What is common in stocks like
Hawkins India ,Cera Sanitary,Wimplast,Selan Exploration,Manjushree
Technopack,RS Software ,TTK Prestige ..etc.The obvious answer from an ordinary
retail investor may be – “ All these stocks turned as multi baggers in past
2-3 years” . But for someone with some academic interest in stocks and spending
some time to explore ,it is easy to find out the presence of a common name in
the public share holding of all these stocks ie, the name of Dolly Khanna.
Some high profile individual investor’s are equally interested in publicity and hence
they are frequently appearing in TV interviews and celebrating their purchases
through ‘Bulk Deals’ .But on the other hand some are interested to hide behind curtain ,media-shy and buying stocks in bit by bit to avoid any
unnecessary publicity and market attention.Dolly Khanna belongs to second
category and because of this reason ,frankly speaking I have not much idea
about the whereabouts of this investor. But if we go through the history of shares
owned by this investor ,it is clear that she/he is an investor with Midas touch
and with special blessings to pick future multibaggers at an early stage.
Having said ,since this investor buying without any publicity and in small lots
it is difficult to get information about her/his activities in any stock at an
early stage. But now ,this week let us look into one stock in which she entered
only recently or may be still in the process of accumulating .As on latest June
quarter share holding Dolly Khanna holding 123010 shares in Mold-Tek
.This recommendation is not only due to the entry of this investor but taking
into consideration of reasonable valuation based on its fundamentals and its
potential.
Mold Tek Packaging
This Hyderabad based company is a market
leader in Moulded plastic packaging and commanding close to 25% market share.
Company mainly concentrating in manufacturing of Pails(cylindrical type container) used in industries like
Paints,Lubricants,food products..etc.This leakage free,easy to handle, and
attractively decorated rigid plastic containers already dominated paint and
Lubricant industry and replaced metal containers in these sectors.All major
companies in these sectors are customers of Mold-Tek which includes Akzo
Nobel,Berger, Kansai Nerolac, Castrol, Indianoil, HPCL,Shell,BP ..etc.In the
rigid packaging space itself Mold Tek is the pioneer in In-mould Labelling technology .This
technology is used for decorating plastic surfaces with color and labels
to make it more attractive.As of now company manufacturing various products
from its seven manufacturing facilities – 4 units in Andra Pradesh ,one each in
Daman,Tamilnadu and Maharastra . Moldtek is the only molding company in the
world having in house mold designing mold making, IML
label making and ROBOT making facilities.Company initially imported robots from Taiwan and later started to build robots in-house for its use .A robot
made by the company costs only one third of the cost of an imported robot and its spped is higher than the imported robots.These
robots are used in in-mould
labelling (IML) process and by this company eliminates human intervention and
contamination.( At least some of you may dreaming Mold Tek as a commercial robot manufacturer too
when there is shortage of workers in India few years down the line - fine )
Company now aggressively tapping
emerging opportunities from food and beverages sector . Small size IML
decorated containers gaining acceptance in packing ice-creams and jams and
company started supplying this products to Vadilal,Amul and HUL..etc.. Due to
attractiveness and easy to handle features more and more items from food
segment may opt for this product in future.
Conclusion
For the past many years ,Mold-Tek packaging
was a company reporting decent growth but ignored by the market participants
and always trades at lower price earning
multiple.There is no bad mark for the company management so far and they handsomely rewarding its share holders with
decent dividend without interruption.I believe ,entry of a highly successful investor like Dolly Khanna will really change
the image of this company and results in sharp re-rating in the years to come
.The only negative point is its slightly higher debt with debt equity ratio of over 1.3 . If its stock price
reaches a decent valuation there is options for debt reduction through diluting
some equity to investors at a premium. In FY 2013-14 ,Company reported a turnover of Rs.256 Cr ,net profit of Rs.9 Cr and an EPS of Rs.8 .In recent months company’s stock price
appreciated and it may be due to overall improvement in small-caps and
accumulation by the mentioned investor.But ,still this Rs.256 Cr turn over ,profit
making and dividend paying company is
available at a market cap of less than Rs.90 Cr.Considering the potential of
Industry,innovation led growth,decent management and possibility of a change in
the image of company in market circles due to the entry of proven investor ,
risk takers may take some exposure in this indirect proxy of consumption theme it at CMP of Rs.78
Link to Company Website HERE
Disc: It is safe to assume that I have vested interest in MPL
