Xpro india is a small cap company with market cap of 800 crores. It’s part of Birla group with the leadership of Siddhart Birla. Company is a major producer of co-extruded sheets and refrigerator liners for the white goods industry and a sole manufacturer of dielectric BOPP films in India. It also produces cast films which are high clarity films including stretch wrap and cling, especially formulated films for medical disposables, hygiene films & other applications.
Recent initiatives by Central government to promote electronic manufacturing and associated policies has created a level playing field for this company against Chinese competitors. This could be part of a bigger story of China + 1 manufacturing.
Company has a debt to equity ratio of 1.2 but management also indicated that the company expects to close the sales transaction of its unviable unit II (located at Barjora, West Bengal) in FY22 itself, the proceeds of which would be mainly utilized for its debt servicing.
The company’s revenue profile has improved consistently during 9MFY21 despite the COVID-19 pandemic. It reported a revenue of over Rs. 100 Cr and based on current order flows the management is expecting to surpass its FY21 revenue estimates. Company has been maintaining operating margins of 11-12%.
Sounds very interesting with a) being a sole manufacturer in india of certain products b) Pro Govt policies c) improving revenue & margins d) established leadership
Stock has run up 4x in 6 months but still bigger story seems to be ahead. Any thoughts ?
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