Cosmo Films – Diffentiated player in commodity business

1. Commodity margin to be around Rs.30 level per kg in Q2. This is good as it is stable now at this level per Pankaj Poddar interview.

2. BOPET plant is live now. Next quarter we can see topline growth on both YoY basis and QoQ basis.

3. This quarter EPS will likely be subdued due to
   a. Slightly lower commodity margin (~3% overall impact)
   b. depreciation and interest for new plant
   c. inventory losses as raw material prices have corrected this quarter. (Another 3% maybe)
   d. Zigly losses as it has started scaling up. I would expect Zigly to be EBITDA -ve till FY24. (1%?)

How much these will be offset by higher speciality film volume (2%?) and higher sales in speciality chemicals is to be seen(1%?). Net net I expect a fall QoQ basis. (~5%). Q3 not likely to be impacted by 3a and 3c. And we should be able to see some contribution from new BOPET line.

4. Promoter purchase is surprising. Does it any way inhibit ability to do buy-back? Doing a buy back in next 2 quarters will be a smart move. If this hampers ability to do it – it will be pity. Given Euro weakness are they retiring some debt early? Maybe that.

5. The price is nearly 40% off ATH. All these are factored in and more IMO.

Note : Invested. No reco. DYOR.