Mold-tek Packaging's (MPL) Q4FY21 result was better than our estimates on key parameters. Strong sales volume growth and higher NSR (on account of increased raw material prices) supported net sales, while higher share of IML products in total volume led to EBITDA margin expansion.

Net sales increased by 51.2% YoY to Rs 1,610 million, while EBITDA came in at Rs 320 million, higher by 75% YoY. The company reported net profit of Rs 181 million, growth of 106.1% over Q4FY20. The management remained confident to keep the earnings growth momentum once pandemic situation comes under control.

Commenting on the result review, IDBI Capital said, "Second wave of Covid-19 has dented product off-take owing to statewide lockdown, however, Q1FY22E would still outperform compared to Q1FY21. MPL's focus on new products launches, increasing share of IML in total sales and addition of new clients across the product segments paves the way for sustainable earnings growth.

We have increased our net sales/PAT estimates by 3.9%/6.6% and 11%/10.6% over FY22E/FY23E respectively. After a sharp run up in the stock, valuation looks expensive at current level. We downgrade the stock to REDUCE with a revised TP of Rs 442, assigning 17x PER on FY23E."

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