Hi Gaurav,
Coding and marking is a niche industry and Control Print has a strong positioning within it. Management has mentioned that the industry grows at 1.5x GDP growth. I have collected market sizes over years from different reports.
Indian market size:
- 900 – 1000 cr. (FY16)
- 1200 – 1300 cr. (FY19)
- 1300 – 1500 cr. (FY22)
Growth comes around 6-8% from FY16-22. However, I dont think this is correct as Control Print has grown sales at 11% over this period, despite maintaining similar market share. Please look at market share numbers for Control Print over years.
Indian Market share
- FY15: Domino (32%), Videojet (30.1%), Markem-Imaje (19.9%), Control Print (18.1%)
- FY21: Control Print (18.5%)
- FY22: Control Print (18.5%)
- FY23Q3: Control Print (19%)
FMCG companies like HUL and Nestle have grown their sales at 7-8% over this period (FY16-22). The basic logic behind higher growth in marking and coding industry is that there are more things printed on packaging products over time and that should mean that ink sales growth should be higher than FMCG sales growth. We also see this in Control Print’s growth, where they have grown at 11-12% vs FMCG cos growing at 7-8%. It also kinds of add up with management’s claim of 1.5x GDP growth.
Now coming to the recent spurt in growth, we can see that there has been a recent spurt in printer sales.
Number of installed printers: 5’000 (FY15), 7’000+ (FY18), 13’000 (FY21), 15’000 (FY22), 16’500 (FY23Q3)
Since FY18, installed printer base has more than doubled with sharp growth happening in FY21-23 period. This was because Control Print launched TIJ/TTO printers which are used in the packaging industry, where Control Print had lesser presence. Management has also been mentioning that they are not only winning new business, but also winning competitor’s accounts. Also, they have become much more aggressive in pursuing growth opportunities (launch of lower priced printers for economy segment through ICIPL, going into software solutions for pharma industry through track & trace technology, more export focus, Markprint acquistion, JV with V-shapes SRL, etc.). All this suggests to me that management has become more growth hungry. The good thing with this business is its asset light nature meaning a large part of profitability comes as dividends. Recent spurt in growth is an extra bonus.
Disclosure: Invested (same as before)
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