Control Print - Rs.84.00

Established in 1991, Control Print (India) Ltd (CPIL) is the undisputed market leader in the coding and marking machinery with a market share of around 40%. It has a product range of contact coders, superior touch coders, specialized metal marking systems, sophisticated ink jet coders and also advanced laser coders which can be used to print on any type of material like plastic, glass bottle, paper, wood, steel etc. It specializes in providing solutions for printing variable information like batch number, date of manufacture, expiry date, maximum retail price (MRP), Serial number, special markings, logos, company/brand name, barcode etc. Besides, one-third revenue comes from its lucrative consumable sales of ink refills, ink rollers, spare parts and income from annual maintenance contract (AMC). Importantly, CPIL has a sole marketing agreement with the world leader ‘Videojet’ for its coding and marking machinery in India.

Having been in the industry for a long time and given its experience in servicing machines, CPIL is setting up a facility in Himachal Pradesh to manufacture ‘Conprint HRC’ a coder based on ‘Hot Melt Ink’ technology and its consumables like Hot Ink Rolls etc. It also plans to manufacture low cost Contact Coders- 'Conprint CC' and its consumables and other accessories. The plant will also have several backward area benefits including sales tax, excise, and income tax benefits. The plant is expected to go on stream shortly. Besides, it is introducing new high-end products like Thermal Transfer Printers, Thermal Coders and Digital Printers. Additionally, the company is in talks with pharma companies to sell them digital printing systems of CSAT Digital Industrial Printing GmBH (Germany) for on-line printing of foil for blister packs valued at around Rs.80 lakh. The machine has the capability to print invisible marks, which can be seen only using ultraviolet light. The company plans to assemble these printers later in India.

The Indian retail segment is moving rapidly from the unorganized to the organized segment and is accompanied by an increase in branding. This has led to a tremendous rise in the demand for coding and marking printers. And with the rise in installed printers base, its revenue from consumables is also mounting and operates at 30~40% profit margin For FY06, CPIL is estimated to register sales of Rs.40 cr. and NP of Rs.6.50 cr. which can shoot up to Rs.55 cr. and Rs.9 cr. respectively for FY07. This translates into EPS of Rs.9 and Rs.13 for FY06 and FY07 respectively. Being the only listed company in this growing sector, the company is bound to witness huge buying and demand hefty premium in the near future. Investors are strongly recommended to buy at CMP with a price target of Rs.180 in 12~15 months.