Cosmo Films on a Roll

Buy at Rs. 355 with a target of Rs.371

About The Company

Cosmo Films Ltd., an Indian MNC, operates in the manufacturing of
bi-axially oriented polypropylene films (BOPP) for packaging,
labeling, industrial applications and lamination.
It is the largest exporter of BOPP films from India and the largest
producer of thermal lamination films in the world having a customer
base spread across 100+ countries. Its manufacturing units are situated
in India, South Korea
The Company, being a leading manufacturer of specialty BOPP films,
announced (on 16th August) the launch of an exclusive BOPP film
that would enhance the moisture resistance of cement bags. This film
is used for the lamination of block bottom cement bags which are made out of woven PP material.

Management Says...
Ashok Jaipuria, CMD, Cosmo Films in his interview with CNBC TV-18, dated August 23rd, said that
they had scheduled an expansion in the last quarter of the year around mid-March. This is expected to
add another Rs.60-70 crores to their bottom-line. In the next financial year, they plan for an Indian
expansion which will kick in another Rs.500 crores.
Cosmo Films faced an issue with its Asian subsidiaries of Japan and Korea. The reasons attributed to
this were the existence of some non-recurring items. Also, an unfavorable currency movement took
place. But now, the currency is bouncing back towards older levels of 80 Yen/USD which is improving
prospects for the company from the Asian side.
Moreover, the Company is aiming to expand its US operations with increased expenditure (Rs.5-6
million) on their processes, which will result in at least a two-fold increase in revenue in the coming
two years. The Company claims that its US operations are better off than the performance of its Asian
subsidiaries.

Subsidiary Liquidation
CF Global Holding Mauritius, a wholly owned subsidiary of the company, has filed a petition for
liquidation of its wholly owned entity called Cosmo Films (Netherlands) Cooperative U.A. This step
has been viewed as a means of simplifying the holding structure and for administrative convenience.

Financial Highlights
2.7% growth in its net profit amounting to Rs.18.9 crores in the quarter ending June 30, 2016 in
comparison to Rs. 18.4 crores in the quarter ending June 30, 2015.
However, a quarter-on-quarter comparison shows a fall in net profit figures from Rs.24.11 crores in
the March quarter to Rs.18.9 in the June quarter of 2016.
Total income in its first quarter of FY 17 stood at Rs.382.53 crores.
The current market capitalization of the Company is Rs.637.63 crores.
The promoters holding in the company was 43.51%, while Institutions and Non-Institutions stood at
5.08% and 49.99% respectively.

Market Scenario
The Cosmo Films share price has been rising in the past three days. It has witnessed a surge in trading
volumes with an increase in delivery position. The stock made a low of Rs. 322 on August 23rd, which
is viewed as a good support level. We recommend a buy at Rs. 355 with a target of Rs.384.

Disclaimer

The investment advice or guidance provided by way of recommendations, reports or other ways are solely the personal views of the research team.
Users are advised to use the data for the purpose of information and rely on their own judgment while making investment decision.
Dynamic Equities Pvt. Ltd - SEBI Investment Advisory Reg. No.: INA300002022

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Relative:

Do not have any financial interest / any actual/beneficial ownership in the subject company.
Do not have any other material conflict of interest at the time of publication of the research report
Have not received any compensation from the subject company in the past twelve months
Have not managed or co-managed public offering of securities for the subject company.
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subject company, nor engaged in market making activity for the subject company
Have not served as an officer, director or employee of the subject company

Article Written by
Paridhi Sureka