Earnings Call Transcript Analysis Report #
Financial Performance #
Key Financial Metrics (Q3 FY25 vs. Q3 FY24) #
- Sales (Rupee Terms): Up by 15.25%.
- Sales (Volume Terms): Up by 7.5%.
- EBITDA: Up by almost 12%.
- PAT (Profit After Tax): Dipped by 3.9% compared to Q3 last year.
EBITDA per kg #
- Current (as of Q3 FY25): Approximately INR 36.7.
- Target for year-end (FY25): Expected to cross INR 38 in Q4.
- Target for next financial year (FY26): Aiming to cross or be close to INR 40.
Realization per kg #
- Improvement noted in Q3 FY25 due to marginal raw material price increase and product mix.
Depreciation and Interest #
- Higher depreciation and interest impacted PAT.
- Depreciation for FY25: Expected around INR 50 crores (INR 36 crores depreciated in 9M).
Guidance/Forecasts #
- Overall Volume Growth FY25 (Revised): Expected to be close to 8-9%.
- Overall Volume Growth FY26: Confident of double-digit growth, internally aiming for 15%.
Areas of Growth #
Pharma Segment Revenue #
- Q2 FY25: INR 1 crore.
- Q3 FY25: INR 2.27 crores.
- January 2025 (Month): Crossed INR 2.1 crores.
- Q4 FY25 (Projection): INR 5.5 to INR 6 crores.
- FY25 (Full Year Projection): Approx. INR 8 crores.
- FY26 (Projection): Aiming for INR 30-35 crores.
- FY27 (Projection): Aiming for INR 60-65 crores.
Paint Segment Volume (9M FY25 vs 9M FY24) #
- Up by 8.4% (Value up by 14%), primarily driven by Aditya Birla Group (ABG).
Food and FMCG Volume (9M FY25 vs 9M FY24) #
- Up by 7.3%.
Qpack Volume (9M FY25 vs 9M FY24) #
- Up by 18%.
Areas of Decline/Concern #
Lubes Segment Volume (9M FY25 vs 9M FY24) #
- Down by 1.5%.
Paint Segment (excluding ABG) #
- Negative growth, major reduction from Asian Paints (lost almost 10% volume).
Strategic Initiatives & Business Updates #
Pharma Segment Entry & Consolidation #
- Plant inaugurated in February 2024.
- Commercial supplies started picking up pace in Q4 FY25.
- Developed 12 new bottle SKUs and 2 child-resistant featured products.
- Undertaken a challenging project for a Hyderabad-based MNC exporting to the US, for which a patent has been applied.
- Exporting canisters (1 million pieces) directly to a US company.
Capacity Enhancement #
IML Printing Capacity #
- Increasing by 35-40% by end of February 2025 with new machines from Italy and Delhi.
Pharma Capacity #
- Currently at 40% utilization (at INR 2 crore/month sales). Steps taken to enhance capacity within existing premises in 3-4 months. New premises construction initiated, expected to start from next calendar year.
- FY26 Capex for Pharma: INR 25-40 crores planned.
New Client Wins & Product Launches #
Surf Excel (Food & FMCG) #
- Packing 4-pack Surf Excel in 10-liter square pack. Volumes expected to grow by 40-50% next year.
Horlicks (Food & FMCG) #
- Clearances received, encouraging volume indications. Molds made over a year ago.
Operational Updates #
- Panipat Plant: To start manufacturing thin-walled products for Food & FMCG from April/May 2025.
- Aditya Birla Group (ABG): Commercial production started at Cheyyar, Panipat, and Mahad.
- Pharma Audits: 12 pharma players have audited and cleared premises.
Overall Capex #
- FY26 capex expected to reduce substantially to around INR 60-65 crores from INR 120 crores run-rate of last 3 years.
Market & Competitive Landscape #
Industry Trends #
Paint Segment #
- Shift towards IML (In-Mold Labelling) is improving.
Pharma Packaging #
- Described as a “very huge market of more than INR3,000 crores, INR4,000 crores per annum.” Government tightening standards for pharma production, potentially increasing demand for quality packaging.
Competitive Positioning #
IML #
- Mold-Tek positions itself as a leader with robotic capacities, in-house IML, and design capabilities, making it a “better choice for players like Asian Paints or even KNP and Berger.”
Pharma #
- Differentiating through rapid new product development, in-house tool room, design team, and world-class facilities. Unique canister design (single-piece with laser marking).
Pricing #
- Acknowledges being “a little expensive than other players” due to R&D, design, and robotics costs, which might be a reason for losing some business with Asian Paints.
Market Challenges & Opportunities #
Paint Segment #
- Price pressure exists. Losing volume with Asian Paints due to pricing and redistribution. Opportunity with ABG’s growth and increasing IML adoption by existing players.
Lubes Segment #
- Competition “not so severe,” hence price pressure is “not so much.”
Food & FMCG Segment #
- Increased competition from “small players with a couple of machines” especially in ice creams and dairy. Growth opportunity from Panipat plant catering to North India, and new clients like Surf Excel and Horlicks.
Qpack (Square Pack) #
- Demand improving in the North, supported by patent enforcement.
Market Share/Positioning Comments #
- Asian Paints: Lost almost 10% volume. Management hopes to stabilize share next year.
- Aditya Birla Group (ABG): All major paint packaging suppliers (except Hi-Tech) are associated with ABG. Management does not foresee ABG entering plastic molding directly.
- Pharma: Aiming for significant market share in the long term (e.g., 20% of sales in 5 years). Current competitors include Shriji Polymers (largest), Gerresheimer, Gopaldas, Dr. Pack, Bericap.
Risk Factors & Challenges #
Supply Chain/Operational Constraints #
- Past challenge: Printing capacity for IML and timely procurement impacted supplies in Food & FMCG and Paints. (This is now being addressed with new machines).
- Past challenge: Pharma mold availability impacted confirmed orders. (This is now resolved).
Client-Specific Challenges #
Asian Paints Volume Loss #
- Lost ~10% volume due to “redistribution of volumes between the vendors based on pricing.” Also attributed to tepid growth in Asian Paints’ own volumes.
Market Uncertainties/Competition #
Paint Segment Growth #
- Management cautious about overall paint segment growth.