Q1 2027 EPL Ltd Earnings Call

August 11, 2026

Speaker #1: Ladies and gentlemen, good day and welcome to the EPL Limited Q1 FY27 earnings conference call hosted by Systematics Institutional Equities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Operator 2: Ladies and gentlemen, good day and welcome to the EPL Limited Q1 FY27 earnings conference call hosted by Systematix Institutional Equities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Pratik Oza from Systematix Institutional Equities. Thank you, and over to you, Mr. Oza.

Operator: Ladies and gentlemen, good day and welcome to the EPL Limited Q1 FY27 earnings conference call hosted by Systematix Institutional Equities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Pratik Oza from Systematix Institutional Equities. Thank you, and over to you, Mr. Oza.

Speaker #1: Should you need assistance during this conference, please signal an operator by pressing star, then zero, on your touch-tone phone. Please note that this conference is being recorded.

Speaker #1: I now hand the conference over to Mr. Prateek Ozar, from Systematics Institutional Equities. Thank you, and over to you, Mr. Ozar.

Speaker #2: Thank you. Good evening, everyone. On behalf of Systematics Institutional Equities, I welcome you all to Q1 FY27 earnings conference call of EPL Limited. Representing the management today, we have Mr. Hemant Bakshi, MD, and Global CEO, Mr. M.

Pratik Oza: Thank you. Good evening, everyone. On behalf of Systematix Institutional Equities, I welcome you all to Q1 FY27 earnings conference call of EPL Limited. Representing the management today, we have Mr. Hemant Bakshi, MD and Group CEO, Mr. M.R. Ramasamy, COO, Mr. Deepak Goyal, CFO, and Mr. Onkar Ghangurde, Head Legal, CS, and Compliance Officer. We sincerely thank the EPL management team for giving us the opportunity to host this call. Without further ado, I will hand the floor over to Mr. Hemant Bakshi, sir, to commence the proceedings. Over to you, sir.

Speaker #2: R. Ramasamy, COO, Mr. Deepak Goyal, CFO, and Mr. Omkar Gangude, Head Legal CS and Compliance Officer. We sincerely thank the EPL management team for giving us the opportunity to host this call, and without further ado, I will hand the floor over to Mr. Hemant Bakshi sir to commence the proceedings over to you, sir.

Speaker #3: Thank you, Prateek. Good evening, everyone, and thank you for joining us for EPL Limited Q1 FY27 earnings call. I'm delighted to share the that EPL has delivered an outstanding quarter in the midst of unparalleled external challenges and a very volatile environment.

Hemant Bakshi: Thank you, Pratik. Good evening, everyone, and thank you for joining us for EPL Limited Quarter 1 FY27 earnings call. I am delighted to share that EPL has delivered an outstanding quarter in the midst of unparalleled external challenges and a very volatile environment. This amply demonstrates the clarity of our strategy, the resilience of our business model, strength of our customer partnerships, and our continued focus on disciplined execution. Revenue for the quarter grew by 25.3%, while EBITDA increased by 15.2%, with EBITDA margins at 18.8%. On an underlying basis, excluding the passthrough impact of higher raw material prices, we delivered 20% underlying revenue growth while delivering EBITDA margins of 19.6%. This is a record performance. We have grown our top line faster than any time in the past and held margins despite unprecedented cost inflation. This is the fifth consecutive quarter of double-digit growth.

Speaker #3: This amply demonstrates the clarity of our strategy: resilience of our business model, strength of our customer partnerships, and our continued focus on disciplined execution.

Speaker #3: Revenue for the quarter grew by 25.3%, while EBITDA increased by 15.2%, with EBITDA margins at 18.8%. On an underlying basis, excluding the pass-through impact of higher raw material prices, we delivered 20% underlying revenue growth, while delivering EBITDA margins of 19.6%.

Speaker #3: This is a record performance, we have grown our top-line faster than any time in the past, and held margins despite unprecedented cost inflation. This is the fifth consecutive quarter of double-digit growth.

Speaker #3: Our growth continued to be broad-based across both categories and geographies. Beauty and cosmetics maintained its strong growth trajectory, with growth exceeding 20%, while oral care also crossed the 20% growth mark.

