 "Plastic drums; Image courtesy: Time Technoplast")
Shares of plastic products maker Nilkamal extended gains to hit a record high of Rs 1,459, up 6% on the BSE, after reported nearly four-fold jump in net profit for the second quarter ended September 2015 (Q2).
Since November 2, 2015 the stock zoomed nearly 50% from Rs 979 as compared to 6% fall in the S&P BSE Sensex.
The company had reported a strong 276% year on year (YoY) growth in net profit at Rs 25.74 crore for Q2FY16, due to lower raw material cost. It had profit of Rs 6.84 crore in the same quarter year ago.
EBITDA (earnings before interest, tax, depreciation and amortization) margin expanded 436 basis points from 6.87% to 11.23%.
The company posted profit of Rs 51.05 crore for the first half of current financial year 2015-16 (FY16). It had profit of Rs 42.46 crore in the entire previous fiscal FY15.
Umesh Patel, analyst at IDBI Capital recommended ‘’Buy’ rating on the stock with a target price of Rs 1,595.
“We expect consolidated earnings to grow at 46% compound annual growth rate (CAGR) on account of significant debt repayment in FY15; better working capital management; margin expansion; and strong turnaround in retail division both at operating and net profit level by FY17,” the analyst said in a report dated December 29, 2015.
Furthermore, a low capex during FY16-18E (3 years average capex of Rs 68 crore v/s operating cash flow Rs 132 crore) and better operating leverage would lead to a substantial improvement in free cash flow (FCF) generation, added report.
At 11:14 a.m. the stock was up 5.5% at Rs 1,448 as compared to 0.25% rise in the S&P BSE Sensex. A combined 405,456 shares changed hands on the counter on the NSE and BSE.
Since November 2, 2015 the stock zoomed nearly 50% from Rs 979 as compared to 6% fall in the S&P BSE Sensex.
The company had reported a strong 276% year on year (YoY) growth in net profit at Rs 25.74 crore for Q2FY16, due to lower raw material cost. It had profit of Rs 6.84 crore in the same quarter year ago.
EBITDA (earnings before interest, tax, depreciation and amortization) margin expanded 436 basis points from 6.87% to 11.23%.
The company posted profit of Rs 51.05 crore for the first half of current financial year 2015-16 (FY16). It had profit of Rs 42.46 crore in the entire previous fiscal FY15.
Umesh Patel, analyst at IDBI Capital recommended ‘’Buy’ rating on the stock with a target price of Rs 1,595.
“We expect consolidated earnings to grow at 46% compound annual growth rate (CAGR) on account of significant debt repayment in FY15; better working capital management; margin expansion; and strong turnaround in retail division both at operating and net profit level by FY17,” the analyst said in a report dated December 29, 2015.
Furthermore, a low capex during FY16-18E (3 years average capex of Rs 68 crore v/s operating cash flow Rs 132 crore) and better operating leverage would lead to a substantial improvement in free cash flow (FCF) generation, added report.
At 11:14 a.m. the stock was up 5.5% at Rs 1,448 as compared to 0.25% rise in the S&P BSE Sensex. A combined 405,456 shares changed hands on the counter on the NSE and BSE.
