Cosmo First Ltd. (NSE:COSMOFIRST) is a leading producer of BOPP films, established in 1981 and based in India. The company is the largest BOPP film exporter in India and the world’s largest producer of thermal lamination films. It is also a global leader in some specialty segments, such as specialty label films and industrial application films. With a good mix of specialty and commodity films, Cosmo First is uniquely positioned in the market.
The company has also launched a D2C pet care venture, “ZIGLY,” which aims to build India’s largest pet care ecosystem across different channels. Cosmo Films is committed to ESG and sustainability and has a “CareEdge Good” rating. The company focuses on reducing greenhouse gas emissions, using green energy, waste reduction, and water treatment, while also supporting education and fighting against COVID-19.
During Q3 FY23, the BOPP and BOPET industry faced excess supply caused by bunching of new production lines, and demand disruptions in overseas markets. The contribution margin dropped below sustainable levels, impacting everyone in the industry. However, the Company mitigated the impact on the back of its strong presence in the speciality films segment. The company could have performed better, but it faced several issues, such as one-time inventory loss in raw materials and finished goods, planned maintenance of some of the production lines, restricted flow of orders for speciality films due to the festive and holiday season in Europe and the USA, and larger funding of operating deficit in the rapidly growing Petcare vertical.
The BOPET line, which was commissioned towards the end of the second quarter of FY23, continued to focus on perfecting recipes, processes, and quality parameters for various speciality and value-added films in line with the company’s entry strategy in polyester films. The company’s Petcare vertical is rapidly expanding and clocked a monthly run rate of Rs. 1 crore in sales revenue from its 11 experience centres in various locations and increasing online presence through its website and mobile apps.
Cosmo First Ltd. had a relatively stable financial performance during the period ending December 31, 2022. The company’s total income was INR 750.4 crore, which represents a slight decrease compared to the previous quarter. The company’s revenue from operations was the largest contributor to its total income, while other income also added to the company’s revenue streams.
Regarding expenses, Cosmo First Ltd. was able to manage its expenses effectively in December 2022. The company’s total expenses in this period were INR 701.76, which were greater than the expenses incurred in the previous quarter and the same period in 2021. The cost of materials consumed and employee benefits expenses were the largest expenses, followed by depreciation, amortization, and impairment expenses.
The company reported a net profit of INR 45.6 crores for the quarter ended December 31, 2022, which is a decrease of 37% from the net profit of INR 73.2 crores reported for the quarter ended September 30, 2022. When compared to the net profit of INR 104.31 crores reported for the quarter ended December 31, 2021, the net profit has decreased by 56%.
The decrease in net profit can be attributed to a decrease in revenue from operations and an increase in certain expenses, such as finance costs, etc. The company’s basic earnings per share (EPS) for the quarter ended December 31, 2022, were INR 16.95. This figure indicates a decrease of 56% from the EPS reported for the quarter ended December 31, 2021.
Overall, Cosmo First Ltd. had a stable financial performance during the period ending December 31, 2022. The company’s revenue streams were consistent, and its expenses were well-managed, resulting in a healthy net profit. Commenting on the company’s performance, Mr. Pankaj Poddar, Group CEO, Cosmo First Ltd., said that the near-term outlook for BOPP and polyester films is expected to be challenging, though the company’s strong speciality film portfolio should deliver superior returns. Zigly is rapidly becoming well-known among pet parents, benefiting both pet lovers and the company.