Hemant Bakshi: Our growth continued to be broad-based across both categories and geographies. Beauty and cosmetic maintains its strong growth trajectory, with growth exceeding 20%, while oral care also crossed the 20% growth mark. Personal care and beyond continues to expand and now accounts for 54% of our portfolio, further strengthening our presence in high-growth categories. Regionally, APAC led the quarter with growth of 34.3%, followed by Americas at 29.4%, while Europe and AMESA grew by 20.2% and 17%, respectively, marking another quarter where every region delivered double-digit growth. EBITDA continued its strong momentum, growing by 15.2% and marking our 15th consecutive quarter of double-digit EBITDA growth. We were able to pass on the entire cost increase through judicious pricing across all our regions and customers. Further, our frugal mindset and relentless cost discipline enabled us to continue making growth investments while staying in the target margin range.

Speaker #3: Personal care and beyond continues to expand, and now accounts for 54% of our portfolio, further strengthening our presence in high-growth categories. Regionally, EAP led the quarter with growth of 29.4%, while Europe and EMISA grew by 20.2% and 17%, respectively, marking another quarter where every region delivered double-digit growth.

Speaker #3: EBITDA continued its strong momentum, growing by 15.2%, and marking our 15th consecutive quarter of double-digit EBITDA growth. We were able to pass on the entire cost increase through judicious pricing across all our regions and customers.

Speaker #3: Further, our frugal mindset and relentless cost discipline enabled us to continue making growth investments while staying in the target margin range. Packed delivery was in line with our estimates, and is on track to deliver double-digit growth in the full year.

Hemant Bakshi: Pack delivery was in line with our estimates and is on track to deliver double-digit growth in the full year. While Q1 pack declined by 1.4%, our PBT increased by 10%. The difference is because we are lapping a very low base year, ETR, and this will get corrected on full year basis. We have made significant proactive growth investment ahead of the curve in the key strategic areas. This is translating in higher growth. While doing so, we have maintained strong capital efficiency and a disciplined capital allocation approach, resulting in return on capital employed at 18.5%. Sustainability and innovation. Innovation remains central to our long-term strategy as we continue to invest in new technologies and differentiated packaging solutions. This commitment was recognized through multiple innovation awards across India and Europe during the quarter, including the etma Tube of the Year award and the FINAT awards for responsible packaging.

Speaker #3: While Q1 packed declined by 1.4%, our PBT increased by 10%, the difference is because we are lapping a very low base year ETR, and this will get corrected on full-year basis.

Speaker #3: We have made significant proactive growth investment ahead of the curve in the key strategic areas, this is translating in higher growth. While doing so, we have maintained strong capital efficiency and a disciplined capital allocation approach returning resulting in return on capital employed at 18.5%.

Speaker #3: Sustainability and innovation: Innovation remains central to our long-term strategy, as we continue to invest in new technologies and differentiated packaging solutions. This commitment was recognized through multiple innovation awards across India and Europe during the quarter.

Speaker #3: Including the ETMA Tube of the Year Award and the FIPSA Awards for Responsible Packaging, we continue to make meaningful progress on our sustainability agenda, with sustainable tubes now accounting for 44% of our overall product mix.

Hemant Bakshi: We continue to make meaningful progress on our sustainability agenda, with sustainable tubes now accounting for 44% of our overall product mix. Our focus on operational excellence and our people was also recognized through the prestigious IMC Ramkrishna Bajaj National Quality Award for Performance Excellence and our recognition as one of India's best company to work for 2026. Looking ahead, let me first provide an update on our proposed merger with Indovida. During the quarter, we received approval from the Competition Commission of India and the transaction continues to progress well. We remain on track to complete it within our planned timeline and are excited about the opportunities this partnership will create for our customers, employees, and shareholders. As we look ahead, while the geopolitical environment and trade dynamics continue to evolve, our priorities remain clear. First, to further strengthen our leadership in beauty and cosmetics.

Speaker #3: Our focus on operational excellence and our people was also recognized through the prestigious IMCE Ramakrishna Bajaj National Quality Award for Performance Excellence and our recognition as one of India's 2026.

Speaker #3: Looking ahead, let me first provide an update on our proposed merger with Individa. During the quarter, we received approval from the Competition Commission of India, and the transaction continues to progress well.

