Financial Weekly

SMART 9th February 2020 to 15 th

February 2020 13
INVESTMENT

SMART
BUY OF THE WEEK
Dark Horse

Reliance Chemo.
(503162) (70) (Face Value Rs.10)
Particulars 9 Month Ended
Reliance Chemotex Industries Ltd. was established
9MFY20 9MFY19 % Var.
in 1977. The company manufactures Synthetic, Sales 230.51 242.18 -5
Blended Yarn. The Company currently operates PAT 7.78 1.61 383
53,280 spindles and a high temperature / high pres- EPS 10.32 2.14 382
sure fibre-dyeing plant. The company has been export- Month of Latest High Feb. 2018
ing yarn since 1987 and has a loyal customer base High price 137
around the world. Its competitive advantage lies in its CMP 70
versatile product range and commitment to quality. The Discount from high 49%

company manufactures 100% Polyester, 100% Viscose, 100% Acrylic, 100% Bamboo Viscose as
well as Polyester / Viscose, Polyester/ Acrylic, Polyester/ Viscose / Acrylic blended yarns which
are used for knitting, weaving, upholstery, carpet, medical and other industrial end-uses.
It has an equity base of just Rs.7.54crore that is supported by reserves of around Rs.86.40crore.
The promoters hold 72.65% while the investing public holds 27.35% stake in the company. RCIL's
share book value works out to Rs.116.49. Its P/BV ratio stands at just 0.6x.
Company has posted robust numbers for Q3FY20. It PAT grew 302% to Rs.2.45crore as against
Rs.0.61crore on sales of Rs.73.41crore fetching an EPS of Rs.3.25. During 9MFY20, its PAT
zoomed 383% to Rs.7.78crore as against Rs.1.61crore on sales of Rs.230.51crore fetching an
EPS of Rs.10.32. It has recorded 90% higher profit against FY19 in just first nine months of FY20.
Currently, the stock trades at a P/E of 5.2x. It has paid 15% dividend for FY19.
Its recent high rate was Rs.137 which was formed in January 2018. Stock almost corrected 49%
from recent high.
Investors can accumulate this stock with a stop loss of Rs.60. It may give very good returns in
medium to long term.

Cont...
Financial Weekly

SMART 9th February 2020 to 15 th

February 2020 14
INVESTMENT

Pudumjee Paper
(539785 & NSE) (16) (Face Value Re.1)
Particulars Qtr. Ended Pudumjee Pulp & Paper Mills Ltd. (PPPM) estab-
Q3FY20 Q3FY19 % Var. lished in the year 1964, started with the manufacture of
Sales 153.21 140.46 9 high quality papers to meet customers critical and de-
PBT 15.11 6.97 117 manding requirement in packaging of food and oily prod-
PAT 9.91 4.91 102 ucts. Pudumjee Paper Products Limited was incorpo-
EPS 1.04 0.52 100 rated on 14th January, 2015 as a public limited com-
pany under the provisions of the Companies Act, 2013.
Month of Latest High May 2018
Pursuant to the Scheme of Arrangement and Recon-
High price 34.7
struction (Demerger) between Pudumjee Pulp & Paper
CMP 16 Mills Limited (PPPM), Pudumjee Industries Limited (PIL),
Discount from high 54% Pudumjee Hygiene Products Limited (PHPL), Pudumjee
Paper Products Limited (PPPL) and their respective Shareholders and Creditors, the paper manu-
facturing businesses of PPPM, PIL and Hygiene products business of PHPL have been trans-
ferred to Pudumjee Paper Products Limited with effect from 1st April, 2014 vide order of Hon'ble
Bombay High Court. The Company's manufacturing capacity of 60,000 MT per annum comprises
of 2 state of the art fourdrinier specialty paper machines supplied from VoithSulzer Germany which
is updated from time to time with current capacity of 38000 MT per annum and 2 Yankee Machines
with combined capacity of 22,000 MT per annum for production of crepe tissue products, M.G.
Papers and other specialty products. PPPL's distribution network has a presence Pan-India and
an effective reach in Europe, South-East Asia, U.A.E, and Iran amongst others.
It has an equity base of just Rs.9.50crore that is supported by reserves of around Rs.260.46crore.
It has a book value of Rs.27.18 & stock is trading around 0.6 P/BV. The promoters hold 67.11%
while the investing public holds 32.89% stake in the company.
Company has posted robust numbers for Q3FY20. It PAT grew 102% to Rs.9.91crore as against
Rs.4.91crore on higher sales of Rs.153.21crore fetching an EPS of Rs.1.04. During 9MFY20, its
PAT zoomed 50.67% to Rs.23.31crore as against Rs.15.47crore on higher sales of Rs.471.21crore
fetching an EPS of Rs.2.46. It has recorded 39% higher profit against FY19 in just first nine months
of FY20.
Currently, the stock trades at a P/E of 6.4x. It has paid 15% dividend for FY19.
Its recent high rate was Rs.34.7 which was formed on 7th May 2018. Stock almost corrected
54% from recent high.
During the nine months period ended 31st December, 2019, the Company produced 53276 MT
of paper, 11% increase over 47822 MT produced during the same period in the previous year.
While the Turnover for the nine month period increased by about 8% to Rs.47121 lacs (Rs.43787
lacs), EBIDTA for the period increased by 39% to Rs.4804 lacs (Rs.3466 lacs) due to improved
operating efficiency and lower cost. The company is working to replace single use plastic in vari-
ous applications including food & hygiene products packaging. The company is developing value
added papers in collaboration with reputed companies in the field of food, hygiene and medical
packaging. The Company has successfully completed erection of equipment for downstream value
added products which is expected to supplement efforts of the Company for improving performance
as well as strengthening business segment of Flexible Packaging papers.
Investors can accumulate this stock with a stop loss of Rs.13. It may give very good returns in
medium to long term.