Mitsu Chem Plast Limited ($540078)

Ladies and gentlemen, good day, and welcome to Mitsu Chem Plus Limited Q4 FY '26 Earnings Conference Call hosted by Kirin Advisors. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Karan Thakur from Kirin Advisors. Thank you, and over to you, sir.

Yes. Thank you. On behalf of Kirin Advisors, I welcome you alll to the conference call of Mitsu Chem Plast Limited. From the management team, we have Mr. Manish Dedhia, Managing Director and CFO; and Ms. Kashmira Dedhia, President, Finance and Account, with that now, I hand over the call to Mr. Manish Dedhia for the opening remarks. Over to you, sir.

Good afternoon, everyone. It is a pleasure to welcome all investor analysis and participants to the Mitsu Chem Plast Limited Q4 and FY '26 Earnings Conference Call. We sincerely appreciate your continued support and interest in our company. FY '26 has been years of steady progress for Mitsu Chem Plast Limited marked by consistent operational performance and improving profitability. Revenue growth remained stable, supported by refiled demand across key end user industries, while margins improved through better product mix, operating leverage and disciplined cost management. The furnace health care furniture parts vertical continue to gain traction emerging as a key growth and margin driver with rising acceptance across domestic and international markets. Our export business remained resilient now spent more than 17 countries with depending relationships across pharmaceutical, health care, chemicals and FMCG sectors reinforcing our position as a reliable long-term manufacturing partner. We also executed capacity addition that have strengthened our production infrastructure for the quarters ahead. Q4 FY '26 carried forward this momentum as we sharpened operational capabilities and broadened relationship across domestic and international market profitability improved meaningfully, driven by execution, discipline, enhanced efficiency and a gradual portfolio shift towards higher value-added products. Mitsu Chem Plast operates in an integrated blow and injection molding solution provider across initial packaging infrastructure, health care and emergency handling equipment. For our Maharashta facilities, house over 51 blow-molding and 22 molding machines with installed capacity exceeding 29,900 metric tons annually -- supported R&D and testing capability foundation, we are pleased to announce a significant strategic milestone our entry into the intermediate bulk arena vertical, which is called IBC through a fully automatic IBC plant at our Kalapun facility. Our natural extension of our packaging expertise opens a compelling new revenue stream with a strong domestic and export demand potential. Responsible manufacturing and community impact remain core to who we are as a company on the sustainability front. We continue advancing initiatives around energy efficiency, waste recycling and water conservation across our facilities. Simultaneously, through the Mitsu Foundation, we remain actively engaged in supporting health care programs, nurturing sports, talent and contributing to broader community welfare, all reflecting our deep commitment to creating lasting value for every stakeholder we sell. As we move ahead guided by our transformation pillar, packaging products, operational excellence and data-driven marketing and reinforced by our IBC foray, we remain confident of progressing toward our long-term objective for achieving INR 1,000 crores in annual revenue by FY 2028. Before concluding, I would like to thank our employees, customers, business partners and shareholders for their continued trust and support. With this, I conclude my remarks and now request Ms. Kashmira Dedhia to take you through the financial performance for the quarter 4 ended March 31, 2026. Thank you.

Thank you, Mr. Manish Dedhia, and good afternoon, everyone. I will now take you through the financial highlights for quarter 4 financial year FY '26. For the fourth quarter of FY '26, [indiscernible] plasticity improvement in performance, supported by better operating efficiency and an improved product mix. Total income for the quarter stood at INR 8,679.47 lakhs. EBITDA increased to INR 1,422.74 lakh adjusting growth of 72.98% with EBITDA margin improving to 16.45%, an expansion of 736.14 basis points compared to the same period of the last year. Net profit for the quarter 4 FY '26 to INR 770.73 lakhs, up by 117.9% year-on-year with net profit margin incoming to 8.92%. Earnings per share for the quarter stood at 5.68%, higher divas 117.62% compared to the corresponding quarter last year. For the full year FY 2026, total income stood at INR 35, 084.56 lakhs, reflecting year-on-year growth of 5.14%. -- the period increased by 48.88% to INR 3,456 for less, with margin improving to 9.90% reflecting an expansion of 289 basis points year-on-year. Net profit for the FY '26 stood at INR 1,687 lakhs, that is a growth of 15.4% with net profit margin improving to 4.46%. Earnings per share stood at was INR 11.50, up by 13.36% compared to the previous year. This result reflects our continued focus on operational discipline, cost optimization and product mix improvement, which have collectively contributed to healthier margin despite a competitive business environment. As we look ahead, our priorities remain centered on margin expansion, export growth and scaling value-added verticals, particularly in an furniture and Panacea our strategic foray into the IBC vertical both of which we believe will be meaningful growth contributor in the coming years. With that, I conclude my financial update. I will now request the moderator to open the floor for question and answer. Thank you.

