Cmp-185Rs
Poddar Pigments is 100% debt free , ISO 9002 Certificate 29 years old company engaged in a manufacturer of Color & Additive Master batches for dope dyeing of man-made fibers, various plastic applications.
Founded in 1991 Poddar Pigments, is the first company in India to manufacture fibre-grade masterbatches for spin-colouration of filament yarns/fibres of polypropylene, polyester and nylon. The company also produces a wide range of additive masterbatches which will cater to the blown-film, raffia, engineering plastic and other general-purpose plastic industries. The company has installed a modern laboratory and analytical facilities at the plant for testing and quality control of raw materials, intermediate products and finished goods. The company has a pilot masterbatch plant, to develop and produce new shades and products with different polymers and additives. It has also installed pilot plants for multi-filament yarn spinning, injection moulding, and blow moulding equipment to test and pre-determine the quality of the products. Other than additive masterbatches, it also produces LDPE-based masterbatches. The main customer of the company is Rajasthan Petro Synthetics.
The company has developed Polyester Masterbatches in its Laboratory.
Poddar Pigments is a Pioneer in India for fiber-grade Masterbatches. The company is a pioneer in the manufacture of masterbatches for the synthetic fiber industry, based on Polyesters, Nylons and Polypropylenes, for specialty and general purpose applications such as automotives, carpets, home-furnishings, apparels, non- woven fabrics, technical fibers, etc.
Products-:
Versatile polymers inspire innovations that help make life better, healthier and safer every day for millions of people. Polymers enable the manufacture of ultra-light, high strength car bodies. Polymers in carpets, blankets and pillows keep us comfortable in our homes. Strong, lightweight and mouldable plastics are used in thousands of products that add comfort, convenience, and safety to our everyday lives.
The power of polymers lies in the versatility of their composition, which can be tweaked to adapt them perfectly to the intended application. Beyond the broad selection of available polymer types, the real power of polymers comes from the special characteristics that masterbatches add to their applications. With the benefit of highly customisable formulas, additives and colorant masterbatches can help to adjust a polymer properties to specifically suit a user’s needs, whether functional or aesthetic.
Plastics and textiles find their place in countless facets of the modern life. From health and well being, nutrition, shelter and transportation to safety and security, communication, leisure activities, etc., they are present everywhere. In short, the versatility and adaptability of these materials make them an indispensible part of an increasingly complex world. Hence, it is rational to expect the demand for these products to only increase in the future, as they are amongst the largest manufacturing industries in the world.
Poddar Pigments manufactures color and additive Masterbatches for the dope dyeing of man-made fibers (MMF), various plastic applications and engineering plastics and compounds. These are essential products required for textile and plastic products.
The company also produces a whole host of smart products, which impart various forms of functionality to the end products, be it textiles or plastics. This is a promising product segment for the future.
Future Outlook-:
While the global per capita consumption of man-made fiber is around 12 kg per annum, it is merely 3.5 kg in India, hence providing significant scope for the increase in domestic consumption. It is expected that the Indian textile industry will reach US$315 Billion by 2025 i.e. @ 14% CAGR, ( up from US$ 68 Billion in 2013) and exports will reach US$ 185 Billion by 2025 i.e. @14% CAGR, ( up from US$ 40 Billion in 2013)
The consumption of polyester fibers is gaining momentum due to factors such as the fluctuation in cotton prices, increased presence & sourcing by global brands where polyester fiber dominates, growth of women’s wear segment, growth of value retail etc. Also Due to increased domestic consumption, India is also fast emerging as one of the focus destinations for plastics and downstream players worldwide. There is tremendous potential for growth of the sector, catalyzed by drivers such as a growing middle-class, higher disposable income and urbanization. Improved standards of living have led to an increase in consumption of a wide range of consumer goods from packaged food to automobiles. Investments in infrastructure and agriculture have also fueled the demand for plastics and related products in India. Hence, it is rational to expect the demand for plastic products to further increase in the future.
Polymer consumption in India is poised to grow multifold, with the help of new developments in packaging applications, infrastructure growth, modernization of agricultural sector, improved healthcare facilities, improved lifestyles and disposable incomes, automobiles demand and rural penetration. The key growth drivers for this sector are food and processed food items, FMCG and cosmetics.
Government Initiatives/Role-:
The Government of India is playing its part in encouraging investments into the petrochemical sector, with a view to double the per capita consumption of Polymers to 20 kg a person by 2022. Currently, the average per capita consumption of polymers in India is 10 kg., a small number when compared to world average of 32 kg. Further, although India’s population is comparable to China, its polymer demand at only one-fifth that of China. This hints at a strong growth potential for the Indian plastics industry.
As the Indian plastics and man-made fibire industry grows, the consumption of masterbatches, which is linked to the consumption of polymers and synthetic dope dyed fibers, is also expected to grow at the same rate. The scope for innovative products in plastics and textile segments is also large, which will further contribute to the growth of the masterbatch industry in years to come.
Management View-:
The management is certain that the market for master batches is poised for significant growth in the next few years. Hence, in order to serve this growing market, the company has planned for an expansion with a new site, which will add an enhanced capacity of approx. 20-25% to its capabilities. Thus the management is very optimistic that the masterbatch market in India is likely to grow at a CAGR of over 11% until 2025 from now, on account of strong growth in plastics and textile segments.
Exports outlook is also encouraging. Poddar Pigments has also made in-roads into some of the world’s largest masterbatch markets. The growth from export sales is expected to be around 10% per annum for the next few years.
Due to rising costs, reduced government support and stiffer pollution control norms, China, a key player in global markets, has reduced its presence. This has paved way for Indian players to increase their global share.
Capacity Expansion-:
Company has increased Capacity by 20-25% to meet the growing demand
Financials-:
Quaterly
In June 2019 quarter net sales grew 12%
Yearly
Company has stable operating profit margins in the range of 6-8% consistently.
In FY 2019, net sales rose 7%, OPM fell to 6.4% which led to OP fall to 6% leading to 13% fall in PAT fell 13%.
However the company is back on growth track from fourth quarter of FY19, and the growth has been further strengthened in June 2019 quarter. This is in spite of the fact that March 2019 and June 2019 quarter suffered from economic slowdown and sluggish demand.
Key Takeaways-:
- Company is 100% debt free.
- Company has cash Balance of about Rs 11 crore .
- Company has reserves of Rs 208 crore.
- Company has investments worth Rs 90 crore (approx)
- Thus total book value for the company comes at 100 Rs (approx) just considering the investments and the cash balance.
- Compounded Sales growth as well as compounded profit growth has remained subdued over the 3 and 5 year period.
- Previously company had solid ROCE of about 25% which currently has decreased to 15% sliding further to 11% . However given good growth prospects as well as considerable investments and cash balance company can scale easily to higher levels.
- Company is available at very cheap valuations of jus 10PE.
- Original Book value (Full Book value) for the company comes at 197 Rs. Given the current market price of the stock, it is available at less then its book value.
