Valuation and Conclusion
Company's focus on improving profitability by sprucing up product mix; more focus on developing value added products to 35% in 2 years in the polyester film business, Scaling up Revenue share in the Specialty Polymer business which is currently at 6-7% & plans to take it to 30-40% over 4-5 years(around 5X) at higher margins of around 25% attracts the company's share price. Its Product pipeline for the business continues to remain strong on back of strengthening R&D and execution, expanding global footprint through aggressive pursuit of Identified Exports opportunities and participation in international exhibitions to enhance brand visibility in the engineering plastic business and on an overall Cost reduction exercise translating to improving profitability, is hopeful of improving operational efficiencies even further. Moreover, the new agreement in pipeline with Revenue target of Rs 1700-2000cr over 4-5 years, We see a turnaround in the stock- the New Ester, from loss making company past couple of years to delivering profit in the recent quarter & expect the same in the years to come. Going ahead, management is confident of recent efforts towards improving the margin profile of the businesses which will help in delivering better performance going forward.
Therefore, we recommend to Accumulate the stock for long term for a target of Rs 113.