16-Oct-2019 – Dhabriya Polywood is into manufacturing of uPVC and PVC products for a wide range of building interior and exterior applications. The company was incorporated in the year 1992 in the name of “Polywood” with PVC profile products. With continuous growth and innovation, the company extended its product range to uPVC windows, uPVC doors, PVC doors, PVC wall panels, PVC fencing and PVC furniture. The company has a production capacity of 10,000 metric tons of PVC Profiles annually. Dhabriya Polywood mainly works in two segments, Plastic Products and Modular Furniture. Plastic products contributes around 85% of its revenue.
The company introduced artificial Italian marble under the brand D-Stona. Dhabriya has created this niche product and is the only manufacturer in India. D-Stona looks like marble but costs much lower than marble. D-Stona is tough and durable.
Dynasty Modular Furniture is a subsidiary of Dhabriya Polywood. Dynasty Modular manufactures modular kitchen, wardrobes, workstations etc. Dynasty already completed 1000+ projects in India. They have 150+ dealers across India.
In the financial year 2019, Dhabriya achieved total revenue on standalone basis Rs 7374.28 lakhs compared to Rs 7813.21 lakhs. Operational revenue of the company is reduced by 5.62% over the previous year on account of general slowdown in the economy. Profit after tax stands at Rs 296.92 lakhs as against Rs 421.91 lakhs in the previous year. On consolidated basis, the total revenue of the company stands at Rs 12077.21 lakhs against Rs 13215.67 lakhs in the previous years. Profit after tax stands at Rs 566.24 lakhs against Rs 706.23 lakhs in the previous year.
The poor performance of the company on account of subdued economic condition and more specifically the real estate sector. We believe that real estate sector will unlikely go further down. And there is high probability that the sector will again revive going forward. The affordable housing sector will be most prospective. Dhabriya’s eco-friendly and pocket-friendly solution have all the potential to improve its topline and bottomline. Over and above, the GST rate applicable on PVC sheets for doors and windows is 18% compared with 28% in case of Aluminium sheets. Thus, Dhabriya Polywood will be a major beneficiary in the affordable housing segment.
Dhabriya Polywood has a strong balance sheet. It has used its financial leverage quite judiciously. It has maintained its debt equity ratio 1 all along. For the financial year 2019, the consolidated EPS was 5.14. That means the stock is available at below 10 price earnings multiples (CMP Rs 48). Once, the economy and the real estate segment revive, the EPS will be further increased. We set a target of Rs 98 for the stock for a period of twenty four months, a gain of more than 100%.
Risk: Prolonged subdued real estate segment may dampen the revenue of Dhabriya Polywood.
BSE Code: 538715
Written by Research Analyst (SEBI Registered) Suvendu Manna
Disclaimer: The research analyst has position in the stock as on the date of writing this article.
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