Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TCPL Packaging Ltd (BOM:523301, Financial) reported a 9% increase in consolidated revenues, reaching INR406 crores in Q1 FY25.
- EBITDA grew by 16% year-on-year to INR71 crore, with margins improving by 108 basis points to 17.6%.
- PBT and PAT for the quarter grew by 29% and 34%, respectively, reflecting robust profitability.
- Significant progress on a greenfield facility in Southern India, expected to be commissioned by Q3 FY25, enhancing logistical strength and service capabilities.
- Approval from NCLT Mumbai for the merger of TCPL Innofilms Private Limited with TCPL Packaging Ltd, leading to better cost efficiency and synergy.
Negative Points
- Soft domestic demand environment despite the overall positive performance.
- Raw material prices are increasing again, which could impact future margins.
- The flexible packaging segment is currently underutilized, with a utilization level of 50%-60%.
- The new Chennai facility will initially have a negative impact on margins due to overhead costs and underutilization.
- The flexible packaging business, including Innofilms, is still in the early stages of scaling up, impacting overall profitability.
Q & A Highlights
Q: Our EBITDA margin used to be in the 15% to 16% range in the past, but in the last 2 quarters, we've delivered 17%-plus margin. Is it fair to assume that our margin will be in the 17% to 18% range going forward?
A: Yes. Historically, we've been around 15% plus/minus. In a stable environment, we are managing these numbers and hope to continue it. - Akshay Kanoria, Executive Director
Q: What is our growth outlook for FY25 in terms of value and volume growth?
A: We don't have specific guidance, but we have been growing at a high double-digit rate for several years. We expect a healthy mix of value and volume growth this year. - Akshay Kanoria, Executive Director
Q: Could you quantify the CapEx requirement for the Chennai facility?
A: We don't give a specific breakup for each unit, but overall, we should be doing more than INR100 crores on CapEx this year, including new equipment and the Chennai unit. - Akshay Kanoria, Executive Director
Q: Finance costs have remained flat for the last few quarters. Will they stay the same going forward?
A: Yes, finance costs should remain in a similar range going forward. - Akshay Kanoria, Executive Director
Q: Is the growth in domestic market a sign of recovery in domestic demand or due to new products or client additions?
A: The domestic market is growing, and we are adding new customers and gaining share with existing ones. - Akshay Kanoria, Executive Director
Q: Can we expect the quarterly run rate for subsidiaries to continue in the coming quarters?
A: Broadly, yes. We hope to maintain the high EBITDA margin trajectory, depending on factors like raw material pricing and domestic market conditions. - Akshay Kanoria, Executive Director
Q: What is the capacity utilization for carton and flexible packaging in Q1?
A: In the paperboard segment, we are at 70% plus utilization. In flexible packaging, we are at 50%-60% due to a new line added recently. - Akshay Kanoria, Executive Director
Q: What is the peak utilization for paperboards and flexible packaging?
A: For paperboards, 80%-90% levels are achievable. For flexible packaging, there's a long way to go. - Akshay Kanoria, Executive Director
Q: What is the revenue potential for the new Chennai plant?
A: The Chennai plant is expected to start by Diwali and will take 6 months to a year to scale up. It will add about 5% to our total capacity. - Akshay Kanoria, Executive Director
Q: Are there any plans to increase the export share?
A: We aim to grow our export share further, but the domestic business should grow faster due to vast opportunities. - Akshay Kanoria, Executive Director
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
