CMP

Jindal Poly Film is the largest manufacturer of BOPET and BOPP films in India. The manufacturing plant at Nashik, Maharashtra is the world’s largest integrated facility for the production of BOPET and BOPP Films.

Segments – Packaging Films and Nonwoven Fabrics

Stock Details

Market Cap. (Cr.) 2190.85
Face Value 10.00
Equity (Cr.) 43.79
52 Wk. high/low 525.10/150.0
BSE Code   500227
NSE Code JINDALPOLY
Book Value (Rs) 509.68
Industry Packaging
P/E 3.43

 

Share Holding Pattern %

Promoter

74.55
FIIs  5.21
Institutions 0.03
Non Promoter Corp. 1.51
Public & Others

Government

18.70

0.00

Total 100.00

Price-Chart

Key Highlights:

  • The company  is  the  largest  player  in  India’s  bi-axially-oriented  polyethylene  terephthalate  (BOPET)  and BOPP markets, with capacities of 177,500 TPA and 251,000 TPA, respectively. It also has a strong position in  the high-value-added metallised films market, with   consolidated capacity of  71,000 TPA,   and in  coated  products  with  capacity  of  19,678    The company is adding on domestic BOPP capacity to 3,03,500 TPA.

  • In view of expected future growth to meet the requirement of nonwovens fabrics, the Company decided to increase the production capacity from 35000 TPA to 59000 TPA. Demand of nonwoven fabrics is growing in hygiene and Medical. End products of hygiene segment primarily consist of diapers, sanitary napkins, adult incontinence and end products of medical segment consist of masks, gowns and coverall used in PPE Kits and hospitals.

  • Operating Profit Margin of the company increased to 20.52% in FY20 from 14.43% in F19. The margin is expected to moderate because of inherent cyclicality in demand and newer capacities being added in the industry.

  • The packaging industry has experienced rapid growth globally as a result of greater innovation and customer preferences for global brands. Packaging sales in the emerging markets are expected to continue to show strong momentum as both increased consumption and demand for consumer goods drives the need for more sophisticated packaging.

  • Consolidated net revenue of Jindal Poly Film in Q2FY21 stood at Rs1091 cr, which increased by 29% YoY from Rs844 Cr. in Q2FY20. The company has reported EPS of Rs.56.26 for the period ended September 30, 2020 as compared to Rs.29.78 for the period ended June 30, 2020. Share of domestic revenue in total revenue rose to 81% in FY20 from 73% in FY19.

Product Range:

Packaging Films –

BOPP and BOPET Films – are extensively used for food packaging such as biscuit packaging to ensure good appeal, product protection and extended shelf life. Common examples of flexible packaging are various single or multilayer packaging structures like pouches and bags.

PET Film – Jindal Polyfilms offers speciality PET films like high barrier metalised films (as an Aluminium foil replacement), twist film, high matte and high friction (COF) film. These products provide best in class performance in an extensive range of packaging, confectionary, industrial lamination and PET food applications.

Metallized Film is used for high barrier Flexible, packaging, metallic yarn, sequins for textiles, decoratives, etc. Metallized BOPP films are used for flexible packaging, gift wraps and decoaratives.

Coated Films

JPFL has installed 3 coating lines. The lines are especially developed for manufacturing of entire range of specialty coated films like PVDC, Acrylic, ,Silicon, AlOx, Ink receptive, Digital Printable & DG coated Films & Coated High COF Matte PET & Lidding Films

Thermal Lamination Film- Having the World’s largest stand-alone manufacturing unit of BOPP & PET films, Jindal Poly Films Ltd have integrated forwarded with the installation of Extrusion Coating Line capable of both BOPP & PET based Thermal Lamination Films.

Medical X-Ray Films

Fujifilm Super RX is a blue sensitive universal Medical X-ray film with a wide tonal range for all types of applications.

Nonwoven Fabrics –

Demand of nonwoven fabrics is growing in hygiene and Medical. End products of hygiene segment primarily consist of diapers, sanitary napkins, adult incontinence and end products of medical segment consist of masks, gowns and coverall used in PPE Kits and hospitals.

OPPORTUNITIES AND THREATS

Opportunities

  1. Thin BOPET films constitute nearly three fourth of the worlds consumption and the company manufacturers both thick and thin BOPETs.

