Control Print Ltd - Research Report

 

Private Client Research

Rating

Buy

Sector

Printing

Company

Control Print Ltd

Reco Price
Rs. 320
Price Target (1.5 - 2 Years)
Rs. 640
Upside
100%

Date

17 August 2015
Sensex
27878.27
CNX Nifty
8477.3

Exchange

Code

NSE
-
BSE
522295

Well executed strategy and strong in all core areas - Finance, Marketing, Product Range, Manufacturing & Technical skills is a key driver of growth.

Complete Solution:
Control Print Ltd (CPL) provides complete solutions - machines, consumables, spares, training and after sales service, all under one roof. It offers correct and customised solution, irrespective of the product's shape, size, packaging material etc. CPL has a strong technically qualified, trained & experienced team of sales and service people, reaching all corners of India through a network sales & service offices make sure that its customer's needs are met anytime anywhere and translates into an unparalleled support capability, committed to total customer satisfaction.

Coding & Marking essential for products:
It helps to provide legal information to customers; Satisfying legal requirements by printing information such as MRP, Batch Numbers, Expiry Dates, etc.; Printing specifications, ISI logo, and Company logos .Reduction in wastage of packaging material by printing on last minute can reduce the inventory level, printing on production line , using standardized pouches printing ingredients and other graphics to avoid wastage due to change in ingredients or customer destination. Tracking inventory through the supply chain by bar-coding thus reduces cost; Variable bar-coding enables tracking of products from one market to another; ensuring the most efficient supply chain by printing variable bar-codes onto shipper cartons enabling tracking of inventory by product.

Expansion Plans:
CPL’s manufacturing unit at Guwahati, Assam has already started operations in April 2015 in order to expand its business operations giving impetus to higher production and sales thereby leading to profit maximization. The management has taken requisite steps to devise the unit in a way to be fully equipped with necessary technology required for production. The proposed unit is entitled to tax benefits under Income Tax Act. Company plans are to indigenize the production of parts of existing products. CPL is looking forward to a new era of growth & expansion that will see it reigning as a leading performer in many fields.

Effective Productive Identification System:
One of the most popular & essential uses of coding is information like exact time, date, batch, production line are essential for tracking products in the event of tampering or recall. Also, to comply with ISO & UL certification, the user companies must have an effective product identification system in place. This provides good business opportunity for coding companies like CPL. As manufacturing becomes increasingly computerized, coded information can guide products through distribution channels and thereby reduce costs. Hence there is lots of scope for a company like Control print in next 4 years.

Strong Protection:
Counterfeit/Duplication and unauthorized diversion prevention; Legal liability and warranty protection; Protecting brand reputation by printing with invisible, fluorescent, and other specialty inks, dual serializers, variable bar-codes, encrypted bar-codes; Printing with invisible/fluorescent inks for counterfeit prevention; Ensuring that products are not diverted from one market to another, stolen during the production process itself with invisible codes and variable bar-coding.

Products:
CPL specializes in providing reliable solutions for printing all kind of variable information such as Batch No., Mfg. Date, Expiry Date, and Best before Date, MRP, Serial No., Special Markings, Logos, Company/Brand Name, Barcode etc. These solutions work on-line at high speed and offer the most economical running cost. Hence company deals with very unique products in its portfolio.

Manufacturing System:
Aesthetically designed and fully equipped, these facilities are complete with all the necessary support tools, services and amenities required to ensure the highest quality of products and services consistently. In addition to manufacturing capabilities each center has comprehensive service training facilities for external as well as internal customers. Spanning over 8000 sq ft, the Vasai centre is a hub for assembly and manufacture of the entire Control Print product range. The entire range of Control Print inks is also manufactured at this facility. CPL's additional facility at Nalagarh, Himachal Pradesh commenced production in 2008. This new facility was a step towards fortifying our expansion plans enabling a large increase in overall manufacturing and assembly capacity for all foreseeable future requirements.

