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Mold Tek Technologies

Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=1495
Printed Date: 21/Apr/2025 at 4:35pm


Topic: Mold Tek Technologies
Posted By: sayonee
Subject: Mold Tek Technologies
Date Posted: 29/Dec/2007 at 7:36pm
Basantji, cud you pls start a new topic for Mold Tek Technologies. I am providing a writeup here:
 
Mold Tek Technologies Ltd - Engineering a multibagger
 
In an interview on NDTV Profit, Madhusudamn Kela spoke about engineering services as a promising theme going forward. At about the same time I happened to look at Mold Tek, a Hyderabad based company
 
Mold Tek has two divisions - Plastic packaging and KPO services
KPO division is engaged in providing services for structural engineering sector in US & Canada specifically including pre-engineering and conventional detailing.
Mold Tek has applied for the demerger of its plastic division into a separate listed company and is awaiting high court approval
 
Key figures:
Share price Rs 179
No of shares  11.6mn
Mcap: Rs.206 crores
 
Sales (FY08): Rs 125cr
KPO div Rs 25cr
Plastic div Rs 100cr
 
PAT (FY08): Rs 14cr
KPO div Rs 10cr
Plastic div Rs 4cr
 
I have tried to examine Mold Tek Technologies (KPO business) on two factors which are common to any potential multibagger stock 1) high earnings growth visibility 2) Potential for PE expansion
 
1) Earnings growth drivers:
a) US structual engineering services market is worth $6b (Rs 25,000cr). Assuming a 1% growth rate mkt will grow by Rs250 cr each year which itself is 10 times Mold Tek's FY08E revenues. So the external opportunity is huge esp. if we also include the EU market which I presume could be as large as US. In the past few years Mold Tek has grown revenues at above 100% CAGR.
 
b) To tap this huge market Mold Tek's strategy involves acquiring small sized firms in the US which would give ready access to clients and also provide the front end marketing setup to acquire new clients apart from critical technical expertise
 
c) HR: Currently MoldTek employs around 270 emplyees in its KPO and plans to reach a size of 1000 people in the next 2-3 years. I presume that in 5 years it will need around 3000 employees. It will be competing with IT and construction companies for talent and will have to contend with wage inflation. Though I believe that an entry level civil engineer will prefer Mold Tek over a Infy or Satyam as he would get a chance to put his civil engineering skills to better use unless the salary differential is large
 
d) Value chain: Currently, most of the work done by Mold Tek is in pre-engineering (140 employees currently) where billing rates are $2000-2500 per employee per month. As it increases exposure to the detailing segment (90 employees currently but low utilisation) where billing rates are 2x pre-engg rates, there is scope for employee productivity to improve
 
e) Based on this, I would assume a CAGR of 50-60% over the next 5 years. This would give a revenue figure of 200-250cr in 5 years which would still be only 1% of the current US market size.
Assuming current PAT margins of come down from current 40% to 30-35% over time PAT number in 5 years time amounts to Rs 70-90 cr
 
2) P/E expansion:
a) Currently MoldTek trades at around 8 times FY '09 earnings. Post the demerger of the plastic packaging business the standalone KPO business could be rerated
 
b) If the management can execute as per the above earnings growth estimates, Mold Tek could improve P/E to 15-20 times 1-yr forward as institutional exposure increases. As per September data Reliance Capital owns 3% stake in the company and there is no MF holding
 
As per this hypothesis, Mold Tek could prove to be a 10-15 bagger in 5 years. The key risks to this include execution risk, exchange rate, wage inflation  & risk of major equity dilution in the future (though high ROE should largely negate this possibility)
 
Would like to know what other members think of this company and any critical aspects which I may have missed in my analysis
 
I have a small exposure to Mold Tek in my portfolio and plan to increase exposure when I have excess cash
   
 
 


Replies:
Posted By: deveshkayal
Date Posted: 29/Dec/2007 at 10:54pm
I think some brokerage recently initiated coverage on this stock. KPO business do look interesting. Rel Cap AMC which operates MF and PMS holds stake.
 
Plz introduce yourself http://www.theequitydesk.com/forum/forum_posts.asp?TID=17&PN=61 - here
 


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"You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett

Posted By: BGKGURU
Date Posted: 30/Dec/2007 at 3:55pm
sharkhan recommended it

Posted By: sayonee
Date Posted: 30/Dec/2007 at 11:51am
sorry didn't mention that the Fy 08 estimates are sourced from Sunidhi research report

Posted By: stock_surgeon
Date Posted: 17/Jul/2011 at 7:24pm
The Mold-tek packaging is looking very interesting to me.

1) Dividend yield of ~5%

2) Promoters recently increased their stake by 2.5% in June 2011 by converting warrants at a price of Rs 80/share

Current market price of Rs. 61

Looks good to me!!

Posted By: TCSer
Date Posted: 17/Jul/2011 at 11:12pm
The promoter it seems are highily educated lot from IIM if I remember correctly but the co has not scaled up after it went public somewhere in 90s

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Share market is nothing but a game of temperament. Success mantra Right Price,Right Business,Patience, Conviction .Do not do panic buying or selling.It may be the only profession where inactivity pays

Posted By: stock_surgeon
Date Posted: 17/Jul/2011 at 12:45pm

Mold-Tek Packaging to set up unit in Hosur
Andhra Business Bureau
Apr 09, 2010

HYDERABAD: Mold-Tek Packaging Ltd., the city-based plastic packaging product manufacturer, is all set to ramp up its production with the opening of a new unit in Hosur  taking the number of its manufacturing units to five. The company plans to invest Rs 5 to 6 crore in the Hosur unit and expand its unit in the Union Territory of Daman.

