We covered Manjushree Technopack recently and the stock has shown a pretty good movement since then (as was expected). MTP (Manjushree Technopack) is one of the companies we have loved to work upon. Together with Donald and his esteemed team, we had collected all the data and did some very useful research and compared the same with the peers. The same has been brilliantly compiled and presented on his site along with 10 Questions to Manjushree Technopack Management:
[…] You see negative Free Cash Flows, but that’s not a bad thing for a company in its early growth stages. It is investing all the profits it generates and more back into business expansion. As you can see even the much bigger global majors report marginal or negative free cash flows in this industry.
Best Margins & Returns in the business
And when we look at its track record, it makes us feel even better. Although achieved on a small base, it has more than tripled its sales in last 5 years while earnings per share (EPS) has gone up 8x (on an adjusted basis) in the same period. Just look at the long term track record, it tells us this Management is managing growth nicely.
Exciting Growth on a low base
Makes me wonder about the quality of this growth. How has it managed profitability and returns in the pursuit of this growth?
Its heartening to see that margins have consistently been trending up. Returns shot up tremendously in FY07 on the back of high capacity utilisations. Since FY07 Manjushree has been investing in this growth aggressively by doubling capex every year. This has led to lower capacity utilisations and Asset turns, in turn lowering RoA and RoE. But on the whole returns have also been trending up.
Tells me Management is savvy and doing the right things while pursuing growth aggressively. […]
You can read the complete in depth analysis done by us jointly at Stock Pick Focus.
You might also like 10 Questions to Manjushree Technopack Management.