Company Update

August 12, 2015

Wim Plast Ltd

Rating matrix
Rating
Target
Target Period
Potential Upside

:
:
:
:

Sell
| 1620
12 months
-23%

Muted sales growth amid lower demand

Whats Changed?
Target
EPS FY16E
EPS FY17E
Rating

Unchanged
Changed from | 78.7 to | 74.4
Changed from | 93.7 to | 92.7
Changed from Hold to Sell

Quarterly Performance
Revenue
EBITDA
EBITDA (%)
PAT

Q1FY16
86.5
15.9
18.4
9.4

Q1FY15
82.8
12.6
15.2
7.8

YoY (%)
4.5
26.4
317bps
20.6

Q4FY15 QoQ (%)

103.2
-16.2
21.0
-24.2
20.3 -194bps
13.5
-30.1

Key Financials
| Crore
Net Sales
EBITDA
Net Profit
EPS (|)

FY14
296.4
53.6
32.5
54.2

FY15E
365.4
60.7
38.4
63.9

FY16E
401.1
73.7
44.6
74.4

FY17E
474.6
90.3
55.6
92.7

FY14
38.6
29.9
18.1
6.4
21.5
29.5
3.3

FY15E
32.7
25.3
15.8
5.5
21.6
29.1
2.7

FY16E
28.1
21.8
12.9
4.5
20.4
28.1
2.4

FY17E
22.6
17.5
10.5
3.7
21.0
28.8
2.0

Valuation summary
P/E
Target P/E
EV / EBITDA
P/BV
RoNW (%)
RoCE (%)
Mcap/sales

Stock data
Particular
Market Capitalization (| Crore)
Total Debt (FY15) (| Crore)
Cash and Investments (FY15) (| Crore)
EV (| Crore)
52 week H/L
Equity capital (| Crore)
Face value (|)

Amount
1,255.6
0.0
14.3
1,241.2
2499 / 975
6.0
10.0

Price performance (%)

Nilkamal
Supreme Ind
Wim Plast

1M
72.6
(1.4)
17.5

3M
127.7
(3.4)
52.1

| 2092

6M
150.8
(3.8)
51.7

12M
238.9
4.4
94.7

Research Analyst
Sanjay Manyal
sanjay.manyal@icicisecurities.com
Hitesh Taunk
hitesh.taunk@icicisecurities.com

ICICI Securities Ltd | Retail Equity Research

Wim Plast (WPL) recorded muted sales growth of 4.5% YoY to ~| 87

crore in Q1FY16, largely driven by volume growth (~5% YoY). The
company has not yet passed on the benefit of lower raw material
prices to its customers. Benefit of lower raw material cost (due to
benign crude prices) to the tune of~600 bps YoY was partially offset
by a sharp increase in other expenses and employee cost during
Q1FY6. As a result, EBITDA margin expanded ~317 bps YoY to
~18%. The tax rate has increased ~200 bps YoY to 30%, due to
expiry of exemption in some manufacturing plants. Finally, the
company recorded PAT growth of ~21% YoY to | 9.4 crore in Q1
We have tweaked our revenue, earnings estimate for FY16E and
FY17E, considering Q1 performance of WPL. We have modelled
revenue CAGR of ~14% in FY15-17E led by 10% volume growth. We
believe an expansion in EBITDA margin by 240 bps in FY15-17E
would result in PAT CAGR of 20% during the same period
Focus on garnering market share from unorganised segment
The plastic moulded furniture business is largely dominated by the
unorganised segment (market share ~55%). Over the last four years, WPL
has done a capex of over ~| 60 crore to increase the manufacturing
capacity and diversification in the new business. Growing demand for
plastic furniture coupled with a gradual shift towards the branded
products category would further help WPL gain substantial market share
(currently 12% in value terms) along with other major brands like
Nilkamal and Supreme. WPL has a strong dealer network (~10,000 across
India) and has been targeting the upper middle class. However, the
management has guided that WPL would be expanding its dealer network
in rural India (by adding 1000 dealers in future). In addition, WPL is also
looking for opportunities to expand in new geographies like AP and Tamil
Nadu. We have modelled revenue, PAT CAGR of 20% each, led by
volume CAGR of 10% in FY15-17E. We have revised our EBITDA margin
estimates up by 180 bps YoY for FY16E and 60 bps YoY for FY17E, as the
benefit of raw material prices was partially offset by higher purchase of
traded goods. In addition, entrants into the new segment would keep
margins under check in the initial years (due to lower operating leverage).
Launch of premium products to help maintain margin
As part of diversification and to leverage its existing strong dealer
network, WPL plans to enter air cooler business with an initial outlay of
| 10 crore. We have built in revenue of | 5 crore and ~| 6 crore for FY16E
and FY17E, respectively. Also, WPL plans to introduce bathroom
accessories and storage materials in the coming years. The company has
maintained its EBITDA margin in the range of 17-18% considering its
capability to pass on price hikes to dealers. However, with the recent
expansion, the margin would remain under pressure considering lower
operating leverage.
Richly valued at current price: downgrade to SELL
The stock has run up substantially in the past year and is richly valued at
the CMP. We believe that at the CMP of | 2092, the stock is discounting all
its near term positive news. In addition, due to a slow pick-up in demand
of plastic products, we believe volume growth would not be as strong as
in FY12-15. At the CMP, the stock is trading at its all-time high P/E of 28x
FY16E and 23x FY17E. We value the stock at 18x FY17E earnings
(implying a target PEG of 0.9x FY15-17E, ~30% premium to industry
average) with SELL rating.

