Equity Research Report · The Positive supply audit report to open floodgates of new orders for Fiberweb India after Wal-Mart auditors gave a thumbs-up to supply audit report. The

Multibagger Pick EQUITY ANALYST CAPITAL SERVICES

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Multibagger Pick

Equity Research Report

April 2017

Fiberweb (India) Ltd. BSE CODE: 507910 Sector: Textile & Plastic CMP: Rs. 338 (28/04/2017) Market Cap: Rs 420 Cr (Micro Cap) Target Price: Rs. 1240/- Date: 28/04/2017 Time Period: 12 – 18 months

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Independent Equity Research

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TABLE OF CONTENT

S.No Content Page No.

1. Company Background 03

2. Recent Developments 04

3. Shareholding Snapshot 05

4. Financial Performance 06

5. Quarterly& Annual Results 07

6. Investment Rationale 08

7. Risk & Concerns 09

8. Peer Group Comparison 10

9. Technical Chart 11

10. Conclustion 12

11. Disclaimer 13



1. Company Background:-

Fiberweb (India) Ltd. is an ISO 9001 company established in 1985. It manufactures High-Quality Spun

Bond NONWOVEN Roll Goods Used in Hygiene Industry, Agriculture Crop Cover, Medical & Industrial

Clothing & other Innovative Uses.

The Company was established in 1985 in the name and style of PVD Plast Mould Industries Ltd. During

the last two decades, the manufacturing activities have been expanded to include monolayer

and multiplayer films, garbage bags, carrier bags and the Company has also established its flagship unit for

Spun Bond Nonwoven Fabrics, being the first of its kind in India.

Fiberweb (India) has been the pioneer of spun bond non-woven fabric production in India. Since the

commissioning of the plant in the year 1996, the Company with its excellence in manufacturing has

attained glorious heights of producing and supplying high-quality roll goods to various users all over the

world.

Unit 1: This unit comprises of divisions engaged in the manufacture of Monolayer and Multilayer films, for

packaging. Lamination, masking, etc., widely used in India and have excellent export potential. The state

of art machines are manufactured by Reifenhauser, Gmbh, Troisdorf, Germany.

Unit 2 (100% EOU) : - In this unit, Films, Garbage bags and carrier bags are being manufactured. This

unit has one of the most modern plants to ensure quality product, conforming to international standards.

The Unit No.3 (100% EOU) of the company is set up for the manufacture of Non-Woven Spun Bonded

Polypropylene Fabric. This fabric has diverse applications, Hygiene usage cover stock for baby diapers,

sanitary products, etc; Agricultural usage “ crop covers, ground covers, etc., Medical usage “ medical made

ups, bed linen, etc., and other applications like filtration medium, industrial work clothing, head covers,

disposable table wipes and mats, etc. to name a few. This unit incorporates the state of art Reicofil II

Double Beam plant supplied by the renowned plastic Extrusion machinery manufacturer Reifenhauser

Gmbh of Troisdorf, Germany.

The product range of the company includes:

High-Quality Spun Bond NONWOVEN Roll Goods

Monolayer and multilayer films

Garbage bags

Carrier bags

Spun Bond Nonwoven Fabrics

Lamination

Masking

Achievements/ recognition: It is an ISO 9001 certified company.



2. Recent Developments :-

The company manufactures high-quality Spun Bond Polypropylene Non-Woven roll goods and products

thereof, used in Hygiene industry, Agriculture Crop Cover, Soil Cover, Medical and industrial clothing and

many other innovative products, like Bags, Pillow ticks and Covers, Bed Covers, Curtains, Table Cloth,

Garment Interlining, etc.and is still in the early stages of growth, with its bottom line doubling and trebling

on a year-on-year basis. No wonders then, the stock is ending the year as the second best performer. Apart

from manufacturing and exporting garbage bags and carrier bags, the company has established its flagship

unit for spun-bond nonwoven fabrics, being the first of its kind in India. Net profit of the company jumped

3.50 times to Rs 7.10 crore in FY16 compared with Rs 2.03 crore reported for the previous year and Net

profit preceding 12months: ₹ 12.39 Cr. Apart from this more recent development will boost company

performance.

The Positive supply audit report to open floodgates of new orders for Fiberweb India after

Wal-Mart auditors gave a thumbs-up to supply audit report. The new order inflow will help take

care of expansions, said Sheth. The compnay plans to expand from 7500 tonnes to 10 tonnes.

However, the Chairman and Managing Director Pravin Sheth clarified that it was Lowe's Company

that conducted the surprise audit. Lowe's are the main suppliers to retailers like Wal-Mart, Home

Depot and that the company does not directly supply to Wal-Mart.

