Mold-Tek Packaging expects 20% earnings growth as pharma, food businesses lift margins

Mold-Tek Packaging expects profitability to grow faster than volumes in the current financial year as higher-margin businesses, manufacturing efficiencies and a better product mix offset higher raw material costs and supply disruptions.

Lakshmana Rao Janumahanti, Chairman and Managing Director of the Hyderabad-based manufacturer of rigid plastic containers said the company continues to expect 10-12% volume growth. It has also raised its earnings before interest, taxes, depreciation, and amortisation (EBITDA) per kg guidance to ₹44-45 from ₹42-43 earlier and is targeting at least 20% EBITDA growth during the year.

Janumahanti said the company's confidence comes from internal operational improvements rather than changes in raw material prices. While geopolitical tensions in West Asia and challenges in the lubricants industry have weighed on volume growth, he said the impact on profitability has been limited.

He added that the company has followed this pricing model for nearly three decades. According to him, higher raw material prices mainly increase working capital requirements and interest costs but do not materially affect the business.

A key contributor to the improved margin outlook has been the consolidation of manufacturing operations in Hyderabad. Mold-Tek Packaging reduced its five facilities in the city to two larger units, bringing printing and related operations under one roof. The company expects this restructuring to deliver lasting cost savings.

He added that the move has reduced manpower requirements, lowered transportation costs between facilities, minimised product damage and improved accountability, resulting in better operating efficiencies.

Apart from cost savings, the company is seeing faster growth in higher-margin businesses. Revenue from the pharma segment rose 38% year-on-year in the first quarter to around ₹11 crore, while food and fast-moving consumer goods (FMCG) packaging recorded 26% growth. Janumahanti said these businesses contribute higher margins than the company's traditional product mix and are expected to support profitability over the rest of the year.

The company expects its pharma packaging business to generate ₹50-55 crore in revenue during the current financial year. Janumahanti said Mold-Tek Packaging continues to add new pharmaceutical customers every month, with several moving from the audit stage to commercial production.

The company, which has a market capitalisation of ₹2,191.95 crore, has seen its shares decline more than 18% over the past year.

The paint packaging business also showed signs of improvement during the quarter. The company reported around 11% growth in the segment and expects to maintain double-digit growth, supported by demand from major customers and increasing business from other paint manufacturers.

At the same time, the lubricants packaging business, which declined 17% in the first quarter because of base oil supply issues, is expected to recover as customers secure alternative sources. Janumahanti said the recovery could add around 3-3.5% to overall volume growth during the year.

Looking beyond the current fiscal, the company plans to expand into new product categories, including dosage pens, ophthalmic packaging and semiconductor trays. These products can be manufactured using existing imported injection moulding machines and are expected to contribute higher margins. Mold-Tek Packaging is also expanding food and FMCG packaging capacity at its northern plant and strengthening its marketing team to support future growth.

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