“The company is targeting the FMCG (Fast moving consumer goods) sector, with its indigenously developed in-mould labelling technology which enhances the images on the packing nearer to a photograph and becomes part of the mould,” said Mohan Padmanabhan, Dy. General Manager, Marketing and Co-ordination, Mold-Tek Packaging Ltd, while speaking at the India Packaging Show 2010 organised by Print-Packaging.com (P) Ltd. in the city on Friday.

The company plans to increase its turnover to Rs 150 crore from last year’s Rs 132 crore. The company, which is growing at 17 per cent currently, plans to grow at 30 per cent in 2011, Mr Padmanabhan said.

“The company has 22 to 25 per cent market share in the pail business. In the lubricants sector we have 60 to 70 per cent market share and have the distinction of making tamper- proof containers,” P. Vijay Mohan, Asst. Manager-Marketing, said.



Posted By: hit2710
Date Posted: 17/Jul/2011 at 11:07am
total dividend declared for fy 11 for moldteck packaging is Rs 5 -- interim rs 2 plus final rs 3. On stock price of Rs 62 this amounts to a very good dividend yield of around 8%.

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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.

Posted By: hit2710
Date Posted: 20/Jul/2011 at 4:18pm
Mold Tek packaging has come out with excellent q1 fy 12 numbers.

Sales is up 34% while PAT is up 35%.

quarter       q1 fy 12      q1 fy 11    fy 11(12 months)
sales           56            42               164
PBT             6.15          4.12              15
NP               3.5           2.6                  8

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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.

Posted By: hit2710
Date Posted: 20/Jul/2011 at 5:33pm
I would request the admin to change the title of the thread because after the demerger the plastics business is named Mold tek Packaging .(whereas the name mold tech technologies has been retained for the KPO business)

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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.

Posted By: photophobic111
Date Posted: 12/Aug/2011 at 5:18am
Hitji,

Any idea how much this In mold labelling machine costs or what would be entry to barriers if others want to enter this? Would barriers be this company image rather than actual machine set up. Just googled, and looks like you ca buy these machines easily online too..not sure how good quantity and how commercial these machine would be.


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Doing best is the essence and improving your best is the key to everything....

Posted By: hit2710
Date Posted: 12/Aug/2011 at 10:44am
Originally posted by photophobic111

Hitji,Any idea how much this In mold labelling machine costs or what would be entry to barriers if others want to enter this? Would barriers be this company image rather than actual machine set up. Just googled, and looks like you ca buy these machines easily online too..not sure how good quantity and how commercial these machine would be.


Not too much idea about ur query. Regarding barriers we have to consider the main business of the company of packaging to consider these things. In Mould labelling would be an additional offering from the company to its customer.

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Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.

Posted By: smartcat
Date Posted: 13/Aug/2011 at 12:40pm
There are no entry barriers for packaging businesses as such. You can buy the machines and hire some men to run it - but the key is customer relationships.

FMCG companies don't bother to change their existing partner to a new one, especially since packaging costs are not much when compared to their overall sales. If their existing partner is doing quality work at decent prices, the new guy will have a tough time getting the FMCG company to switch.

However, if a FMCG company is launching a new product, they might be willing to try a new packaging company. Actually, there are thousands of small scale industries that are involved in the packaging business. A friend of mine who owns such an unit is doing brisk business. His new factory which he opened one year back is almost running at full capacity.

Basically, as long as there is consumption growth, these packaging units will continue to do well. They piggyback on the growth of FMCG companies.

But stocks like MoldTek and Manjushree should find a place only in a diversified portfolio, and not in concentrated ones. These packaging companies are like auto ancilliary companies - they depend on other companies for their business (and not on consumers). And that carries lot of risk - in terms of pricing, client loss etc. Plus they also carry other risks because packaging business is capital intensive, and that brings more problems to the table (interest costs, cash flow issues etc).

Posted By: sainivas
Date Posted: 14/Aug/2011 at 1:08am
Before investing, please make your own enquires re management quality.



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Agey Dekho

Posted By: stock_surgeon
Date Posted: 03/Nov/2011 at 11:41am
Originally posted by stock_surgeon

The Mold-tek packaging is looking very interesting to me.1) Dividend yield of ~5%2) Promoters recently increased their stake by 2.5% in June 2011 by converting warrants at a price of Rs 80/shareCurrent market price of Rs. 61Looks good to me!!


Cool. Breakout today- at 70 now !

Posted By: TCSer
Date Posted: 05/Nov/2011 at 9:25pm
why what happened to it an old favorite of hit bhai?

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Share market is nothing but a game of temperament. Success mantra Right Price,Right Business,Patience, Conviction .Do not do panic buying or selling.It may be the only profession where inactivity pays

Posted By: stock_surgeon
Date Posted: 11/Nov/2011 at 2:16pm
Mold tek at 71.4 . Has beaten all the indexes by a huge margin since my first post on Mold tek in this forum.

Posted By: stock_surgeon
Date Posted: 11/Nov/2011 at 2:17pm
Originally posted by stock_surgeon

The Mold-tek packaging is looking very interesting to me.1) Dividend yield of ~5%2) Promoters recently increased their stake by 2.5% in June 2011 by converting warrants at a price of Rs 80/shareCurrent market price of Rs. 61Looks good to me!!


And, this was my first post here- in July 2011

Posted By: stock_surgeon
Date Posted: 11/Nov/2011 at 2:48pm
With high volumes- at 73 now. I am not complaining!!


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