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Healthy demand outlook, improving mix to drive growth

We raise our FY28/FY29 EPS estimates by 4.3%/2.7%, given

1) healthy near-term outlook, with double-digit volume growth guidance for 2HFY27

2) improving product mix, driven by a rising volume share of F&F and pharma ( F&F/Pharma volume share at 35.2%/2.9% up from 31.4%/2.5% in Q2FY26

3) sustained EBITDA/kg guidance of Rs45- 46 despite RM volatility

4) resilient demand across Pharma and F&F, supported by robust client additions

5) foray into high-margin businesses such as semiconductor packaging, supporting sustainable EBITDA/kg levels. MTEP reported an earnings beat, driven by stronger-than-expected realisation growth, with EBITDA/kg improving to Rs45.8 in 2QFY27 (vs. Rs39 in 2QFY26)

We believe MTEP’s LT growth drivers remain intact, supported by:

1) increasing business from leading paint and FMCG players, improving utilisation and scale-up of the pharma business

2) healthy demand from Cheyyar and Panipat units, along with Hyderabad plant consolidation, driving medium-term capacity utilisation. We estimate Sales/EPS CAGR of 17.3%/28.8% over FY27-FY29. We assign an 17x PE multiple to Sep’28 EPS, arriving at a TP of Rs345/share ( Rs372 earlier on 19x Sep’28 EPS). Retain Accumulate.

Sales/ Volumes grew 30.7%/10.1 in Q2:

* Revenues grew by 30.7% YoY to Rs2.7bn (PLe: Rs2.58bn).

* Volume growth came in at 10.1% (Ple: 9%)

* Gross margins contracted by 402bps YoY to 41.7% (Ple: 42%).

* EBITDA grew by 29.2% YoY to Rs506mn (PLe:Rs454mn); Margins contracted by 21bps YoY to 18.4% (PLe:17.6%)

* Adj PAT grew by 36% YoY to Rs211mn (PLe:Rs185mn)

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