The shares of leading players in the rigid plastic packaging industry gained 3.5% to ₹800.10 per share after IDBI Capital gave a buy call with an upside of 20%.
At 1:10 p.m., Mold-Tek Packaging Ltd shares were trading at ₹800 a share, down ₹27 or 3.49 percent from the previous close price on the exchange, and the company has a market capitalization of ₹2,654 crores.
Mold-Tek Packaging is engaged in the manufacturing of injection-molded containers for lubes, paints, food, and other products.
The company holds a dominant position in the Indian rigid plastic packaging market, commanding a substantial 25% market share. Additionally, it is recognized as a trailblazer and expert in In-Mold labeling (IML) decoration.
The company specializes in the production of injection-molded containers for lubricants, paints, food, and various other products, the company operates 12 manufacturing units and 2 stock points across the country.
Shares of Mold-Tek Packaging Ltd have dropped by 8% over the past six months and experienced an 18% decline in the last 12 months.
From Q4 FY23 to Q4 FY24, the company experienced a significant 4.3% declined in revenue, soaring from ₹185 crores to ₹177 crores. Concurrently, net profit declined by 21.7%, climbing from ₹23 crore to ₹18 crore.
Having a positive outlook for the company, IDBI Capital has given a buy call on the stock with a target price of ₹956, indicating an upside of 20 percent as compared to the current price levels of ₹799 per share.
The analyst believes that the company is strongly positioned in the paints industry. As industry demand improves, the company’s volume uptake is expected to return to its previous track in the near term.
The brokerage notes that Mold-Tek Packaging Ltd has a strategy of timely capacity expansion and entry into high-value products. Moreover, the company’s management is focused on high-margin segments like food, FMCG, and has entered the pharmaceutical segment, which is expected to lead to a revival in earnings in the near term.
The company’s management has projected sales volume growth to be around 15% in the near term, mainly supported by new capacity additions. In Q4FY24, the company secured new orders from reputable companies like MK Agrotech, Sri Tulasi Industries, Patil Biotech, Sri Vijay Visakha Milk, Pure Food Processing, and Drools Pet Food, as noted by the brokerage.
With the company’s new capacity additions across paints, pharma, food, and FMCG, its total capacity is expected to reach 60,000 MT in the next couple of years. Analysts have slightly adjusted net sales/PAT estimates for FY25E/FY26E, assigning a 35x PER on FY26E.
The company has recently commenced commercial production at its Pharma plant in Sultanpur. It anticipates a topline contribution of Rs 200mn and Rs400 mn in FY25 and FY26, respectively, with a capacity utilization of around 80% in FY25. Additionally, the company expects a 20% volume growth in the Food and FMCG segment in FY25.
Written by Omkar Chitnis
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