Anad Rathi has initiated coverage on Ester Industries which produces PET films & Engineering plastic, whereindemand and realizations are moving northwards in recent past. Company’s utilization levels are more than 100% for PET film andlooking to realization trend in last 6 months, this division will be a big money spinner for now. The company is also doubling the capacity of PET Films, which maybe commissioned by the end of calendar year 2010. Engg Plastic division which caters to Automobile, Engg & Electrical segments is also doing well.
Over 80% revenues come from PET films, where realizations are very strong since April’10. Per Kg prices have moved up from around Rs.100 in March’10 to Rs 140 in June’10. Fortunately PTA & MEG prices are more or less stable, so whole incremental revenues will add to the profits.
June Qtr will be much better then March’10; plus next i.e. Sept Qtr will be much much better; for not only this company, but for the whole industry. Most of the sales are to the domestic markets [80%%], catering to flexible packaging segment which in turn depends upon FMCG sector where demand is strong at 20‐22% [and least affected by any slowdown], rest is exported.
Anad Rathi expects a 50% appreciation in stock price to Rs 45 in next 3‐4 months and target for Rs 80/‐in next 12‐15 months time frame. BUY