A Detailed Equity Research Report on Control Print Limited

Summary

A Detailed Equity Research Report on Control Print Limited with a tagline Pursuing Progress. Ensuing Expansion.

Control Print Ltd

CMP: Rs.794/-             Target : Rs. 853/- 

SENSEX:  65512/-                                NIFTY:   19512/-

KEY STOCK STATISTICS:

Market Capitalization (crs):  1271/-

Book Value: Rs.168/-

Face Value: Rs.10 /-

52 week High/Low:  866/376

P/E Ratio: 23.40/-

Industry P/E: 32.80/-

P/BV: 4.70/-

Dividend Yield: 1.13/-

Source: www.sharescart.com 

Company Background:

ü  Control Print Ltd is involved in development, research, manufacturing, and marketing of printing machines, spare parts, consumables (fluids) and associated services. Company’s manufacturing facility for printers and consumables are located at Nalagarh (Himachal pradesh) and Guwahati (Assam) respectively.

ü  The company collaborated with various partners such as KBA Metronic GmbH, Germany, and ID, S.A, Spain on strengthening technological capabilities for new product development.

ü  The company has a strong domestic distribution network servicing ~2500 pin codes in 1600+ cities with 300+ field staff.

ü  Some of the key clients of the company are Godrej, JKtyres, Colgate, Cipla, HUL, ITC, Emami, Cadbury, Tata Steel, Hindalco, Parle, etc.

ü  Product Portfolio includes Continuous InkJet, Thermal Inkjet, High Resolution, Large Character, Thermal Transfer, Laser Printer, Hot Roll Coder, Consumables, Disposable masks.

Shareholding Pattern (%):

Returns (%):

Source: Company, KFO Research 

Industry Overview:

Coding and marking systems play a crucial role in the manufacturing and supply chains of both industrial and consumer goods. These systems are utilised to print vital product information, including lot size, manufacturing date, batch number, MRP (Maximum Retail Price), expiration date, and other pertinent details, onto the product packaging. It is aimed at ensuring that consumers receive accurate and authentic information, as well as to track the product from factory to retail outlets.

Opportunities:

ü  India holds the potential to emerge as a leading manufacturing hub on a global scale, offering ample growth prospects for industry players to grow and expand.

ü  The significance of packaging has grown substantially as brands strive to convey vital information regarding sanitation, safety, and product quality in an efficient manner. India's coding and marking integration software market is projected to grow rapidly following the rising need for traceability and authentication of products, particularly in the pharmaceutical industry, plagued by counterfeiting.

ü  The strict Governmental regulations mandating clear product information on the packaging necessitates effective coding and marking technologies.

ü  Increasing living standards are driving the need for coding and marking systems due to the growing demand for packaged food and beverages. Moreover, the Government's requirement for appropriate labelling of food and beverage products, including ingredient lists, manufacturing and expiration dates, and nutrient information, is also contributing to the surge in demand for coding and marking.

Outlook:

The coding and marking industry in India are expected to witness substantial CAGR of 9.85%. Herein, it may reach ` 34,025.07 Million by 2027, up from ` 19,361.28 Million in 2021. This growth may be primarily driven by the Make in India initiative, which has made the country a favourable destination for foreign direct investment in manufacturing. According to the World Bank, India ranked 63rd in 2022 in ease of doing business across the world among 190 countries, improving its rank from 142 in 2014. India's business-friendly environment has further enhanced its appeal to investors. This is expected to fuel demand for coding and marking solutions, with end-users across various industries expanding their operations in India. Global giants such as Apple, Samsung and Foxconn have already established manufacturing facilities in the country and many more global giants are anticipated to set their shops in India. Meanwhile, growth in investments across diverse manufacturing industries shall spur demand for coding and marking equipment. The food and beverage, healthcare, electronics, chemicals and construction, and automobiles industries are among the major growth drivers of the coding and marking market in India. As these industries continue to expand, there will be a corresponding increase in the demand for coding and marking equipment.

