A smallcap multibagger firm, which is engaged in the packaging business and also in manufacturing decorative packaging containers for the paint, lubricant, FMCG and foods sector, just reported an all-time high consolidated bottom line in the March quarter. The net profit of the company increased 32.79 per cent YoY to Rs 22.99 crore in Q4FY23. On the other hand, gross sales of the firm increased by 3.81 per cent YoY to Rs 184.71 crore during the quarter under review. This is Mold-Tek Packaging.
Shares of the company have surged 5,101 per cent to Rs 984.25 on May 10, 2023 from Rs 18.92 on the same day in 2013.
It was the first company to introduce in-mould label (IML) decorative products and QR-coded packaging products in India. While new product launches helped drive the profitability of the company, its balance sheet remained strong with RoCE and RoE of around 19 per cent and 16 per cent, respectively (three-year average). Market watchers hold mixed views on Mold-Tek Packaging post the March quarter results.
Brokerage ICICI Securities has a ‘Hold’ rating on Mold-Teck Packaging with a target price of Rs 1,110, indicating an upside of nearly 15 per cent from the current market price of Rs 966 on May 11. “Capacity addition, new launches (foraying into pharma packaging) and increasing wallet share from existing clients are expected to drive revenue. Aiming to increase EBITDA per kg to Rs 42-43/kg from Rs 39/kg in FY23. High-margin FMCG and pharma products to drive EBITDA per kg. Balance sheet to remain healthy with low debt, high RoCE and RoEs,” ICICI Securities said in a report.
On the other hand, IDBI Capital Markets upgraded the stock to ‘Buy’ with a target price of Rs 1,252. “The stock is poised to give decent returns in the near term owing to healthy earnings growth aided by capacity expansion,” IDBI Capital Markets said in a report.
Meanwhile, the company reported 8 per cent YoY and 20 per cent QoQ volume growth at 9,053 million tonnes in Q4FY23. The management guided sales volume to be in the range of 15 per cent-20 per cent in the near term.
Reliance Securities last month gave a ‘Sell’ call on Mold-Tek Packaging with a target price of Rs 875. “We believe that due to pricing moderation and competitive pressure as well as the company offering competitive pricing to gain volumes in few segments, revenue growth would be impacted despite volume growth. Factoring 15 per cent volume CAGR and 200 basis points EBITDA margin expansion over FY23-FY25, our EPS stands at Rs 35 for FY25 and stock is trading at 28.6 times FY25E, which appears expensive,” the brokerage said in a report.
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