Muhurat Picks 2025 : Mallcom (India) Ltd for Target Rs.1,744 by Sushil Finance
Secular tailwinds in the safety segment and capex to drive growth
India’s new Occupational Safety, Health & Working Conditions (OSH) Code 2020 is enforcing stricter mandatory Personal protective equipment (PPE) usage across sectors , while large companies and MNCs now require safety compliance in their supply chains (ESG and audit mandates). This has resulted in the shift in the manufacture of PPE from India’s unorganized sector to the organized due to strict regulations on quality. Also worldwide, currently only 15% of workers worldwide have access to specialised occupational health services, providing enough opportunity for the growth for the company.
During the last couple of years, the company made an investment of Rs.180 cr in the expansion of its Odisha manufacturing facility and commissioning of the greenfield facility at Sanand for PPE, with the potential additional revenue of Rs.200-250cr in the next 2-3 years, according to the management. Operating leverage along with high proportion of branded products vs. private label, should result in improvement in the margins going forward.
Healthy balance sheet and robust financials
Mallcom combines growth with financial prudence. It has virtually zero long-term debt, even after expansion, has maintained healthy profitability through cycles (FY25 PAT margin 11.8%, up from ~8.6% in FY24). Return on Capital Employed (RoCE) stood at 16.9% in FY25, indicating efficient capital use. It managed to fund its expansion through its internal accruals. The company generated seven straight years of revenue growth with no meaningful debt, indicating healthy demand for its products.
OUTLOOK & VALUATION
We expect the company’s topline to grow at a CAGR of ~17% to Rs. 669 cr in FY24-27E. EBITDA margin is likely to remain at healthy level, 13.4%, on account of high domestic sales, where margins are strong. Hence, with an expected PAT margin of 9.5% in FY27E, we expect the PAT and EPS to be at Rs. 63 Cr and Rs. 101.4 respectively. We have assigned a P/E multiple of 17x to arrive at a price target of Rs. 1,744 which provides an upside of ~23% within 18 to 24 months from the current market price of Rs.1,420.
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