  2. High demand for thin BOPET films and comparably good profit margin.

  3. Penetration of flexible packaging in the developing economies in Asia is still low and huge opportunities exist for growth with the increase in organized retail and small serve packs

Threats

  1. Given the volatile trend in crude oil and demand for polymers for competing applications the pressure on input costs can fluctuate

  2. Latest and modern machinery with most competent technical backup does not ensure success against fierce competitions

  3. Capacity increase in many part of Asia and India, without corresponding increase in demand.

Industry Outlook

  • While most of the major industries faced this challenging environment, packaging industry continued to play a crucial role in adding value to various manufacturing sectors by delivering preservation of quality and enhanced shelf life of various products which is crucial for F&B and pharmaceutical industry. Indian packaging market which was valued at USD 50.5 billion in 2019 is expected to reach USD 204.81 billion by 2025, registering a CAGR of 26.7% from 2020 to 2025.

  • Under the influence of COVID-19 pandemic, the packaging industry continued to remain on its toes to meet all time high demand for packed food, medicine and other essential goods. The global packaging industry will very soon witness a major shift towards smart and intelligent packaging – packaging that can sense changes in its external environment and transmit the signals informing about the change.

  • In recent years, India has seen sustainable packaging growth due to the increase of packaged food consumption and awareness, and demand for quality products. Consumer awareness surrounding packaged food, specifically packaged food deliveries, has heightened. The boom in e-commerce and organized retail is expected to enhance the growth of plastic packaging and per capita consumption in the near future.

  • The rapid growth of the market is primarily driven by the pharmaceuticals and foods and beverages industries. Huge investments in the food processing, personal care, and pharmaceuticals end-user industries are creating scope for expansion of the packaging market.

 FINANCIAL PERFORMANCE:

Particulars ( in Rs. Cr.) 202009 202006 201909 YoY (%) QoQ (%) FY20 FY19 YoY

( % )

Revenue from Operations 1091.23 771.25 844.52 29% 41% 3546 3726 -5%
Other Income 31.01 21.19 14.88 108% 46% 73.56 68.5 7%
Total Income 1122.24 792.44 859.4 31% 42% 3620 3795 -5%
Expenditure
Raw Material Consumed 575.41 375.34 576.6 0% 53% 2255 2623 -14%
Raw Material as % of Sales 53% 49% 68% -23% 8% 64% 70% -10%
Stock Adjustment 1.52 32.81 -19 108% -95% -52.51 -64.85 -19%
Purchase of Fin. Goods 0.01 0 1.29 -99% 1.38 9.58 -86%
Employee Expenses 27 24.93 25.69 5% 8% 100.6 92.7 9%
Other Expenses 149.23 123.71 135.35 10% 21% 575 1226 -53%
Total Expenditure 753.17 556.79 719.93 5% 35% 2879 3887 -26%
PBIDT 369.07 235.65 139.47 165% 57% 740.8 -91.85 907%
Interest 19.75 25.16 10.73 84% -22% 95.22 45.04 111%
PBDT 349.32 210.49 128.74 171% 66% 645.6 -136.9 572%
Depreciation 36.51 34.52 29.9 22% 6% 118.4 103.9 14%
PBT 312.81 175.97 98.84 216% 78% 527.2 -240.8 319%
Tax 63.53 47.22 7.2 782% 35% 129.1 86.3 50%
Deferred Tax 2.92 -1.64 -69.68 104% 278% -90.49 81.54 -211%
Profit After Tax 246.36 130.39 161.32 53% 89% 488.6  -408.7 220%
EPS 56.26 29.78 36.84 53% 89% 111.6 -93.33 220%
PBIDTM (%) 33.82 30.55 16.51 1731 327 20.89 -2.46
PATM (%) 22.58 16.91 19.1 348 567 13.78 -10.97

Financial Highlights

  • Jindal Poly Film Reported strong numbers in Q2FY21 with revenue up 29% YoY.

  • Profit before tax rose to 2x led by lower raw material cost

  • The flexible packaging gross revenue was Rs 3,213.47Crore (2019-20) as against Rs. 3,361.95 Crore (2018-19)

  • The Nonwoven Fabrics gross revenue was Rs. 303.31 Crore (2019-20) as against Rs. 264.00 crore

  • (2019-20)

  • The EBITDA has increased by over 40% to Rs 648 crore, with the margin at 18.3%, in fiscal 2020 as compared with the previous fiscal.

  • In case of Packaging segment no single customer has contributed 10% or more to their respective segment’s revenue for both 2019-20 and 2018-19.

