Cosmo First Ltd

- 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.

- 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.

- 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.

- 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).

- 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.