AMD Industries Ltd - Value Pick

Amd Industries Ltd

  Listed on both NSE: AMDIND & BSE: 532828
Currently trading around 39-40 with a market cap of around 70 crores.

Promoters hold 66.76% stake.
It has a Debt of around 78 crores.

Total Reserves are around 102 crores.

Established in 1958 Amd Industries Ltd has emerged as one of the prominent packaging players in the industry, providing packaging solutions to some of the biggest brands and companies in the beverage, liquor and processed food categories.

AMD is headed by executive chairman Mr H S Gupta and Mr Adit Gupta is the M.D.

The company's key products are: Pet Preforms (Bottles), Bottle Caps and Crown Caps.

Around 38% of the business is Crown Caps, 34% is Pet Bottles and 20% is for the Bottle Caps (CSD Closures)

The company is headquartered in New Delhi and it has its manufacturing facilities UP, Rajasthan and the company in order to cater to Coca Cola's increasing demand has started to set up another facility in West Bengal.

The company a month back has also set up four new lines of machines at Rajasthan having a capacity of manufacturing 25,000 PET bottles and 22,000 jars in a day.

Earlier, The company's Rajasthan plant was mainly for manufacturing Crown Caps.

Some of the key clients for the company are: Coca Cola, Pepsi, Hindustan Unilever, Foster, United Breweries, SAB Miller and Dabur.

The company was earlier named as AMD MetPlast and came with its IPO back in 2007 with an issue price of 75 Rs Per share.

Let's take a look at the financials of the company :-

The company right from 2007 till now has never reported an loss for its annual results, and right from 2007 till date the company has paid dividend every year to its shareholders even on years when its bottom line was hit.

From the above table it looks like company is running at full capacity utilization and that is why there hasn't been any revenue growth. But with recent capacity expansion in Rajasthan and the new facility in West Bengal the company should be showing really good growth going forward from here.

Due to the crude price crash, AMD Industries like other packaging and plastic companies will be benefited.

For full year FY16 the topline with just few days left in the FY the top line is expected around 176 crores and the bottom-line is expected at just under 7 crores and the EPS should be at 3.6.

On an EPS of 3.6 at current price of 39 the stock is trading around an P/E of 10.80.

Other packaging names like Hitech Plast which became highlighted due to its client Patanjali's challenge to MNCs is trading at 25 p/e and the same is with other packaging names.

Tin, Plastic, Glass are some of the main and conventional options for Beverage packaging.

While AMD is into plastic, to compare it with someone in the industry we can take a look at Haldyn Glass listed on the BSE and trading at around 30 which has witnessed no growth in the last 6 years but still commanding a p/e of 20 currently that too after it has crashed significantly.

Haldyn at its peak of around 44 was enjoying a p/e of 30+.

Applying a P/E of 20 would give AMD a stock price of 72 and applying the best case p/e of 30 would give stock price of 108. This ofcourse is as per FY16 and growth yet to come which should make its EPS much better in the future though.

We have often seen that companies like AMD Industries which lie low due to lack of growth spurt to good heights due to the growth triggers and for AMD the capacity expansion as well as the new facility should felicitate good growth for the company.

The young population of India the catchy promotional campaigns all help the demand of brewed drinks which have slowed off late though.

All in All, I feel Amd Industries is a good business and a value pick at current valuations for Investors.

Apart from fundamentals, Technically AMD has broken out of CUP & HANDLE pattern on the daily charts on back of good volumes.

Note: The above is not a research report but information as available on public domain and it should not be treated as a research report.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that i might have Amd Industries Ltd in my portfolio and hence my point of view can be biased. Readers should consult their financial advisory before any investments.