Fundamental Analysis of Polyplex Corporation: Investors look for diversification in their portfolios to hedge risk. This transcends to product lines, geography, and customers of the stocks. Polyplex is one such well-diversified stock with multiple products spanning various segments. It has a presence in 75 countries with manufacturing plants in 7 countries. Sounds so diverse, let us perform a fundamental analysis of Polyplex Corporation to know more about the company in detail.

Fundamental Analysis of Polyplex Corporation

In this article, we shall conduct a fundamental analysis of Polyplex Corporation. We will get ourselves acquainted with the history and business of the company, followed by the industry overview of the different product segments in which it operates.

Later, a few sections are devoted to assessing revenue & profitability growth, return ratios, and debt analysis. A highlight of the future plans and a summary to conclude the article at the end.

telegram channel

Company Overview

Established in 1983, Polyplex Corporation is the seventh-largest manufacturer of polyester (PET) films globally. It is a leading producer of BOPET films and offers a broad portfolio of various substrates including BOPET (thin & thick), BOPP, CPP, and Blown PP/PE.

Note: If you want to learn Candlesticks and Chart Trading from Scratch, here’s the best book available on Amazon! Get the book now!

This specialty, innovative and differentiated products find their applications in packaging, electrical & electronic, and other industrial uses. The company has well-integrated backward and forward capabilities offering it cost competitiveness, supply security, higher innovation, value addition, and decreased earnings volatility. 

Polyplex has a global presence in 75 countries with manufacturing and distribution facilities across the USA, Indonesia, India, Thailand, and Turkey. As for domestic sales, India contributed 18% of the revenues in the recent fiscal year. Overall, the company is well diversified in terms of region-wise sales.

Its downstream businesses that produce digital media films, laser printer films, lamination films and more such diverse products made up 16% of the revenues in FY23. This segment assists in stabilizing overall margins for many products. 

The table below shows the breakdown of sales of Polyplex Corporation across various heads:

source- Polyplex Corporation Annual Report FY 2022-2023

We read about the business of Polyplex with a focus on diversity as per various segments. Now, let us move ahead to understand the polyester (PET) films industry and its growth prospects.

Industry Overview

For our industry analysis, we’ll restrict our coverage to the product segments in which the company primarily operates: Thin PET, Thick PET, and BOPP. Together these three segments accounted for 71% of the income.

The global BOPET films market is divided into thin films and thick films. 

Thin BOPET Films

Thin films make up over 3/4th of PET film demand worldwide. Flexible packaging is the largest sub-segment of thin films, accounting for 75% of the total thin films used.

As for consumption, Asia is the largest market for thin polyester films. The continent consumes more than 3/4th of the total thin films produced worldwide. Globally, the market is projected to grow at 5-6% for the next few years. Domestic market growth is expected at about 10% every year.

In the years ahead, an increase in purchasing power and a concurrent rise in per capita packaging material consumption will primarily lead to thin BOPET film demand growth.

Thick BOPET Film Market

Electronics, electrical & other industrial products make up for the demand for thick BOPET films. The global thick film market is projected to grow at a consistent CAGR of 4-5% in the coming years. 

A rise in photovoltaic, flat panel displays, liners for electronic applications, and flexible electronics are expected to be major growth catalysts.

BOPP Film Market

BOPP is similar to BOPET but has added properties of high moisture resistance, sealing, etc. The global BOPP market is estimated to grow at 4% every year. Domestic market growth is expected at about 15% every year.

As for the two major segments, food packaging made up 64% of the total BOPP demand, followed by 18% of non-food packaging applications.

Putting all this together, we can say that the BOPET and BOPP demand in India (and other developing countries as well) is projected to grow faster than the global average. In the next section of our Polyplex Corporation, let us take a look at how the company has grown over the years.

Polyplex Corporation – Financials

Revenue & Net Profit Growth

The operating revenue of the BOPET manufacturer has grown at a CAGR of 13.71% every year from Rs 4,570 crore in FY19 to Rs 7,640 crore in FY23. During the same period, its net profit has seen a sharp decrease from 965 crore in 2022 to Rs 615 crore in 2023.

The table below presents the operating revenue and net profit figures of Polyplex Corporation for the last five financial years.

