MMP Industries LtdQ2 FY22Non - Ferrous Metals

MMP Industries Ltd

Q2 FY22 Earnings Call Analysis

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Order

N/A

Capex

Yes

1 of 4 growth signals are positive — mixed outlook.

Revenue guidance

Category 3

→Foil segment is identified as a major growth driver, especially in value-added products like pharma laminate, blister coating, and printing.
→Capacity expansions: Installation of a second rolling mill expected by Q4 this financial year, enabling peak aluminum rolling capacity of 700 MT/month and potential topline of Rs. 240-250 Crores next year.
→Pharma sector approvals underway with large companies like Ajanta Pharma, Sun Pharma, Alkem, and others; ramp-up expected to accelerate post audits and vendor approval processes.
→Powder segment growth is driven mainly by the AAC construction segment, expected to be the fastest-growing area.
→Q2 expected to see 10-15% volume growth over last year despite seasonality.
→Volumes in foil segment currently at ~45-50% capacity in conversion, with plans to raise utilization and thereby margins.
→Overall, growth driven by increased capacity, approvals, and entering new markets (Bangladesh, Nepal, Nigeria).

Category 3

→The company expects strong revenue growth particularly in the aluminium foil segment driven by approvals and orders from major pharma companies, along with growth in value-added segments like printing (Page 7, 14).
→Volume growth in the aluminium powder segment is anticipated at 10-15% in Q2 compared to last year despite monsoon-related slowdowns (Page 7).
→Margins currently impacted by volatile metal prices and inflationary pressures, but management hopes for margin stability with aluminum price stabilization (Pages 5-6, 9).
→EBITDA per ton in the powder segment is around Rs. 30,000 to Rs. 35,000; foil EBITDA per ton not yet stable due to evolving business (Page 17).
→Free cash flow positive status is expected sometime next financial year (Page 15).
→Operating asset turnover improvement to about 5 times is targeted within two years, though 6-7 times is currently challenging (Page 9).
→The ramp-up in foil business and conversion segment capacity utilization increase will drive margin expansion (Pages 13-14).

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→The company is currently financing expansions, including the second rolling mill, entirely through internal accruals.
→As of now, there are no plans to raise funds through external borrowings or equity.
→Management mentioned that future expansions and capacity increases will also be funded internally.
→No specific timeline or discussion of new debt or equity fundraising was indicated in the call.
→For detailed capital allocation plans, the management offered to respond to investors via email.

→MMP Industries Limited does not maintain a formal order book as orders arrive regularly based on demand rather than being booked months in advance.
→In the powder segment, Q2 is typically the slowest quarter due to seasonal factors such as the monsoon, which reduces mining and construction activities.
→The company expects a 10% to 15% volume growth in Q2 compared to Q2 of the previous year despite it being traditionally slow.
→Foil segment is anticipated to see strong growth with approvals pending from a major pharma company and increasing orders in value-added printing.
→Overall, the business expects growth in both powder and foil segments, but orders are managed on a rolling basis rather than pre-booked.

Yes

→The company is undertaking a rolling mill installation expected to be commissioned by Q4 of the current financial year or Q1 of the next financial year.
→This new rolling mill will increase peak aluminium rolling capacity to 700 metric tons per month.
→The company targets a topline of about Rs. 240-250 Crores with the new rolling mill capacity starting next financial year.
→Expansion is being financed through internal accruals; as of now, there are no plans for external borrowings.
→Management is open to exploring capital allocation strategies including dividend payout and potential new avenues but prefers to reply on these details via email.
→No explicit mention was made of any "big bang" new or different product category investments beyond capacity expansions in foils and powders.

How does MMP Industries Ltd rank vs peers in Non - Ferrous Metals?

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1MMP Industries Ltd

Rev 3Mar 3

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