Digitisation takes toll, limited volume growth on offer Linc is a writing instrument player manufacturing pens and associated consumables domestically. It derives ~75% of its sales from the domestic market and the rest ~25% of sales from exports. With increasing penetration of digitisation, the core writing instrument market is not growing globally with growth limited to ~10% in the domestic market, the size of which is pegged at ~| 4,100 crore (FY17). Domestic growth is supported by rising literacy rates and higher share of school going population. Going forward,...

Linc Pen & Plastics (Linc) posted a muted Q4FY18 performance, primarily tracking headwinds in export markets coupled with a slower-than-expected rebound in domestic segment. On the margin front, Linc witnessed compression due to increase in crude price as crude derivatives form ~40% of raw material costs (~65% of sales) Net sales for the quarter came in at | 103.4 crore, down 1.5% EBITDA in Q4FY18 was at | 8.5 crore with corresponding EBITDA margins at 8.2%, down 130 bps YoY. PAT in Q4FY18 was at | 3.1...

ICICI Securities Ltd | Retail Equity Research Linc Pen & Plastics (Linc) witnessed stellar price appreciation in the recent past with the stock up 100% from lows in September 2017. A part of the journey is explained by the scarcity of profitable names in the writing instrument category in the listed space and reference to last M&A; activity involving Cello Pens (acquired by BIC Pens, France) However, Linc's financial performance has been weak with H1FY18 sales at | 146 crore, down 16% YoY, EBITDA at | 9.9 crore with...

ICICI Securities Ltd | Retail Equity Research Linc Pen & Plastics (Linc) posted a muted Q1FY18 performance, largely tracking a decline in exports (down 50% YoY) on account of currency appreciation and trade barriers in its key export markets. Domestic sales also came in lower on account of de-stocking ahead of the implementation of new indirect tax regime i.e. GST Net sales in Q1FY18 were at | 67.5 crore, down 22.4% YoY EBITDA for the quarter came in at | 2.9 crore with corresponding...

For 1QFY2017, Linc Pen & Plastics Ltd (LPPL)’ results have come in in line of our estimates on the top-line as well as the bottom-line front. Its top-line grew 10% yoy while on the operating front, the company reported margin improvement, primarily on account of lower raw material costs. Further, the net profit grew by ~17% yoy to `4.4cr aided by higher sales growth and a strong operating performance. Angel Broking recommend an Accumulate rating on the stock with a target price of `283.

Linc Pen & Plastics Ltd (LPPL)s 3QFY2016 results have come in below our estimates. The companys top-line for the quarter grew 5% yoy. On the operating front, the company reported margin improvement, primarily on account of lower raw material costs. Further, on the bottom-line front, the company reported a soft ~4% yoy growth on account of lower sales growth. Top-line grew ~5% yoy: The companys top-line grew by ~5% yoy to ~`72cr (which is below our estimate of ~`75cr), mainly due to a poor sales performance on the export front (8.3% yoy de-growth due to geographical instability and currency volatility). However, domestic sales grew by ~11.5% yoy. PAT grew ~4% yoy: Despite margin expansion, the reported net profit grew by a soft ~4% yoy to ~`3.3cr (which is below our estimates of ~`3.6cr) on account of lower sales growth and higher tax rate. Outlook and valuation: Going ahead, we expect LPPL to report a top-line CAGR of ~8% over FY2015-17E to ~`371cr owing to strong domestic as well as export sales. On the bottom-line front, we expect the company to report ~17% CAGR over FY2015-17E. This would be on account of expansion in operating margin on the back of lower...

Linc Pen & Plastics (LPPL)s 2QFY2016 results outperformed our estimates on the bottom-line front. The companys top-line for the quarter grew 5% yoy. On the operating front, the company reported margin improvement, primarily on account of lower raw material costs. Further, on the bottom-line front, the company reported a strong growth on account of a favorable operating performance and lower interest costs. Top-line grew ~5%: The companys top-line grew by ~5% yoy to ~Rs88cr (which is below our estimates of ~Rs89cr), mainly due to lower growth in Domestic (5.0% yoy growth to ~Rs64cr) and Export sales (4.6% yoy growth to ~Rs24cr). Exports have recovered considering the segment posted a decline of 5% in FY2015. PAT grew ~23% yoy: The reported net profit grew by ~23% yoy to ~Rs5cr (our estimate was of ~Rs4cr) on account of falling material prices and lower interest costs with the company having repaid a significant amount of its debt in FY2015. Outlook and valuation: Going ahead, we expect LPPL to report a top-line CAGR of ~8% over FY2015-17E to ~Rs371cr owing to strong domestic as well as export sales. On the bottom-line front, we expect the company to report ~17% CAGR over FY2015-17E. This would...