Speaker #3: We remain on track to complete it within our planned timeline and are excited about the opportunities this partnership will create for our customers, employees, and shareholders.

Speaker #3: As we look ahead, while the geopolitical environment and trade dynamics continue to evolve, our priorities remain clear. First, to further strengthen our leadership in beauty and cosmetics, we continue to see immense long-term opportunity in the category, supported by a strong pipeline across customers and markets.

Hemant Bakshi: We continue to see immense long-term opportunity in the category, supported by a strong pipeline across customers and markets. Our continued investment in innovation, differentiated packaging solutions, front-end specialization, and new technologies provides us with a strong platform to capture this opportunity and sustain our growth momentum. Second, to accelerate our presence in high-growth markets. Thailand continues to make excellent progress, supported by a strong customer pipeline and recent wins with multinational customers. We will continue investment behind these opportunities while actively expanding our presence across other attractive growth markets to strengthen our global footprint. Third, to remain relentless on margins and capital efficiency. In an increasingly dynamic global environment, maintaining financial discipline is more important than ever. We remain focused on driving productivity, operational excellence, and disciplined capital allocation to support sustainable margin expansion and profitable growth.

Speaker #3: Our continued investment in innovation, differentiated packaging solutions, front-end specialization, and new technologies provides us with a strong platform to capture this opportunity and sustain our growth momentum.

Speaker #3: Second, to accelerate our presence in high-growth markets. Thailand continues to make excellent progress, supported by a strong customer pipeline and recent wins with multinational customers.

Speaker #3: We will continue investment behind these opportunities while actively expanding our presence across other attractive growth markets to strengthen our global footprint. Third, to remain relentless on margins and capital efficiency, in an increasingly dynamic global environment, maintaining financial discipline is more important than ever.

Speaker #3: We remain focused on driving productivity, operational excellence, and disciplined capital allocation to support sustainable margin expansion and profitable growth. Fourth, our long-term vision is to go beyond our current format of tubes and expand into newer, higher-growth packaging formats to become a leader in consumer packaging in emerging markets.

Hemant Bakshi: For our long-term vision is to go beyond our current format of tubes to expand into newer, higher growth packaging formats to become a leader in consumer packaging in emerging markets. Our merger with Indovida is the first step in this very exciting journey. Based on our recent performance and the current environment, we are raising our growth guidance to high teens for next few quarters while holding on to our margin range of underlying 20% EBITDA. We continue to remain focused on managing the extremely volatile environment and feel confident that we will retain and grow our market share while we also cover the entire cost impact through our pricing actions as we have demonstrated in Q1. Our confidence stems from our actions in this quarter where we have demonstrated agility, focus and resilience while continuing to invest behind our strategic big bets.

Speaker #3: Our merger with Individa is the first step in this very exciting journey. Based on our recent performance and the current environment, we are raising our growth guidance to the high teens for the next few quarters while holding on to our margin range of an underlying 20% EBITDA.

Speaker #3: We continue to remain focused on managing the extremely volatile environment and feel confident that we will retain and grow our market share, while also covering the entire cost impact through our pricing actions, as we've demonstrated in Q1.

Speaker #3: Our confidence stems from our actions in this quarter where we've demonstrated agility focus and resilience while continuing to invest behind our strategic big bets.

Speaker #3: We believe EPL is entering an exciting new phase in its journey, with a strong foundation clear strategic priorities and a relentless focus on execution.

Hemant Bakshi: We believe EPL is entering an exciting new phase in its journey with a strong foundation, clear strategic priorities, and a relentless focus on execution. We are confident in our ability to deliver sustainable, profitable growth and create enduring value for our customers, employees, shareholders and all our stakeholders. This will be further enhanced as and when the merger with Indovida gets approval and the synergies are fully realized. Thank you for your continued support and we will now open the floor for questions.

Speaker #3: We are confident in our ability to deliver sustainable profitable growth and create enduring value for our customers, employees, shareholders, and all our stakeholders. This will be further enhanced as and when the merger with Individa gets approval and the synergies of fully realized.

Speaker #3: Thank you for your continued support, and we will now open the floor for questions.

Speaker #1: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone.