Financial YearOperating Revenue (Rs Cr)Net Profit (Rs Cr)
20237,640615
20226,624965
20214,918862
20204,487494
20194,570584
4 Yr CAGR (%)13.71%1.30%

Margins: Operating Profit & Net Profit

Polyplex reported an operating profit margin and net profit margin of 9.74% and 8.04% in FY23 respectively. The margins were lower than those clocked a year before. This was due to higher raw material prices and increased volumes, coupled with an increase in power and fuel costs that resulted in lower profits.

The data below shows the operating margin and net profit margin of Polyplex Corporation over the last five fiscals.

Financial YearOPM (%)NPM (%)
20239.748.04
202217.5614.56
202120.2517.52
202013.1211
20191512.77

In the next section, we take a look at the return ratios of the business.

Return Ratios: RoE & RoCE

Following the suit of profit margins, the return ratios: the return on equity (RoE), and the return on capital employed (RoCE) have gotten better in the last five years.

In FY 2022-23, RoE and RoCE of Polyplex Corporation stood at 14% and 15% respectively.

The information below highlights the RoE and RoE for the previous five years of the company.

Financial YearRoE (%)RoCE (%)
20231415
20222527
20212526
20201618
20192321

From the figures above, we can take into note one more thing. There is not much disparity between the two return ratios across different fiscals in the past. Perhaps, the debt is low and the management has not resorted to financial leverage to inflate the return on equity.

Time to find out in the next section of our fundamental analysis of Polyplex Corporation.

Debt to Equity & Interest Service Coverage

The table below shows lists the debt-to-equity ratio (D/E) and interest service coverage ratio (ISCR) of Polyplex Corporation for the last five years.

Financial YearDebt/EquityInterest Service Coverage
20230.2321.16
20220.2870.49
20210.2356.67
20200.2536.53
20190.2823.58

We can easily see that the stock carries very low debt at a D/E ratio of 0.23 only. In addition to this, its ISCR has decreased from 70.49 in 2022 to 21.16 in 2023.

Future Plans Of Polyplex Corporation

So far we have only looked at the previous fiscals’ results for our fundamental analysis of Polyplex Corporation. In this section, let us see what lies ahead for the company and its investors.

  1. The company is currently increasing its manufacturing capacity of polyester films in the US. After its completion, it will be the second-largest producer of BOPET globally excluding China.
  2. Polyplex has 27 patents across various products, processes, & nations and has filed applications for 14 more patents. 
  3. The company is investing approximately $128 million USD in a Brownfield BOPET Film line and Offline Coater Project in the United States. The project is currently under implementation and is expected to commence operations by the second quarter of the fiscal year 2024-25.

Fundamental Analysis of Polyplex Corporation – Key Metrics

We are now almost at the end of our fundamental analysis of Polyplex Corporation. Let us take a quick look at the key metrics of the stock.

ParticularAmountParticularAmount
CMP₹1,061Market Cap (Cr.)₹3,267
Debt to Equity0.23Dividend Yield7.70%
EPS₹50.39Stock P/E22.78
Face Value₹10Book Value1095
Net Profit Margin8%Operating Profit Margin9.70%
ParticularAmountParticularAmount
Promoter Holding51%Price to Book Value1.04
ROCE15%ROE14%

In Conclusion

In this year, Polyplex corporation’s sales and other income rose by 15%, mainly because of higher BOPP Sales. However its net profits dropped by 36%. This was because of higher product prices that hurt the margins, lower exports and promoter stake sale. The company still has growth prospects in the future, as it leverage its demand, diversification and industry expansion to improve its revenue and profits.

In your opinion, what lies ahead for the Polyplex group? At present P/E of 22.78, is it an attractive bet? Will the company be able to sustain its margins? How about we continue this conversation in the comments below?

Written By Vikalp Mishra

You can now get the latest updates in the stock market on Trade Brains News and you can also use our Trade Brains Stock Screener to find the best stocks.


Start Your Stock Market Journey Today!

Want to learn Stock Market trading and Investing? Make sure to check out exclusive Stock Market courses by FinGrad, the learning initiative by Trade Brains. You can enroll in FREE courses and webinars available on FinGrad today and get ahead in your trading career. Join now!!