Any current/future new fundraising through debt or equity?

The company is planning a CAPEX of about Rs. 490 Cr over the next two years, mainly for BOPP and CPP lines. As of September 2023, the net debt stands at Rs. 502 Cr with a comfortable Debt/EBITDA ratio of 1.7x and Debt/Equity of 0.4x, indicating a strong balance sheet. There was no explicit mention of any immediate new fundraising through debt or equity in the current call transcript. Management emphasized maintaining a healthy debt level and did not indicate plans for new equity issuance. Overall, based on the discussion, no current or near-term plans for fresh fundraising via debt or equity h

Any current/future capex/capital investment/strategic investment?

The company plans a capex of about Rs. 490 Cr over the next two years focused on BOPP and CPP lines. Work on BOPP and CPP lines is progressing as planned; these will be the world’s largest production capacity lines, increasing production capacity by close to 50% by March 2025. New initiatives include: - Launch of rigid packaging business (Cosmo Plastech) with Phase 1 capacity of 4,800 mtpa, targeting Rs. 70-80 Cr annual sales. - Metallization of capacitor film capacity at 600 mtpa, serving the growing electronics industry. Additional investment of Rs. 40-50 Cr in rigid packaging, with some

Future growth expectations in sales/revenue/volumes?

Specialty sales expected to grow, targeting increase from 65% to 80% of total volume by FY25. New specialty products like synthetic paper, shrink film, window film, capacitor films, and rigid packaging to drive future growth. Zigly pet care vertical showing rapid growth with expanding retail and online presence; consolidation planned in H2 FY24 before next growth phase in FY25. Rigid packaging business expecting Rs.70-80 Cr annual sales potential in Phase 1 within 12-18 months. Capacitor film business expected to ramp up faster, aiming to fill capacity by Q4 FY24 with Rs.40-50 Cr reven

Future growth expectations in earnings/operating earnings/profits/EPS?

Near to medium-term outlook for BOPP and BOPET films remains challenging due to industry-wide supply overhang and capacity additions (Page 4). Specialty films and strong specialty portfolios expected to support earnings and help improve margins (Page 15). Company targeting 80% specialty chemical business by FY25, which should improve stability and EBITDA by 2.5%-3% incrementally (Pages 13, 9). Cost rationalization initiatives, including renewable power and operational restructuring, expected to generate Rs.50-60 Cr annualized savings (Page 4). New production lines (BOPP and CPP) will increase

Current/ Expected Orderbook/ Pending Orders?

Specialty volume in Q2 FY24 accounted for about 65% of total BOPP volume, up from 62% last year, indicating improving order flow in specialty films. There was uneven/orders disruption from a high-margin specialty film export customer, but management expects the specialty order flow to resume from next year. One particular specialty customer’s sales revival is expected next year, with some delays currently. The company remains confident in capacity utilization, including for new lines, with no major concerns about unutilized capacity. Despite industry-wide challenges and oversupply, Cos

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Cosmo First LtdQ3 FY23Industrial Products

Cosmo First Ltd Q3 FY23 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹822P/E: 13.7Market Cap: ₹2.0K CrSector: Industrial Products

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

N/A

Order

N/A

Capex

Yes

1 of 3 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

Category 3

→Specialty sales expected to grow, targeting increase from 65% to 80% of total volume by FY25.
→New specialty products like synthetic paper, shrink film, window film, capacitor films, and rigid packaging to drive future growth.
→Zigly pet care vertical showing rapid growth with expanding retail and online presence; consolidation planned in H2 FY24 before next growth phase in FY25.
→Rigid packaging business expecting Rs.70-80 Cr annual sales potential in Phase 1 within 12-18 months.
→Capacitor film business expected to ramp up faster, aiming to fill capacity by Q4 FY24 with Rs.40-50 Cr revenue potential.
→BOPP and CPP lines expansion to increase production capacity by ~50% by March 2025, improving cost efficiencies and supporting sales growth.
→Export market demand showing revival, especially for specialty films; export proximity providing competitive advantage.
→Near to medium-term outlook acknowledges challenges in BOPP/BOPET overall market but specialty portfolio expansion to support growth.

Margin guidance

Category 3

→Near to medium-term outlook for BOPP and BOPET films remains challenging due to industry-wide supply overhang and capacity additions (Page 4).
→Specialty films and strong specialty portfolios expected to support earnings and help improve margins (Page 15).
→Company targeting 80% specialty chemical business by FY25, which should improve stability and EBITDA by 2.5%-3% incrementally (Pages 13, 9).
→Cost rationalization initiatives, including renewable power and operational restructuring, expected to generate Rs.50-60 Cr annualized savings (Page 4).
→New production lines (BOPP and CPP) will increase capacity by nearly 50% by March 2025 with a better cost proposition (Page 4).
→Rigid packaging and metallized capacitor film businesses expected to scale up revenue, supporting diversification and growth (Pages 5, 8).
→Export market improvement expected to revive specialty order flows starting next year, supporting revenue growth and margins (Pages 4, 13).
→Overall, traction expected to return in coming quarters with revenue and margin growth on the back of specialty products and operational efficiencies (Page 15).

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Fundraise plans

→The company is planning a CAPEX of about Rs. 490 Cr over the next two years, mainly for BOPP and CPP lines.
→As of September 2023, the net debt stands at Rs. 502 Cr with a comfortable Debt/EBITDA ratio of 1.7x and Debt/Equity of 0.4x, indicating a strong balance sheet.
→There was no explicit mention of any immediate new fundraising through debt or equity in the current call transcript.
→Management emphasized maintaining a healthy debt level and did not indicate plans for new equity issuance.
→Overall, based on the discussion, no current or near-term plans for fresh fundraising via debt or equity have been disclosed.

Order book

→Specialty volume in Q2 FY24 accounted for about 65% of total BOPP volume, up from 62% last year, indicating improving order flow in specialty films.
→There was uneven/orders disruption from a high-margin specialty film export customer, but management expects the specialty order flow to resume from next year.
→One particular specialty customer’s sales revival is expected next year, with some delays currently.
→The company remains confident in capacity utilization, including for new lines, with no major concerns about unutilized capacity.
→Despite industry-wide challenges and oversupply, Cosmo is progressing as per planned timelines for new projects and expects to fill new capacities fairly quickly due to branding and specialty product portfolio.
→Management notes that orders have been stable with some recovery in specialty demand and expects further improvement next year.

Capex plans

Yes

→The company plans a capex of about Rs. 490 Cr over the next two years focused on BOPP and CPP lines.
→Work on BOPP and CPP lines is progressing as planned; these will be the world’s largest production capacity lines, increasing production capacity by close to 50% by March 2025.
→New initiatives include:
→ - Launch of rigid packaging business (Cosmo Plastech) with Phase 1 capacity of 4,800 mtpa, targeting Rs. 70-80 Cr annual sales.
→ - Metallization of capacitor film capacity at 600 mtpa, serving the growing electronics industry.
→Additional investment of Rs. 40-50 Cr in rigid packaging, with some projects ongoing into Q4.
→Focus on expanding specialty films and continued R&D with new product launches.
→Investment in renewable power to reduce cost and improve margins.
→No current plans for backward integration into polypropylene resin production due to project scale.

How does Cosmo First Ltd rank vs peers in Industrial Products?

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1Cosmo First Ltd

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