Recommendation from Packaging & Auto Ancillaries Sectors

The scrips in this column have been recommended with a 15-day investment horizon in mind and carry high risk. Therefore, investors are advised to take into account their risk appetite before investing, as fundamentals may or may not back the recommendations. 
 

EMMBI INDUSTRIES LIMITED 

CMP - Rs 98.75
BSE CODE : 533161
Volume : 5,433
Face Value : Rs 10
Target : Rs 112
Stoploss: Rs 90 (CLS)

Emmbi Industries Limited is posed to be one of the reputed brands in the field of woven polyethylene and polypropylene products. They primarily design and manufacture FIBC (flexible intermediate bulk container) bags. The company operates in specialty packaging, advance composites, Avana designs and Avana create. Looking at the standalone quarterly results of the company, the net sales and operating income declined by 9.75 per cent from Rs 81.51 crore in Q3FY20 to Rs 73.56 crore in Q3FY21. The operating profit dipped by 22.51 per cent from Rs 9.82 crore in Q3FY20 to Rs 7.61 crore in Q3FY21. The company reported net profit of Rs 2.35 crore in Q3FY21 as compared to net profit of Rs 3.59 crore reported in Q3FY20. The order books of the company are healthy and over the next few quarters it is predicted to show a marked improvement. Also, despite the challenges, the company records positive cash flow from operations, and continues to maintain excellent financial strength. Hence, we recommend a BUY.

MINDA INDUSTRIES LIMITED

CMP - Rs 571.40
BSE CODE : 532539
Volume : 35,736
Face Value : Rs 2
Target : Rs 615
Stoploss : Rs 535(CLS)

UNO Minda Group is a leading Tier 1 supplier of proprietary automotive solutions to original equipment manufacturers (OEMs). As regards the consolidated quarterly results of the company, the net sales and operating income improved by 35.78 per cent from Rs 1,326.84 crore in Q3FY20 to Rs 1,801.62 crore in Q3FY21. The operating profit surged up by 57.08 per cent from Rs 174.66 crore in Q3FY20 to Rs 274.36 crore in Q3FY21. The company reported significant increase in net profit at Rs 120.76 crore in Q3FY21 as compared to net profit of Rs 53.45 crore reported in Q3FY20. The company has acquired new orders to be executed soon. It has also invested in capex for greenfield plan for blow moulded parts at a new location to enhance its overall capacity and is in the process of setting up an in-house paint shop facility. Hence, considering the optimistic expansion plans of the company, we recommend BUY.

(Closing price as of May 18, 2021)