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UFlex stock has excellent potential for smart upside

NewsUFlex stock has excellent potential for smart upside

UFlex is India’s largest multinational flexible packaging materials and solutions company with over 30 years experience in the polymer technology business. The company has a packaging product manufacturing capacity of 135000 TPA across plants located in Noida, Jammu and Sanand in the country. It has world class manufacturing facilities of packaging films in Dubai, Egypt, Mexico, Poland and USA with a capacity of 337500 TPA engaged in providing flexible packaging solutions to blue-chip customers like Coca Cola, GlaxoSmithKline, Amul, Nestle, L’Oreal, PepsiCo, P&G, ITC, etc. The India packaging industry has been posting excellent growth on the back of a rising population, increasing income levels, changing lifestyles, increased media penetration through internet and television and a growing economy. Not surprisingly, it is one of the strongest growing sectors in the country with more than 49% of the paper produced in the country being used for packaging purposes.

The rapid growth of the market is primarily driven by the pharmaceuticals and foods and beverages industries. Large investments by MNC’s in the food processing, personal care, and pharmaceuticals industries are creating scope for expansion of the packaging industry particularly companies like UFlex which have manufacturing facilities across the globe. The rise of the Indian middle class, rapid expansion of organised retail, growth of exports, and India’s rising e-commerce sector are further facilitating growth.

Packaged food is the fastest-growing segment in the Indian packaging industry due to demand for plastic packaging, as it ensures food quality, safety, and long shelf life. Though the grocery market is a traditional retail industry, the food delivery and services market is fostering growth in the country with players like Bigbasket, Grofers, Zomato, Swiggy, etc registering rapid increase in sales. The industries where plastic bottles and jars are mostly used in the country include food and beverage, cosmetics and personal care, and pharmaceuticals industries. Polyethylene terephthalate (PET) and HDPE are the preferred materials for the manufacturing of bottles and jars in India. There are some applications, where PVC is still being used to manufacture bottles, jars, and vials. However, due to the increasing environmental concerns, the manufacturers are trying to shift to PET and HDPE. The UFlex stock had always been ruling around the Rs 275 levels for most part of 2019 and had crashed in March during the Covid outbreak to Rs 120 levels. Since then, the UFlex stock has improved to Rs 185 levels and analysts and fund managers are betting on the stock to touch the Rs 240 levels in the next two quarters. Investors can buy the UFlex stock on fundamental basis at the current market price of Rs 185 for a smart upside in their investment portfolio.

Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.

 

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