We recommended Linc Pens at Rs. 95 in our first report dated 02-Sep-2014. Linc Pens is currently trading at Rs. 128. We further gave a couple of updates here and here.

With the crude price falling globally, we think it would benefit Linc in reduction of its costs without decreasing its sale price. Here is the update regarding the same.
Majority of the plastic granules used by Linc Pens are made from either of the 3 compounds - Polypropylene (PP), High Density Polyethylene (HDPE) and Polystyrene (PS). These are stage 1 derivatives of crude oil and falling crude oil prices will immediately result in reduction of prices of the plastic granules. At max, it takes a 1-2 month for the crude oil benefit to be passed on to LINC. Plastic granules account for ~30% of the cost of raw materials. Selling price of its products is fixed at Rs. 5 or Rs. 10 or Rs. 15 per pen. This can result in margin benefits for LINC Pens.
If we recollect, LINC had to bear the brunt of rising crude prices and depreciating currency in FY11-13. It was unable to increase its selling prices from Rs. 5 despite the cost prices. Similarly, we expect LINC to benefit from the falling crude prices.

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