Packaging Stocks on the Rise: Four Key Players Shaping the Industry’s Future

Packaging is rapidly emerging as a cornerstone of the Indian economy, holding the fifth-largest sectoral rank. Its significant contribution to industrial progress and innovation underlines its growing importance in the economic landscape.

The packaging industry in India has witnessed phenomenal growth, with an annual increase of 22-25%. This expansion is propelled by technological advancements and robust infrastructure, making India a preferred destination for packaging solutions.

In 2019, the Indian Packaging Market was valued at a substantial US$ 50 billion. Projections indicate that it will soar to an impressive US$ 205 billion by 2025, reflecting a remarkable compound annual growth rate (CAGR) of 26.7%.

This surge in demand for packaging is largely driven by the rapid expansion of consumer markets, particularly in sectors like processed food, personal care, and pharmaceuticals. Additionally, the rising population, increasing income levels, and evolving consumer lifestyles further fuel the industry’s growth.

Data from the Indian Institute of Packaging (IIP) reveals that packaging consumption in India has doubled over the last decade, increasing from 4.3 kg per person per annum (pppa) to 8.6 kg pppa as of FY20.

Moreover, India is gaining prominence as a significant exporter of packaging materials, with the United States being its largest export destination, followed by the United Kingdom, the UAE, the Netherlands, and Germany.

1. Polyplex Corporation

Polyplex Corporation stands as a formidable player in the flexible packaging industry, specializing in the production of BOPP, blown PP/PE, and CPP films. These products cater to both the packaging industry and industrial applications such as release liners, tapes, and labels.

With seven manufacturing facilities spread across five countries, Polyplex boasts a global presence. Over its 35-year history, the company has established itself as a leading PET film manufacturer, holding the second spot globally (excluding China) in thin BOPET film capacity with a market share of approximately 10%.

Polyplex derives 69% of its revenue from the food and non-food packaging sectors, while the remaining 31% comes from industrial applications. Its international footprint is extensive, with sales in over 90 countries and a robust customer base exceeding 2,600 clients.

Financially, Polyplex exhibited strong performance in Q1FY25, with an 8% increase in revenue and a remarkable 160% growth in operating profit. The company’s EBITDA margins saw significant expansion, rising from 3.9% in Q1FY24 to 9.7% in Q1FY25.

Looking ahead, Polyplex’s management has expressed confidence in continued demand recovery in both industrial and packaging segments. Strategic efforts are being made to diversify the product portfolio and further enhance margins. Consequently, the stock has appreciated by 30% over the past year, driven by solid operational performance.

2. Jindal Poly Films

Jindal Poly Films Limited, a member of the B.C. Jindal Group, ranks among India’s largest manufacturers of BOPET and BOPP films. The company’s product portfolio includes BOPET, BOPP, CPP, thermal, metalized, and coated films.

A substantial 79% of Jindal Poly Films' revenue comes from its packaging films segment, with 14% from non-woven fabrics, and the remaining 7% from the labels division. The company exports its products to more than 80 countries, with exports accounting for 30% of its total revenue.

Jindal Poly Films boasts significant production capacities, with BOPET and BOPP capacities of 173,000 tonnes per annum (TPA) and 294,000 TPA, respectively. It also holds a strong position in the high-value-added metalized films market, with a consolidated capacity of 100,000 TPA, and in coated products, with a capacity of 11,000 TPA.

The company’s BOPET business is backward integrated, helping mitigate raw material cost volatility. Recently, Jindal Poly Films announced the setup of a new BOPP production line at its Nashik plant, which will substantially increase production capacity and introduce cutting-edge technology to the market.

In Q1FY25, Jindal Poly Films reported robust revenue growth of 48.3%, with EBITDA growth of 176%. EBITDA margins also improved significantly, reaching 38.4% in Q1FY25. The stock has risen by 39% over the last year, supported by sustained financial performance.

3. Cosmo First

Founded in 1981, Cosmo First (formerly known as Cosmo Films Limited) specializes in specialty films used in packaging, lamination, and labeling applications. The company’s product range includes biaxially oriented polypropylene (BOPP) films and cast polypropylene (CPP) films, with plans to introduce biaxially oriented polyethylene terephthalate (BOPET) films in the near future.

Cosmo First is the largest exporter of BOPP films from India and ranks as the second-largest player in specialty label films. The company derives 50% of its revenue from the packaging films segment, 24% from lamination films, 10% from label films, and the remaining 16% from industrial films.

Geographically, Cosmo First generates 52% of its sales from the domestic market, with the remaining 48% coming from exports. The company’s customer base includes prominent names such as Amcor, Coveris, Coca-Cola, Hindustan Unilever, Cadbury, and Pepsi.

Cosmo First operates four state-of-the-art manufacturing facilities, three in India and one in South Korea, with a BOPP capacity of 0.2 million metric tonnes per annum. The company also has an additional capacity of 0.14 million metric tonnes per annum for products such as metalized films and thermal lamination films.

In Q1FY25, Cosmo First reported a 4.9% growth in consolidated revenues, while EBITDA surged by 91%. The company’s EBITDA margins nearly doubled, rising to 9.8% compared to 5.4% in the previous year. Shares of Cosmo First have increased by 51% over the past year, with a 13.5% gain in the past month alone.

4. Nahar Polyfilms

Established in 1988, Nahar Poly Films Ltd. specializes in the production of transparent and metalized flexible packaging films. The company’s BOPP films are used in a variety of applications, including laminations, reverse printing, packaging, decoration, tapes, and textile bags.

Nahar Polyfilms primarily serves the domestic market, which accounts for 91% of its revenue, while exports contribute the remaining 9%. The company’s top 10 customers generate more than 54% of its revenue.

Nahar Polyfilms operates a factory in Raisen, Madhya Pradesh, with an annual production capacity of 30,000 tonnes. In 2022, the company added a second BOPP production line, doubling its capacity to 60,000 tonnes per annum.

In Q1FY25, Nahar Polyfilms reported a 7.4% increase in consolidated revenues, with EBITDA nearly tripling year-over-year. The company’s EBITDA margins improved to 8.9%, up from 2.2% in the previous year. Shares of Nahar Polyfilms have gained 45% over the last year, with a 30.2% increase in the past month.

In conclusion, The packaging sector in India is on an upward trajectory, with companies reporting strong financial performance in Q1FY25, driven by accelerated sales growth and significant margin expansion. Lower raw material costs and improved operational efficiency have contributed to this impressive margin performance.

As the industry continues to evolve, driven by rising consumer demand, increased urbanization, and technological advancements, packaging companies are increasingly focusing on sustainability and innovation. The shift towards eco-friendly materials, smart packaging solutions, and improved efficiency is reshaping the industry.

However, investors should remain cautious, considering the sector’s dependency on economic growth and the volatility of raw material prices, which can significantly impact margins. Despite these challenges, the packaging industry remains a vital component of India’s economic landscape.

Disclaimer: This article is for informational purposes only and should not be construed as investment advice.