Manjushree Technopack - Latin Manharlal Securities

Incorporated in 1984, Manjushree Technopack Ltd (MTL) is involved in the manufacture of specialty plastic packaging products for domestic/export markets and it caters to the needs of leading companies in the FMCG, Pharma, Liquor, Carbonated Soft Drinks and Food & Beverages sectors. About 94% of MTL' revenue comes from domestic business and the remaining 6% comes from exports.

Over 25 years of packaging experience

The company has over 25 years of packaging experience. MTL's expertise spans all kinds of rigid plastic packaging solutions. It is one of the largest producers of customised blow and injection moulded containers in PET, multilayer, High-density polyethylene, polypropylene, and other varieties of polymers employing state-of-the-art Japanese and European technologies.

Caters to the needs of varied industries

FMCG sector contribute major part of MTL' business followed by Pharma and Liquor. The major business within FMCG space comes from companies like Pepsico, Coca Cola and Bisleri. The business of carbonated soft drinks and juices is seasonal and requires products in large quantities. So they opt for Preforms or semi-finished bottles which can be blown up in their factories.

New Manufacturing Unit to go on stream by Oct'12E

MTL is the largest convertor of PET in the country, with an existing capacity of 50,000 MTPA. This is expected to further increase with the commissioning of new greenfield manufacturing plants, being set up at an investment of Rs.150 Crs. The company is well on target to completing construction of the manufacturing plant in Bidadi, Karnataka. The new unit with a capacity to produce 20,000 tonnes will commence production (in phases) in October 2012 and in the next 5 years the capacity will be scaled to 100,000 tonnes.

Esteemed Clientele list: Added new premium clients in 1QFY13

The Company enjoys a preferred supplier status in regard to the Specialty Plastic Containers, which are marketed under the brand name of 'POLYPET' predominantly to MNC's in FMCG sector; which assures a consistent market to MTL's products. Some of the leading brands that MTL works with include Coca Cola, Pepsico, Bisleri, Cadburys, Unilever, GSK and P&G among many others. In the 1QFY13E the company has added new clients, like United Spirits Limited, Reckitt Benckiser, Bacardi, Diageo and Big Cola for PET containers and Preforms.

Product Innovation + Designing: Key Differentiator

The company has been very actively working with FMCG companies as new techniques like flip open caps and better closures are emerging and there is a greater emphasis on packaging with the growth of modern retail and rising competition. The Kissan Squeezo bottle that MTL manufactured for Unilever is an example in packaging innovation.

Strong Operating metrics + Debt free + Cash rich

- Revenues have grown at a CAGR rate of 43.2% over the FY08-FY12.
- EBITDA has grown by 49.6% CAGR over FY08-12 and the average operating margin maintained at ~19% levels over the period.
- PAT has grown at a CAGR rate of 46.9% over the FY08-FY12 period.
- Debt/Equity ratio stood comfortably at 0.61 at the end of FY12.
- Full taxpaying company, Average tax rate at ~33% since last 5 years.

At the CMP of Rs.78, the stock is trading at 2.7x its FY14E EPS of Rs.28.80. We recommend BUY on the stock with a 12-18 months target price of Rs.109, providing an upside of 39.7% from the current levels.

Source : Equity Bulls

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