Mitsu Chem Plast Limited (MITSU.BO) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Mitsu Chem Plast Limited Q3 FY '26 Results Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ganesh from Kirin Advisors Private Limited. Thank you, and over to you, sir.

Thank you. On behalf of Kirin Advisors, I welcome you all 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, Vice President, Finance and Accounts. With that, now I hand over the call to Mr. Manish Dedhia for the opening remarks. Over to you, sir.

Thank you, Mr. Ganesh. Good afternoon, everyone. It is a pleasure to welcome all investors, analysts and participants to the Mitsu Chem Plast Limited Q3 and 9 months FY 2026 Earnings Conference Call. We sincerely appreciate your continued support and interest in our company. Q3 FY '26 reflects continued progress for Mitsu Chem Plast as we strengthen our operational capabilities and deepen relationships across domestic as well as global market. The company delivered strong improvement in profitability, reflecting disciplined execution and improving operational efficiencies. Mitsu Chem Plast today operates as an integrated blow and injection molding solution provider serving industries such as industrial packaging, infrastructure, health care and emergency handling equipment. Our 3 manufacturing facility in Maharashtra equipped with over 51 blow molding and 20 injection molding machines provide installed capacity exceeding over 29,000 metric tons annually. Supported by strong in-house R&D testing capabilities, this enable us to consistently deliver quality products while responding efficiently to evolving customer requirements. Health care furniture components under our Furnastra brand continue to be a key growth driver with rising acceptance across domestic and export markets. Participation in international exhibition and industry events continue to strengthen brand visibility and deepen engagement with global OEM partners. Our export business also continued to grow steadily with Mitsu brand Furnastra currently exporting to more than 17 countries. Participation in global trade fairs has helped enhance brand recall and strengthen relationship with OEM customers across pharmaceutical, health care, chemical and FMCG sectors, reinforcing Mitsu's position as a reliable long-term manufacturing partner. During the quarter, we progressed on key operational initiatives aimed at supporting future growth. The company undertook a capacity expansion that has added approximately 650 metric tons per annum, taking total installed capacity over 29,000-plus metric tons annually. This expansion is expected to improve production flexibility and responsiveness to customer demand. Sustainability and responsible manufacture remains central to our operation as we continue initiative focused on energy optimization, recycling and water conservation while gradually working towards reducing carbon and energy intensity across facilities. Beyond business performance, we remain committed to social impact through Mitsu Foundation, supporting initiative in health care, sports and community welfare, including eye care programs, cancer support and promotion of sports talent, reflecting our commitment to long-term stakeholders' value creation. As we move ahead, our strategic focus remains on driving profitable and sustainable growth through innovation, operational excellence and diversification guided by our transformation pillars, health care furniture under Furnastra, packaging products, operational excellence and data-driven marketing, we continue progressing towards our long-term objective of 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 I request Ms. Kashmira Dedhia to take you through the financial performance for the quarter and 9 months ended December 31, 2025.

Thank you, and good afternoon, everyone. I will now take you through the financial highlights for quarter 3 and 9 months FY 2026. For the third quarter of financial year 2026, Mitsu Chem Plast Limited reported steady growth in performance, supported by better operating efficiency and improved product mix. Total income for the quarter stood at INR 8,608.85 lakhs, reflecting a year-on-year growth of 6.92%. EBITDA increased significantly to INR 954.45 lakhs, registering a growth of 73.35% with EBITDA margin improving to 11.10%, reflecting expansion of 426 basis points compared to the same period of last year. Net profit for quarter 3 financial year 2026 stood at INR 470.63 lakhs, up by 217.03% year-on-year with net profit margin improving to 5.47%. Earnings per share for the quarter stood at INR 3.47, higher by 218.35% compared to the corresponding quarter of the last year. Moving to the performance for 9 months financial year 2026. Total income stood at INR 26,405.09 lakhs reflecting a year-on-year growth of 8.94%. EBITDA for the period increased by 35.71% to INR 2,043.58 lakhs, with margin improving to 7.75%, reflecting expansion of 152 basis points year-on-year. Net profit for the 9-month period stood at INR 790.13 lakhs, registering growth of 113.03%, with net profit margin improving to 3%. Earnings per share stood at INR 5.82, up by 110.11% compared to the previous year. This result reflects better sales realization and higher margins achieved during the quarter, supported by the company's continued focus on improving operational efficiency, optimizing costs and enhancing product mix despite a competitive operating environment. Going forward, we remain focused on strengthening margins, expanding exports and scaling higher value-added segments, including health care furniture components under the Furnastra brand. That concludes my update on the financial performance. I would now request to open the floor for questions. Thank you.

