEs).
Steady Growth in Exports
India is one of the most promising exporters of plastics among developing countries. The Indian plastics industry
produces and exports a wide range of raw materials, plastic moulded extruded goods, polyester films, laminates,
moulded/ soft luggage items, writing instruments, plastic woven sacks and bags, PVC leather cloth and sheeting,
packaging, consumer goods, sanitary fittings, electrical accessories, laboratory/ medical surgical ware and travel
ware, among other products.
Key Markets and Export Destinations
• In 2013-14, exports of Indian plastics stood at around US$ 7,916.94 million, compared to US$ 7,088.08
million in 2012-13.
• Indian plastics exports have grown at a rate of 11.69 per cent in 2013-14, compared to the previous financial
year.

8. • China is the major importer of plastic products from India which was estimated at around US$ 869 million in
2013-14, followed by USA at US$ 819.93 million and UAE at US$ 386.18 million.
• Products from the Indian plastics industry are exported to more than 150 countries; major trading partners
being China, the US, the UAE, Turkey, Italy, the UK, Indonesia, Germany, Vietnam, Bangladesh, Nigeria,
Pakistan, South Africa, Brazil, Singapore, Saudi Arabia, Nepal, Egypt, Sri Lanka and the Netherlands.
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purchase or sale of any financial instrument or as an official confirmation of any transaction. The information
contained herein is from publicly available data or other sources believed to be reliable but we do not represent that
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in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
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the recipients’ investment decision based on this document.

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