[Operator Instructions] First question from of Deepak Poddar from Sapphire Capital.

Sir. I just wanted to understand the EBITDA margin improvement in fourth quarter, what were the key drivers? I mean, you had mentioned something, but I just wanted to press it deeper here.

Yes. From the last third quarter, we're doing a lot of value addition as well as a lot of operational efficiency. And some part, the extra margin has come up from maybe the wash situation, which has happened and somewhat -- we consider that some little more -- little margin came from that war also. war situation Yes, 1% or 2%. 1% to 2%.

So what's the sustainable margin 1 should look at going forward? Is it a comparable?

So I think double-digit is -- Q3 also was double digit. And I think we consider that to is fair enough in our business. So 10% I consider.

Okay. Okay. So 10% is a sustainable margin, sir. I mean, this quarter, it was around 16.5% rate. So it's quite a big difference. So ideally one-off the margins would be higher, right, rather than 1% to 2% that you are mentioning.

Sorry, sir?

So your one-off margin, I mean the margins because of special situation would be much higher because this quarter is 16.5% as compared to sustainable margin, we are talking about 10% today?

Obviously, we aim -- our internal targets are a little more than 10%. But we always say that this 10% should be minimal.

Okay. Okay. Okay. Understood. And I think our journey or vision to a INR 1,000 crores that we have outlined. This year also, we were expecting some growth rate, but I think growth was quite otedfor FY '26 also. So how should 1 look at growth trajectory? I mean from this INR 350 crores to INR 1,000 crores journey that you're talking about. So can you throw some more light how the trajectory would look like?

Yes. Okay. So I'll take it, like you see whatever we have said, I think we have achieved until now, the turnover is a little -- okay. I think from last 2 quarters, we are seeing the 1 we won thing first, we really wanted to improve our bottom line. And that's what we are trying to get. So for that might be, we are promising with our sales, which are not profitable. That is number one. So here, our major focus on bottom line rather than top line number. Number two, yes, our -- the plans are still on the pipeline, and we are -- I'll not say too much delay, a little delay. And hence, we have started our unit at Tarapur because this is the reason we have -- we are ready with the infrastructure. Now as soon as the situation stabilized you will see the growth again back. And also, we have launched IBC machine, which is also 1 of the growth driver -- growth driver.

Okay. So what's the growth we are targeting for this year, FY '17?

Much, much better than this. I think minimum, minimum 13 % growth this year, minimal.

Okay. And how much is the contribution from the farmer health care furniture.

So around 15% is our furniture and infrastructure and 84% from the packaging terms.

Furniture and infra would be about 16% revenue mix, right? And the margin profile of -- how would that mean?

So it's a much better 15-plus margin. EBITDA margiin is at 15 -- plus.

[Operator Instructions] Next question is from the line of Keshav Garg from Counter PMS.

Sir, I'm trying to understand, firstly, how much has the raw material prices, what is our raw material? Is it PVC? Or is it PP?

It is HBP. SDP. mainly HBP, then there are many other materials also. .

Okay. But main is the HBP?

Yes, sir.

Okay. And how much have HDP prices increased year-on-year in Q4?

So around 40% has increased. Prices increased by 40% in only after warl.

And they are still 40% up in first quarter, where we are currently.

No, no. I think they have reduced quite good. I think now it must be 30%, something like that.

