Jindal Poly Films is a market leader and the largest producer of Bopet and Bopp films in India. If you invest into the packaging industry, the first pick would be Jindal Poly Films because of this company is the best out there. As I have been speaking about how the poly film prices have increased lately by a huge margin which benefited Uflex, Ester which I have recommended to buy already, Jindal Poly is also a company that is benefiting big time because of that.

Jindal Poly has reported a huge leap in earnings in Q2 FY11 due to the price increase of poly films. It reported revenues of 687cr (+175% YoY) and net profit of 179cr (+458% YoY) in Q2 FY11. The management has been interviewed and he has said that similar revenues and profits will be coming in over the next few quarters as well as the film prices have stabilised at a high rate and might be the same for the next one year. Now these profits will skyrocket the EPS and in turn the stock price will sky rocket too.

Jindal Poly currently maintains an EPS of close to 75 and the management expects to cross an EPS of 150. Seeing the net profit growth and expected profits to come in Q3 and Q4 of FY11, we can assume that the full year EPS can easily be anywhere between 125-150 just like their management said when they were interviewed by CNBC TV18. The stock maintains an EPS of 75 right now and a P/E of 7 and so the stock is trailing close to those 525 odd levels. However the industry P/E still stands at 12. Assuming no change in P/E and an EPS of 150 by FY11 end, we can still see levels of 1050. But I believe that we will atleast see some re-rating of the company and P/E to move upto 8 or even 9. After Q3 results, the EPS should be anywhere in between 100-110. So for short term, one can buy with targets of 750-800 in 2-3months and in the long run with targets of 1100-1200 in 6-7months.

Buy Jindal Poly(cmp: 537) with short term targets of 800 and long term targets of 1200.

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