Sunil Singhania Adds Stake in this Beaten Down Stock. More Details Here...

Investing in the stock market can be a daunting task, especially for those who are just starting out. One strategy that many successful investors use is to follow the big names in the industry.

By keeping an eye on the buying and selling activity of these market leaders, you can gain valuable insight into which stocks may be undervalued and worth investing in.

These market leaders have the resources and expertise to conduct thorough research and make well-informed decisions. So by following their lead, you can increase your chances of making profitable investments.

Following the big names in the stock market can also help you stay on top of industry trends, allowing you to make more informed investment decisions.

A recent activity we want to highlight is in a beaten down stock which has caught the fancy of Sunil Singhania's fund.

The market maven recently bought stake in a beaten down stock from the packaging space.

A word about Sunil Singhania and Abakkus Asset Manager LLP

Abakkus Asset Manager is an investment management company founded by Sunil Singhania, who was the CIO of Equity Investments at Reliance Mutual Funds.

Sunil Singhania has a track record of over two decades in equity markets and he played an important role in building Reliance-Nippon MF into one of India's largest asset management companies (AMCs).

Which packaging stock did Sunil Singhania buy and why?

The company in question is NSE listed Rajshree Polypack.

Rajshree Polypack is one of the leaders in manufacturing of rigid plastic sheets and thermoformed packaging products to the industry segment it caters to.

The company manufactures customised thermoformed packaging products which are tailored to the client's requirements. Its products range from yogurt & ice cream containers, food packing, QSRs, coffee cups, bakery products, etc.

The latest shareholding pattern of Rajshree Polypack shows that Sunil Singhania via Abakkus Growth Fund increased stake in the company during September-December 2022 quarter.

His stake now stands at 7.62% as of December 2022 which was valued at Rs 143 million (m).

While we don't know why Sunil Singhania bought more shares, there are some reasons that we can guess...

One reason could be the company's improving quarterly numbers.

For the past two quarters, the company has reported growth across segments and delivered an all-round performance. Take a look at the table below.

Quarterly Performance

Rs m, consolidated	Sep-22	Sep-21	Change (%)	Jun-22	Jun-21	Change (%)
Net Sales	651.7	502.2	30%	683.0	486.7	40%
Operating Profit	83.3	67.6	23%	108.2	72.2	50%
Profit After Tax	24.6	22.6	9%	47.6	26.0	83%

Data Source: Ace Equity

Singhania must be of the view that the company will continue its momentum owing to diversified product profile.

It's expected that the company will give a good quarter because of the new capacity additions being operational in the quarter under review.

Another reason could be that the stock is beaten down. Rajshree Polypack has fallen around 30% in the past one year.

At the current levels, the company is undervalued compared to its peers and the industry average.

Comparative Analysis of Rajshree Polypack

Company	Rajshree	Captain Polyplast	TPL Plastech	Cosmo First	Kaiser Corp
ROE (%)	8.6	4.3	13.7	32.7	0.7
ROCE (%)	11.5	9.3	18.6	27.7	1.2
Latest EPS (Rs)	10.4	0.4	1.8	120.5	0.0
TTM PE (x)	15.7	40.8	17.9	6.1	0.0
TTM Price to book (x)	1.5	1.3	2.3	1.6	59.7
Dividend yield (%)	0.3	0.0	1.3	4.8	0.0
Industry PE (x)	20.3
Industry PB (x)	3.7

Data Source: Ace Equity

Going forward, the company is hoping for increased revenue and profitability on the back of newly installed capacities.

In its earnings call, the company said installation and trial runs of injecting moulding has completed and commercial production has started.

Further, the company also received a new extrusion line at its Sarigam Unit with installed capacity of 3,500 metric tons per annum. It's also in the process of receiving two more printing machines which shall be installed in the next 3-4 months.

Right now, the company is facing input cost pressures as raw material prices have increased.

In the past three years, the raw material prices have almost doubled, increasing the base raw material prices, creating margin pressures.

How Rajshree Polypack has performed recently

In the past one year, shares of the company have fallen 30%. In a month, the stock is down over 5%.

Rajshree Polypack has a 52-week high of Rs 268 touched on 24 August 2022 and a 52-week low of Rs 137.6 touched on 23 June 2022.

About Rajshree Polypack

Originally established as a partnership firm in 2003, Rajshree was reconstituted as a limited company in 2011.

The company is only listed on the NSE.

The company has decades long experience and strong understanding of the local market dynamics.

To know more, check out Rajshree Polypack's financial factsheet and its latest quarterly results.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...