Stock Data

CMP (Rs)
337.9
Face value (Rs)
10
52 Week Range (Rs)
389.90 - 158
Market cap (Rs Crores)
334.34
Price To Book Value (x)
3.52
P/E Ratio (x)
16.74
EV/EBIDTA (x)
12.42

One Year indexed Stock Performance

Control Print LtdSensex
Control Print Ltd
Performance (%)
1m
6m
12m
Absolute
19.65
58.35
128.10
Sensex
-7.40
-10.26
-1.53

Shareholders

(in %)
30-Jun
Promoter
55.83
FII
7.58
DII
1.49
Others
35.1
Total
100

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Industry

The industry of Coding and Marking is driven by:

• Legal requirements to provide product information to customers, printing specifications, ISI logo and Company logo.

• Inventory control by reduction in wastage of packaging material and printing on the production line;

• Traceability of products by date of manufacture, batch numbers, shift numbers, and real time-date and ensuring quality control, counterfeit prevention, marketing promotion by printing variable information and logos.

Profile

CPL incorporated in 1991, came out with an issue of equity shares at a premium of Rs 20 in Feb 95 to part-finance its expansion-cum-diversification to assemble and manufacture additional coding and marking equipment and measuring and process control equipment, as also to set up additional sales and service centres. CPL has two modern manufacturing centers located at Vasai, on the outskirts of Mumbai, and Nalagarh, Himachal Pradesh. CPIL has also set up a laboratory-cum-demonstration unit at Marol, Andheri. Earlier, CPL had technical tie up with the world-leader Avery Dennison, US, a Fortune-500 company.

Profit & Loss Statement:- (Consolidated)
(Rs Crores)
Particulars
Mar 13
Mar 14
Mar 15
Mar 16E
Mar 17E
Income:-
  • Net Sales & Other Operating Income
  • Growth (%)
  • Total Expenditure
  • EBIDTA
  • EBIDTA Margin (%)
  • Other Income
  • Operating Profit
  • Interest
  • Exceptional Items
  • PBDT
  • Depreciation
  • PBT
  • Tax
  • tax rate
  • Profit After Tax
  • Extra Ordinary Items
  • PAT (After Extraordinary Items)
  • PAT Margin (%)
  • Adj Calculated EPS
  • 79.82
  • -
  • 64.48
  • 15.34
  • 19.22
  • 0.39
  • 15.72
  • 0.29
  • 0.62
  • 16.06
  • 1.19
  • 14.87
  • 2.60
  • 17.48
  • 12.27
  • -
  • -
  • 15.37
  • 13.53
  • 91.06
  • 14.08
  • 70.95
  • 20.11
  • 22.08
  • 0.90
  • 21.01
  • 0.75
  • 0.08
  • 20.34
  • 1.41
  • 18.94
  • 5.25
  • 27.72
  • 13.69
  • -
  • -
  • 15.03
  • 15.09
  • 112.92
  • 24.01
  • 85.70
  • 27.22
  • 24.11
  • 1.29
  • 28.51
  • 1.05
  • 2.34
  • 29.80
  • 2.14
  • 27.66
  • 7.79
  • 28.16
  • 19.87
  • 1.01
  • 18.86
  • 16.70
  • 20.18
  • 135.50
  • 20.00
  • 98.50
  • 37.00
  • 27.31
  • 1.50
  • 38.50
  • 1.20
  • 0.00
  • 37.30
  • 2.95
  • 34.35
  • 10.50
  • 30.57
  • 23.85
  • -
  • -
  • 17.60
  • 22.82
  • 160.50
  • 18.45
  • 112.50
  • 48.00
  • 29.91
  • 1.75
  • 49.75
  • 1.50
  • 0.00
  • 48.25
  • 3.75
  • 44.50
  • 13.50
  • 30.34
  • 31.00
  • -
  • -
  • 19.31
  • 29.67
Source: Stockaxis Research, Company Data

Valuation

CPIL's growth has been the result of a well executed strategy and today it is strong in all core areas - Finance, Marketing, Product Range, Manufacturing & Technical skills. In a short span of time, it has demonstrated considerable progress in all growth parameters - product range, infrastructure and net worth. The confidence and trust of its customers have placed in CPL and stimulated its growth and broadened its horizons.

At CMP of Rs 337 stock is trading at 11.35x to FY 2015E which is very low valuation for such growth oriented stock. We assign Buy rating on stock with target price of Rs 640 where it trades at 21.57x which is fair valuation for stock in near term.

 

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