This smallcap glass container firm has made investors richer by 5x in 5 yrs

Shares of small-cap glass packaging maker AGI Greenpac (formerly HSIL Ltd) rallied 19 per cent on Monday to notch a fresh 52-week high of Rs 592 on the BSE. With this, the stock has surged 43 per cent over the last 2 days. 

Over the last one year, the stock has given returns of around 98 per cent, rising from Rs 298.6 apiece. The stock’s 5 year-run has also been stellar with an increase of over 5 times (up 436 per cent to Rs 592) from a level of Rs 110.45 touched on May 10, 2018.  

The recent two-day rally follows the company’s strong Q4FY23 results announced on May 4 last week. The firm reported revenue from operations of Rs 680 crore, compared to Rs 432 crore in the year-ago quarter.  

During the quarter, its EBITDA saw a growth of 111 per cent YoY to Rs 196 crore with a margin of 29 per cent. The net profit (from continued operations) rose 152 per cent YoY to Rs 96 crore with net profit margins of 14 per cent.

The company attributed the improvement in the sales and profitability to an improved product mix and an increase in demand for its glass containers products from the non-alcoholic & alcoholic beverages and packed food segment, which drove the volumes. 

In a recent interaction with media, the company’s management said it expects FY24 revenue to grow over 15-18 per cent. 

It further aims to expand the share of its non-alcohol business from nearly 30 per cent to around 40 per cent in the next two years.

In March this year, the company had received Competition Commission of India’s approval to acquire one of the country’s largest glass container maker Hindusthan National Glass & Industries (HNG). 

The firm told CNBC-TV18 that it will infuse a capex of Rs 500-700 crore for HNG, which has a peak revenue potential of Rs 3000 crore. HNG, it said, should break even within 9 months of its takeover. 

The firm is a focussed packaging product company, which mainly deals in glass containers (92 per cent of revenues). Within this segment, it derives 75 per cent of the revenues from the alcoholic and beverage industry, followed by food and beverages at 19 per cent and pharmaceuticals at 6 per cent. 

Its top clients and brands, to which it supplies its packaging products/containers, include United Spirits, Radico Khaitan, Sula Vineyard, Kingfisher, Bacardi, HUL, Dabur, Sun Pharma, Dr Reddy’s, GSK Pharma among several others. 

The company operates under three brands- it manufactures glass containers and speciality glass under the brand AGI Glaspac; PET (polyethylene terephthalate) bottles and products business under the brand AGI Plastek and security caps and closures under the brand AGI Clozures. 

That said, in its Q4 investor presentation, the company said a shift towards sustainable packaging is resulting in growing demand for glass packaging. 

“Growing consumption of spirits and beer is leading to increased demand for glass bottles, higher usage of glass packaging in the food and beverage industry. The cosmetic and perfume glass packaging market is growing owing to premiumisation of the segments,” it said.