Diversification in new business to drives sales.

Historically WPL has recorded strong sales CAGR of 22% during FY12-15
led by volume CAGR of ~17% (I-direct estimate). The volume growth was
largely driven by stabilisation of new plants, addition of dealers in new
geographies and a gradual shift towards branded product categories. We
believe the company will continue its growth journey albeit at a slow pace
at a CAGR of ~14% in FY15-17E (compared to historical growth rate)
amid slow demand pick-up in plastic products. Further, the company
plans to enter the cooler segment that would help in driving overall
revenue growth in coming years. We have modelled revenue of | 5 crore
and | 6 crore for FY16E and FY17E, respectively, from the air cooler
segment.
Higher gross margin to be partially offset by introductory cost of new
products...
The company has largely benefited from benign raw material prices
(polypropylene prices declined ~18% YoY) during the quarter wherein
gross margin expanded sharply by ~600 bps YoY in Q1FY16. In-spite of
lower raw material prices, the company has not passed on the benefit to
its dealers during Q1. We believe the company would partially pass on
the benefit to customers in the coming quarters to maintain its market
share. In addition to this, introductory cost in the new business segment
air cooler would keep a check on any sharp rise in EBITDA margin. We
have modelled ~180 bps YoY and ~60 bps YoY expansion in EBITDA
margin for FY16E and FY17E, respectively. This is expected to lead to PAT
CAGR of 20% for FY15-17E.
Exhibit 1: Net sales growth trend

Exhibit 2: EBITDA margin trend

500
475
365

300

401

296
200

201

(%)

(| crore)

400

248

100
FY12

FY13

FY14

FY15

FY16E

19.5
19.0
18.5
18.0
17.5
17.0
16.5
16.0
15.5
15.0

FY17E

Source: Company, ICICIdirect.com, Research

19.0
17.9

18.4

18.1

17.7

16.6

FY12

FY13

FY14

FY15

FY16E

FY17E

Source: Company, ICICIdirect.com, Research

Exhibit 3: Change in estimates

Particulars
Revenue
EBITDA
EBITDA Margin %
PAT
EPS

Old
434.3
74.8
17.2
47.2
78.6

FY16E
New
401.1
73.7
18.4
44.6
74.4

% Change
(7.6)
(1.5)
114 bps
(5.4)
(5.4)

Old
508.9
88.4
17.4
56.2
93.7

FY17E
New
474.6
90.3
19.0
55.6
92.7

% Change
(6.7)
2.2
166 bps
(1.0)
(1.0)