Operator 2: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. We also request that you please limit yourselves to two questions only. If you have any further questions you may rejoin the queue. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Samir Gupta with IIFL Capital. Please go ahead.

Operator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. We also request that you please limit yourselves to two questions only. If you have any further questions you may rejoin the queue. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Samir Gupta with IIFL Capital. Please go ahead.

Speaker #1: If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question.

Speaker #1: We also request that you please limit yourselves to two questions only. If you have any further questions, you may rejoin the queue. Ladies and gentlemen, we will now wait for a moment.

Speaker #1: While the question queue assembles, our first question comes from the line of Sameer Gupta with IIFL Capital. Please go ahead.

Speaker #2: Hi, good evening everyone. Congratulations on a fantastic set of numbers, and thanks for taking my question. Now, firstly, I'm just looking at the net debt number, and if I back-calculate, because Capex is already given, the net working capital would have roughly increased by 180 crores in a quarter.

Sameer Gupta: Hi, good evening everyone. Congratulations on a fantastic set of numbers and thanks for taking my question. Firstly, I am just looking at the net debt number and if I back calculate because CapEx is already given, the net working capital would have roughly increased by INR 180 crores in a quarter. If I look at this number for full year, that increase for the full year in FY26 was around INR 170 crores. Just trying to understand what has driven this increase, and in particular have receivables seen a material increase this quarter?

Speaker #2: And if I look at this number for the full year, that increase for the full year in FY26 was around ₹170 crores. So just trying to understand what has driven this increase, and particularly, have receivables seen a material increase this quarter?

Speaker #1: Ladies and gentlemen, please stay with us. The management line seems to have disconnected.

Operator 2: Ladies and gentlemen, please stay with us. The management line seems to have disconnected.

Operator: Ladies and gentlemen, please stay with us. The management line seems to have disconnected.

Speaker #2: Thank you again. To join earlier, EPL—oh, sorry.

Sameer Gupta: Join kar liya. Kya join kar liya EPL? Oh chal raha.

Operator 2: Ladies and gentlemen, we thank you for your patience. We have now reconnected with the management. Samir, I would request you to please repeat your question.

Operator: Ladies and gentlemen, we thank you for your patience. We have now reconnected with the management. Samir, I would request you to please repeat your question.

Speaker #1: Ladies and gentlemen, we thank you for your patience. We have now reconnected with the management. Sameer, I would request you to please repeat your question.

Speaker #2: Sure. I'll repeat it. So sir, good evening and congrats on a fantastic set of numbers. First question, I'm just looking at the net debt number that you have disclosed in the PPT, and if I just back-calculate, net working capital would have roughly increased by around 180 crore versus March in a particular quarter.

Sameer Gupta: Sure, I will repeat it. Sir, good evening and congrats on a fantastic set of numbers. First question, I am just looking at the net debt number that you have disclosed in the PPT and if I just back calculate, net working capital would have roughly increased by around INR 180 crore versus March in a particular quarter. If I look at the full year increase in FY26 in working capital, that number was around INR 170 crore. Just trying to understand what has driven this sharp increase. Is receivables in particular, has it seen a material increase this quarter? That would be the first question, sir.

Speaker #2: And if I look at the full-year increase in FY26 in working capital, that number was around ₹170 crore. So just trying to understand what has driven this sharp increase—has receivables in particular seen a material increase this quarter?

Speaker #2: That would be the first question, sir.

Speaker #3: Yeah, okay. Hi, Sameer. Deepak here. Thank you for the question. So you're right that our working capital has gone up during this crisis period.

Hemant Bakshi: Yeah. Hi Samir, Deepak here. Thank you for the question. You are right that our working capital has gone up during this crisis period. However, this is largely driven by inventory. There are two reasons. One is the pricing of the inventory itself. With the raw material prices going up, our inventory cost has gone up, so it is not as much an increase in quantity as in the price as well. Second is the safety stock. Supply security was paramount for us and we ensured that we build the right level of inventory to avoid any supply disruptions. One of the reasons for the net debt growing also is some of the ahead of the curve investments that we have made in our CapEx. With these three reasons, the numbers kind of add up to what you mentioned.

Speaker #3: However, this is largely driven by inventories. There are two reasons. One is the pricing of the inventory itself. With the raw material prices going up, our inventory cost has gone up.

