| Experienced management and established track record of operations
MPPL has an operational track record of over six decades in the synthetic resins industry. The company was established as a proprietorship concern in 1962 by Mr. Shirish Parikh (Chairman) and later in 1995, the constitution was changed to private limited company. At present, the company is promoted by his son, Mr. Mayank Parikh (Managing Director), who possess an extensive experience of over three decades in the synthetic resins industry. He is further supported by its well-qualified and experienced team of professionals in managing day-to-day operations of MPPL. The extensive experience of the management has enabled MPPL to establish a healthy relationship with its customers and suppliers.
Acuité believes that MPPL will continue to benefit from its experienced management and established track record of operations.
Moderate financial risk profile
The group has a moderate financial risk profile marked by moderate net worth, low gearing, and moderate debt protection metrics. The tangible net worth of the group stood at Rs.87.74 Cr. as on March 31, 2024, as compared against Rs.75.08 Cr. as on March 31, 2023. The group has conducted buyback of shares in September 2024. The total share buyback was of Rs.26.52 Cr. (including Rs.4.90 Cr. of tax). 2,38,000 shares have been bought back with a face value of Rs.10/share at a premium of Rs.912/share. The gearing level of the group improved to 0.24 times as on 31 March 2024 as against 0.44 times as on 31 March 2023. Interest Coverage Ratio (ICR) stood at 8.56 times in FY2024 against 6.36 times in FY2023. Debt Service Coverage Ratio (DSCR) stood at 2.61 times in FY2024 against 1.33 times in FY2023. The total outside liabilities to tangible net worth (TOL/TNW) of the group improved to 0.77 times as of March 31, 2024, as against 1.05 times as of March 31,2023. The Debt/EBITDA levels also improved to 0.83 times as of March 31, 2024, as against 1.59 times as of March 31,2023. Going ahead, the financial risk profile of the group is expected to remain moderate on account of planned debt funded capex in the near term.
Improved operating performance amid volatile profitability
The group’s revenue has been improving year-on-year, recording a growth of ~9% in FY2024. The revenue increased to Rs.303.78 Cr. in FY2024 against Rs.278.47 Cr. in FY2023 and Rs.242.72 Cr. in FY2022, primarily on account of increased sales volumes during the year. Further, the 10MFY2025 revenue stood at Rs.276.45 Cr. However, the operating profit margin of the group stood volatile over the past three years at 7.87 percent in FY2024 against 7.10 percent in FY2023 and 11.73 percent in FY2022. The volatility in the operating profitability is on account of fluctuations in the raw material prices. The PAT margin stood at 4.40 percent in FY2024 against 3.39 percent in FY2023 and 6.20 percent in FY2022.
Going ahead, the ability of the group to sustain growth in its scale of operations and while improving its profitability margins will remain a key monitorable.
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| Moderately working capital intensive operations
The group’s working capital operations are moderately intensive as with GCA days of 121 days in FY2024 against 127 days in FY2023. The inventory days stood at 39 days in FY2024 against 42 days for FY2023. The debtor days stood at 66 days for FY2024 against 78 days for FY2023. The creditor days stood at 67 days for FY2024 against 72 days for FY2023.
Acuite believes that, the working capital operations of the company would remain moderately intensive in the near to medium term.
Susceptibility of profitability margins to volatility in raw material prices
The group's profitability margins are susceptible to volatility in raw material prices, which are derived from petroleum-based products and are inherently volatile. Any adverse movement in raw material prices could significantly impact the group's profitability. Furthermore, the group faces foreign exchange fluctuation risk, as approximately 15% to 20% of its revenue is generated through exports. However, this risk is partially mitigated by the group's foreign currency imports, which provide a natural hedge to some extent.
Presence in a highly competitive and fragmented industry
The resins industry is highly competitive and fragmented marked by presence of many organised and unorganized players in this industry, thus putting pressure on the profitability margins of the group.
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