CK Narayan Bullish On Packaging Films Stocks As Fundamentals Recover

The packaging films sector has the potential for a near-term rally, according to CK Narayan, founder of NeoTrader. He prefers Uflex Ltd. in the segment.

Packaging films is a swinging space in the market, he said. "When the seasonality kicks in, the gains are tremendous. They are well patronised, so popular names are doing reasonably well," Narayan told NDTV Profit in an interview.

"The packaging films industry was doing great prior to 2020. Every company in the space built new capacity. Then the pandemic struck, and this whole space went for a toss because of the supply chain disruptions.  As a result, pricing dropped substantially. It was a kind of downward loop for the industry," he said.

These stocks peaked in 2022. These stocks have been hitting a series of lows for the past two years. Now, prices are finding their feet in the packaging films segment. All the companies are seeing a turn-around in prices, Narayan said.

Eventually, fundamentals get reflected in stock prices. Packaging film stocks have gone through big declines. Polyplex Corp. fell over the past two years. On Aug. 1, 2021, the stock was at Rs 2,493.60, and now the stock is at Rs 1,322.10.

"In contrast, Uflex has only declined 9% from the highs. The stock has completely retraced its downward trend. Uflex has shown the maximum amount of recovery compared to peers," he said.

If the benchmark index is close to 25,000 and someone wants to buy stocks, they can choose packaging films spaces that have shown a significant run when seasonality starts.