Speaker #3: So it's not as much an increase in quantity as in the price as well. Second is the safety aspect. Supply security was paramount for us, and we ensured that we built the right level of inventory to avoid any supply disruptions.

Speaker #3: One of the reasons for the net debt growing also is some of the ahead-of-the-curve investments that we have made in our CapEx system.

Speaker #3: So, with these three reasons, the numbers kind of add up to what you mentioned.

Speaker #2: Got it. Got it. Just to clarify, receivables has grown in a normal range, as I was what I'm assuming.

Sameer Gupta: Got it. Just to clarify, receivables has grown in a normal range is what I am assuming.

Speaker #3: That is right. So while the value would grow because we have taken pricing, the number of days and the aging is well under control.

Deepak Goyal: That is right. While the value would grow because we have taken pricing, the number of days and the aging is well under control.

Speaker #2: Got it. But the pricing would also affect the receivables as well as the sales, right?

Sameer Gupta: Got it. But the pricing would also affect the receivables as well as the sales, right?

Speaker #3: That is right. That's exactly what I'm saying. That the AR value will show an increase because we have taken pricing. However, the underlying aging of the ARs and the quality of receivables remain very solid.

Deepak Goyal: That's right. That's exactly what I'm saying.

Deepak Goyal: Sure.

Deepak Goyal: The AR values will show an increase because we have taken pricing. However, the underlying aging of the ARs and the quality of receivables remain very solid.

Speaker #2: Sure, great. That's wonderful. Second question is on the Europe margin contraction. So firstly, can you explain the transitional costs here? What is the adjustment amount, and is it a one-off for this quarter?

Sameer Gupta: Sure. Great. That's wonderful. Second question is on the Europe margin contraction. Firstly, can you explain the transitional costs here? What is the adjustment amount and is it a one-off for this quarter? We expect this to continue in near future. A part question to this, which is more strategic. We have had multiple instances of moving manufacturing bases in Europe. What is the status currently? You think that all of this is now done and large part of manufacturing now is based out of Poland? Or do you think there are any other transitions in the pipeline that you foresee in near future?

Speaker #2: Expect this to continue in near future. And a part question to this, which is more strategic, we have had multiple instances of moving manufacturing bases in Europe.

Speaker #2: So what is the status currently? You think that all of this is now done, and large part of manufacturing now is based out of Poland?

Speaker #2: Or do you think there are any other transitions in the pipeline that you foresee in near future?

Speaker #3: Yeah. So Sameer, firstly on Europe, I just want to call out that Europe delivered a 20.2% revenue growth, which is a really exceptional performance.

Hemant Bakshi: Yeah. Samir, firstly on Europe, I just want to call out that Europe delivered a 20.2% revenue growth, which is a really exceptional performance. The growth trajectory in Europe has continued for the last couple of quarters, so we are really pleased with our performance on the top line in Europe. Having said that, as we had called out a couple of quarters back also, there have been operational challenges in Europe. The good thing is that these have been identified fully and are now getting disproportionate focus from the team. We are confident that these will be resolved in the coming quarters. Also I would like to call out that Europe is the biggest and a widespread BNC market. We have invested in Europe being the future of growth. We have invested in capacity expansion, new production capabilities, and front-end people.

Speaker #3: And the growth trajectory in Europe has continued for the last couple of quarters. So we are really pleased with our performance on the top line in Europe.

Speaker #3: Having said that, as we had called out a couple of quarters back also, there have been operational challenges in Europe. The good thing is that these have been identified fully, and are now getting disproportionate focus from the team.

Speaker #3: We are confident that these will be resolved in the coming quarters. Also, I would like to point out that Europe is the biggest and most widespread BNC market.

Speaker #3: We have invested in Europe being the future of growth. We have invested in capacity expansion. New production capabilities and front-end people. The pipeline of sales remains very promising, which we which helps us in de-leveraging our dependency on few customers.

Hemant Bakshi: The pipeline of sales remains very promising, which helps us in deleveraging our dependency on few customers. These investments are for the long-term growth and are bound to give scale benefits in the coming years. As the operational efficiency improve, we expect margins to progressively recover. I think on the manufacturing footprint, we have a manufacturing footprint in Poland and in Germany. That's our current position, and that's what we will stay with in the near future. As we might have said in the past also, we have centralized some of our capabilities in Poland, both in terms of customer service as well as printing, and this is bringing both efficiency as well as superior service to our customers in Europe.

