Kuantum Papers: for > 50% gains as positional trade

Kuantum Papers Ltd: A Terrific value buy

Kuantum Papers Ltd ( listed only at BSE )

Price : Rs 88        Date: 16^th Jan 2015

Upside: 50% to 100%      Time Frame: 6 Months to 1 year

Kuantum papers is a very decent paper manufacturing company with sales and profit growing at 16% and 22.33% in last 3 years. It has a very good RoE of 36.30% and RoCE of 21% and with a good working capital cycle. See the company’s fundamental below.

Return on Equity ( 2013 – 14 ) :   36.30 %	Return on Capital employed ( 2013 – 14 ) : 21 %
Sales ( CAGR last 4 years ): 16 %	Net Profit Growth ( CAGR last 4 years ): 22.33 %
Net Working Capital Cycle (13 – 14 ) : 33 days	Operating cash flow ( last 3 years ): 157 Cr
EPS CAGR Growth ( last 3 years ): 22 %	Current P/E ( TTM ): 2.3
MCap to Sales ( TTM ): 0.16 Times	MCap to Operating Profit ( TTM ): 1 Time

The striking undervaluation is that the current market cap is just one time its Operating profit and just 2.33 times its Net profit for FY 2013-14. This undervaluation is a great opportunity to have a positional trade to make a 50 – 100% gain in the next 6 – 12 months

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