Prabhudas Lilladher's research report on Mold-tek Packaging
We cut our FY23/24 earnings by 2.5%/3.3% on the back of gross margin pressure due to sustained increase in input cost inflation. However, we remain structurally positive on MTEP’s long term story given 1) improving utilization levels at current plants and EBITDA/Kg driven by mix shifting towards F&F segment 2) new plant at Lucknow and addition of capacity in Mysore & Visakhapatnam will help meet demand from Berger Paints and Asian Paints respectively 3) foray into Pharma & OTC business 4) exports to US market which opens up new opportunities 5) new brands added by gulf for their own products and OEM products 6) increased contribution from ThinWall, F&F segment and acceptance of new launches like QR coded IML products to help increase market share from new and existing clients 7) pick up in pumps expected form 2HFY23 With strong focus on technologically advanced niche products, we expect EBITDA per/kg to increase from Rs 41 in FY22 to Rs 48 in FY24.
We estimate Sales and PAT CAGR of 14.9%/35.9% over FY22-24 and maintain buy rating with target price of Rs781 (21xMar24 EPS) from Rs793 (22xDec23 EPS). MTEP is currently trading at 18.9x FY24EPS which makes a good proxy play on Paint & FMCG segments with steep valuation discount.
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