Speaker #3: These investments are for the long-term growth, and are bound to give scale benefits in the coming years. As the operational efficiency improve, we expect margins to progressively recover.

Speaker #3: I think, on the manufacturing footprint, we have a manufacturing footprint in Poland and in Germany. That's our current position, and that's what we will stay with in the near future.

Speaker #3: As you might have as we might have said in the past also, we have centralized some of our capabilities in Poland, both in terms of customer service as well as printing and this is bringing both efficiencies as well as superior service to our customers in Europe.

Speaker #2: Got it. So, just to quickly summarize, these are new investments that have been made, basically eyeing the great growth opportunity in the medium term.

Sameer Gupta: Got it. Just to quickly summarize, this is new investments that have been made in basically eyeing the great growth opportunity in the medium term. That would be a correct interpretation?

Speaker #2: That would be a correct interpretation?

Speaker #3: Yeah. The investments are in line with the BNC opportunity we see in Europe, and the investments have been made both in terms of front-end capabilities—of salespeople—as well as CapEx in certain new technologies.

Hemant Bakshi: Yeah. The investments are in line with the BNC opportunity we see in Europe, and the investments have been made both in terms of front-end capabilities of salespeople as well as CapEx in certain new technologies.

Sameer Gupta: Fair. I still have some questions. I'll come back in the queue for follow-ups. Thanks.

Speaker #2: Fair. I'll come back in I mean, I still have some questions. I'll come back in the Q for follow-ups. Thanks.

Speaker #3: Thanks, Sameer.

Hemant Bakshi: Thanks, Sameer.

Speaker #1: Thank you. Our next question comes from the line of Sanjesh Jain with ICICI Securities. Please go ahead.

Operator 2: Thank you. Our next question comes from the line of Sanjesh Jain with ICICI Securities. Please go ahead.

Operator: Thank you. Our next question comes from the line of Sanjesh Jain with ICICI Securities. Please go ahead.

Speaker #4: Yeah, good evening, sir. Thanks for the opportunity. First question on the guidance, which you have upgraded to IT from the double digit. But if I look at it, there are two benefits to it, right?

Sanjesh Jain: Good evening, sir. Thanks for the opportunity. First question on the guidance, which you have upgraded to high teens from the double digit. If I look at, there is two benefit to it, right? Because we are looking at in a rupee term, one is currency depreciation, the other one is the inflation. If we come down to the PBT level, a lot of it gets offset because we also have a currency negative impact on the depreciation and on the cost line item. Does your view change on the PBT growth as well, or it is largely to the revenue growth?

Speaker #4: Because we are looking at in a rupee term, one is currency depreciation, the other one is the inflation. But if we come down to the PBT level a lot of it gets offset because we also have a currency negative impact on the depreciation and on the cost line item.

Speaker #4: Does your view change on the PBT growth as well, or it is largely to the revenue growth?

Speaker #3: So I think firstly, I want to call out that we've increased our guidance on top line. We've raised our guidance from early double digits to high teams.

Hemant Bakshi: I think, firstly, I want to call out that we have increased our guidance on top line. We have raised our guidance from early double digits to high teens. This is because we have seen continued momentum in BNC over the last few quarters. With demand remaining healthy and our investments continuing to contribute, we expect this momentum to sustain. Equally, oral has started to recover strongly, adding further momentum to our growth outlook. We have also, as we mentioned, set up operations in Thailand. Our Thailand operations are beginning to ramp up, and Thailand is a really significant BNC market, and this ramp up will be another growth driver as we go forward. At this stage, we expect to operate in a high inflationary environment for some time.

Speaker #3: And this is because we've seen continued momentum in BNC over the last few quarters. With demand remaining healthy and our investments continuing to contribute, we expect this momentum to sustain.

Speaker #3: Equally, oral has started to recover strongly, adding further momentum to our growth outlook. We've also as we mentioned, set up operations in Thailand, our Thailand operations are beginning to ramp up, and Thailand is a really significant BNC market.

