Outlook of JBF Industries bright: Kartik Mehta

ET Now spoke to Kartik Mehta, AVP Research, Sushil Finance, to get his views on the outlook of JBF Industries.

JBF Industries features in your today's list. But its intraday pattern today is not looking fairly encouraging. It seems pretty flat. What is the rationale behind picking up this stock?

JBF Industries is into manufacturing of polyester chips, which are used in the textile and FMCG industries. It is also into manufacturing of films used in the solar panel which is a very high grade film and also films that are used on televisions and LCD screens. There is a volume expansion by the company by around 20-25% and against that the realisation of particularly in the film side, which is being manufactured at their RAK plant in Dubai, is seeing a lot of upside. The realisation has seen a lot of surge in the recent time and this is one of the reasons that not only JBF but also related polyester film making stocks are going up.

So, there is a volume growth in the value-added product which will be expanding the margin by 150 basis points over a period of time. So, there is going to be a bottom line growth and that is what is the reason for catching the investors' fancy. Another thing is that the company, which was supplying 100% of the production to the textile industry four years ago, is now getting 51% of the business from FMCG and beverages. So, a company which is supplying to FMCG cannot be trading at the such cheap valuations.