Jindal Poly Films Ltd: Hugely Undervalued

1)EPS for 9mFY16 Rs 90 (before minority interest)

2)EPS for 9m FY16 Rs 70 (after minority interest)

3)FY16E Eps Rs 105 (after minority interest) and Rs 85 (after minority interest)

4) PE Ratio 4.65 only.

5) Leading producer of Polyester and BOPP Films for Flexible packaging industry

6)Largest producer in the WORLD of BOPP films

7) Apart from India, two plants in U.S.A and three in Europe

8) FY15 Sales Rs 7284 crores and PAT of Rs 172 crores (after One-time

provision of Rs 118 crores)

9) FY15 Eps (after one-off) Rs 43.22

10) Stock is trading at only  0.24xSales

FINANCIALS:

                          2014-15

                            Rs/Cr

Sales                    7284

Interest                     82

Depreciation            226

One-Off                   117

PBT                        233

PAT                        172

Equity                    42.05

EPS Rs                  43.22

For FY15, JPFL reported Eps of Rs 43.22 after one-off provision of Rs 117 crores. But for same, Eps would have been Rs 65+.  JPFL made huge provision of 226 crores for depreciation which means CASH PROFIT OF NEARLY Rs 400 crores.

CURRENT YEAR:

                                 2015-16E  9M/FY16

                                  Rs/Cr       Rs/Cr

Sales                          7000        5308

PAT                              442          377

Equity                           42.05      42.05

EPS Rs                        105           90

Eps(after minority Int)      85           70

JPFL IS CURRENTLY TRADING AT PE RATIO OF ONLY 3.76 and 4.65 (before minority interest and after minority interest respectively) DESPITE BEING LEADING PLAYER IN FLEXIBLE PACKAGING INDUSTRY.  These valuations are extremely low by any yardstick, particularly at a time when at Bse/Nse hundreds of companies (with much much smaller size/turnover) are trading at PE Ratio of 20-40.

FY16ECash profit 650 crores as against market cap of 1660 crores. Even if JPFL get very modest PE Ratio of

12, based upon estimated earnings for FY16, its stock price should be Rs1020 (if stock markets remain stable and do not tumble). 

A large sized company available at very attractive valuations where downside is low and UPSIDE SHOULD BE HUGE