Results time: I had invested in Moldtek around 15 months back. Here is the thread for those interested: https://twitter.com/manujindal2803/status/1452077894839189506?t=U6St7dyVbsukZ8e3wzBFkw&s=08
Results were a tad disappointing from the street’s point of view but let’s deep dive to explore further:
- In terms of QoQ, volumes were up by 3% from Q3 22. In terms of revenue, there was a decline of 3.4% and EBITDA declined by 9.2%. PAT decreased by 2.12% QoQ. Revenues were 154.83 cr and PAT was16.83 cr
- Since paint pails make up 50% of the turnover, lower paint sales along with new Capex and new project implementation suppressed the margins. Despite 3% increase in volumes, there was 2.12% drop in profits
- Capex of 129 cr has been planned for next 12 months out of which 79 crores is already spent. These include new Pharma plant in Sultanpur, brownfield expansion in Daman and Greenfield expansion for panipat and Cheyyur plant
- Company is focussed on majorly three initiatives: Injection blow moulding, flexibility in terms of taking low MOQ orders and export potential
- Out of the total revenue, 72 crores came from paints, 40 crores from lubes and 43 crores from food and fmcg. Total capacity utilisation stands at 74%
- As per the concall, maintenance costs have shot up because semiconductor shortages in the automated machines like printing lines and to some extent robotics and their non-availability has led to loss in productivity and sales actually
- Another reason for the decline in performance were power costs and transportation costs due to increase in diesel prices. Power costs comprises of 7% of cost structure. It had been increased by 12%-15%, thus having the impact of 1% overall on EBITDA
- Regarding the dispenser pumps, the company took the Capex of 13 cr for manufacturing 25 lac pumps per month keeping in mind the demand from WIPRO. However the utilization is at 4 lacs a month
- Most of the dispenser pumps Capex is fungible which means the same gets utilised for food and FMCG sectors. Hence the company is trying to recover the costs from these sectors
- For IML initiative, both valvoline and castrol had come up with the design of QR codes on both jars and caps. At least one of these proposal would get closed by end of this quarter which would give a first POC for the much touted IML
- Regarding the upcoming capacity at Panipat, it would majorly cater to Grasim paints as well as food industry situated in Baddi. This would save on transportation costs for Baddi since Panipat is 250 km away from Baddi
- One major point to come up in the concall was the Capex philosophy for moldtek. On probing by Harsh from Marcellus, the management confided that they are not just putting up the Panipat plant only for Grasim. Rather if Grasim does not work well, they would have a whole lot of food and FMCG to cater to in north.
- Regarding the EBITDA level ramp up, the company would be focussing on in-house manufacturing and printing of entire labels rather than getting it procured from third parties. This will increase the supply dependancy and at the same time would be EBITDA accretive to the tune of 3 crores per annum
- Regarding the increase in power costs, it takes 3 months to pass the increase of costs to the client in 80% cases. In the remaining 20% cases, the increase gets reflected in 6 months time.
- Regarding IBM, most of the containers would be exported to Indian Pharma players for their export business. The competitive advantage stems from nearness to Pharma players in Hyderabad, deep packaging knowledge and limited competition
https://twitter.com/manujindal2803/status/1623174564938383360
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