Mold-Tek Packaging Q1 FY27 earnings call

Mold-Tek Packaging Limited delivered a strong Q1 FY27, with turnover exceeding INR300 crores. A key highlight was the significant increase in per kg EBITDA, which rose to INR46.7, notably higher than the historical range of INR40-42. This improvement was primarily driven by successful internal efficiencies, consolidation efforts, and a favorable shift in the product mix towards higher-margin offerings, despite economic disturbances.

The company is actively diversifying its revenue streams, with high-value segments showing robust growth. Pharma sales grew 41% in value and 38% in volume, while Food & FMCG volumes expanded by 24.2%. Management anticipates paint's revenue contribution to decrease from the current 50% to 40% over the next 3-4 years, as Food & FMCG and Qpack are projected to achieve a 40-50% CAGR.

The substantial improvement in EBITDA per kg is largely attributed to the consolidation of manufacturing units, particularly in Hyderabad where the number of units was reduced from five to two. This consolidation has led to reduced overheads, minimized wastage, and improved capacity utilization, providing long-term benefits. These efficiencies, combined with the ability to pass on raw material price increases, have significantly enhanced profitability.

Despite overall strong performance, the lube segment experienced a 17% volume decline in Q1 FY27, primarily due to base oil unavailability for certain private companies affected by global geopolitical events. The Qpack segment also saw tempered growth, with only a 2% volume increase, as it is a price-sensitive segment impacted by increased raw material costs in the edible oil and cashew industries. Management expects Qpack to return to double-digit growth in coming quarters.

Mold-Tek is making significant strides in the pharma segment, targeting INR50-55 crores in revenue for FY27, a substantial increase from INR34 crores last year. Plans include developing ophthalmic products, with a new 25,000 sq ft facility under construction, and high-end medical devices like dosing pens. The company aims to commercialize these products by the beginning of the next calendar year, potentially reducing development time to one year with a suitable IP partner.

The company incurred INR20-22 crores in capex during Q1 FY27 and has planned a total of INR90 crores for FY27, with INR25-30 crores allocated to pharma expansion. Working capital increased from INR110-112 crores at March-end to INR125 crores, leading to a 20% QoQ rise in finance costs. This increase was primarily due to higher raw material prices, which management expects to stabilize, potentially easing working capital pressures.