Source Coding &Marking Market Report, Arizton https://www.investindia.gov.in/team-india-blogs/budget-2023- easing-ease-doing-business-india

WAY FORWARD :

Ø  Higher Consumables Sales with improved industrial production.

Ø  Newly Launched products to deliver exponential growth.

Ø  Replacement Market, OEM and Key Accounts to be the drivers.

Ø  Focused marketing plans to capture last mile user. Internal dedicated team for generating new leads / customers.

Ø  Larger Market Share with increasing installed base of printers.

Ø  Global market access & New Product / Technology through organic / inorganic routes.

Source: Q1FY24 - Investor presentation

Growth Drivers:

ü  Company has expanded their installed base of printers to 17000+ and are increasing penetration in newer sectors with introduction of new printers.

ü  Company aspires to reach 400 cr. revenues by FY25.

ü  The company is the only ‘Make in India’ company & is in the top four players in India commanding nearly 19% market share of the 1800-2000 cr. coding and marking solutions Indian market.

ü  Company is planning to invest 10 cr. in a JV with V-Shapes Packaging, where Control Print will hold 90% with 10% being held by V-shapes. This JV will carry on business of contract filling and packaging services, sale and marketing of packaging machines & packaging materials etc.

ü  Acquired 75% stake in Mark print BV for 1.5mn euro in FY23. Mark print is a prominent provider of high-speed printing and coding solutions, and allows Control Print access to the European market.
Their subsidiary Innovative Codes (I) Private Limited caters to the lower price segment of Indian marking and coding market. They did sales of 7.89 cr. in FY23.

ü  Exports accounted for 3% of FY23 revenues and grew by 30% vs FY22.Company exports to 12 countries (Sri Lanka, Bangladesh, Nepal, Bhutan, Kenya, Italy, Tanzania, Germany, and Indonesia). The company has exported components used in Printer Manufacturing to its Technology Partner KBA-Metronic in Germany. The company has also started exporting components to KBA Medtronic Plant in China.

ü  Expanding Global Footprints:  Leveraging our expansive footprint spanning across various countries, we aim to broaden our horizon beyond our current reach. Our strategic acquisitions and export capabilities propel us to stimulate our expansion efforts across territories. Recently, we forged a joint venture alliance with V Shapes SRL to have its unique machinery and material accessible in Indian market. Our acquisition of Mark print BV allows us to use its integrated technology to slowly adding unmet customer needs and knowledge. Furthermore, we plan to utilise Mark print technology in India and strengthen our market dominance. Overall, our Company is completely aligned with the current market demand and stays focused on expanding our footprint in the European Market.

ü  Pursuing Progress through Pointed Strategies: Our strong focus is on continuous progress, and we have implemented a range of robust strategies to achieve this. Our concerted approach enables us to strengthen our present and prepare for future. Our Company’s unique roadmap offers us multiple directions to help us attain our business objectives.

ü  Enhancing Product Portfolio: With the aid of our proficient R&D unit, we have established the capability to comprehensively understand the market dynamics, scrutinise customer demands and preferences. As a result, we have successfully introduced a wide range of new products that cater to multiple industries, in process, strengthening our market standing. Moreover, our Company constantly engages in innovation and enhancement of existing products, while continuously manufacturing new ones.

 Source: Company,KFO Research 

VALUATIONS:

ü  On the basis of EPS Multiple Method, we are recommending ‘Buy’ for the stock. Since the stock offers good opportunity, we initiate a ‘BUY’ signal on the stock with 12-month price target of Rs 853/- share an upside of 7.43 % from current levels.

PEER COMPARISON: 

Source: www.sharescart.com

BALANCE SHEET (RS. IN CRS):

CASH FLOW STATEMENT (RS. IN CRS):

PROFIT AND LOSS ACCOUNT (RS. IN CRS):

Source: www.sharescart.com