Prima Plastics posts robust results for Q4 and FY16

Prima Plastics, a moulded plastic furniture player, has reported 136 per cent jump in standalone net profit at Rs 4.05 crore for the quarter ended March 31, 2016 as against Rs 1.72 crore in the corresponding quarter of the previous year.

The company’s standalone revenue has grown by 7.03 per cent at Rs 27.41 crore in Q4FY16. Its standalone operating profit (EBITDA) has grown by 28 per cent at Rs 3.45 crore along with operating profit margin expanding by 207 bps for the current quarter, i.e. at 12.60 per cent. During the current quarter other income has shot-up due to the company receiving a dividend of Rs 2.47 crore from its Cameroon JV. Depreciation sharply increased to Rs 1.08 crore in Q4FY16 as against Rs 0.26 in Q4FY15 due to the provision of higher depreciation for one time as per the press release.    

For the entire period of FY16, it has reported standalone net profit growth of 180 per cent at Rs 9.63 crore, while its revenue has grown by 8.94 per cent at Rs 94.03 crore. Its standalone operating profit (EBITDA) has grown by 136 per cent at Rs 10.25 crore along with operating profit margin expanding by 587 bps for the current year at 10.90 per cent. Operating margin has sharply shot-up due to the company shutting down its loss making Aluminium Composite Panel (ACP) business in the previous year.

On consolidated basis including Cameroon JV Operation, it has reported growth of 83.4 per cent at Rs 12.3 crore in FY16, while its revenue has grown by 9.32 per cent at Rs 129.2 crore. Its consolidated operating profit (EBITDA) has grown by 43.78 per cent at Rs 19.84 crore along with operating profit margin expanding by 368 bps for the current year at 15.36 per cent.

Due to robust performance in the current year, the company’s return ratio has been improved i.e. ROE has expanded by 689 bps to 18.92 per cent in FY16 as against 12.03 per cent in FY15 on a consolidated basis.

The company will now see better days ahead, due to (1) Shut down of its loss making Aluminium Composite Panel (ACP) business (2) Capacity expansion in India and Cameroon JV (3) starting a new venture in Latin America, which is expected to commence in second half of FY17 (4) Acceleration in earnings and lastly (5) Improvement in margin profile and return ratios.

In last one year stock price has jumped by more than two and half times; still it is trading at 13.8x its FY16 earnings of Rs 11.16 per share which is trading at much reasonable valuation compared to its peers. Currently stock price has increased by Rs 3.05 or 2 per cent at Rs 155.95 per share.