Emmbi Polyarns Limited (EPL) BSE Id: 533161 NSE Code: EMMBI

CMP (BSE): Rs. 17.10

CMP (NSE): Rs. 17.05

Industry: Packaging

Emmbi Polyarns Limited (EPL) is a newly listed company that is engaged in the manufacture and sale of FIBC (jumbo bags) and wowen sacks and various woven polymer based products like container liners, protective irrigation system, canal liners , flexi tanks, car covers, etc. EPL is one of the well established brands in the field of woven polyethylene and polypropylene product manufacturing industry. Its manufacturing facility is located at Silvassa. In addition to FIBC EPL also manufacture various woven polypropylene products including small bags, box woven bags, roofing underlayment fabric, courier bags, ground covers, silt fence and geotextiles.

Presently, EPL is involved in producing various types of packaging material for domestic as well as export markets. In domestic markets, EPL is one of the most active players for addressing the packaging needs of the FMCG products such as detergents, branded salt, branded wheat flour, etc. In recent years, EPL has acquired substatial share in the export market for the various packaging needs for products such as construction aggregates, chemicals, seeds, fertilizers, cements, foodgrains, etc. It even makes few value added products such as car/automobile covers, container liners, anti corrosive packaging, electrically conductive polymer based packaging, etc. Last year, EPL launched a new product called 'AquaSave', which was specially focused on the water conservation based product.

During this year, EPL successfully completed its IPO and raised an equity of Rs. 38.95 crore. The proceeds from the IPO will be used in its expansion program. Currently, EPL is under the expansion mode and will be enhancing its manufacturing capacity from the current level of 5000 MTA to around 18000 MTA, with theaddition of around 13000 MTA new capacity.

EPL has an equity base of Rs.16.49 crore. Its has a small debt equity ratio of 0.31 which keeps it well within the safety zone. It EPS has shown a growth of almost 25% from FY09 to FY10. At the CMP, EPL is quoting at a PE of 8.34 in an industry where the average PE is around 14.8. Its market cap is 28.2 crore whereas its sales for FY10 stood at 51.89 crore. Thus you are getting this stock at half the price of its sales and these sales are slated to grow almost more than 3 times post expansion. Its book value comes out to be Rs.27.10/share and at the CMP, EPL is available at a discount, with its P/BV at 0.63. This further adds on to make it a good buy.

EPL is present in both domestic as well as export markets owing to its distribution networks. Almost 40% of its sales come from the export markets and the rest 60% from the domestic markets. In addition to this, packaging industry is one industry that can be considered recession proof industry. Since EPL too belongs to this sector, I consider it as a safe bet and a good value buy.

Happy Value Investing.