Polylink Polymers manufactures polymeric compounds that are mainly used in
— Power cable
— Telephone cable
— Engineering Plastics
All these sectors are growing at a rapid pace.
Here are the reasons why the stock can have multibagger potential:
1. Belongs to the India Glycols group.
2. EVs are upon us and every country will have to ensure that all citizens get adequate power. Power cable manufacture will spiral upwards, benefiting the company in the long run. Another positive news is that the company has discontinued the Production of ST and LT cable (finished product) because of intense competition, and is focusing on manufacturing raw materials.
3. Composites are the future and therefore engineering plastic manufacture will grow faster than you can expect. This is because the demand for lightweight engineering parts will outpace the demand for engineering materials made using conventional metals.
4. Telephone cable demand also is a no-brainer. India has thousands and thousands of villages where basic mobile telephony services have to be strengthened/installed.
5. The company’s product demand is impacted by high crude prices, but the margins aren’t. The company revises prices based on crude rates and therefore, going forward, as crude prices soften, the margins will remain more or less the same but the demand will increase because the selling prices will be revised downward.
The current profit margin of the company is 25%, and the company is growing @11.5% CAGR.
Plus, the advent of EVs is upon us. This is a huge market for plastics and it is bound to take off in a big way. The impact of this event is not factored into this report.
It’s not just EVs, even 3D printers are upon us and resins and composites are the major materials used to craft products from 3D printers.
As crude price drops, the margins will remain steady but the products will become cheaper and consequently demand will increase. Plus there’s disruption waiting to happen (EVs, 3D printers).
6. Sales for 2017-18 were 35 crores and EPS was 67 paise (Cash EPS 1.08). Sales in 2018-19, going by trends will hit 45 crores and EPS should hit Re 1 (expected cash EPS Rs 1.4).
7. The company is optimizing its product mix by focusing on manufacturing black and other colour masterbatches (compounds required for the manufacture of plastics). Earlier it was focused on making white master batches. Coloured masterbatches enjoy a higher demand.
8. The company’s exports to Africa have been hit for the last 2-3 years because of unrest. However, domestic demand is growing by leaps and bounds specially after GST. Quality conscious manufacturers are ditching unorganized polymer compound manufacturers and moving to the organized sector, which is an advantage for the company.
The write-up above is on the information contained in the AR and on my telephonic conversation with the company’s officials on 14 November 2018.
In my opinion, this company does have good potential if it is held for 2-3 years given the current demand and disruptions that are around the corner. But please do your diligence before acting.
Disclosure: I and my friends are holding the stock since the last 8 months and have bought some more between 17-19.
Seems too risky. Will track it though. Thanks for idea
1. Average 3 months volume of 13000
2. BSE only stock
3. Accumulation happened between 15 and 17 from July to October => with 50% gains at 22 to 25 price range they might dump the stock
1. SEP sales up 54% QoQ
2. More than 100% increase in profit
It is illiquid but has massive, massive potential if you analyze the business model
Thank you so much Sir for this post. Its a great experience for me learn from you. If possible could you please help me to on option trading, like select the stock, analysis the trend ect. Thank you again. Regards, Sudip Santra
For that you will have to register for my seminar. First one kicks off in Bangalore on 9th December. This will be followed by others
Thanks for introducing a company with great future. However,is it not that the products of the company appear to have low entry barrier.
Not many in the organized sector. GST has shaken off unorganized players..
Sir any views on polylink polymers now. Can we consider for long term
I’m holding. I believe in its future
join this share market group to get free training.
Any views on polylink polymer?..Is it better to hold for long term?.Thanks in advance
Hi sir,I am regularly following polylink polymers…profit is very less in this quarter..Any views/suggestions?
I spoke to the company’s employee last month and asked if this is good time to avg and if business has picked up. He says demand is down. Guess we are stuck with it till economy improves. I too hold many shares.
Thank you sir…Hope it will do well in long term…
Sir hope your long term(3 to 5 years or more)view has no change. “Being stuck withit” is an alarming statement. Please help. Thank you sir.
I cannot say nice things when the truth is that all small caps and the economy are doing badly. Equities come with risk and without guarantees. Even a novice investor knows that.
Sir, is this right time to buy add some more polylink polymers now? please suggest
It depends on the market price of masterbatches. Keep your eyes on the price (google it). If prices are increasing or supply is getting short, buy
Sir – Are you still holding it?