Okay. And sir, so now I understand that we have a monthly price contract with our customer. Is that understanding correct?

Yes and no, both. So some of the customers, yes, we have monthly contracts. Some of the comes,we have a spot also. In the war situation, we have to have a spot contract because we were also not aware how the pricing will be.

Okay. So now that prices are down, HDP prices are down quarter-on-quarter -- so are you expecting any reversal of the inventory gain that we made last quarter in this quarter?

Yes, yes, obviously. It will be either gaining either loss because a lot of things are depended on war situation also. But yes, we remain very calm in this like we are not too much big speculator that in the goes you have to buy extra quality and then remain the same. So I think we are very moderate with that. because we are focusing only on the manufacturing things. And by grace of god , I think the raw material suppliers are also supporting us whether price goes up or well goes down, we are supplying it at that reasonably good to us.

So basically, what I'm trying to understand is that since the raw material itself is up 30% year-on-year.in FY '27. So the 30% revenue guidance that you gave for , is it volume growth or is it revenue growth?

I think you have -- you are mistaken on some of the parts. And I've never said year-on-year. I just said the last war situation had become 40%. And now it is 30%. It is not remain the same. Any situation -- if it is a 30% or 35%, there will be a huge problem with India. And so it cannot be remain 30%. So it will definitely come within 1 or 2 months, it will be normalcy will come up.

Okay. So we are expecting a further reduction in raw material price.

Hope so.

Okay. Understood. Sir, so for FY '27, what is our revenue growth target?

Yes. I think just now I said we are targeting around 30% growth.

So that's what I'm asking you, 30% is revenue growth or volume growth?

Both. This revenue growth is also not significant increase because of the rate increase. Okay? So we are -- till February, it was remain -- it was the same amount of the HDPE rate. Even in the next coming year, also, it will be before war situation rate will come up, and we are talking on the same volume only.

Sir, so just to get clarity, last year, FY '26, we did around 21,000 tonnes -- now this year, FY '27, are we expecting to do somewhere around 27,000 tonnes?

Yes, sir, we are already coming up with the expansion. Unit 4, we have already started. There also some expansion will come up. Some -- as you see, a growth in our operational efficiency there also will come up. Our IBC project is also coming up. So definitely, there will be a growth.

Sir, and what is the CapEx for this financial year, F 27?

We will announce that very soon.

Okay. And sir, now again, we are going to FBC. -- basically, we are expanding capacity, 84% revenue coming from container-only and FBC is also continues. So the FBC margin, is it higher than the current container that we are making?

I'll correct you. It is not FBC . It's IBC.

Yes, yes, BCI Yes, yes, yes.

Yes, it is a good margin as many less player in this and hope that yes, we -- our Yes, we can get the better margin, yes, for that.

So basically, IBC margin should be better than the current container what we are doing in the current container division.

Yes,.

Okay. And can you quantify that how much exactly the margins you are expecting to be higher?

We will be very early into this. So let us come up. So we have just announced this project. And as we said, we will cope with the quarter 2. So once we come up, we will share a lot of things.

Okay. Understood. Now sir, if we compare since we are predominantly 84% is container-only and Time Technoplast or also containers. So they are doing 15% EBITDA margin very stable. So what is -- how come our margins, firstly, are so low as compared to them for the same product? And then how is there so much volatility?

I would not like to comment on any competitor sorry. Sorry for that.

No, no. Sir, I'm asking you to comment on Time Technoplast margins. I'm asking you to comment why your margins are lower than your competitor who is in the same product -- after all, we compare you with the industry leader only.

I'd like to give an answer on this sorry. We are at -- as I said, in my all calls are saying we are doing better. You can see all my quarters, we are doing a little better on every quarter-to-quarter.

Sir, so now this EBITDA that we did around INR 14 crore in last quarter and around INR 10 crores in third quarter. Sir, so going forward, on a quarterly basis, can we expect EBITDA somewhere between INR 10 crores and INR 14 crores, let's say, INR 12 crore average? Is it sustainable number per quarter?

