Kanpur Plastipack Ltd Valuation Shifts Signal Renewed Price Attractiveness

Valuation Metrics Show Marked Improvement

Kanpur Plastipack’s price-to-earnings (P/E) ratio currently stands at 11.70, a level that is notably lower than many of its packaging sector peers. This P/E multiple is indicative of a stock trading at a reasonable price relative to its earnings, especially when compared to companies like Sh. Rama Multi, which trades at a P/E of 16.39 and is rated as very expensive. The company’s price-to-book value (P/BV) is 1.92, suggesting the stock is valued just under twice its book value, a figure that aligns well with industry norms and supports the very attractive valuation grade.

Further supporting this valuation shift is Kanpur Plastipack’s enterprise value to EBITDA (EV/EBITDA) ratio of 9.22, which is comfortably below the levels seen in several peers such as Sh. Rama Multi (23.23) and Shree TirupatiBa (12.63). This metric highlights the company’s operational earnings strength relative to its enterprise value, signalling efficient capital utilisation and earnings quality.

Financial Performance and Returns Reinforce Valuation

Kanpur Plastipack’s return on capital employed (ROCE) and return on equity (ROE) further justify the improved valuation. The latest ROCE is 13.52%, while ROE stands at 16.38%, both reflecting solid profitability and effective capital management. These returns are attractive within the packaging sector, where capital intensity and margin pressures can often weigh on profitability.

The company’s dividend yield, though modest at 0.49%, complements its growth profile and valuation appeal. Investors seeking a blend of income and capital appreciation may find this yield acceptable given the company’s growth trajectory and improving fundamentals.

Market Performance Outpaces Benchmarks

Kanpur Plastipack’s stock price has demonstrated resilience and growth, with a current price of ₹181.55, up 2.63% on the day. Over the past year, the stock has delivered a remarkable 39.65% return, significantly outperforming the Sensex’s 8.51% gain. Longer-term returns are even more impressive, with a five-year return of 118.23% compared to the Sensex’s 77.96%, and a three-year return of 95.22% versus the benchmark’s 40.02%. These figures underscore the company’s ability to generate shareholder value consistently over time.

Despite a recent one-month decline of 10.10%, the stock’s year-to-date performance remains positive at 2.63%, suggesting that short-term volatility has not derailed the broader upward trend. The 52-week trading range of ₹102.05 to ₹249.45 indicates significant price appreciation potential, with the current price positioned closer to the mid-range, offering a balanced risk-reward profile.

Peer Comparison Highlights Valuation Edge

When compared with key peers in the packaging industry, Kanpur Plastipack’s valuation stands out as very attractive. For instance, Sh. Jagdamba Pol trades at a slightly lower P/E of 11.42 and is also rated very attractive, but Kanpur Plastipack’s EV/EBITDA ratio of 9.22 is more favourable than Sh. Jagdamba Pol’s 7.54, indicating a balanced valuation with strong earnings quality.

Other peers such as RDB Rasayans and HCP Plastene are rated fair and attractive respectively, with P/E ratios of 9.65 and 12.66, but their EV/EBITDA multiples are higher or comparable, suggesting Kanpur Plastipack offers a more compelling valuation blend. Meanwhile, companies like Bluegod Enterta. and Aeroflex Neu are classified as very expensive or do not qualify, with P/E ratios soaring above 130, underscoring the relative value Kanpur Plastipack presents.

Mojo Score Upgrade Reflects Improved Outlook

Reflecting these valuation and performance improvements, Kanpur Plastipack’s Mojo Grade was upgraded from Sell to Hold on 16 May 2025, with a current Mojo Score of 58.0. This upgrade signals a more balanced risk-reward profile and acknowledges the company’s strengthened fundamentals and valuation appeal. The Market Cap Grade of 4 further supports the company’s mid-tier market capitalisation status, which may appeal to investors seeking growth potential without excessive size-related constraints.

Valuation Multiples in Context

Kanpur Plastipack’s EV to capital employed ratio of 1.59 and EV to sales ratio of 0.81 are indicative of efficient asset utilisation and reasonable sales valuation. The exceptionally low PEG ratio of 0.01 suggests that the company’s price is highly attractive relative to its earnings growth potential, a rare finding in the packaging sector where growth is often moderate.

These valuation multiples, combined with solid returns on capital and equity, position Kanpur Plastipack as a stock with a favourable risk-return profile. Investors should note, however, that the packaging industry can be cyclical and sensitive to raw material price fluctuations, which may impact margins and earnings in the near term.

Investment Considerations and Outlook

Kanpur Plastipack’s improved valuation metrics and solid financial performance make it an attractive candidate for investors seeking exposure to the packaging sector. The company’s ability to generate returns above 13% on capital employed and over 16% on equity demonstrates operational efficiency and shareholder value creation.

However, investors should weigh the company’s valuation against sector cyclicality and competitive pressures. The packaging industry is subject to raw material cost volatility, regulatory changes, and evolving customer preferences, which could impact margins and growth prospects. Monitoring quarterly earnings and margin trends will be essential to assess whether the current valuation remains justified.

Given the stock’s recent outperformance relative to the Sensex and its peers, Kanpur Plastipack appears well positioned to benefit from continued demand in the packaging space, especially as consumer goods and industrial sectors expand. The current price level near ₹181.55 offers a reasonable entry point, considering the 52-week low of ₹102.05 and high of ₹249.45, providing scope for upside while limiting downside risk.

Conclusion

Kanpur Plastipack Ltd’s transition to a very attractive valuation grade, supported by favourable P/E, P/BV, and EV/EBITDA ratios, alongside strong returns and market performance, marks a significant positive shift for investors. The upgrade in Mojo Grade to Hold reflects a more balanced outlook, with the stock offering a compelling risk-reward profile within the packaging sector. While sector-specific risks remain, the company’s fundamentals and valuation metrics suggest it is well placed to deliver sustained shareholder value in the medium term.

Only Rs. 9,999 - Get MojoOne + Stock of the Week for 1 Year (MRP = Rs. 34,999) Start Saving Now →