Prabhudas Lilladher has given Buy recommendation for Mold-tek Packaging with a target price of Rs. 793 in its research report issued on Jan 27, 2022
Prabhudas Lilladher’s research report on Mold-tek Packaging
We cut our FY22 earnings largely on the back of weak 3Q paint volumes, however increase FY23/24 earnings by 1.4%/2.7% on the back of 1) sustained improvement in EBITDA/Kg led by better mix 2) pick up in Pumps Demand and 3) Improvement in F&F expected on account of foray into IBM We remain positive on MTEP’s long term story given 1) Improving utilization levels at current plants, increasing efficiency and improving EBITDA/Kg 2) New plant at Kanpur will help meet demand form KNPL and Berger Paints 3) Addition of new segments like (detergents, dates, nutrition powder, agronutrients) and acceptance of new launches like QR coded IML products will help increase in market share from new and existing clients 4) Pick up in pumps expected form FY23 and 5) Foray into IBM (Injection Blow Molding), which offers strong growth potential. With strong focus on technologically advanced niche products, we expect EBITDA per/kg to increase from Rs 36.5 in FY21 to Rs 45 in FY23.
We estimate Sales and PAT CAGR of 20.1%/36.1% over FY21-24 and re-assign Buy rating (earlier Under Review) with target price of Rs793 (22xDec23 EPS). MTEP is currently trading at 24.4x/18.4x FY23/FY24EPS which is a good proxy play on Paint & FMCG segments with steep valuation discount.