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Matthew 7:7,8 Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you: For every one that asketh receiveth; and he that seeketh findeth; and to him that knocketh it shall be opened.

26 Oct 2015


Hi Friends,   Linc Pen and Plastics Limited is an India-based  manufacturer of writing instruments.  The Company provides writing instruments and allied products, which include pencils (wooden and disposable), sketch pens, geometry boxes and erasers.  The Company  manufactures pens across 30 models, which are marketing under its different Linc brands.  The Company’s products are available in around  50 countries.  The Company is spread across two manufacturing units and two assembly units in Kolkata.   The  Company’s two manufacturing units are located in Serakole (West Bengal) and Falta (West Bengal).  The Company has its presence across Africa, South East Asia, the Middle East and the Commonwealth of Independent States (CIS) countries.  The Company holds rights for marketing Mitsubishi’s Uniball brand in India.

The company would be able to increase its margins owing to easing raw material prices including  that of high density polyethylene, nylon etc. which are linked to crude prices.  Also, the company is now targeting higher margin segments like greater than Rs.10 pens which command higher margins compared to less than Rs.6 pens.  The share of the former segment in the sales mix has increased to 9% in FY 2015 from 7% in FY 2014.  The company is continuously generating better cash flows which has  resulted in debt reduction and improvement in ROE.  The company has been consistently repaying debt over the past four years, resulting in debt having come down from Rs.43 crore in FY 2012 to Rs.18 Cr in FY 2015.  The company will continue repaying  debt with strong  cash flows, which in turn will lead to reduction in interest cost.  The interest cost has reduced from Rs.3.8 crore in FY 2012 to Rs.1.5 crore in FY 2015.  A lower interest expense in turn will lead to higher profitability for the company.  Further the company’s ROE has improved from 3.6% in FY 2012 to 16.2% in FY 2015.  Increased focus on western & southern  regions coupled with recovery in export business to accelerate top-line growth.  LPPL to report a healthy recovery and post a top-line CAGR of 8% over FY 2015-17 E, on the  back of various triggers.  

These include  (a) the company’s increased focus on southern and western regions (which contributed by less than 25% to the total revenue in FY 2015) should contribute additionally to the overall top-line,  (b)  the company has a market share of 10% with a strong brand recall.  Further the company is spending significant amount on ad spend to boost sales growth,  (c) an expected recovery in exports.  The geographies where the company exported were affected due to political turmoil/socioeconomic crisis in FY 2015;  the crisis has now been resolved (d) the company’s strong distribution network coupled with continuous new product launches, should aid the top-line.  LPPL to report a top-line CAGR of 8% over FY 2015-17 E to Rs.371 Cr owing to strong domestic as well as export sales.  On the bottom-line  front, expect the company to report 17% CAGR over FY 2015-17E.  This would be on account of expansion in operating margin on the back of lower material prices and higher exports, which is a high margin business.  Further, the company has reduced its debt significantly, which will lead to cost saving for the company.  At the current market price Rs.162 LPPL trades at a PE of 11.6x its FY 2017 E EPS.

Financials:  Market cap  241.01,  Book Value  59.61,  Div. 25%,  F Value  Rs.10/-,  PE – 14,  Industry PE  30.45,    Capital  14.79 Cr,  Debt equity ratio  1.45,  Promoter holding  60.43.  Gross Sales for the period from 2011 – 2015 in Cr.   253.64,  275.05,  305.26,  314.10 and 318.30.  Net profit for the period from 2011 to 2015 in Cr.    8.4,  1.7,   5.41,   11.51,  and  14.32.

Good Luck.                                                           See You Later

.I  have started this site on 14.06.2015 and my first post was regarding Aurobindo Pharma.  I recommended this share for long term investment.  But  the current bear market , investors, please look the performance of this share till date.  On 14.06.2015 recommended price was 1180/-.  If an investor buy 100 shares, his cost is Rs. 1,18,600.  Subsequently the company declared bonus @ 1:1 and given to share holders.  Therefore 100 share  (1:1) doubled into 200.   After 135 days i.e . today the share price is Rs.846/-.  If the investor sells the share today he will get  Rs.1,69,200  (846x200).  Net Profit is Rs.50,600/-  (1,69,200 – 1,18,600).  Eighty percent (80%) shares recommended in this site  has shown good appreciation and full review of these shares will be published when 6 month’s completed.    I am trying my level best to post fundamentally strong shares after collecting so many news and details from media.  Your comments and recommendations are always welcomed .  I have already more than thousand followers.Pl. reply through email.

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