Packaging stocks hit new highs; Jindal Polyfilms, Uflex surge up to 10%

Jindal Polyfilms has hit a new high, surging 10 per cent at Rs 941 on the BSE in the intra-day trade. The stock has zoomed 91 per cent in the past 10 trading days of the March

Shares of container & packaging companies were on a roll, hitting new highs on the BSE on Monday, in an otherwise weak market on improved outlook. Jindal Polyfilms, Uflex and Cosmo Films rallied between 6 per cent and 10 per cent in the intra-day trade. In comparison, the S&P BSE Sensex was down 1.1 per cent at 50,228 points at 10:13 am.

Under the influence of Covid-19 pandemic, the packaging industry continued to remain on its toes to meet all time high demand for packed food, medicine and other essential goods.

That apart, the government has also issued a draft regulation under which there can be a ban on single use plastic for candy & ice cream stick, film wraps around sweet boxes and cigarette packets, etc.

Amid these triggers, individual stocks such as Jindal Polyfilms hit a new high, surging 10 per cent at Rs 941 on the BSE in the intra-day trade. The stock has zoomed 91 per cent in the past 10 trading days of the March on report that the firm is exploring the sale of a significant minority stake to raise as much as Rs 1,000-1,200 crore as the BC Jindal group company looks to take advantage of frenzied investment activity in the packaging industry.

Jindal Poly Films is engaged in the manufacturing of Biaxially-Oriented Polyethylene Terephthalate (BOPET) and Biaxially Oriented Poly Propylene Films (BOPP films), Cast Poly Propylene Films (CPP films), Thermal Lamination Films and Non-Woven Products such as Interlining, Disposable Fabrics and Fabrics for Industrial Applications, etc.

"In recent years, India has seen sustainable packaging growth due to the increase of packaged food consumption and awareness, and demand for quality products. Consumer awareness surrounding packaged food, specifically packaged food deliveries, has heightened. The boom in e-commerce and organized retail is expected to enhance the growth of plastic packaging and per capita consumption in the near future," the company said in FY20 annual report.

Uflex, too, hit a new high of Rs 446, up 7 per cent in the intra-day trade, gaining 23 per cent thus far in the current month. The company, on February 25, said that the Brickwork Ratings (BWR) has reaffirmed the rating of the Uflex's proposed non-convertible debenture issue of Rs 400 crore at BWR A+ (Stable).

"The stable outlook factors in the company's improved YoY financial performance in 9MFY21 due to the essential nature of industry and benign raw material prices and BWR’s expectations that the company’s scale of operations will expand further in the medium term on account of added capacity in overseas operations. BWR notes ongoing strong demand for the flexible packing industry, which is growing at 15 per cent- 16 per cent which got further bolstered by Covid-19 pandemic," the rating agency said in rationale.