As promised, here I am with a brand new stock discussion. And let me remind you of the fact that the microcap segment of stocks is highly volatile in nature and you should exercise your judgment to invest in them only with surplus money, there are chances of permanent capital loss in them.
So let’s delve into this stock called Premier Polyfilm.
And those of you like, here is the Annual report of the same and for other’s let start the study in our specified format.
What does it do?
It manufactures the PVC products like vinyl flooring, sheeting and leather cloth etc.
Products : PVC flooring, insulating mats, artificial leather etc. mainly of industrial use.
Sales and Profit growth: Nice
Last 10 years performance:
Notice the fluctuations in margin during 2016/2020 etc.
Pledging: Zero, the less the more.
Debt: 10 cr (in 2018 it was 32 cr, so a constant reduction in debt is positive)
Dividend: No dividend paid last year, usually pay around 15% of earnings, which is good enough for micro cap companies.
What’s the trigger?
The infra push is gaining traction all over the country and with that companies that help in creating temporary infra will be in good position.
Also, the raw material used in this, the PVC resin, is in decline since last few month and this can increase the profitability margin of the company.
The export market are current in decline and a healthy uptick is expected in those lines sooner or later. This scenario can positively impact companies like premier polyfilm.
Risk?
Apart from obvious risk associated with microcap companies. The failing of infra push can create trouble for company.
The stock has stagnated since last two years, notice the sync with overall small cap cycle, which is in downtrend since 2021. The sustenance of price beyond cycle is another example of its stability. But any degradation in overall market sentiment can potentially dent this stock as well.
Apart from this, any change in petroleum price can adversely impact the price of its raw material, PVC Resin and impact the growth and margin of the company overall.
Hope you enjoyed the discussion, will try to bring similar stock on this theme in coming weeks. Till then, keep investing.