Cosmo Films - Diffentiated player in commodity business

Stock Opportunities Untested - but worth a good look
106

Most of the discussion was dominated by 2-3 shareholders asking for some gifts for attending the AGM.
couple of points as below:

  • the company would continue striving to reduce the commodity component of the business by investing in newer products like synthetic paper etc
  • margins are not completely in their control, however, they will ensure max utilization of capacities
  • the management believes in healthy dividend payouts and subject to profits they would keep paying reasonable dividend to the shareholders

In summary - not too much of a value add as maximum time was taken by the 2-3 shareholders as mentioned above

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107

Cosmo films Q1 20 results. Margin improvement continues.Cosmo Films Q1 20.pdf (3.2 MB)

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108

Not able to understand why is SRF saying that BOPP is still in oversupply but Cosmo says that demand-supply is balanced now. Any idea on the same?

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Received this question by a few. BOPP CU is increasing. One needs to always look at data more than what managements say. IMHO.

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110

This was pointed out by CFO in one of the webinars with DSIJ. What he said was that the nameplate capacity calculation is based on a single size, 1 micron, running continuously. This is never the case as there are always different size requirements so that has a turnaround time. So a 75% utilization of nameplate capacity is considered good or “100%”. Cosmo was running at 95% of this 75% utilization.

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111

Ambrish Jaipuria (Promoter) sold 21000 shares 3 days back.

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From the article:

  1. Sachet and small packs of biscuits, photo wafers, savouries, shampoos and several such items help drive sales.
  2. While the small packs enhance the affordability of various goods, contributes significantly to plastic pollution
  3. Govt embarks to cut the consumption of single-use plastics on the 150th birth anniversary of Mahatma Gandhi
  4. 60% for biscuits and 80% for potato chips - comes from packs priced below ₹10
  5. Companies need the change package sizes and switch to eco-friendly and recyclable packages

Seems like this can hit hard the packaging companies and FMCG companies. Any thoughts?

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113

BOPP is recyclable. It could benefit rather that affect demand in my opinion.

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Decent results by Cosmo Films. Margin improvement continues. H1 consolidated EPS about 30 Rs.

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115

Good results. US operations have also showed healthy improvement as guided by management. Expect margins to improve further with no new supply coming in over the next 1 year. EPS of Rs 60 looks easily achievable for FY20.

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116

In Q2 concall, SRF has also agreed that BOPP demand supply is getting balanced and things should improve further over next 1 year.

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117

BOPP cycle playing out as expected and alerted last year.

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118

Hi @jitenp sir, you were absolutely spot on on! Where would you say we are in the cycle and how much fuel does it this have left?

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119

I would stay put. As CU increases EBITDA margins can improve. Of course, it will not be linear.

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120

Hello
So the Cosmo films profit is corelate to price of raw material bopp and the oil. If the price of these things increase then profit gets lower. But the packing industry is also growing so how we think of it as a cyclical or mid turm story

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Does anyone have idea as to why Cosmo films give 2% of dividend yield while its debt is increasing steadily to 640 Crores.

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But CU is almost at peak. Topline growth should not be much. Main growth will be at bottomline level as the margins improve led by improving spreads.

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How is CU at peak ? You are probably going at nameplate capacity utilization, which might not be the right way to look at it. Actual utlization is much lower than nameplate CU.

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It has always been liberal with dividends. Even in worst years (even when making losses), it has given dividends.

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What’s the point ? wouldn’t it increase the risk for investors in the event company isn’t able to serve the debt in market downcycle or the excess supply?