Cosmo First Research Report: Dive Into Specialty, Pet Care Business To Drive Growth

Cosmo First Limited, formerly known as Cosmo Films has emerged to become one of the in-demand global brands. Offerings from this company include biaxially oriented polypropylene (BOPP) films, cast polypropylene (CPP) films, and biaxially oriented polyethylene terephthalate (BOPET) films.

Cosmo First is global leader in some specialty segments:

• world’s largest producer of thermal lamination films
• globally second largest player in specialty label films
• world’s largest supplier of Industrial Application Films

The company is foraying into several new specialty products.

The Indian flexible packaging industry is likely to record a CAGR of double-digit growth during 2022-2027.

To tap those opportunities, the company targets a 70% capacity increase over the next three years in phases. It has planned Capex of Rs 940 crores. EBITDA was close to Rs 600 crore for FY22, post-expansion could rise to over Rs 1,000 crore annually.

The company also owns the pet care brand Zigly. The pet care market in India is booming with the industry size expected to touch Rs 15000 crore from Rs 5100 crore in 2020.

Zigly has launched six stores across India. Plans to expand to 150 stores in the next four years. Cosmo First expects capex of Rs 100 crores and annual sales up to Rs 300 crore from Zigly by FY27.

The company plans to eventually demerge the unit by roping in a PE player. Potential listing of the unit is also on cards within next two years. Based on past deals in the segment, valuations could be at 8x of annual revenue. We see a value of above Rs 2000 crores in the event of divestment.