Equity L/S Analyst | Forensic Accounting | India, Yellowstone Equity

Ankit Agrawal, CFA

Equity L/S Analyst | Forensic Accounting | India

Creating Wealth through Alpha and Compounding

Yellowstone Equity

Providing unbiased and independent research on Indian equities to global institutions and individual investors


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Regulatory Disclosure: 
Note that Ankit Agrawal (Proprietor of Yellowstone Equity) is a SEBI registered Research Analyst (Registration No.: INH000007216). Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Investment in securities market are subject to market risks. Read all the related documents carefully before investing.

Research Analyst Contact Details:
Address: A-412, Shilp Aaron, Sindhu Bhavan Road, Ahmedabad, Gujarat - 380059
Email: services@yellowstoneequity.com
Mobile: +91-7575817289

Compliance/Grievance Officer:
Name: Ankit Agrawal
Email: services@yellowstoneequity.com
Mobile: +91-7575817289
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Equity Bottom-Up

<ul>
<li>Q3FY23 tends to be the weakest quarter seasonally. Volume de-growth was -10% QoQ, in line with the expectation as per historical seasonality trend.</li>
<li>Q4FY23 is all set to be a strong quarter. Management is confident of closing FY23 as per the previously stated revenue and margin guidance.</li>
<li>The new value-added segment, Barrier Packaging, has started to contribute meaningfully to the revenue. Tube Laminates, another value-added segment, will also start to contribute soon.</li>
</ul>


Q3FY23 tends to be the weakest quarter seasonally. Volume de-growth was -10% QoQ, in line with the expectation as per historical seasonality trend.
Q4FY23 is all set to be a strong quarter. Management is confident of closing FY23 as per the previously stated revenue and margin guidance.
The new value-added segment, Barrier Packaging, has started to contribute meaningfully to the revenue. Tube Laminates, another value-added segment, will also start to contribute soon.


RPPL: Q3FY23 Was Seasonally Weak As Expected, But Q4FY23 Is On Track To Be Strong

<ul>
<li>EBITDA per kg in Q2FY23 declined to INR 29.5 vs INR 35+ QoQ, due to one-off items and marginal decline in volume due to seasonality.</li>
<li>However, RPPL is on track for FY23 EBITDA of INR 37cr+ in line with our prior projection, with EBITDA per kg at INR 34-35 and volume at INR 11,000+ MT.</li>
<li>
<a href="https://www.smartkarma.com/entities/rajshree-polypack-ltd" target="_blank" data-smartkarma-citation="entities:33486:1" rel="noopener">Rajshree Polypack (RAJPPL IN)</a> continues to introduce new products including its venture into injection molding technology as well as sustainable packaging for disposable cutlery.</li>
</ul>


EBITDA per kg in Q2FY23 declined to INR 29.5 vs INR 35+ QoQ, due to one-off items and marginal decline in volume due to seasonality.
However, RPPL is on track for FY23 EBITDA of INR 37cr+ in line with our prior projection, with EBITDA per kg at INR 34-35 and volume at INR 11,000+ MT.

Rajshree Polypack (RAJPPL IN) continues to introduce new products including its venture into injection molding technology as well as sustainable packaging for disposable cutlery.


Rajshree Polypack (RPPL): Weak Q2 Was Due to One-Off Items, However FY23 Is On Track As Per Guidance

<ul>
<li>Q1FY23 earnings came in strong for RPPL led by robust demand and margin expansion. Volumes grew by 23.6% YoY and 24.5% QoQ.</li>
<li>Operational EBITDA per kg grew by 25%+ YoY and 36%+ QoQ to INR 37.5+ per kg as the price rise in raw materials was passed on.</li>
<li>RPPL has guided for a strong FY23. It can clock a volume of 10500+ MT and EBITDA of INR 35+ per kg, barring any adverse volatility in raw material prices.</li>
</ul>


Q1FY23 earnings came in strong for RPPL led by robust demand and margin expansion. Volumes grew by 23.6% YoY and 24.5% QoQ.
Operational EBITDA per kg grew by 25%+ YoY and 36%+ QoQ to INR 37.5+ per kg as the price rise in raw materials was passed on.
RPPL has guided for a strong FY23. It can clock a volume of 10500+ MT and EBITDA of INR 35+ per kg, barring any adverse volatility in raw material prices.


