Hello Sir,
Hope you are doing well.
Do you know what PPE is?
It’s personal protective equipment. The below image will make it clear.
In this mail, we have shared notes from the Q2 FY 25 concall of Mallcom (India) which is one of the largest manufacturers and distributor of PPE in India. It also does private label manufacturing for large global customers.
The management is targeting 1,000 crore sales by FY 28 or before.
Before that: On 18th Jan’25, we released a new stock recommendation under “Insider Bets“ subscription which is based on Promoters’ actions.
Promoter is basically infusing capital and increasing stake when the stock is down 60% from peak. You can read the details HERE
Mallcom India – Notes from Q2 FY 25 concall
Operational Performance
- Achieved robust growth in both revenue and profitability for Q2 FY25
- Successfully launched a new B2B and B2C e-commerce platform, receiving positive traction
- Introduced a newly designed single-density sole for the Docker and Doxle shoe range, catering to evolving Indian market demands for value-added products
CAPEX Updates
- Sanand-II (Gujarat) Manufacturing Facility:
- The first phase is nearing completion
- Trial runs for dipped gloves expected to commence in November 2024
- Rs 75 crore invested against the projected Rs 90 crore for the Sanand project
- Ghatakpukur Facility Expansion:
- Phase-2 expansion for industrial safety shoes is progressing as planned
- Completion targeted within FY25 with a total CAPEX of Rs 20 crore
Financial Performance
- Q2 FY25 Financials:
- Consolidated revenue at ~ Rs 129 crore, up 19% YoY
- EBITDA at Rs 16 crore with a 12.24% margin, impacted by higher branding, promotional, and consultancy expenses
- Net Profit of Rs 10 crore, reflecting 10% YoY growth, with a PAT margin of 7.82%
- H1 FY25 Overview:
- Operating revenue up 14% YoY to ₹232 crore
- EBITDA at Rs 30 crore, with a PAT margin of 8.03%
Market Demand & Strategic Outlook
- Export demand remains strong, particularly from Europe and the U.S., driven by supply chain diversification due to geopolitical factors
- Increased interest from U.S. companies seeking alternative suppliers outside China, presenting significant opportunities
- Sanand facility expected to reach peak sales of Rs 100 crore within three years
Challenges & Industry Dynamics
- Global shipping constraints and container shortages impacting logistics and lead times
- Market-specific challenges in Turkey and Argentina affecting demand
Product Development & Certifications
- Emphasis on product certification as a key differentiator
- Government support for enforcing industry standards is increasing
- New product pipeline includes NBR and PU gloves, helmets, and eyewear, expected to contribute significantly to future revenue growth
Margin Guidance
- EBITDA margin decline in Q2 FY25 due to higher marketing and operational costs
- Targeting a recovery to 15% EBITDA margin as operational efficiencies improve
- Long-term margin stability expected at 15%, with potential upside as capacity utilization increases
Future Outlook
- Management targeting a Rs 1,000 crore revenue milestone in the next two-three years
- Revenue split currently at 60% domestic, 40% international, with a long-term goal of achieving a 50-50 balance
(End)
Disclaimer: This is not a recommendation to buy/sell any of the stocks mentioned above. The securities quoted are for illustration only and are not recommendatory.
Best Regards,
Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.
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