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 2

Richly valued at current price: downgrade to SELL

WPL is leveraging the brand Cello by creating value in the market where
Nilkamal and Supreme are already present and expected to benefit from
rising urbanisation. However, we believe at the CMP | 2092, the stock is
discounting all its near term positive news. In addition, due to a slow pickup in demand of plastic products, we believe volume growth would not
be as strong as in FY12-15. We have modelled volume CAGR of ~10% for
FY15-17E. Also, considering the nature of the business (mainly
commodity business) the company has to pass on the benefit of lower
raw material prices and discounts to promote the new business (including
advertisement expenses). Hence, we do not see any sharp increase in
margin, going forward. At the CMP, the stock is trading at its all-time high
P/E of 28x FY16E and 23x FY17E (the company has traded at 8x one year
forward P/E multiple in the last five years). With the recent sharp run in
the stock, it is trading at expensive valuation multiples, which we believe
would be unsustainable. Hence, we maintain our target price at | 1620
and value the stock at 18x FY17E earnings (implying a target PEG of 0.9x
FY15-17E, ~30% premium to industry average) with a SELL rating.
Exhibit 4: One year forward P/E band

31-Mar-15

30-Sep-14

31-Mar-14

30-Sep-13

31-Mar-13

30-Sep-12

31-Mar-12

30-Sep-11

31-Mar-11

30-Sep-10

31-Mar-10

30-Sep-09

31-Mar-09

30-Sep-08

31-Mar-08

30-Sep-07

31-Mar-07

30-Sep-06

31-Mar-06

2000.0
1800.0
1600.0
1400.0
1200.0
1000.0
800.0
600.0
400.0
200.0
0.0

Source: Company, ICICIdirect.com Research

Exhibit 5: Valuation matrix

Mcap (in
crore)

Sales

EBITDA

FY15 FY16E FY17E

Net Profit

FY15 FY16E FY17E

Supreme ind

8225

4219

4468

5688

527

723

887

Nilkamal

1560

1787

1938

2112

87

157

173

Astral Polly

4858

1429

1936

2462

132

266

365

Time Techno

1308

2476

2671

2970

338

382

424

PE

FY15 FY16E FY17E

322
42
76
110

342
51
145
142

446
64
200
169

Average
Wimplast

1256

365.4

401.1

474.6

60.7

73.7

90.3

38.4

44.6

55.6

Mcap/Sales

FY15 FY16E FY17E

ROE

FY15 FY16E FY17E

FY15 FY16E FY17E

27

25

19

29

26

37

30

25

10

11

67

33

24

16

21

24

0.4

0.5

0.4

11

12

13

35
32.7

24
28.1

19
22.6

3.4

3.1

2.6

21.6

20.4

21.0

Source: Bloomberg, Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

29

Page 3

Financial summary
Profit and loss statement

| Crore

Cash flow statement

| Crore

(Year-end March)

FY14

FY15E

FY16E

FY17E

(Year-end March)

FY14

FY15E

FY16E

FY17E

Total operating Inc

296.4

365.4

401.1

474.6

Profit after Tax

32.5

38.4

44.6

55.6

19.7

23.3

9.8

18.3

9.0

9.0

12.2

13.9

178.3

190.8

213.6

223.4

-28.7

-6.4

-20.9

-36.1

Employee Expenses

10.1

12.3

16.9

22.8

Inc/(dec) in CL and Provisions

7.6

0.7

0.9

5.7

Purchase of goods

23.2

53.6

32.9

70.2

CF from operating activities

20.7

41.8

36.8

39.1

(Purchase)/Sale of Fixed Assets

-22.0

Growth (%)
Raw Material Expenses

Other expenses

31.3

48.0

64.1

67.9

242.8

304.7

327.4

384.3

EBITDA

53.6

60.7

73.7

Growth (%)