RPPL: Strong Earnings Led by Robust Demand and Margin Expansion

<ul>
<li>RPPL posted a decent FY22 despite significant rise in the raw material costs. Sales volume grew 30%+ and EBITDA per kg improved by 11%.</li>
<li>FY23 is likely to be robust for RPPL. Revenue growth is likely to be strong at 20%+. Margins are guided to expand to 15%+ level from current 13.5%.</li>
<li>RPPL is consistently improving the mix of value-added products like Barrier Packaging and Tube Laminates. Contribution from Barrier Packaging is likely to grow to 10-15% in FY23 from 5% currently.</li>
</ul>


RPPL posted a decent FY22 despite significant rise in the raw material costs. Sales volume grew 30%+ and EBITDA per kg improved by 11%.
FY23 is likely to be robust for RPPL. Revenue growth is likely to be strong at 20%+. Margins are guided to expand to 15%+ level from current 13.5%.
RPPL is consistently improving the mix of value-added products like Barrier Packaging and Tube Laminates. Contribution from Barrier Packaging is likely to grow to 10-15% in FY23 from 5% currently.


<ul>
<li>RPPL reported decent Q3FY22 earnings as gross margins expanded to 36.9% vs 33.7% QoQ and EBITDA margins expanded to 13.7% vs 13.5% QoQ.</li>
<li>The margin expansion seems to have been led by higher utilization of finished goods and WIP inventory which helped in curtailing adverse impact of volatility in raw material pricing.</li>
<li>The material decline in depreciation and amortization expenses by 13% QoQ is likely due to consolidation of the Unit 1 and Unit 3 facilities.</li>
</ul>


RPPL reported decent Q3FY22 earnings as gross margins expanded to 36.9% vs 33.7% QoQ and EBITDA margins expanded to 13.7% vs 13.5% QoQ.
The margin expansion seems to have been led by higher utilization of finished goods and WIP inventory which helped in curtailing adverse impact of volatility in raw material pricing.
The material decline in depreciation and amortization expenses by 13% QoQ is likely due to consolidation of the Unit 1 and Unit 3 facilities.


Rajshree Polypack (RPPL): Margin Expansion Led The Q3FY22 Earnings Growth

India

Hindusthan National Glass & Industries Limited manufactures glass bottles and vials.

Hindusthan National Glass & Industries (HNGI IN)

Kanpur Plastipack Ltd. manufactures plastic packaging.  The Company produces flexible intermediate bulk containers and plastic bags.

Kaira CAN Co Ltd. manufactures metal containers. The Company manufactures a wide range of OTS and General Purpose Cans for packing Processed Foods, Ready-to-eat Foods, Canned Vegetables, Fruit Pulps, Juices, Pickles, Dairy Products, etc. and Aerosol cans for Deodorants, Room Fresheners, Pesticides, etc.

Hindustan Tin Works Limited produces tin cans for dairy, edible oils, tea, coffee, motor oils, medicines, pesticides, chemical and paint industries.

Flexituff Ventures International Limited manufactures plastic and laminated coated bags. The Company distributes various bags for food and pharmaceutical industries.

Flexituff Ventures International (FLEXI IN)

Orient Press Limited is a commercial printing company. The Company also manufactures packaging products and smart cards.

Rollatainers Limited is a paper manufacturer whose primary products are packaging cartons and polyethylene coated packing material.  The Company also manufactures duplex paper board, writing and printing paper and packaging and weighing machines.  Rollatainers sells its products throughout India and abroad.