The company launched a new product which was very well received in the US, this will

help them perform better in the last quarters of this fiscal.

Superior quality, product development and global presence is a key to grow.

Robust order book gives revenue visibility.

The company expects operating margin of 15 percent in FY18.

Fiberweb India's Chairman and Managing Director Pravin Sheth expects a revenue growth

of 18-20 percent in FY17 after the company reported strong numbers in the second quarter of

current fiscal.

http://www.moneycontrol.com/india/stockpricequote/plastics/fiberwebindia/PVD

http://www.moneycontrol.com/india/stockpricequote/plastics/fiberwebindia/PVD



3. Shareholding Snapshot : Mar 17

Promoters59.57%Non Institution37.79%Insurance2.26%Mutual Funds0.2%Other

DIIs0.18%

Majority shareholders : Promoters

Pledged Promoter Holdings : None

Mutual Funds : Held in 9 Schemes (0.2 %)

FIIs : Held by 0 FIIs (0 %)

Promoter with highest holding : PRAVIN V SHETH (22.44%)

Highest Public shareholder: LIFE INSURANCE CORPORATION OF INDIA (1.81%)

Individual Investors Holdings : 32.43%



4. Financial Performance as on Dec 16:-

1 YEAR RETURN - OUTPERFORMED THE SENSEX BY 1448.51%

Industry Textile & FMCG.

Market cap: - Rs 420 Cr (Micro Cap)

Current Price: ₹ 320.85

Stock P/E: 32.28

Dividend Yield: 0.00%

Face Value: ₹ 10.00

52 Week High/Low: ₹ 378.90 / ₹ 25.25

EPS last year: ₹ 5.59

Expected Annual EPS: ₹ 9.89

Price to Earning: 32.28

PEG Ratio: 0.70

Profit growth 1 year: 57.39%

Profit growth 3Years: 323.83% Net Profit last year: 7.10 cr

Net profit preceding 12months: ₹ 12.39 Cr.

Expected quarterly net profit: ₹ 2.62 Cr.

Expected quarterly sales growth: 31.11%

YOY Quarterly profit growth: 201.49%

Sales growth: 22.90%

Sales latest quarter: ₹ 26.62 Cr.

Return on invested capital: 21.99%

Return on assets: 10.85%

Return on assets 3years: 4.49%

Enterprise Value: ₹ 504.49

Promoter holding: 63.77%

Pledged percentage: 0.00%

Leverage: ₹ -1.72

Change in promoter holding: -2.39%

High price: ₹ 378.90

QoQ Profits: 43.77%

Change in promoter holding 3Years: 22.11%



5. Quarterly& Annual Results:-

Quarterly Results Figures in Rs. Crores

(in Cr.) Dec-16 Sep-16 Jun-16 Mar-16 Dec-15 FY 15-16

Income Statement

Revenue 26.62 22.07 13.14 17.88 16.31 61.95

Other Income -- -- -- -- -- --

Total Income 26.62 22.07 13.14 17.88 16.31 61.95

Expenditure -21.66 -18.44 -10 -14.37 -14.09 -51.59

Interest 0 -0.01 -0.01 -0.01 -0.01 -0.04

PBDT 4.95 3.62 3.13 3.5 2.21 10.32

Depreciation -0.91 -0.81 -0.82 -0.1 -0.87 -3.22

PBT 4.04 2.81 2.32 3.4 1.34 7.1

Tax -- -- -- -- -- --

Net Profit 4.04 2.81 2.32 3.4 3.87 7.1

Equity 12.6 12.59 12.59 12.59 10.99 12.6

EPS 3.21 2.23 1.84 2.85 3.52 6.34

CEPS 3.93 2.88 2.49 2.78 4.31 8.19

OPM % 18.62 16.43 23.88 19.62 13.59 16.73

NPM % 15.19 12.74 17.63 18.99 23.74 11.47

Annual Results Figures in Rs. Crores

(in Cr.) 2016 2015 2014 2013 2012

Income Statement

Revenue 61.95 68.5 64.17 51.14 44.77

Other Income -- -- -0.03 -- --

Total Income 61.95 68.5 64.14 51.14 44.77

Expenditure -51.59 -66.28 -63.02 -50.07 -12.92

Interest -0.04 -0.07 -- -- --

PBDT 10.32 2.15 1.12 1.07 31.85

Depreciation -3.22 -0.12 -2.27 -2.24 -1.23

PBT 7.1 2.03 -1.15 -1.17 30.62

Tax -- -- -- -- --

Net Profit 7.1 2.03 -1.15 -0.91 30.62

Equity 12.6 10.99 10.99 10.99 10.99

EPS 6.34 1.85 -1.04 -0.83 27.85

CEPS 8.19 1.95 -- 1.21 --

OPM % 16.73 3.24 1.75 2.09 71.14

NPM % 11.47 2.97 -1.79 -1.79 68.39



6. Investment Rationale:-

We believe, going forward the non-woven Technical Textile sector would grow globally as well as in India

led by

changing perception of consumers towards disposable products.

increasing per capita income.

increasing awareness of hygiene.

