Cosmo First Limited has declared its financial results for the quarter ended September 2023. The company says improved Q2 FY24 EBITDA is underpinned by enhanced BOPP film margins primarily due to festive season demand pick, partial revival of export demand and range bound movement in raw material prices. Cosmo First says it continues to outperform the industry at large on the back of speciality films.
According to the consolidated results, the company had a net revenue of Rs 664 crore in Q2 FY24 against Rs 658 crore in Q1 FY24 and down from Rs 778 crore in Q2 FY 23. EBITDA was Rs 72 crore, Rs 55 crore and Rs 124 crore respectively. Profit (PAT) after tax was Rs 22 crore in Q2 FY24 against Rs 14 crore in Q1 FY24 and down from Rs 73 crore in Q2 FY 23.
The near-to-medium term BOPP and BOPET margins are expected to remain subdued, more so for BOPET films due to an industry-wide supply overhang (58% capacity increase over Dec 21 capacity in BOPET versus 23% in BOPP and an incremental 17% more by Mar26 in BOPET versus 40% more in BOPP). The company says it is working towards BOPET margin improvement over the next few quarters on the strength of shrink films and many other specialty films already launched.
With an objective to rationalize cost, the company is in process of shifting extrusion coating plant from South Korea to India and has carried out operational restructuring in South Korea in Q2, FY24. Consequently, the consolidated results are affected by one-time restructuring costs of Rs 3 crore.Â
Under new initiatives, the company has launched its rigid packaging business under the brand name ‘Cosmo Plastech’, which will manufacture thin wall containers and sheets for a wide array of FMCG products particularly for food industry. The company has also started metallization of capacitor film which shall serve the rapidly growing electronics industry in India.
The company’s petcare vertical (Zigly) continued to grow rapidly and clocked a monthly revenue (GMV) run rate of about Rs. 4 crore on the back of expanding retail footprints with 19 stores as of September end and increased online presence. The company will now look for consolidation in H2, FY24 before initiating next round of growth in FY 25.
The speciality chemical subsidiary has got good initial response with its packaging and lamination adhesives and shall scale up the same in a phased manner from H2, FY24. Many of these new business initiatives post higher capacity utilization in the next 3-4 quarters will drive growth.
Commenting on performance, Pankaj Poddar, Group CEO, Cosmo First, said, “In short-term, the company remained focused on increasing specialty sales. In the medium term, multiple drivers, including speciality BOPET films, sun shield film, rigid packaging and specialty chemicals will result in profitability enhancement/margin stabilization. Zigly will take 2-3 years to turn profitable and will be a wealth creator for the stakeholders. Pet adoption is expected to grow multi fold over the coming years with smaller families and rise of disposable incomes.’
Founded in 1981 by Ashok Jaipuria, Cosmo First has a presence across 100+ countries around the globe. Cosmo First is a global leader in specialty films and an emerging player in specialty chemicals (masterbatches, adhesive and coating chemicals). It has a digital-first omni-channel pet care business under the brand name Zigly, rigid packaging (Cosmo Plastech) and soon to be launched Window Films (under Cosmo Sunshield brand name).