[Operator Instructions] The first question is from the line of [ Aditya Singla ] from Oaklane Capital.

Sir, so my first question is that your EBITDA margins have moved up sharply year-on-year and also improved quarter-on-quarter. So what exactly drove this jump? And is this level sustainable going forward?

Yes. Thank you very much, Mr. Aditya-ji. I think good question, but see, I think we are starving to get a lot of things here. As we said, operational efficiency, the better margin, the better sales realization and the better purchasing. I think all together, we are working right now. So we hope this continues for the further quarters as well.

And so sir, like how should we think about a normal margin for Mitsu through the cycle? Like what EBITDA margin range do you believe is structurally achievable over the next 12 to 18 months?

So generally, I think 8% to 10% is a quite reasonable amount because we have both mix, commodity and niche item. So I think 8% to 10% is quite accepted. But we are trying for the new innovation things and new things because we have also a niche product. So we always try to get more margin and more efficiency there. So I think 8% to 10% for your answer.

Okay. So what were the key reasons for the lower margins in the last few quarters?

Yes. There were many. So I think in the last call also, I mentioned -- so the raw material prices, the better sales -- sales realization. So all together mix, and we are trying to get -- we are adding a new customer every quarter, every month. So if some customers are not giving you better rates, so maybe we have to switch over to another customer. So I think these are the practice, but it takes a lot of time. And we are trying to do that.

Okay. Sir, can you share the current revenue mix for Q3 and 9 months across your key verticals like...

So the niche item is around 16%, and the rest is 84% is my commodity like containers.

And within this mix, which vertical is like currently has the highest margin and which has the lowest margin?

Yes. So as I said, like 16% contains of like furniture parts and other articles. So they have like a little more marginable item compared to the containers.

And sir, do we plan to schedule increase...

Sorry to interrupt you sir. But if you have a follow-up question, please rejoin the queue.

Okay.

Our next question comes from the line of Maitri Shah from Sapphire Capital.

Yes. Firstly, congratulations on the great set of margins that you've achieved to this quarter. Since you said that our reasonable range is around 8% to 10% that we can assume our expectation to reach INR 1,000 crores in FY '28, what sort of margins do you see when we achieve that number of revenue?

I'm sorry, the last line, I think, after INR 1,000 crores, we got -- your voice got cut.

Sure. So in FY '28, we are expecting INR 1,000 crores revenue. What sort of margins do you see on the EBITDA during that fiscal year?

Yes. So see, basically, when I say this 8% to 10% is in the current scenario. But yes, definitely, we are also trying to improve our EBITDA margin. In the industry, it looks like 8% to 15% margin because since 3, 4 quarters, we are trying to get a little better, better the margin. And I think we have achieved near to the 10%. But I expect a little more margin when we go for a larger turnover. That's for sure.

Correct. So the operational efficiency will also kick in to achieve this INR 1,000 crores, what sort of capacity expansion do you expect now going forward in FY '27 to take place?

Okay. So if you must have seen, I mean, like after 31st -- before 31st, we have already announced one -- I mean like we are doing a little smaller, smaller. So as soon as -- I mean, as the machines are coming, we are announcing on the website. So we have announced already 2 announcements, one is in November and one is in January. One is in January for capacity announcement.

[indiscernible] and the announcement of capacity expansion will be enough to fulfill the INR 1,000 crores?

No, no. Obviously not. So I think I said very small thing. Even we have announced just in January, we have announced Unit 4 also, so which will also have an addition to the capacity. It takes a lot of time to come -- when we order the machine, it takes around 4 to 6 months. So I think we are in the process of the expansion right now.

So any sort of number range you can give on the capacity...

Your voice got disconnected.

Your voice is getting cut in between. Words are getting cut. If you can speak a little louder and near the microphone.

Yes, sure. Any sort of range you can give on the capacity that you need to achieve this INR 1,000 crores, if that's possible?

Range means?

Like currently, we have close to 29,000 plus metric ton capacity, maybe at 35,000 metric ton capacity, we can achieve the INR 1,000 crores. Any number you can give on that?

Yes. So approximately, it will be double the capacity definitely.

Double the capacity. Okay.

Yes, double the capacity.

And what sort of CapEx would be required to increase that to get to that number of capacity?

We will announce because we are yet to finalize many of the things. And we will announce, I think, in a piecemeal as soon as we finalize and we get installed, we will announce...

