XPRO India – Multibagger Recommendation

XPRO India Ltd. is a part of S.K. Birla Group and is a diversified company involved in the manufacture of BOPP Films, Coextruded Plastic Sheets, Coextruded Cast Plastic Film, Thermoformed Components, Refrigerator Liners, Thermoset Moulding Powders and Synthetic Resins.The company has its manufacturing operations located at Faridabad, Greater Noida, Ranjangaon (Pune) and Barjora (West Bengal). The company had relocated its manufacturing plant located at Kandivali, Mumbai to Ranjangaon, Pune.

The company owns land at Kandivali and has entered into an agreement with a builder for the development of that land. Though the company has not spelt out the details of the land bank or the terms of the agreement with the builder in either its Annual Report or the company’s website, and believe any positive surprises there could significant rerating of the stock.

The promoter group has recently been allotted Equity Shares and Convertible Warrants at Rs 41.50, signifying confidence of the promoters in the future of the company.

Recommendation:
The company has been a consistent dividend payer. The Cash Profit for FY 06-07 was Rs 12.41 crores leading to a Cash EPS of Rs 11.80. The stock therefore trades at roughly 4 times its Cash EPS of FY 06-07. Moreover with a Book Value of over Rs 100, manufacturing operations at 4 places and consistent dividend track record, the stock looks undervalued at its current price.