Buy Mold-Tek Packaging Ltd For Target Rs. 660 - Axis Securities Ltd
Est. Vs. Actual for Q4FY25: Revenue: MISS; EBITDA: Largely INLINE; PAT: MISS
Change in Estimates post Q4FY25
FY26E/FY27E: Revenue: -5%/-1%; EBITDA: -3%/1%; PAT: -6%/-1%
Recommendation Rationale
Momentum in Pharma and F&F Segment: The pharma division witnessed strong momentum in Q4, with sales nearly tripling to Rs 6.67 Cr compared to Q3, crossing the break-even threshold and beginning to contribute positively to profitability. For FY26, the management is targeting revenue of Rs 30–35 Cr from the pharma segment, supported by planned capacity expansions and product diversification by Q1/Q2 FY26. With enhanced IML printing capacities, the F&F segment recorded robust sales growth of 25.5% in Q4. The company expects 15–20% growth in this segment in FY26, as FMCG production commences at the Panipat facility from June 2025.
Improving Margin Trajectory: EBITDA per kg for the quarter stood at Rs 40.15, aligning with the company’s guidance for the quarter. This improvement was largely driven by increased contributions from the Pharma and F&F segments. Management expects EBITDA/kg to improve further as capacity utilisation ramps up, aiming for Rs 41–42/kg by FY26.
Rebound in Paints: During the year, the company expanded its paint segment capacity to cater to increasing demand from a key client, ABG. While the volumes from Asian Paints declined in FY25, the volumes have started stabilising, and the company expects positive momentum after the adoption of IML packing by the client. Overall, the paint business is projected to grow by around 10% in the upcoming fiscal year (from 6.7% in FY25).
Sector Outlook : Positive
Company Outlook & Guidance: The company’s volume growth rate is expected to accelerate over the next few quarters as new capacities and products in F&F, Paint, and Pharma Packaging start contributing significantly. A strong momentum (double-digit) of volume growth is anticipated from FY26 onwards, mainly driven by Pharma capacities and an increase in volumes from Aditya Birla Group. Additionally, the company is focusing on higher utilisation and an improved product mix to achieve its target EBITDA/Kg of Rs 41-42 by FY26.
Current Valuation: 20x FY27E; ( Earlier: 18x FY27E)
Current TP: Rs 660/share; ( Earlier: Rs 600/share)
Recommendation: We maintain our BUY rating on the stock.
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SEBI Registration number is INZ000161633
