COMPANY OVERVIEW:
Company was incorporated in 1994 at Kolkata. The main object is to manufacture all types of writing instruments and other plastic moulded goods.

Realization:
Our continued focus on improving our product mix for both pens and refills helped the company to improve average realization per pen from Rs.2.60 to Rs.2.69 and that of refills from Rs.1.16 to Rs.1.86.

Exports:
Company has seen surge of 45% in export in FY10. It sells branded Linc Pen in South East Asia, SAARC, Middle East and Africa. It even has presence in Europe and US but growth is stagnant due to the slowdown in these regions.
It also supplies writing instruments and stationery to various global retail chains.

Brand Building:
Linc is on aggressive advertising its product which is going to deliver good result in the near future, though a short term impact on profitability is seen.
Its brand portfolio includes Uniball from Mitsubishi Pencil & Company and Lamy of Germany.

Improving Cash Flow:
Company has moved from 15-30 days credit to advance payment terms with its distributors. This has improved the cash flow and also decreased the working capital requirement. A significant portion of interest outgo is saved from this term.
Manufacturing Units:
Company has three manufacturing units; one in Kolkata and two are in Goa.

Retail Foray:
Company is rolling out outlets for office stationery under the brand name Justlinc and Officelinc. These retail outlets are based on idea of providing all stationery items under one roof. It has already set up few stores in Kolkata and is now planning to nationwide rollout.

INVESTMENT RATIONAL:
News of any major orders global retail chain will take the stocks to newer high. It supplies to Wal-Mart and Tesco.
It is also planning to expand its retail network which increase its top line and also help in increasing the brand visibility.
Increasing thrust of government on education sector will benefit the company in getting good orders.

RISK:
Increase in crude oil prices will adversely impact the profitability as the input cost will rise.
Slow down in the global economy will hit its export.

	NO. OF SHARE	% OF TOTAL
PROMOTERS	8778908	68.66%
INSTITUTION	0	0.00%
GENERAL PUBLIC	4007052	31.340%
GRAND TOTAL	12785960	100.00%

	31/03/07	31/03/08	31/03/09	31/03/10
TOTAL INCOME	146.06	177.38	192.38	225.65
EXPENDITURE	-137.05	-165.58	-179.59	-209.33
PBDITA	9.01	11.8	12.79	16.32
DEPRECIATION	-2.81	-2.89	-3.09	-3.07
PBIT	6.2	8.91	9.7	13.25
INTEREST	-2.16	-2.92	-2.86	-1.7
PBT	4.04	5.99	6.84	11.55
TAX	-0.73	-0.97	-1.8	-3.15
PAT	3.31	5.02	5.04	8.4
*Extra Ordinary Item is excluded from the calculation.

Key Highlights:
Total Income grew at CAGR of 15.4% in the last four years.
PBDITA grew at CAGR OF 21% in the last four years.
PAT has shown stupendous CAGR of 35% in the last four years.

	31/03/07	31/03/08	31/03/09	31/03/10
EPS	2.58877706	3.926182	3.94182369	6.569706
PBDITA MARGIN	6.1686978	6.652385	6.64830024	7.23244
NPM	2.26619198	2.830082	2.61981495	3.722579
INTEREST COVER	2.87037037	3.05137	3.39160839	7.794118

Key Highlights:
EPS has grown at CAGR of 35% in last four years to Rs 6.57 in FY10.
PBDITA margin improved from 6.1% in FY07 to 7.2% in FY10.
NPM improved by 150 basis points in last four years to 3.7% in FY10.
Interest cover too has improved over the period from 2.9 in FY07 to 7.8 in FY10.

	Q4FY09	% CHANGE	Q4FY10
TOTAL INCOME	53.31	18.21421872	63.02
EXPENDITURE	-48.88		-59.43
PBDITA	4.43	-18.96162528	3.59
DEPRECIATION	-0.87		-0.73
PBIT	3.56		2.86
INTEREST	-0.74		-0.18
PBT	2.82		2.68
TAX	-0.94		-1.44
PAT	1.88	-34.04255319	1.24

Key Highlights:
Total Income grew by 18.2% to Rs 63.02 crores in Q4FY10 on YoY basis. Increase in volume growth has seen the top line moving up.
PBDITA declined by 18.9% to Rs 3.59 crores in Q4FY10 on YoY basis. Margin came under pressure on account of higher input cost.
PAT came down by 34.05% to Rs 1.24 crores in Q4FY10 on YoY basis. Higher input cost and interest outgo are the primary reason for decline in the PAT.

VALUATION &OUTLOOK:
At current market price of Rs 86.50, stock is trading at 14X to FY10 EPS. We expect Linc Pen to close the FY11E with sales Rs 300 crore and EPS of Rs 11.1. So it is trading at 7.8X to expected FY11E EPS. We value the company at 14X; the fair value we arrive at is Rs 155.40.
Company Fair value we arrive at is Rs 155.40. As the market is trading at higher level, we suggest buying on dips in order to increase the margin of safety.

CONCLUSION:
Investors should take at least 8-12 months view while investing in the stock. Buying on dips is suggested as there is systematic or market risk at these levels.