Okay. Yes, no worry. Makes sense. And the EBITDA margins, if you can give a differential between the niche products and the commodity, is that possible? What sort of margins we earn on the niche side and on the commodity side?

So around the difference is around 5% to 7%.

5% to 7%. And currently, we have around 16% of sales from the niche products. So how do you see that expanding to reach that INR 1,000 crores? What sort of percentage do you expect from niche products going forward?

So we are expecting around 15% to 20% when we reach -- I mean it's -- although we were reaching INR 1,000 crores, we wanted to keep that niche item should be approximately 15% to 20%.

We are currently in that range. So nothing more that we can expect or the niche products...

No. As soon as we are expanding. So we are expanding in both these things. We are expanding into niche item, we are expanding into commodity item as well.

We'll follow the same growth path.

Yes, yes. But we will try to increase the niche items because better margin.

Correct, correct. Okay. And the export share for 3Q versus the export share in revenue currently?

So around 2.5% because see, we have been exporting to 17 countries because I think this is a capital item, and it takes a lot of time to successfully pass from the customer. So we have already achieved that milestone. And now maybe the export will be generated once all -- I think we have achieved that milestone. Now I think the results will come.

And this export is majorly for the niche products but also the commodities are being exported.

Mostly niche, mostly niche.

Mostly niche. So do we have a better margins on the export side? And if you can give the differential between...

A little better than domestic. Yes.

Little better. And mostly these exports are in which continent have we [indiscernible]?

Europe, Canada and Gulf.

Europe, Canada and Gulf. Okay. Any guidance on the '27 -- FY '27 revenue you can mention or will grow -- how will we grow from '26, '27?

So almost in the same range, almost in the same range, yes, but because more focus right now, we are doing on the profitability.

[Operator Instructions] Our next question is from the line of [ Surbhi Vohra ] an individual investor.

So my question is on pricing, how quickly are you able to pass through resin price increase to customers? And in resin -- I mean, rising resin cycle, how much margin compression do you typically see before you changing prices, sir?

Ma'am it's echoing. Your voice is echoing and could not understand any of the words.

Now, is it audible?

Yes, maybe.

Okay. So I just wanted to ask you that on pricing, how quickly are you able to pass through resin price increases to customers? And in rising resin cycle, how much margin compression do you typically see before pricing catches up?

Good question, ma'am. So yes, it takes -- sometimes it takes a good time and sometimes it is very, very quick. So due to a lot of fluctuation in the U.S. dollar, the crude and everything and market sentiment and everything. So the prices sometimes goes up, goes down also. But yes, I think it takes a little more time. Sometimes customers are not agreeing on to give the rates immediately. So it takes around sometimes more than a month.

Okay. So -- and what is the export potential over the next 2, 3 years?

Yes, very good potential because see, as I said, we are exporting to these niche items and it's a capital goods item. And we have now achieved one milestone that all that 17 countries have been -- all our export orders and everything has been successfully passed. So I think now we expect a huge jump in the export.

Okay. So can you also tell me like which export geographies are working best today?

So ma'am, everything -- I mean, like for us, everything right now is a similar situation as like Europe and well. But with the India-EU tie-up, so we expect a good demand, and they will maybe try to purchase from us there rather than other countries. I know I'm sure that the tax benefit and everything, it will take a little longer time, but at least they will start purchasing from India. So I hope the Europe will be the major chunk for us.

Our next question comes from the line of [ Avesh Chauhan ] an individual investor.

Sir, congratulations on great margins in this quarter.

Sir, can you speak loudly, your voice is not coming at all.

Am I audible now?

Now it's good.

Okay. Sir, congratulations on great set of margins in this quarter. Sir, my question is on sales growth target. I think our target of INR 1,000 crores, if we have to reach there in FY '28 or even FY '29, we'll require 35% -- 35% to 40% CAGR. And historically, we have done -- in last 5 years, I was saying that we have done something like 18%, 19% CAGR. So what new thing is happening that we are going to grow at a far faster rate than historical?

Great question, sir. Thank you. So I'll tell you, I mean, see, obviously, with our capacity, we have grown very slow in this. You must have heard our -- we have announced our Unit 4 also recently. Very recently, we announced, I think, last week only that we have in our Unit 4 plant. And also in the month of December also, we bought land. So all this is plan is an expansion. So I think once we are freezing our plant, definitely, we will announce step by step.