  • In case of Nonwoven Fabrics Segment, three (previous year four) customers individually account for more than 10% each of the revenue aggregating Rs. 23,761 Lakhs (previous year Rs. 15,598 Lakhs) .
  • The Profit before exceptional item and Tax was Rs. 552 Crore as against Rs.386 Crore. The Company is taking various measures to retain and increase its market share and also improve margins.

Key Ratios 202003 201903 201803 201703 201603
Debt-Equity Ratio 0.62 0.45 0.63 0.87 0.96
Current Ratio 0.94 0.81 0.95 1.05 1.07
Interest Coverage Ratio 9.53 8.21 3.46 4.47 7.02
PBIDTM (%) 20.02 14.25 10.36 10.7 13.19
PATM (%) 13.83 -6.24 2.34 3.69 6.09
ROCE (%) 16.15 11.22 9.99 10.87 17.97
RONW (%) 23.77 -9.55 6.29 11.76 22.84
Payout (%) 0.9 -1.07 5.93 1.63 0.92

Source: Capitaline Corporate Database, EWAL Research

Cash flow Statement

Particulars 202003 201903 201803 201703 201603
Cash and Cash Equivalents at Beginning of the year 21.93 32.3 74.89 92.22 97.02
Net Cash from Operating Activities 368.81 499.3  1 739.31 503.26 619.31
Net Cash Used in Investing Activities -416.82 -547.55 -1349.09 -457.17 -645.83
Net Cash Used in Financing Activities 277.14 37.87 701.7 -63.43 21.72
Net Inc/(Dec) in Cash and Cash Equivalent 229.14 -10.38 91.92 -17.34 -4.8
Cash and Cash Equivalents at End of the year 251.06 21.93 166.8 74.88 92.22

Source: Capitaline Corporate Database, EWAL Research

Balance Sheet

Particulars 202003 201903 201803
SOURCES  OF  FUNDS :
Share Capital 43.79 43.79 43.79
Reserves Total 1810.51 2213.22 2433.18
Total Shareholders Funds 1854.3 2257.01 2476.97
Secured Loans 1248.18 974.06 798.83
Unsecured Loans 179.02 138.41 237.27
Total Debt 1427.2 1112.47 1036.1
Other Liabilities 368.55 275.12 196.12
Total Liabilities 3650.05 3644.6 3709.19
APPLICATION OF FUNDS :
Gross Block 2821.82 2404.43 2052.24
Less: Accumulated Depreciation 459.51 344.58 266.05
Net Block 2362.31 2059.85 1786.19
Capital Work in Progress 181.61 31.45 14.85
Investments 439.56 1389.62 1541.94
Current Assets, Loans & Advances
Inventories 589.93 493.7 428.58
Sundry Debtors 126.62 144.66 151.01
Cash and Bank 275.44 59.96 88.5
Loans and Advances 386.31 338.28 393.53
Total Current Assets 1378.3 1036.6 1061.61
Less : Current Liabilities and Provisions
Current Liabilities 529.52 470.88 346.48
Provisions 0.1 0.02 0.03
Total Current Liabilities 529.61 470.9 346.51
Net Current Assets 848.69 565.69 715.1
Deferred Tax Assets 69.26 66.28 113.93
Deferred Tax Liability 273.13 531.3 497.41
Net Deferred Tax -203.87 -465.02 -383.48
Other Assets 21.73 63 34.58
Total Assets 3650.03 3644.59 3709.18

Source: Capitaline Corporate Database, EWAL Research

Outlook:

The Company has established itself as a significant player in the BOPP, BOPET, CPP and other products. The products of the Company are well known in the market place for their good and consistent quality. Considering its successful approach towards research and development so as to innovate customer’s centric products, strong marketing network and logistics strength, the outlook remains positive. Under the   influence of COVID-19 pandemic, the   packaging industry continued to remain on   its  toes    to  meet    all time high demand for packed food, medicine and other essential goods. On performance front we expect company to report EPS of Rs.170 for FY21E, at CMP of Rs.472 PE works out to be 2.77x. Hence, investors can buy the stock at CMP of Rs.472 for target price of Rs.650. Time frame should be 9-12months.

DISCLOSURE IN PURSUANCE OF SECTION 19 OF SEBI (RA) REGULATION 2014

Elite Wealth Advisors Limited does/does not do business with companies covered in its research reports. Investors should be aware that the Elite Wealth Advisors Limited may/may not have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as read more


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