So I -- just now the last question, I said the 10% is sustainable, very, very sustainable. So minimum 10% will sustain. As of all the quarters, we were below -- and we will make sure that minimum 10% plus margins should be there. Yes, we will try to achieve more than 10% per share.

Okay. Sir, 1 last question. I don't want to repeat the same question, but just for the understanding, sir, you see the raw material prices if the prices sustain at these levels or let's say, increase further, then in which case, our revenue will -- even if the volume is same, the realization will go up, right? Now the realization goes up -- then -- so basically, higher raw material prices is good for us because we are talking about operating margin being minimum 10%, right? So the higher the raw material cost, the higher the revenue and the margin will be 10% and vice versa. So if the raw material prices go down, revenue goes down, the margin will still remain 10%.

Yes. Sir, I appreciate your calculations. But as I said, again, in this price, India will not sustain for sure. And if any chance the board extends and if these prices remains, yes, then we also will have our turnover and everything will change as per whatever the prices remains.

Sir, what I'm asking is whether operating margin is the right way to look at it or EBITDA per tonne is the right way to look at it? Because if the price -- raw material price goes up, yes, please go on.

EBITDA, EBITDA margin.

Okay. Understood. And sir, one last thing, sir, can you shed some light on that whatever hospital bed this thing we did with the Polish company, what exactly are we supplying? How big can the revenues be?

Yes, good question. So see, we have tied up with the -- as a global supplier to them. They have -- they are a world leader. I think they come in the top 3 companies in the world. And we have tied with to supply them world over. So I think 3 to 4 designs have already passed and maybe many more are on the way. So the revenue is big enough, but it will be -- this is a capital item. So to say any revenue, it is very difficult. But I can say, however, my 16% or 17% contribution in furnace will remain the same. That's what I can say for sure. Although we are increasing business in container, my -- this business will remain the same because this is also expanding.

What is the other segment is container, is furniture and what is the other?

That is the infrastructure product. So we make cables...

That is the infrastructure product. So we make cables... Okay. So the margins are highest in furniture than in infra in container. Is that understanding correct?

Furniture and infra is almost the same margin.

Next question is from the line of [ Ritesh Jha , ] an individual investor.

Sir, my first question is that our units now online, what is our targeted incremental asset turnover for this new capacity?

Sir, sorry, your voice is not -- can you speak a little louder?

Sir, my question is with our 4 units now online, so what is our targeted incremental asset turnover for this new capacity?

It will be. Honestly speaking, we have not gone away that ratio because in a base manner we are doing. I think Kashmira will be able to tell you exactly.

Okay. So sir, more or less, we try to keep it as a fixed asset turnover ratio what you're asking. So by the time all the installed capacity, all the machines will come and we come to the normal capacity utilization, it will remain more or less same. We are 4 to 5.

Okay. But because our current network average is around 1.70x . So do you expect to surpass this -- by the time you reach INR 1,000 crores revenue target in FY '28?

Can you repeat which ratio you are talking about current?

I mean our current network average, I mean average around all the peers, it is around 1.70x...

Average turnover ratio is 3.70. This is our turnover ratio.

Yes, yes. So I'm asking if we can expect to surpass our current network average, which is around 1.70. So when we will hit INR 1,000 crores revenue as we are targeting.

It will improve.

It will be more than 4 -- it will be more than 4. But I always say that's the plant start and then maybe we can have a lot of things on the surface.

Okay. And if our high-margin export demand scales slower than expected, so what is our minimum utilization rate required to keep this new CapEx from diluting our margins?

Sorry, come again. What is the question, sir?

If our high-margin export demand scales slower than expected. So what is our minimum utilization rate that is required to keep this new CapEx from diluting our current margins?

40%.

Okay. Okay. And our current ratio is around -- ROCE is around 16.2%, right? So what is our specific internal hurdle rate for your Tarapur expansion?

What is our...

Internal hurdle rate?

One request to you. If you can keep your device a little away from your mouth because when you are speaking it's coming echoing voice.

Okay. Is my voice little clear now?

Yes.

