| Experienced Management:
The Mitthan Lal Group (MLG) Group comprises of three entities—MLJ Industries Limited, MLM India Limited, and Mitthan Lal Marketing Private Limited—engaged in the manufacturing and trading of paper and paper-related products. The group mainly caters to packaging industry, food and beverages industry. The group has been operating in the paper industry since 1948 and is a family-run business managed by the Jain family, currently in its fourth generation. The key promoters, Mr. Vinay Jain and Mr. Siddharth Jain, collectively bring over three decades of industry experience, which has helped the group build relationships with customers and suppliers. Acuité believes that the group will continue to benefit from the promoters’ extensive experience going forward.
Geographically diversified and Steady Scale of operation:
The group reported an increase in revenue to Rs.784.41 crore in FY 26 (prov.), compared to Rs.720.89 crore in FY 25 mainly driven by increased demand for paper and paper pulp. Out of this revenue around 55-60% is contributed by trading segment and remaining is contributed by manufacturing segment. The group’s revenue is diversified across various states in the domestic market as well as the global market. Around 15% of total revenue is contributed by exports. Further EBITDA margin also marginally improved to 4.23% in FY 26 (prov) from 3.84% in FY 25 mainly due to better margins in the trading segment. However, PAT margin moderated to 1.85% in FY 26 (prov) as compared 2.65% in FY 25. PAT margin was higher in FY 25 on account of profit made from sale of land and building. Further the group is also focusing on expanding its scale in both domestic and export markets. While entering new geographies and building a new customer base, the group sometimes needs to sell products at a lower margin to remain competitive. The group is planning to expand its capacity for self-adhesive paper & film capacity from 16.80 Crore Sqm to 25.20 Crore Sqm. This expansion will help the group to increase their revenue by 30-40% in the medium term. Acuite believes operating performance is expected to improve, however further improvement in margins will remain key monitorable.
Moderate Financial Risk profile:
The group’s financial risk profile remains moderate, supported by increased net worth, improving gearing, and moderate debt protection metrics. The total tangible net worth increased to Rs.110.05 crore in FY 26 (prov.) from Rs.95.54 crore in FY 25 mainly driven by internal accruals. Total borrowings declined marginally to Rs.171.39 crore in FY 26 (prov) from Rs.175.95 crore in FY 25, resulting in an improvement in gearing to 1.56 times in FY 26 (prov) from 1.84 times in FY 25, as borrowings largely comprise short-term working capital limits. Debt protection metrics remained moderate, with interest coverage ration (ICR) and debt service coverage ratios at 2.51 times and 1.81 times, respectively, in FY 26(prov.), compared to 3.12 times and 2.21 times in FY 25. ICR is high in FY 25 as compared to FY 26(prov) on accpunt of one time profit on sale of land and building. TOL/TNW and Debt/EBITDA improved to 2.62 times and 5.16 times in FY 26 (prov) from 2.97 times and 6.36 times in FY 25, respectively. Acuite believes the group’s financial risk profile is expected to improve over the medium term in terms of coverage indicators supported by improvement in net worth.
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| Intensive Working Capital Management:
The working capital management of the group has remained intensive, as reflected in gross current asset (GCA) days of 148 days in FY26 (Prov.) as compared to 151 days in FY25. Debtor days stood at 65 days in FY26 (Prov.) as against 63 days in FY25, in line with the company’s average collection period of around two months. However, collections may occasionally be delayed in the case of export orders. Nevertheless, the group benefits from long-standing relationships of over two decades with its customers, ensuring realization of receivables upon delivery of products at the final destination. Inventory days improved to 69 days in FY26 (Prov.) from 75 days in FY25, primarily in line with the nature of its manufacturing segment, where the average production cycle ranges between 2 to 2.5 months. Other current assets stood high at Rs. 34.95 crore in FY26 (Prov.) mainly on account of advances to suppliers, balances with revenue authorities, and GST receivables. Creditor days stood at 49 days in FY26 (Prov.) as against 48 days in FY25, with average supplier payments typically made within 45–60 days. Acuite believes that the group’s working capital management is expected to remain moderate over the medium term, given the inherent nature of its operations.
Exposure to cyclicality in the paper industry:
Exposure to cyclicality in the paper industry remains a key concern, as paper prices—being commoditized—are subject to sharp fluctuations, impacting profitability. Demand is closely linked to overall economic activity, making the sector inherently cyclical. The industry also faces intense competition, particularly in the industrial paper segment due to low entry barriers and policy-related challenges, as well as from large, established players in the fragmented packaging segment. Consequently, adverse demand-supply dynamics or cyclical downturns can lead to pressure on realizations.
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