MOLD TEK PACKAGING---dividend plus growth

MOLD TECH PACKAGING  bse code 533080

CMP AROUND 62, MARKET CAP 49 CRORES

The company is the leader in manufacturing plastic packaging products including pails.  It specialises in both standard and made to order packaging solutions for industries like paints, lubricants, cosmetics, pharmaceuticals etc.

In a new development the company is venturing into providing packaging solutions for icecreams by making tubs for packing ice creams and orders for the same have started from players like Baskin robbins and other ice cream brands.

The company has for the first time in India introduced In Mould Labeling (IML) decorating system to expand the product range.

MANUFACTURING FACILITIES

Company has five manufacturing units out of which 3 are located in Andhra Pradesh, one in tamilnadu and one in Daman.  The Daman facility is expected to come on stream in Dec 11 and would lead to around 50% hike in total capacity.

FINANCIALS

Current equity is around 8 crore with 80 lac shares outstanding.   Promoters allotted themselves and others 22 lac warrants convertible into equity shares at a price of around Rs  45 back in Aug 2010 which when converted will lead to total no of outstanding shares to 1.02 cr shares.

Debt as on march 11 was 42 crores.

It holds 10% stake in Mold Tech Technologies whose market cap is around 31 crores.

LAST THREE YEARS PERFORMANCE

YEAR	08	09	10	11
SALES	97	113	131	164
PBT	3.8	4.6	11	12
NP	3.3	3.7	7.36	8

EPS on fully diluted equity comes to 7.5 for fy 11.

Results for q1 fy 12 have been quite encouraging.

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 

DIVIDEND

Dividend declared for fy 11 is Rs 5 per share.   Rs 2 declared in may 2011 and already paid and Rs 3 declared recently to be approved by AGM and yet to be paid. At this dividend payout, the dividend yield at cmp works out to around 8%. The catch in this dividend yield is that it needs to be seen whether this kind of dividend and dividend payout is maintained in next few years.

The company has paid dividend of Rs 3 for fy 10 and Rs 2 for fy 09. So the dividend  amount continues to increase.

POSITIVES:

Company has been showing consistent growth in past 3 years.

Available at cheap valuations for a company showing consistent growth.

Good return ratios

If first quarter is anything to go by then fy 12 maybe much better than fy 11.

High dividend yield of 8% if total dividend is considered for calculation of div yield.

NEGATIVES:

High debt

Company is dependend on the fortunes of the user industries.

Promoter warrant conversion will lead to some equity dilution.