Packaging Profits - Manjushree Technopack
By Prasanna Bidkar |
11/8/2010 2:50 PM Monday
Remember Reliance Power’s IPO and its after-effects? The kind of downfall the market witnessed immediately after such a large-sized IPO? So what has that got to do with our current pick i.e. Manjushree Technopack? To some extent it is true that there exists no direct relationship between the two. But what they do have in common is that both these companies hit the primary market floor in January 2008. Also, it was immediately after Reliance Power’s IPO that Manjushree Extrusion hit the primary market. Despite the negative sentiments in the market, the issue managed to sail through. However, the listing on February 28, 2008 was quite miserable as on the very next day it closed below the offer price and the scrip remained there for the next 19 months. It was only on December 31, 2009 the stock traded above its offer price, yet, the price remained in the narrow range. Recently, though, the scrip is witnessing an upward movement. The management has announced expansion plans and also changed the company’s name to Manjushree Technopack (MTL). The financial performance has been very good with growth in topline over six consecutive quarters on a QoQ basis. A similar performance was witnessed at the operating level also. So, considering the increased investor activity in the counter, expansion plans, improving financial performance, and change of name, we decided to meet the management and analyse the company for our investors who would undoubtedly be curious to know whether there still exists any steam in the counter.
Understanding The Business
MTL is basically into the manufacturing of PET bottles and caters to industries such as FMCG, pharmaceuticals, beverages, and chemicals. Informs Vimal Kedia, Managing Director, MTL: “We are basically a packaging solution provider in rigid plastics. We are the only company providing a total packaging solution starting from design to commercialisation. We enjoy a market share of 10 per cent cater to the leaders in the industry with our top five clients being Nestle, Cadbury, Coca Cola, Pepsi, and Unilever.” As regards the production capacity, it is divided into two elements viz. preforms and containers. Currently the company has a total capacity of 29,000 tonnes per annum (TPA), divided into 19,000 TPA of preforms and 10,000 TPA of containers.
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