Cosmo Films – Diffentiated player in commodity business

I think market is expecting drastically poor results in Cosmo, given price levels. It is true that SRF reported poor results for the Packaging Films Business. However, Cosmo is different from most other Packaging Films companies in 2 respects (which has impacted the performance the most)

1. Cosmo is till now a pure BOPP (with some CPP)play. BOPP margins though fallen are still respectable. Its BOPET which is under higher stress. All other than Cosmo are majority BOPET (>60%). Thus margin erosion for Cosmo, will be limited.
2. Most players have production facilities in Europe – which are hit by high power costs and have created a drag on margin. Cosmo on other hand manufacters almost all in India (except for a small facility in Korea). There is NO impact of “European Crisis” on Cosmo.

This quarter will be the real test of Cosmo’s claimed “Speciality” volumes and it being insulated from commodity margin movements. If it stands this test, results are likely to be in the range posted above on 1st Oct. If it happens, I hope market to acknowledge.

Note: Invested. On Wait and watch mode.