Fenoplast Ltd - Rs.14.50

Fenoplast Ltd (FPL) was originally incorporated a private limited company in 1975 by Sarvasri H. Kishan, and K. Seshagiri Rao and was later converted to public ltd company in 1994. FPL started its operation in 1976 by setting up PVC leather cloth unit using direct coating technology with an installed capacity of 30 lakh sq. mtrs. per annum. Encouraged by the success of first unit, FPL put up second unit using transfer-coating technology with a capacity of another 30 lakh sq. mtrs. Witnessing the strong growth potential, FPL diversified into manufacture of PVC calender films by acquiring and adopting for the first time in India the fully automatic and advanced technology, known as C7 Calenderette.

Today, FPL is engaged in manufacture of PVC leather cloth and PVC films. PVC leather cloth is extensively used for domestic upholstery, automobile upholstery, ladies bags, soft luggage, footwear industry, garment lining, belts, etc. Whereas rigid PVC Film is used for blister packaging meant primarily for the pharmaceutical industry and soft PVC films are used for automotive interiors, electrical insulation, stationery and other applications. FPL’s main strength includes two transfer coating lines with coating heads imported from Stork of Holland and RCM of Italy for manufacturing coated PVC leather xloth and also one calender line imported from Battenfield Extrusiontechnik GmbH of Germany, for manufacturing PVC Films. It has unmatched capability to manufacture more than 950 shades of leather cloth and can also consistently reproduce shades matching the shades of the earlier lots when repetitive orders are placed. Nearly 30% of the production is being exported to over 28 countries including UK, USA, Germany, France, Holland, South Africa and Singapore and it has a huge reputed domestic clientele.

Due to strong demand, FPL is currently working at 96% capacity utlization at its PVC leather cloth plants and at 85% capacity utilization for PVC film plants. For FY05, its Sales grew by 24% to Rs.86 cr. and NP increased 500% to Rs.0.12 cr. As both automobile and pharmaceutical industries are doing well, demand for PVC leather cloth and PVC films are showing healthy signs and the company is in a position to increase the capacity of its PVC leather cloth at short notice. Considering all these factors, FPL is expected to report sales of around Rs.100 cr. and NP of Rs.1.50 cr. leading to an EPS of more than Rs.3 on small equity of Rs.4.60 cr. Having a book value of Rs.27 and a current market cap of merely Rs.7 cr., its share price has the potential to double in 12~15 months.