Stovec Industries Ltd - Research Report

Muhurat Pick

Private Client Research




Textile - Machinery


Stovec Industries Ltd

Reco Price
Rs. 1769
Price Target (12 Months)
Rs. 2835


November 07, 2015
CNX Nifty




Strong business earnings will rerate the stock in future.

Strong Business Model:
Stovec Industries Ltd (SIL) is a market leader for the supply of rotary – screen and printing machines. SIL is presently engaged into manufacturing of perforated nickel rotary screens and engraved cylindrical screens, (“consumables”), Rotary printing machines, Anilox Rollers, Press room chemicals, etc. The company is also engaged into trading of Rotamesh screens for label printing.It has entered into a technical collaboration agreement with Stork Screens B.V. (since renamed as SPBV) for the supply of complete know-how and information for the manufacturing screens, planning of the project and to supply imported machinery.

Diversified client base: SILhas a diversified client base including:
Graphic Section: SIL caters to the packaging industry including label printers & converters. They also cater to Repro Houses and industrial / security printers in graphics market.

Textile Section: Commission engravers and in-house engraving facilities are the specialties of SIL.

Metal Precision Section: SIL caters to Electronics, Automotive, Food & Medical Industry. Hencethe company has diversified client base where they can easily leverage their product portfolio.

Market Leader:
SIL is world leader in Rotary screen printing for textile industry& precision metal products. They are second in digital printing and rotary screen printing technology for the graphic industry and have a place amongst the top 3 in flexographic laser engravers. The company is emerging as a strong market player since last decade as they have an overall experience of more than 50 years in their leadership department Hence due to a strong senior team, SIL has been able to show robust financial growth over the last few years.

Strong Collaboration:
The company has entered into a technical collaboration agreement with Stork Screens B.V. (since renamed as SPBV) for the supply of complete know-how and information for the manufacturing screens, planning of the project and to supply imported machinery. Stormac India Limited was merged with SIL with effect from October 1, 1987. Consequent to an order passed by BIFR on November 26, 1990, Assotex Engineering Industries Limited, was amalgamated with SIL effective from April 1, 1989. Hence company is well equipped with the technology to support innovation and a strong product portfolio.

September Quarter Results:
SIL’s net profit increased to Rs. 5.57 crores against Rs. 2.60 crores in the corresponding Q-o-Q, i.e. an increase of 114.45%. Revenue for the quarter increased by 75.03% to Rs. 38.52 crores from Rs. 22.01 crores Q-o-Q and reported an EPS of Rs. 26.66 during the quarter, registering 114.45% increase over previous year period. This is in continuation to the witnessed excellent growth by the company in the previous quarter i.e. June 2015.

Strong Product Portfolio:
Consists of Rotary screen printing, Rotary screen integration,Rotary screens , Inkjet printing, Digital inks, Direct laser engraving, Engraving lacquers and chemicals, Wallcovering equipment, Coating & Finishing, Software development, Service and Precision metal products. Company is continuously working to improve its product portfolio by spending in R&D activities.

Stock Data

CMP (Rs)
Face value (Rs)
52 Week Range (Rs)
1995 - 720
Market cap (Rs Crores)
Price To Book Value (x)
P/E Ratio (x)

One Year indexed Stock Performance

Stovec Industries LtdSensex
Stovec Industries Ltd
Performance (%)


(in %)

+91 22 6639 3000



The Company essentially operates in three customer verticals viz. Textile, Graphics and Sugar Screen. The large part of the company product portfolio goes into textile industry which is a key contributor to the India’s GDP. During the year, performance of the textile industry has been moderate. The step to allow 100% FDI in textile and retail sector and measures to establish more textile parks by the government is expected to bring moderate growth in business. The Indian graphic industry is complex, dynamic and fast growing. Rotary screen printing technology is a growing segment of a graphic portfolio. It is getting accepted and it is expected to grow more in coming years driven by need for high quality label printing. SIL had entered the sugar screen business a few years back. This industry continues to operate in a competitive landscape.


Stovec Industries was founded in 1973 and is headquartered in Ahmedabad, India. It engages in the development and production of consumables for textile and graphic printing industry. The company produces rotary printing machines for textiles, rotary screens and chemicals for textile printing, anilox and screens for graphic printing, digital ink and sugar screens. It operates in three segments: Textile Machinery and Consumables, Graphics Consumables, and Galvanic. The Textile Machinery and Consumables segment offers perforated rotary screens, laquer and auxiliary chemicals, digital ink, rotary screen printing machines, engraving equipment, components, and spares. The Graphics Consumables provides anilox rollers, rotamesh screens, and rotaplates whereas Galvanic segment offers galvano consumables. SIL serves textile printing and processer, packaging, label printers and converters, industrial/security printers, and sugar mill markets.

Profit & Loss Statement:- (Standalone)
(Rs Crores)
Dec 13
Dec 14
Dec 15
Dec 16E
Dec 17E
  • Net Sales
  • Growth (%)
  • Total Expenditure
  • EBIDTA Margin (%)
  • Other Income
  • Operating Profit
  • Interest
  • PBDT
  • Depreciation
  • Profit Before Taxation & Exceptional Items
  • Provision for Tax
  • Tax Rate (%)
  • Profit After Tax
  • PAT Margin (%)
  • Adjusted EPS
  • 77.28
  • -
  • 64.05
  • 13.22
  • 17.11
  • 3.47
  • 16.69
  • 0.08
  • 16.61
  • 1.50
  • 15.12
  • 4.54
  • 30.01
  • 10.58
  • 13.69
  • 50.68
  • 102.34
  • 32.44
  • 85.49
  • 16.85
  • 16.46
  • 3.12
  • 19.97
  • 0.08
  • 19.89
  • 2.65
  • 17.24
  • 5.65
  • 32.77
  • 11.59
  • 11.32
  • 55.57
  • 148.50
  • 45.10
  • 122.50
  • 26.00
  • 17.51
  • 3.50
  • 29.50
  • 0.02
  • 29.48
  • 3.50
  • 25.98
  • 5.95
  • 22.90
  • 20.03
  • 13.49
  • 96.04
  • 210.50
  • 41.75
  • 170.50
  • 40.00
  • 19.00
  • 3.50
  • 43.50
  • 0.02
  • 43.48
  • 4.50
  • 38.98
  • 6.25
  • 16.03
  • 32.73
  • 15.55
  • 156.93
  • 295.50
  • 40.38
  • 235.50
  • 60.00
  • 20.30
  • 3.50
  • 63.50
  • 0.02
  • 63.48
  • 5.05
  • 58.43
  • 6.50
  • 11.12
  • 51.93
  • 17.57
  • 248.99
Source: Stockaxis Research, Company Data


Being a strong market player in most of the segments complimented by strong financial ratios, the company deserves a rich valuation going forward. Currently it is doing EBIDTA margins of more than 17% and with PAT margins of more than 11% company is betterly placed than its peers. It is also doing ROCE of 32% and ROE of 22% which is best in industry.

We assign the valuation of 11.38x to FY 2017E earnings indicating target price of Rs 2835 which is a fair valuation for the company with long term horizon.



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