JF Packaging eyes debt-free growth, stronger investor returns post-listing

Wednesday, 22 October 2025 00:24 - - {{hitsCtrl.values.hits}}

JF Packaging Chairman S.D.R. Arudpragasam

JF Packaging Managing Director K.P. David

HNB Investment Bank Senior Assistant Vice President – Corporate Finance Shivanthi Sugathadasa

JF Packaging Ltd. is preparing to enter a new growth phase following its Rs. 600 million Initial Public Offering, with the company aiming to reduce debt, boost profitability, and accelerate investment in innovation and exports. The IPO, which opens on 30 October 2025, will fund the settlement of specific term and import loans, strengthening its balance sheet and improving financial flexibility.

According to HNB Investment Bank Senior Assistant Vice President – Corporate Finance Shivanthi Sugathadasa, who manages the issue, the deleveraging move is expected to significantly enhance shareholder value.

“Post-IPO, the group’s interest coverage ratio is projected to improve from 1.9 times to around 3 times, translating to a 20% annual saving in finance expenses,” she said. Sugathadasa added that the IPO price of Rs. 11.60 per share offers a potential 36.6% upside to investors, making it attractively valued relative to peers.

She noted that the implied forward price-to-earnings multiple of 7.78 times and price-to-book value of 1.25 times remain below the market averages, underscoring the issue’s relative value proposition.

“The offer positions JF Packaging for sustainable long-term growth while providing investors with an entry point at a fair valuation,” she said.

JF Packaging Managing Director K.P. David said the company’s immediate priority after listing will be to strengthen its balance sheet and reinvest in innovation.

“By deleveraging, we position ourselves to reinvest more confidently in capacity expansion, sustainability, and research and development,” he said. “The IPO is a strategic step to free up cash flow and unlock growth opportunities across the group.”

JF Packaging’s revenue has doubled over the past five years from Rs. 2 billion to Rs. 4.4 billion, with projections indicating a further rise to Rs. 7.3 billion within four years at a compound annual growth rate of 13%. The company maintains gross profit margins above 25% and serves global and local FMCG clients including Nestlé, Unilever, Prima, Keells, Cargills, and CBL.

JF Packaging Chairman S.D.R. Arudpragasam said the post-listing phase will focus on scaling exports and consolidating market leadership in flexible and sustainable packaging.

“The listing is a natural extension of our diversification strategy and strengthens our ability to compete regionally,” he said. “We are committed to upholding the highest standards of governance and transparency as we move into the public market.”

JF Packaging’s operations span five subsidiaries, producing flexible packaging, PET products, adhesive tapes, and paper-based solutions, with one-third of its revenue linked to exports. The company operates a globally certified facility in Ekela and holds over 80 industry awards, including the World Packaging Organisation’s WorldStar President’s Award.

Sugathadasa said the company’s integrated model, sustainability-driven innovation, and export exposure make it a strong candidate for investors seeking long-term value. “This IPO is not just about listing a packaging company,” she said. “It’s about bringing a well-diversified, award-winning Sri Lankan manufacturer to the market at a valuation that leaves room for meaningful upside.”