Hitech Plast Ltd. manufactures rigid plastic packaging. The Company markets its products to manufacturers and shippers throughout India.

Haldyn Glass Limited manufactures clear glass containers. The Company specializes in Soda Lime Flint & Amber Glass containers.

Radha Madhav Corporation Ltd. manufactures packaging.  The Company produces flexible packaging, specialty films, folded cartons, bags, liners, stretch films, shrink films, overwrap films, thermoformable films, and paper tubes.

Tomypak Holdings Berhad is an investment holding company. Through its subsidiaries, the Company manufactures and trades plastic packaging materials, polyethylene, polypropylene films and sheets, and thermoforming sheets.

PT Berlina Tbk manufactures plastic containers for cosmetic, pharmaceutical, and mineral water industries.  The Company also manufactures toothbrushes, laminated plastic tubes for toothpaste and other types of plastic products.

SCGM Bhd is an investment holding company. The Company, through its subsidiary, manufactures and trades of plastic products, such as thermo-vacuum-formed plastic packaging and extrusion sheets.

Southern Packaging Group Limited manufactures and sells flexible and rigid packaging products for the pharmaceutical, food and beverage, and personal care industries.

SHOEI CORPORATION designs, manufactures, and sells plastic film products. The company also operates distribution service of direct mails from manufacturing to delivering.

Superbag Company, Limited produces square-bottomed paper bags and polyethylene for department stores and supermarkets.  The Company also uses environment concern materials such as straws, hemp, sugar cane, bamboo, and food waste to manufacture paper bags.  Superbag markets its products in Asia through Taiwan and Shanghai offices.

Kum Bi Corporation designs, manufactures, and markets glass bottles.  The Company supplies its products to the food and alcoholic beverage manufacturers. Kum Bi also produces and sells cosmetics.

PT Champion Pacific Indonesia Tbk manufactures packaging paper, folding cartons, composite cans, and flexible packaging products for pharmaceutical and food industries.

Thai O.P.P. Public Company Limited manufactures and distributes biaxially oriented polypropylene (BOPP) films for use in food packaging, tobacco, and adhesive tape industries.

cotta CO.,LTD distributes packing materials of food. The Company sells cake boxes, handbags, wrapping paper, ribbons, freshness preservatives, and confectionery materials. cotta markets its products in Japan.

Rajshree Polypack Limited manufactures packaging products. The Company offers coffee cups, trays, lids, plates, bowls, and other containers, as well as plastics rigid sheet. Rajshree Polypack serves dairy, beverages, retail, pharmaceuticals, and electronics industries in India.

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Rajshree Polypack (RAJPPL IN)

RPPL: Q3FY23 Was Seasonally Weak As Expected, But Q4FY23 Is On Track To Be Strong

An investment in RPPL has potential to almost double over the next couple of years led by increased contribution from value-added products,...

Ankit Agrawal, CFA

Rajshree Polypack (RPPL): Weak Q2 Was Due to One-Off Items, However FY23 Is On Track As Per Guidance

We estimate an upside potential of 80%+ over the next couple of years. Q2 was weak due to one-off items but RPPL is on track to post a robust full...

Ankit Agrawal, CFA

RPPL: Strong Earnings Led by Robust Demand and Margin Expansion

RPPL is taking all the right steps to enhance its product offerings to deepen wallet share with existing clients. At current price, an investment...

Ankit Agrawal, CFA

RPPL: Set to Fire on All Cylinders

RPPL is making all the right moves: 1) Growing Volumes 2) Expanding Margins 3) Improving Mix of Value-added Products. FY23 is guided to see 20-25%...

Ankit Agrawal, CFA

Rajshree Polypack (RPPL): Margin Expansion Led The Q3FY22 Earnings Growth

RPPL reported decent Q3FY22 earnings as gross margins expanded to 36.9% vs 33.7% QoQ and EBITDA margins expanded to 13.7% vs 13.5% QoQ. This led to...

Ankit Agrawal, CFA

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