Speaker #3: And this ramp-up will be another growth driver as we go forward. As this stage, we expect to operate in a high inflationary environment for some time.

Speaker #3: Against this backdrop, we've raised our guidance to high teams for the next few quarters. Reflecting our confidence in the underlying momentum of the business.

Hemant Bakshi: Against this backdrop, we have raised our guidance to high teens for the next few quarters, reflecting our confidence in the underlying momentum of the business. Having said this, on margin, we are holding on to our guidance of 20% underlying margin in terms of EBITDA, and this is something which we will sustain as we go forward. I would also like to call out

Speaker #3: Having said this, on margin, we are holding on to our guidance of 20% underlying margin in terms of EBITDA, and this is something which we will sustain as we go forward.

Speaker #3: I would also like to call out.

Speaker #2: So this date to assume that

Sanjesh Jain: It is fair to assume that. Yeah. Sorry. Go ahead.

Speaker #4: yeah. Sorry, sorry. Go ahead.

Speaker #3: Yeah. I would also like to point out that you mentioned our EBIT and PAC. I want to firstly call out that our PAC delivery is fully in line with our plans to deliver a double digit growth for the year.

Hemant Bakshi: Yeah. I would also like to point out that you mentioned our EBIT and PAT. I want to firstly call out that our PAT delivery is fully in line with our plans to deliver a double-digit growth for the year. This quarter, numbers are seeming low because of the effective tax rate and phasing issues. Our PBT, if you focus on our profit before tax, is a 10% growth. Therefore, I want to clarify the bottom line. EBIT, there has been a significant increase in CapEx because, as we mentioned already, we are investing ahead of the curve, and that is what is reflecting in these numbers.

Speaker #3: This quarter numbers are seeming low because of the effective tax rate and phasing issues. Our PBT, if you focus on our profit before tax, is a 10% growth.

Speaker #3: So therefore, I want to clarify the bottom line. And EBIT has is there has been a significant increase in Capex because as we mentioned already, we are investing ahead of the curve.

Speaker #3: And that is what is reflected in these numbers.

Speaker #4: So we are looking at a high teams growth in revenue as well as EBITDA? And a lot of it will get translated to PBT.

Sanjesh Jain: We are looking at a high teens growth in revenue as well as EBITDA, and a lot of it will get translated to PBT? For a year as a whole, correct?

Speaker #4: For the year as a whole. Correct? And second question on the other point you touched upon, moving beyond the Q revenue, one obviously is the IndoVida acquisition which will get us footprint into the rigid plastic.

Hemant Bakshi: Yes.

Sanjesh Jain: And second question on the other point you touched upon, moving beyond the tube revenue. One obviously is the Indovida acquisition, which will get us footprint into the rigid plastic. So what other opportunities are we looking? Because we think that is just one of the opportunity we are evaluating. If you can talk about the other opportunities that are today on the drawing board.

Speaker #4: So, what are the opportunities we are looking at? Because we said that this is just one of the opportunities we are evaluating. If you can talk about the other opportunities that are today on the drawing board.

Speaker #3: Yeah, so firstly, I want to just reiterate our vision. Our vision is to become a leader from emerging markets in consumer packaging. So that's our vision going forward.

Hemant Bakshi: Well, so firstly, I want to just reiterate our vision. Our vision is to become a leader from emerging markets in consumer packaging. So that is our vision going forward. As we have said in the past, there are three drivers to this vision. One is to expand our portfolio going beyond tubes. The second is to go into high growth markets in the emerging world. The third is to move from just being a supplier to becoming an innovation partner. I think our merger, which has been proposed with Indovida, ticks all three boxes. Firstly, we go into another category, which is in terms of TAM, much bigger than tubes, so therefore that is a positive. But also Indovida is present in a number of emerging markets in Southeast Asia and Africa where we do not have presence.

Speaker #3: And as we've said in the past, there are three drivers to this vision. One is to expand our portfolio going beyond tubes. The second is to go into high growth markets in the emerging world.

Speaker #3: And the third is to move from just being a supplier to becoming an innovation partner. I think our merger, which has been proposed with IndoVida, ticks all three boxes.

Speaker #3: And firstly, we go into another category which is in terms of TAM much bigger than tubes. So therefore, that is a positive. But also IndoVida is present in a number of emerging markets in Southeast Asia and Africa, where we don't have presence.

