Shares of this small-cap engaged in manufacturing Polyester Films, Polyester Chips, Specialty Polymers, and Engineering Plastic compounds surged over 10 percent on Thursday after the company reported a 27 percent YoY increase in revenue, along with strong net profit growth in its latest quarterly results.
Share Price Movement
During Thursday’s trading session, Ester Industries Ltd’s share price reached an intra-day high of Rs.175.00 per share, 10.44 percent up from the previous close of Rs.158.45 apiece. The shares have retreated since then before closing at Rs.163.75 each.
Rationale for Rise
The strong bullish movement in Ester Industries Ltd’s stock price resulted from substantial revenue and net profit growth in the latest quarter. In its recent filing for the quarter ending September 2024, the company reported a 27 percent increase in revenue, reaching Rs.331.16 crore compared to Rs.261.37 crore in Q2 FY24. Sequentially, revenue also rose by 16 percent from Rs.286.15 crore in Q1 FY25.
During the same period, Ester Industries posted a notable turnaround in net profit, achieving Rs.3.02 crore in Q2 FY25 after a net loss of Rs.30.44 crore in Q2 FY24 and Rs.44.82 crore in Q1 FY25.
EBITDA margins also increased significantly, climbing to 12 percent from 1.1 percent YoY, while PAT margins improved to 1 percent from nil in the same quarter last year.
Management Commentary
Commenting on the performance, Mr. Arvind Singhania, Chairman, Ester Industries said: “We are pleased with our quarterly performance which witnessed a turnaround in our Film business and continued strength in our Specialty Polymer business. After facing challenges over the past 7 – 8 quarters, the Film business is now experiencing early but strong signs of revival in the pricing & margin environment as demand-supply mismatch evens out.
Business Highlights
Specialty Polymers saw robust H1FY25 performance, fueled by higher volumes and an improved product mix, with key products MB03 and Innovative PBT driving profitability and margin gains.
While Q2FY25 consolidated EBITDA would have reached Rs.51 crore (up Rs.8 crore), exchange fluctuations and MTM impacts on Ester Filmtech’s FCL/derivatives reduced this.
Additionally, a notional MTM provision of Rs.6 crore (Rs.4.5 crore net of tax) on an FCL interest rate swap impacted Total Comprehensive Income, though it doesn’t affect actual operating profit or cash flow and is expected to reverse by the FCL’s terminal date.
Manufacturing Facility
Ester Industries Ltd boasts a diverse manufacturing capacity, primarily focused on polyester products. The company’s current installed capacities include 36,000 tons per annum (TPA) of polyester chips, 18,000 TPA of polyester films, and 6,000 TPA of dope-dyed coarse denier polyester filament yarn.
Ester Industries has significantly expanded its operations, with its manufacturing facility in Khatima, Uttarakhand, being equipped with advanced technology to support and enhance production capabilities.
About the company
Ester Industries Ltd is an Indian company specializing in the production of polyester films, specialty polymers, and engineering plastics. Headquartered in Gurgaon, within the National Capital Region of India, the company operates a manufacturing facility in Khatima, Uttarakhand.
Written by – Siddesh S Raskar
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