Mold-Tek Packaging Ltd. (MTPL) is a packaging solution company mainly engaged in the manufacturing of rigid plastic packaging containers through injection molding technology for paints, lubes, oils, food, FMCG and other sectors including cosmetics and pharmaceutical. It develops designs and manufactures standard airtight and pilfer - proof pails as well as customized containers to meet customer's packaging requirements.
The company has introduced certain world class packaging products in India for paints, oil, lubricants, food and FMCG industries through continuous innovation. MTPL decorates products using screen printing, heat transfer labeling technique and In- Mold Labeling ('IML'), which is one of the modern and premium container decoration techniques globally.
It has nine manufacturing units, four at Telangana and one each at Maharashtra, Daman, Karnataka Tamil Nadu and Andhra Pradesh. Company's products mainly cater to three business segments viz (i) paint (ii) oil and lubricant, (iii) food and FMCG. Its products are available in different size and shapes such as circular, rectangular, curving and special shapes as per customer requirement.
The company derives approx 74% of its total revenue from multinational companies in paint, lubricant segment.
To part finance its repayment/prepayment of working capital borrowings (Rs 52.83 cr.), general corpus fund (Rs 17.61 cr.), MTPL is coming out with a rights issue of 555330 equity shares (of Rs 5 each) linked with detachable warrants to mobilize Rs 71.30 cr. The issue opens for subscription on October 28, 2020 and will close on November 11, 2020.
This issue consists of Issue of 1 partly paid-up equity share of face value of Rs 5/-each ('Rights Equity Shares') for cash at a price of Rs 180 per Rights Equity Share (including a premium of Rs 175 per Rights Equity Share] ('Rights Equity Share Price') along with 6 detachable warrants ('Warrants') for cash at a price of Rs 184 per Warrant ('Warrant Price') for every 50 fully paid-up equity shares held by the Eligible Shareholders. MTPL is likely to spend Rs 0.86 cr. for this rights issue process.
Rights issue payment schedule is as under: (considered as investors friendly gesture)
| Amount Payable per Right Equity Share | Fare Value | Premium | Total |
|---|---|---|---|
| On Application | 1.25 | 43.75 | 45.00 |
| One or more subsequent call(s) as determined by Rights Committer at its sole discretion, from time to time | 3.75 | 131.25 | 135.00 |
| Total | 5.00 | 175.00 | 180.00 |
| Amount Payable per detachable warrant (Due Date) | Fare Value | Total |
|---|---|---|
| On Application | 46.00 | 46.00 |
| On Warrant Excercise | 138.00 | 138.00 |
| Total | 184.00 | 184.00 |
Post allotment, shares and warrants will be listed on BSE and NSE.
For the entitlement purpose, the company has fixed October 22, 2020 as the record date. Scrip turned ex-right on October 21, 2020.
MTPL's current paid up equity capital of Rs 13.88 cr. will stand enhanced to Rs 14.16 cr. (post fully paid up of new shares) and Rs 15.83 cr. after conversion of detachable warrants into equity. The company is looking at market cap of Rs 569.77 cr. after completion of full process of this issue.
The issue is solely lead managed by Emkay Global Financial Services Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue.
On financial performance front, on a consolidated basis the company has posted turnover/net profits of Rs 406.85 cr. / Rs 31.92 cr. (FY19) and Rs 439.36 cr. / Rs 37.44 cr. (FY20).
For Q1 of FY21 the company has posted net profit of Rs 1.51 cr. on a turnover of Rs 65.44 cr. against Rs 117.52 cr. and Rs 9.37 cr. respectively for the corresponding previous period. For this period, top 10 customers' contribution in top line marked at 67.6%. This indicates setback for the company amidst ongoing pandemic scare.
Issue is priced at a P/BV of 2.59 based on its NAV of Rs 69.44 as on March 31, 2020 and
MTPL's share has posted 52 week high/low of Rs 305.45/ Rs 142.74. It was last quoted at Rs 272.75 on cum-right basis on October 20, 2020. It opened at Rs 273.00 and closed at Rs 268.40 on ex-right basis on October 21, 2020 and its last traded price was at Rs 258.95 at the close on October 23, 2020. At this closing price, MTPL's post issue market cap stands at Rs 819.68 cr.
Review By Dilip Davda on October 25, 2020
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
