UFLEX Ltd, India's largest flexible packaging company engaged in manufacturing of Polyester chips, Films, Coated Film, Laminates, Pouches, Holographic films Gravure cylinders, Inks and adhesives to all types of packaging & printing machines, offering total flexible packaging solution. Headquartered at Noida UFLEX has capacity of 25000 TPA with the market presence in 80 countries including USA, Canada, UK, Russia and African as well as Asian Countries. UFLEX clients include almost all leading FMCG players in the Indian market.
FINANCIALS: During the last five years (FY05-FY10), the Top line of UFLEX has grown at CAGR growth of 9%, Operating Profit and Net Profit of the company has also grown by 18% and 25% respectively. In FY10 the Net Sales of UFLEX rose by 2.95% to Rs 1579.58 crore over FY09, Operating Profit also surged by 24.62% to Rs 287.43 crore, UFLEX has also reported more than 20% jump in Profit after Tax to Rs 85.74 crore over FY09. In Q2FY11 the Net Sales of the company surged by 41%, Operating Profit and PAT also grew by 146% &328% respectively. The OPM & PATM of UFLEX for the same period were 29% & 14% respectively.
INVESTMENT GROUNDS
Industry Outlook
The Flexible packaging market has excellent growth potential in the food and processed food, personal care, FMCG and retail sector. The demand for smaller packaging and increasing consumerism due to higher purchasing power has been a boon for the flexible packaging market. With the introduction of innovative and new products, Indian Flexible Packaging Industry will lead to faster growth at a rate of around 25% annually. With the advent of newer plastic films, other novel materials and new technologies, the industry will be looking at better quality of the products and thereby, increased sales volumes. In fact, the market is expected to treble its output in the next few years owing to the greater demand from the food and processed food and retail segments.
Eying an Extensive Market Share by FY11
UFLEX is eying to capture the significant market share in flexible packaging industry in next 1-2 years. Currently UFLEX is enjoying 21% market share and further targeting to achieve 25% by the end of this fiscal year. The company is trying to attain this target by augmenting its consolidated revenue from Rs 2300 crore to Rs 3500 crore by end of FY11. If the company achieves this revenue target than the market share of the company will also significantly rise and may arrive at 40% by FY12.
Capacity Expansion to boost Topline
UFLEX has planned to boost its Topline by adding more capacities in both domestic and overseas markets. UFLEX has lined-up a capex of Rs 900 crore over the next two years. The company has planned to enhance its packaging capacity in both domestic and overseas markets to 3.35 lakh TPA from the present 2.35 lakh TPA by FY 12. Company's exposure to the plastic film business has increased due to commissioning of first line of polyester film project with 26400 TPA polyester film capacity at Mexico and the capacity will further increase after commissioning of second line of PET film with a capacity of 26400 TPA and commissioning of 35000 TPA of BOPP film, 30000 TPA PET film & 12000 TPA of CPP film in Flex P Film, Egypt. These expansions will have considerable increase on the profitability of the Company.
Exiting from non-core business will help to focus on existing business
To focus on its core business UFLEX has exited from a non-core business. UFLEX has sold 70% stake in AKC Developers to its joint venture partner Hanjer Biotech for 98 crore. In 2007-08 UFLEX picked majority stake in AKC Developers for the Rs 43 crore. AKC Developers is involved in municipal solid waste processing projects under the public-private partnership model. Further UFLEX has also estimated to exit from its non-core business of MSK Project, Telecommunication and Real Estate by Q3FY12 with estimated price of at Rs. 175 crore.
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