Yes, sir. But in FY '26, I'm seeing that we might end up doing something like INR 300 crores, INR 400 crores or something, and then we will have -- we will be required to more than doubling in next 2 years. But our FY '27 guidance is very much in line with that historical 20% run rate. So I'm still not able to understand the math whether we will have a very significant growth in FY '28 or something?

Yes. So I think, sir, your calculation is perfectly right. Yes, definitely, but in plastics, always, we have to go with the major machinery. All the current plants are saturated right now. So we can't expand too much in the same premises. So obviously, we have to go for expansion. Hence, we have gone with the Unit 4 and now maybe very soon, we will come up with the new plant as well.

Right. Sir, that is on the production part. I am also concerned about the sales thing that how our sales will ramp up so much that in next 2 years, from INR 400 crores, we reached that you do additional INR 600 crores of sales to INR 8,000 crores. So that on the sales.

We will not do immediately INR 600 crores, obviously. So I think it will be gradually. So I think Unit 4 has already started. Now we will see many of the things -- and I think it will be gradually. But yes, we are very confident to achieve what milestone we have set for ourselves. And there will be -- see, we are also building up a team. We are also building up infrastructure. We are also building up the customer relationship. We are building many new customers acquisition. So I think this is all together.

Okay. And we'll do again a rights issue to fund this CapEx Unit 4?

As of today, we don't think so, but you never know how the things goes on.

Right. But sir, in terms of we have to build up a plant at Unit 4 and that to something with the potential of INR 500 crores sales. So I'm sure there will be a lot of CapEx requirements. So any thought process on that, that how we are looking to fund that?

Not as such, sir. But yes, some of the plants are on the paper. So maybe once it is freezed and Board approves, then we will announce soon.

Right, right. Got it, sir. Sir, but I would just have one request that if you could guide on the sales part more thoroughly, it will be better. I actually think that we have very good potential. Our company is very good. And we have a potential to do maybe INR 1,000 crores, but maybe that FY '28 guidance looks a little unrealistic. So sir, maybe if you could -- in the next quarter, if we could come up with a more clearer path to that INR 1,000 crores.

We'll try to -- I think it's a good suggestion, and we'll try to do that.

[Operator Instructions] Our next question comes from the line of [ Aradhya Nayak ] an individual investor.

Sir, actually, can you talk about your current customer base quality? Are orders largely repeat programs? Or do you still depend meaningfully on spot business?

Okay. So ma'am, basically, in our industry, we do not have orders more than a month because the prices change every fortnightly. Hence, the orders are only for 1 month. But yes, see, we have -- I think out of our sales, I think my repeat orders are approximately more than 65% to 70% customers.

Okay. So like what is the current utilization level across your facilities?

Kashmira maybe you can say.

So around 65% for quarter 3.

Okay. Sir, like what is the current debt level and cost of borrowing? And how much leverage are you comfortable carrying while funding expansion?

So current debt level is around INR 63 crores, INR 64 crores, ma'am. Can you repeat your next question?

No, this is like my last question.

Our next question comes from the line of [ Moksh Ranka ] from Aurum Capital.

Sir, I wanted to understand what is the gross margin difference between your niche and commodity products? And who generally are the export customers?

So as I mentioned last time, so EBITDA margin is like around 4% to 7% difference between the commodity and the niche product.

And the gross margin difference -- it will be the same or...

Almost similar, almost similar.

Okay. And who generally are our export customers?

Who means you -- we can't disclose the name.

Custom [indiscernible] Okay. But in the industry.

Yes, they are a hospital bed manufacturer worldwide.

Okay. So...

You're talking about local.

About the local.

Export customers or local domestic customers, sir?

I got about the export. Could you give some more clarity on the local one as well?

So in local one, we have 2 product verticals, majorly industrial packaging and the other is our infrastructure and hospital bed furniture. So in packaging industry, we sell to many industries, chemical, pharma, FMCG, pharmaceutical, many industries. So customer base is very wide as far as the domestic customers are concerned.

Okay. And can you explain our working capital cycle? How is it like?

[indiscernible] in days -- it is around 65 to 70 days.

Okay. The full working capital cycle. And can you give a breakup of the debtor day and receivable day.

So our debtor days lies between 60 to 65 days, sir.

Okay. And just one more question. In the recent announcements we have made that we're adding 900 metric tons of capacity. So is that the Unit 4 capacity which we are speaking of?

Yes.

Sorry, what was the [indiscernible]?