So I was asking as our ROCE is 16.26% around, so what is our specific internal hurdle rate for our Boisar and Tarapur expansion?

Hurdle rate?

Can you just explain what you exactly want, sir?

Hurdle rate means what is like a threshold limit -- what is our threshold ROC for our new project at Boisar and Tarapur?

Okay. So you mean to say from new projects, what ROCE we are going to maintain?

Yes, what is -- yes, what is the threshold limit?

Yes. So definitely, see, the IBC project is not a small project. It's a very, very big project. And maybe as I said, we are coming up with a Q2 a lot of information. We will share the time because many things will be clear.

Okay. Okay. And how will you protect our ROCE trajectory if any sudden spike in our polymer input cost that delays our EBITDA breakeven?

So basically, we always try to pass on the rates whenever there is an increase or there is a decrease, maybe there will be a small time gap.

Next question is from the line of [ Saurabh Patwa from Quest Investment Management. ]

So just wanted to get your sense or get some sense from you on -- you have a long-term target of reaching aspirational target of reaching close to INR 1,000 crores of revenue. So can you just throw some light on how do you plan when you reach that, what are the things you need to build in during this process at INR 1,000 crores, what kind of revenue breakup you would have in terms of the hospital furniture business as well as packaging? What is the trajectory you think and what can be the risk -- what is the risk you think would be -- you would foresee during this journey?

Okay. Great. So currently, I mean, see, we are -- in Mitsu, we are adding more customers for a better profitability and better visibility. So this year, we have added more than 175 customers in last year for better margins, better profitability because we have to always hope for better margin and better practice. Now coming back to your question that what will be the share of -- so INR 1,000 crores when we are saying minimal is like we are thinking for 20% as whatever the growth plan, what we have discussed. So I think hospital and infra will be around 20% out of that, 15% to 20% will be minimal, minimal of this. And the rest will be container and packaging items.

Okay. So that means that this hospital furniture business has to grow infra business to grow almost 7, 8x from what it is currently?

Yes, we are already exporting many of the countries. And now export hasn't yet started like on a peak.

Yes, we are already exporting many of the countries. And now export hasn't yet started like on a peak. Okay. And what are your manufacturing capabilities for that business? Will you need a lot of investment there to reach that level?

No. So we are capable enough to supply whatever the things. We have a good capacity. And obviously, we are also expanding because our packaging line is also getting expanded. So definitely, there will be -- there will be expansion for sure. But we are quite know what we will require in future terms. So we are ready with the infrastructure. So right now, we are ready with all the infrastructure like building, land building, everything.

And this would be suffice enough to reach what kind of revenue that's when you would need more investment?

Yes, sir.

So you're saying that we'll be able to reach by INR 1,000 crores at this kind of capacity or you need to do CapEx for that?

We will require CapEx for sure.

Yes. So what is the kind of CapEx you would require, sir?

Good question. So we will definitely announce step by step. So every year, we are coming -- I mean, you can see quarter-to-quarter, we are announcing many of the things. This also will be announced very well.

Okay, sir. And sir, just one more question on this. How the manufacturing process would be different from these 2 businesses, sir? I like are the capacity fungible depending on the demand which you have or any approvals which you would require for the growth of this furniture business because you already tied up with one of the larger players globally whom you have started exporting. Can you just throw some light which will help us to understand this business more and better?

Yes. So I mean there's a vast difference between these 2, the raw material from the start with the raw material, the process, the labor work and a lot of assembly and everything required. It's a huge labor years work and a huge assembly required in that. And definitely, -- some countries take 6 months, some countries take 1 year to approve the samples.

Okay. So these are done by the local government approvals or since you are supplying through your large -- one of the larger global players, the approvals are taken by them? Or is it like plant level approvals are required?

So generally, we are only supplying the parts. So generally, approval has been taken by our customer in India and internationally, both. But we have to adhere their norms. So every company has a different, different norms. Every country has a different norms. So I think we have to adhere their rules and regulations, and we have to supply accordingly.

Next question is from the line of [ Rohit Suresh from Samatva Investments. ]

Sir, my first question is on the IBC part that you announced. So by when will we have the plant ready?

