Recommendation from Glass & Glass Products Sector
This section gives a recommendation of a stock having a stock price below Rs 150 with sound fundamentals and expected to give handsome returns over a one-year time horizon.
HALDYN GLASS LIMITED (HGL): BREAKING THE GLASS CEILING
HERE IS WHY
✓Growth triggered by consumer trends
✓Expansion of footprint into various sectors
✓Strong financial performance in FY23
The Indian government’s efforts to achieve a plasticfree India, including a ban on single-use plastic, are driving demand for glass packaging. Glass offers advantages like chemical inertness, non-porosity, longer shelf life, and preservation of quality and taste. Increased public awareness about the ecological and environmental impact of plastic usage has led to a growing preference for glass as a sustainable alternative. In such a scenario, the packaging sector in India is expected to experience a CAGR of 26.7 per cent from 2022 to 2027, driven by increased internet penetration, rising income levels, changing lifestyles, population growth as well as the emergence of the middle class, organised retail expansion, exports and the developing e-commerce sector.
Taking all this into account, our lowprice scrip for this issue is Haldyn Glass Ltd. (HGL), formerly known as Haldyn Glass Gujarat, which was promoted by Haldyn Corporation, previously known as Haldyn Glass. The company is engaged in the business of manufacturing exclusive quality glass containers and bottles for the food and beverages, cosmetics and spirit industries. HGL, a renowned glass manufacturer, has established strong relationships with clients in various sectors like liquor manufacturing, food and non-alcoholic beverages and pharmaceuticals. The company has earned trust and loyalty, resulting in repeat orders and becoming a preferred vendor for glass containers.
HGL has expanded its footprint in FMCG and perfumery segments, offering higher margins. Its domestic clients include United Spirits, Amul, Sarabhai Zydus, Bajaj Corp Ltd., Hamdard, Vadilal Industries Ltd., Parle Agro, Tops and ADF Foods Ltd. In Q1FY24, the revenue of the company stood at ₹72.92 crore, which is 4.55 per cent lower on a YoY basis, while it declined by 1.21 per cent on a QoQ basis. The company’s PBIDT excluding other income stood at ₹11.32 crore, which increased by 67.80 per cent YoY, while on a QoQ basis it increased by 94.27 per cent. The company also maintained a PBIDTM per cent excluding other income of 17.87 per cent.
The profit after tax (PAT) witnessed a substantial growth of 59.95 per cent on a YoY basis which stood at ₹6.92 crore. In summary, the company demonstrated strong YoY profit growth. In the fiscal year 2023, Haldyn Glass witnessed a significant increase in total income, which surged by 50.21 per cent to reach ₹319.60 crore compared to ₹212.76 crore in FY22. The net income also experienced robust growth, rising by 127.75 per cent to ₹26.92 crore compared to ₹11.82 crore in FY22.
The shares of the company are currently trading at a TTM PE of 19.2 times, which looks attractive if we compare it with the industry PE of 32.8 times. The price-to-book value of the company is 3.18 times with the industry price-tobook value being 4.90 times. The company is well-positioned to benefit from the increasing focus on reducing plastic packaging and the shift towards sustainable alternatives. The expansion into the FMCG and perfumery segments, along with established relationships with renowned clients, offers growth opportunities and potential for higher margins. In conclusion, Haldyn Glass’ strong financial performance, favourable industry trends, expanding clientele base and strategic initiatives position the company for growth. Keeping all these factors in mind, we recommend BUY.
