Mold-Tek Packaging Limited Q1 FY23 Earnings Conference Call Insights

Key highlights from Mold-Tek Packaging Limited (MOLDTKPAC) Q1 FY23 Earnings Concall

Management Update:

• MOLDTKPAC said it’s all segments reached historical volumes in 1Q23, enabling the company to achieve 55% volume growth in sales.

• MOLDTKPAC also said that in volume terms, it’s the first time in the history of the company, in a quarter it achieved more than 9,000 tonnes in sales. This was driven by huge demand increase in the food, FMCG and lubricant business.

• MOLDTKPAC is planning to invest INR250 crores of capex in the next 2.5-3 years. And in FY22, it has layered out plans to invest INR125 crores, plus/minus 5% to enhance various capacities. The company also plans to setup a second plant in a new land in Daman.

Q&A Highlights:

• Omkar Hadkar from Mirabilis Investment asked how much proportion does PSUs contribute to the Lubes segment. Lakshmana Rao MD replied that regarding the PSU, they have started picking up volumes. MOLDTKPAC clarified that BPCL is the PSU that it has some reasonable contribution. Apart from PSUs, ExxonMobil and all the DEF brands are causing growth.

• Omkar Hadkar from Mirabilis Investment also asked about the sustainability of the volumes from the new products. Lakshmana Rao MD replied that it will continue, however, there might be some dip in the monsoon months for lubricants.

• Omkar Hadkar from Mirabilis Investment enquired about IBM pilot project and if it’s a sizable project. Lakshmana Rao MD replied that the project is a 4 machine project, having capacity to produce 4-5 crore bottles per annum. From a value perspective, it’s in the 8-10 crore range.

• Omkar Hadkar from Mirabilis Investment asked about any update on the pump side where the off take was not up to expectation. Lakshmana Rao MD clarified that the company will have average performance on the pump side. MOLDTKPAC is adding small clients and expects capacity utilization to be above 50% in FY24.

• Bhargav Buddhadev from Kotak Mutual enquired about any update on the QR Coded IML. Lakshmana Rao MD replied that the company’s team is with Shell now. Shell, Valvoline and Gulf are in advanced stage. However, MOLDTKPAC added that Castrol is little behind.

• Hasan Muchhale of Liberty Research also asked that with the easing out of freight cost and container issues, if the company is seeing substantial increase in export business. Lakshmana Rao MD answered that the export business is good, but freight cost has not eased. MOLDTKPAC don’t expect volumes to shoot up beyond INR10-12 crores per annum due to freight limitations.

• Hasan Muchhale of Liberty Research enquired about the company’s key raw materials and the sourcing countries and if there would be any supply chain disruptions going ahead. Lakshmana Rao MD answered the main raw material is polypropylene copolymer and Reliance is the major supplier. Only some grades required for thin-wall molding is imported from Dubai and Saudi.

• Akshay Kothari from Envision Capital asked about volume growth for 1Q23. Lakshmana Rao MD answered that the volume growth for 1Q23 vs. 1Q22 was 51% and vs. 4Q22 was around 8%.

• Hitesh Taunk with ICICI Direct enquired about the capacity addition expectation for FY23 by the capex of INR125 crore. Lakshmana Rao MD replied that the company expects capacity to be expanded to 54,000 tons with the addition.