SP Tulsian of sptulsian.com reviewed two recent IPOs- Flexituff and PG Electroplast . He also gave reading and outlook for these stocks.....
SP Tulsian of sptulsian.com reviewed two recent IPOs- Flexituff and PG Electroplast . He also gave reading and outlook for these stocks.
Below is the the edited transcript of Tulsian's interview with CNBC-TV18. Also watch the accompanying video.
Q: What do you make of Flexituff – good, bad, ugly would you subscribe?
A; I would say it is that bad and ugly and I won’t subscribe. We have heard the management talking about the financial performance of the company. Any industry will go for expansion when they are making very good profits. Either they have the capacity constrain or they have the new products likely to get introduced in the product profile.
For FY10 they had a PAT margin of less than 2%. I can understand the increase in the top-line of the company may be because of their new Kashipur plant going on stream. The moment this company approached the capital market their PAT margin improved to from less than 2% to 5% plus. This is just a way to decorate your financials and then present it.
The tax benefit enjoyed by the company has been huge and will come to an end by FY14. Still the company has this kind of profitability and margins that may be the reason why Clearwater Capital have opted to exit 50% at this stage.
There are many companies operating in pipe and flexible packaging space but the profitability of this company when compared to others is not exciting at all. For FY11 an EPS of Rs 20 on old equity, PE multiple of 7.5 to 8 cannot gel well and I don't think prices can sustain even if it is discovered at a lower end.
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Below is the the edited transcript of Tulsian's interview with CNBC-TV18. Also watch the accompanying video.
Q: What do you make of Flexituff – good, bad, ugly would you subscribe?
A; I would say it is that bad and ugly and I won’t subscribe. We have heard the management talking about the financial performance of the company. Any industry will go for expansion when they are making very good profits. Either they have the capacity constrain or they have the new products likely to get introduced in the product profile.
For FY10 they had a PAT margin of less than 2%. I can understand the increase in the top-line of the company may be because of their new Kashipur plant going on stream. The moment this company approached the capital market their PAT margin improved to from less than 2% to 5% plus. This is just a way to decorate your financials and then present it.
The tax benefit enjoyed by the company has been huge and will come to an end by FY14. Still the company has this kind of profitability and margins that may be the reason why Clearwater Capital have opted to exit 50% at this stage.
There are many companies operating in pipe and flexible packaging space but the profitability of this company when compared to others is not exciting at all. For FY11 an EPS of Rs 20 on old equity, PE multiple of 7.5 to 8 cannot gel well and I don't think prices can sustain even if it is discovered at a lower end.
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