Piramal Glass an outperformer: SKP Securities

Piramal Glass (PGL) is a leading glass manufacturers supplying to the Cosmetics & Perfumery, Pharmaceutical and Food & Beverage industries. Company provides end-to-end solutions which include decoration,designing, in-house mould design & manufacturing and have third party ancillary units for accessories like caps, cartons and brushes. PGL has its manufacturing facilities in India, US and Sri Lanka with 11 furnaces having a combined capacity of 1140 TPD.

PGL Ltd recorded total income of Rs.333.94 cr in Q4FY11, registering a growth of 15% Y-o-Y basis led by better product mix. EBITDA margin improved by 634 basis points to 27.1% as compared to 20.7% in same period last year largely due to company shifting its gear towards high margin premium cosmetics and perfumery business. Net profit grew by whopping 186% to Rs. 32.71 crore after accounting for forex gain of Rs. 6.27 crore as compared to forex loss of Rs. 12.18 crore in Q4FY10. Currently PGL main focus is to shift from low end pharma segment to high margin driven premium segment which derives ROCE of approx 25- 30%. Total market size of premium segment is US$ 1632 million, mostly dominated by EU manufacturers and PGL is the only Asian player with 2% market share.  For Q4FY11, C&P segment grew by 25%. We expect C&P segment to grow at a CAGR of 26.6% over FY11-13E, leading to widening EBITDA margin, C&P segment is expected to contribute around 59% in company total revenue by FY13E .

PGL strategy of capacity expansion and elevated growth in C&P segment, we estimate revenue to grow at a CAGR of 15% over FY11-FY13E. At current market price of Rs 130, PGL is trading at P/E of 9.2x and 6.1x for FY 12E and FY13E respectively. We have revised our FY12E and FY13E EPS to Rs. 14.1 and Rs. 21.3 respectively and arrived at a target price of Rs 181 (39 % upside) in 15 months, implying a PE of 8.5 x to EPS of FY13E,?says SKP Securities research report.