Picture perfect but plastic

Rajesh Naidu
Posted: Sunday, Feb 03, 2008 at 2343 hrs IST
Updated: Sunday, Feb 03, 2008 at 0001 hrs IST

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: in this, availability of raw materials will not be a hassle considering its tie-up with the major players in the petrochemical industry at a competitive price.

However, the company has negative cash flows from operating activities in the half year ended September 2007, resulting in heavy indebtedness. Its debt-equity ratio stood at 1.88 end September 2007. Not to mention, it operates in a highly competitive industry.

Valuation

On the valuation front, considering the annualised earnings and post-issue equity, the company quotes a P/E of around 11.9(x) at the weighted average issue price. In the plastics industry, comparable companies such as Hitech Plast, Pearl Polymers, and Wimplast have P/E of around 18.7(x), 22.2(x) and 26.8(x) times, respectively. However, one should keep in mind the size and sales of the company in comparison to its peers. Investors must consider aforementioned facts before investing....

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