In our recent announcement, which we have made on 27 January to the stock exchange, we mentioned that we are adding a proposed capacity of 900 metric ton, which is quite low. I think our current is 29,000 metric ton. So is this the whole unit for capacity or there will be a much bigger...

No. That's a fact. So as I start -- initially, I mentioned, so machinery takes a lot of time. So as soon as the machinery started coming, we are announcing.

Okay. And based on the current capacity, what is the maximum top line we can generate?

I think around 450 metric ton approximately.

Okay. So to get to INR 1,000 crore turnover, you essentially have to double your gross block. So around INR 50 crores to INR 100 crores could be the approximate investment you might require? Is my understanding correct?

Not exactly. I think -- yes, but there is a change in that. So I mean, like every time you don't have to go with the same exact same thing. So I think we will focus more on the machinery expansion side more. And I think maybe what do you call -- so the amount, obviously, we will definitely -- we will announce amounts and the plan also as somebody recommended. We'll try to announce it by next quarter looks like.

Our next question comes from the line of [ Sakshi Shinde ] from Shah Consultancy Limited.

A few questions, sir with me. So the first is regarding the fund cap. In caps and closure and, what is your customer switching cost? Do you like own the molds, are there long approvals? And what is the typical locking period once you get it into a program?

Okay. So in every business, every customer has a different, different this thing. So it's very difficult to bifurcate the things. But generally, when it is a custom-made design, then definitely a customer owns the mold and generally locking period is around 2 to 3 years.

Okay. And also, sir, like is there any like a regulation angle? Do you see any risks from stricter plastic EPR regulation? And how prepared is Mitsu on those regulations?

So Mitsu from day 1, Mitsu is already prepared with the EPR, and we are already supplying PCR to many of our customers. I think if I'm not mistaken, we were among the first one to give PCR in entire range.

One question because ESG is now very [indiscernible]. So have you -- have any of your key customers started using ESG scorecard, supplier audit covering environment, labor, we are compliant, the formal part of...

Most of the clients. Yes. So most of the clients are adopting those standards because we have around -- from our customer base, approximately 15% to 16% are multinational companies and around 40% is our -- they are limited companies, the large corporates. And obviously, they are following many of the things. And if you can see our annual report last 4 years, we are already following ESG, BRSR and whatever needed as of today, we are following all this.

Our next question comes from the line of Vignesh Iyer from Sequent Investments.

I wanted to know what is the peak utilization level that we can hit on our current capacities? If I heard you right earlier, you said utilization in Q3 FY '26 is 65%?

So you want to understand how far we can go for the current capacity utilization and how far we have...

As in the number, 85%, 90% utilization is possible or we max out at 80%?

So the maximum 85% is industry standard. So you can go 85% to 90%, not more than that. Whatever your capacity utilization -- I mean, capacity, you can go 85% to 90%, not more than that.

Right. And when you say, sir, that peak turnover possibility is INR 450 crores, so you are assuming current prices and the current product mix, right?

Yes.

Our next question comes from the line of [ Rujun Mishra ] an individual investor.

Actually, my first question is how do you see the competition evolving especially...

Sir, your voice is not clear.

Yes. So my first question is, how do you see the competition evolving, especially from the imports and smaller regional players. So where do you see our company has [indiscernible]?

No, the competition is very good. I think we are seeing that we always try to differentiate with the competitors by service and by value addition to the customer. That's the only way to be differentiated with others.

Customers globally are pushing recycled content and sustainability. So are your customer asking for PCR or recycled content? Can you supply without impacting margins?

Yes, we are doing that right now.

[indiscernible] Customer concentration...

Can you be little louder?

One thing is louder and if you can come in the range because your -- most of the words are cracking.

Your voice is too muffled, sir.

Is it fine now?

Yes. Right now, it looks okay.

Okay. So do you have any customer concentration risk? And what percentage of revenue do your top 5 to 10 customers contribute?

Generally, I think our 80% business is with around 30 customers.

Come again, what did you say?

So our 80% business is approximately with around 30, 35 customers.

Okay. 80%. Okay. Fine. And sir, your working capital, I can see that historically has a factor in the sector. So how our receivables and inventory is trending in Q3? Can we improve further?

Yes, sir, we are definitely trying day by day to increase the efficiency of our working capital.

Okay, any approximation of what's our current CCC?

Current?

Cash conversion cycle.

It is 70 days, sir.

[Operator Instructions] Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to Mr. Ganesh from Kirin Advisors Private Limited for closing comments. Please go ahead.

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.

Thank you, everyone.

On behalf of Kirin Advisors Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.