Financial performance based Report. Here's what is working for Fiberweb (India) based on Dec 2016

financials.

Operating Profit to Interest – Quarterly The company hardly has any interest cost. This signifies

that debt on company's books is very low.

The company's Interest Cost is too low as compared to it's Operating Profit.

Net Sales – Quarterly At Rs 26.50 cr has Grown at 53.2 % over average Net Sales of the previous

four quarters of Rs 17.29 Cr Near term sales trend is very positive.

Profit Before Tax (PBT) – Quarterly At Rs 4.04 cr has Grown at 63.0 % over average PBT of the

previous four quarters of Rs 2.48 Cr.

Return on Capital Employed (ROCE) - Half Yearly Highest at 9.80 % in the last five half yearly

periods.

The company has displayed increased efficiency by generating higher profit on overall capital

(equity and debt) in Dec 2016 by 18.80%.

Earnings per Share (EPS) – Quarterly Highest at Rs 3.21 in the last five quarters.

Operating Profit (PBDIT) – Quarterly Highest at Rs 4.96 cr. in the last five quarters. Near term

Operating Profit trend is positive.



7. Concerns & Risk: -

Here's what is not working for Fiberweb (India) based on Dec 2016 financials Reports.

Debtors Turnover Ratio- Half Yearly.

Lowest at 13.20 times in the last five half yearly periods.

Inventory Turnover Ratio- Half Yearly Lowest at 6.54 times in the last five half yearly periods

Company's pace of selling inventory has slowed.



8. Peer Group Comparison:-

Closest peers in term of Market Cap within Textile Indrustry.

Company Quality Valuation Financial Trend

Ganesha Ecosphere Good Fair Flat

Cheviot Company Good Very Expensive Positive

Vardhman Acrylics Does not Qualify Does not Qualify Negative

Zodiac Clothing Below Average Very Risky Negative

Fiberweb (India) Average Attractive Very positive

Alok Industries Below Average Very Risky Negative

Donear Industries Average Expensive Positive

Mafatlal Industries Average Very Expensive Negative

http://www.marketsmojo.com/Stocks?StockId=394105&Exchange=0










9. Technical Chart:-

Technical Analysis Summary:-

Trend Reversal: Stock has gained after 3 days of consecutive fall upto 320 from 52 week high 378.

Taken support near previous resistance 320 and reversed for next upper level of channel is 420.

Day’s High: Stock touched an intraday high of Rs 350.00 (9.09%).

Moving Averages: Stock has traded higher than 5 day, 50 day, 100 day and 200 day moving

average but lower than 20 day moving average.

Rising Investor Participation: Delivery Vol of 1.35 lacs on 27 Apr has risen by 108.36% against

5-day avg delivery vol.

Liquidity: Based on 2% of 5 day average traded Value the stock is liquid enough for trade size of

Rs 7.42 lacs.

Significant increase in 3 Month: Stock has delivered 68.14% returns in the period; Sector return

during the period is 14.16%.

Significant YTD increase: Stock has delivered 95.93% returns in the period; Sector return during

the period is 21.83%.

Significant increase in 1 Year: Stock has delivered 1,590.59% returns in the period; Sector return

during the period is 32.21%.



10. Conclusion:-

I initiate a coverage on FIL with BUY rating and a price target of Rs. 1240 with a potential upside of

300%. The stock is currently trades at 338 PE 32.1x/ 16.7x / 14.2x / 11.6x of FY16/17/18/19e. (32x PE

multiple to FY19e EPS;10 year average PE). FY 15 EPS 1.85, FY 16 EPS 6.34, Current FY 17 EPS 11.92,

FY18 expected EPS 24 and FY 19 expected EPS 48 likely. Company has good consistent profit growth of

Profit growth 3Years: 323.83% And EPS growth expected 100% every year, Valuation at the current price

is very good for long term investments. Financial performation of company is very good.

The Short term target is 420 and two year target is 1240.



11. Disclaimer:

Important Notice: Equity Analyst Capital Services is an Independent Equity Research Company.

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not intended to be and must not alone be taken as the basis for an investment decision.

Documents

Equity Research Report · The Positive supply audit report to open floodgates of new orders for Fiberweb India after Wal-Mart auditors gave a thumbs-up to supply audit report. The