Sir, my first question is on the IBC part that you announced. So by when will we have the plant ready? Sir, you need to repeat the question. I'm sorry, your voice got...

No, I'm asking on the IBC plant by what is the time line? Like by when do you expect it to be fully...

We have already announced that Q2, we will start.

Okay. And sir, in terms of volumes, sorry, I missed it. How big will the plant be in terms of volume?

Did not understand.

The capacity of IBC capacity...

Sir, we will be -- very soon, we will announce a lot of things. See, the project itself is a very, very big project. Let us come up with that project. I think that's a really good project definitely and good revenues also. And fine, we will share, I think, many of the things once -- by Q2, we will announce in detail.

Okay. Sir, just one clarification on the EBITDA margins. Is it fair to assume the higher margins in this quarter was due to the raw material pricing benefit that we had?

So it is a mix of the things. And even the -- so somewhat part is yes. So as soon as like this benefit has been come up the same way, it will be reversed also sometime. How the situation goes on.

Next question is from the line of [ Akhil Parekh from 361 Capital. ]

Just 2 questions from my end. One is our guidance of 30% growth for next year FY '27, is it based on any order book visibility? Or is it more of an aspiration at this point of time? That's my first question.

Need to repeat, sir.

I'm saying the 30% growth guidance for FY '27, do we have order visibility for that kind of a growth? Or is it more of an internal target or aspiration at this point of time?

Yes. Because see, as you know that in the blowing company, most of the things like it is never more than order book for more than 1 month. So definitely, it is a planning only. And as we have a number of customers with us and number of historical data with us on that basis only, we assume that.

Got it. Got it. And 30% growth is INR 450 crores roughly revenue for next year, which implies roughly around INR 100 crores, INR 110 crores of quarterly revenue run rate. So do you expect that to start from 1Q itself or it will be more towards the second half of the year?

Second.

Next question is from the line of [ Sakshi Singh from Shah Consultancy Limited. ]

Congratulations on very good set of number. So I have a few questions. Like how should we think about the revenue bridge from INR 1,000 crores target by FY '28 or let's say, '29ifically? And what proportion of that growth is volume driven versus realization as you scale IBC and furniture alongside your core segments?

Thank you very much for your congratulation number one. Number two, I think you asked me what are the -- if you can repeat that question second and third. I mean sorry, your both questions, if you can say one more time...

The thing is I just wanted to understand specifically what proportion of the growth is volume will be volume driven versus realization as you scale your buses like [indiscernible] and IBC alongside your core segments?

So you mean to say the turnover versus EBITDA margin?

Yes, sir.

Yes. As I said in my talks, when we are growing, so definitely, it will be 10% plus. So it's not like 10%. So higher the turnover, we will definitely will have a better margin for sure. Right now, our focus from last 1 year, our focus is on a better profitability only. And that's what we are doing. So turnover, yes, we will -- definitely, we have a good plan, which we are executing a little slowly as we do not want to compromise our margins. I can just defositly say all these things and can do that and then the margin sacrifice, which we did not want. Hence, we are doing a little cautious and slowly. So to remain our margin because I believe we want to be sustained in the margin. That's very important.

Yes. That we can see, sir, even though revenue was a slight cut, you have maintained the margins and it is up also, I just want to understand how does the mix evolution alter the blended realization? And within that, are there any segments where you are consistently trading volume for margin or vice versa?

So we have 3 verticals as one is packaging. The second one is hospital furniture and others where we have infra. So furniture and others will remain -- the last year was 16% and other was 84% by growing the projection is something like 20-80 ratio. So 20% of our furniture and other parts and about the containers will remain around 80% packaging and containers.

As there are no further questions from the participants, I now hand the conference over to Mr. Karan Thakur from Kirin Advisors for his closing remarks. Over to you, sir.

Thank you, everyone, for joining the conference call of Mitsu Chem Plast Limited. If you have any further queries, you can write to us at [email protected]. Once again, thank you, everyone, for joining the conference.

Thank you so much, sir. On behalf of Kirin Advisors, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.