Hold Mold-tek Packaging; target of Rs 968: Prabhudas Lilladher

Prabhudas Lilladher's research report on Mold-tek Packaging

We are cutting FY24/25 EPS estimates by 6.2%/12.7% for FY24/25 as we reduce our EBIDTA estimates to Rs43/44/kg which are slightly ahead of management estimates. Mold-tek is looking at significant ramp up in volumes in F&F & Pharma and expects high single growth in Paints and Lubes segment with overall volume growth in a band of 15-20%. We believe addition of HUL (Horlicks, Kissan) & Pidilite are positive and will increase scope to accelerate growth in coming years. We remain 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 added at Lucknow & Daman and capacity additions in Mysore & Visakhapatnam to meet demand from Asian Paints & 2 units to fulfill demand for Grasim’s paint foray and 3) Entry into Pharma & OTC business.

Outlook

MTEP is currently trading at 29x FY25EPS which limits scope for further rerating. We retain Hold with a target price of Rs968 (Rs990 earlier) valuing at 28xFY25 EPS.