22.1

13.2

Depreciation

9.0

9.0

Interest

0.2

0.1

0.0

Total Operating Exp

Other Income

Add: Depreciation
(Inc)/dec in Current Assets

-11.2

-22.7

-25.0

Longterm loans and advances

-0.9

2.7

0.0

0.0

90.3

Others

0.2

-0.4

-4.0

-4.0

21.4

22.6

CF from investing activities

-11.9

-20.4

-29.0

-26.0

12.2

13.9

Issue/(Buy back) of Equity

0.0

0.0

0.0

0.0

0.0

Inc/(dec) in loan funds

0.0

0.0

0.0

0.0
-9.1

0.3

2.0

2.6

3.3

Dividend paid & dividend tax

-6.3

-7.0

-8.4

PBT

44.7

53.6

64.1

79.7

Others

-0.4

-4.8

4.7

0.0

Total Tax

12.2

15.2

19.4

24.1

CF from financing activities

-6.7

-11.9

-3.7

-9.1

PAT

32.5

38.4

44.6

55.6

Net Cash flow

2.1

9.6

4.1

4.0

Growth (%)

15.1

18.0

16.4

24.7

Opening Cash

2.7

4.8

14.3

18.4

EPS (|)

54.2

63.9

74.4

92.7

Closing Cash

4.8

14.3

18.4

22.4

FY14

FY15E

FY16E

FY17E

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research

Balance sheet
(Year-end March)

| Crore
FY14

FY15E

FY16E

Key ratios

FY17E

Liabilities
Equity Capital

(Year-end March)
Per share data (|)

6.0

6.0

6.0

6.0

EPS

54.2

63.9

74.4

92.7

Reserve and Surplus

144.9

171.6

212.5

259.0

Cash EPS

69.2

78.9

94.6

115.9

Total Shareholders funds

BV

251.5

295.8

364.0

441.5

9.0

10.0

12.0

13.0

150.9

177.6

218.5

265.0

Total Debt

0.0

0.0

0.0

0.0

DPS

Def Tax Liability

5.7

5.3

5.3

5.3

Operating Ratios (%)

EBITDA Margin

18.1

16.6

18.4

19.0

PAT Margin

11.0

10.5

11.1

11.7

Others
Total Liabilities

0.1

0.1

0.1

0.1

156.8

183.0

223.9

270.4

Assets
Gross Block

Asset Turnover

2.1

2.2

2.0

1.9

Inventory turnover

5.7

6.3

6.8

6.3

127.0

149.7

174.7

196.7

Debtor turnover

10.1

9.0

8.9

8.1

Less: Acc Depreciation

54.8

63.8

76.0

89.9

Creditor turnover

21.6

39.2

40.6

40.6

Total Fixed Assets

72.7

86.4

99.2

107.3

Return Ratios (%)

Inventory

64.2

51.5

65.9

84.5

RoE

21.5

21.6

20.4

21.0

Debtors

29.3

40.6

45.1

58.5

RoCE

29.5

29.1

28.1

28.8

Loans and Advances

12.3

20.1

22.1

26.1

RoIC

29.4

30.7

30.0

30.9

Valuation Ratios (x)

P/E

38.6

32.7

28.1

22.6

EV / EBITDA

23.3

20.4

16.8

13.7

Cash
Total Current Assets

4.8

14.3

18.4

22.4

110.5

126.5

151.5

191.6

Creditors

13.7

9.3

9.9

11.7

EV / Net Sales

4.2

3.4

3.1

2.6

Provisions

7.1

8.5

8.9

10.5

Market Cap / Sales

4.2

3.4

3.1

2.6

Total Current Liabilities

29.2

29.9

30.8

36.5

Price to Book Value

8.3

7.1

5.7

4.7

Net Current Assets

81.3

96.6

120.6

155.1

Longterm loans and advances

Total Assets

Solvency Ratios

2.7

0.0

0.0

0.0

Debt / Equity

0.0

0.0

0.0

0.0

156.8

183.0

223.9

270.4

Current Ratio

3.8

4.2

4.9

5.3

Quick Ratio

1.6

2.5

2.8

2.9

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Page 4

RATING RATIONALE

ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns

ratings to its stocks according to their notional target price vs. current market price and then categorises them
as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional
target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;

Pankaj Pandey

Head Research

pankaj.pandey@icicisecurities.com

ICICIdirect.com Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai 400 093
research@icicidirect.com

ICICI Securities Ltd | Retail Equity Research

Page 5

ANALYST CERTIFICATION
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report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s)
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