Speaker #3: So therefore, the merger wants the approval is comes through will allow us to go into new markets. Having said that, this is a really big first step in our journey.

Hemant Bakshi: So therefore the merger, once the approval comes through, will allow us to go into new markets. Having said that, this is a really big first step in our journey. We are interested in moving into new formats, and we actively are scouting for opportunities for acquisition. As far as acquisitions are concerned, our strategy is very clear. We will seek targets which allow us to move into new capabilities, which means new formats or indeed into new markets. Of course, they must meet the criteria of helping us build growth and margin as we go forward. So we are very actively also looking at opportunities for acquisition.

Speaker #3: We are interested in moving into new formats, and we actively are scouting for opportunities for acquisition. As far as acquisitions are concerned, our strategy is very clear.

Speaker #3: We will seek targets which allow us to move into new capabilities, which means new formats or indeed into new markets. Of course, they must meet the criteria of helping us build growth and margin as we go forward.

Speaker #3: So we are very actively also looking at opportunities for acquisition.

Speaker #4: And how about the synergies from the IndoVida? Because India, which is much larger market and a secular market, do we want to bring that or do you think India is a overserviced as far as the rigid plastic goes?

Sanjesh Jain: And how about the synergies from the Indovida? Because India, which is much larger market and a secular market, do we want to bring that or do you think India is over-serviced as far as the rigid plastic goes?

Speaker #3: So on IndoVida, I must firstly say that we are still awaiting the merger. And till we get approval for the merger, we are not in a position to share any information between the two companies.

Hemant Bakshi: On Indovida, I must firstly say that we are still awaiting the merger, and till we get approval for the merger, we are not in a position to share any information between the two companies. Therefore, anything I can speak is more from what is available in the public domain. From that point of view, I just want to also share with all of you that Indovida declared its results a little while back, and they have come out with a really impressive set of results for this quarter. Their volume grew by 11%, their revenue grew by 25%, their EBITDA grew by 62%, the margin expanded by 614 basis points to 27%. In some ways, if I really reflect it, the EBITDA in this quarter of Indovida is almost INR 383 crores.

Speaker #3: So, therefore, anything I can speak is more from what's available in the public domain. I think from that point of view, I just want to also share with all of you that IndoVida declared its results a little while back.

Speaker #3: And they've come out with a really impressive set of results for this quarter. Their volume grew by 11%. Their revenue grew by 25%. Their EBITDA grew by 62%.

Speaker #3: The margin expanded by 614 basis points to 27%. And in some ways, if I really reflected the EBITDA in this quarter of IndoVida is almost 383 rupees gross.

Speaker #3: So as you can see, they are doing exceedingly well. And the strategy which they have in place a growth strategy is delivering both top line and bottom line.

Hemant Bakshi: As you can see, they are doing exceedingly well, and the strategy which they have in place, a growth strategy, is delivering both top line and bottom line. In terms of your specific question on India and so on, I think it is best addressed to the Indovida management right now because we remain two independent companies. Post the merger, of course, we will look at all opportunities to see how this really handsome growth can be further accelerated.

Speaker #3: In terms of your specific question on India and so on, I think it's best addressed to the IndoVida management right now, because we remain two independent companies.

Speaker #3: Post the merger, of course, we'll look at all opportunities to see how this really handsome growth can be further accelerated.

Speaker #4: Got it. One last question. On my side, was there any element of inventory gain because the price of smooth quite sharply and we do carry a decent amount of inventory.

Sanjesh Jain: Got it. One last question from my side. Was there any element of inventory gain? Because the prices moved quite sharply, and we do carry a decent amount of inventory. Was there any element of inventory gain or there was no benefit of inventory gain?

Speaker #4: Was there any element of inventory gain or there was no benefit of inventory gain?

Speaker #3: So, the consumption cost does have an impact on all inventory. But the pricing also comes with some lag with a few customers. I think, net-net, what is important is that in quarter one, we have recovered the entire cost impact and we are absolutely confident that we will continue to do so in the future quarters as well.

Hemant Bakshi: The consumption cost does have an impact of holding inventory, but the pricing also comes with some lag with a few customers. I think net what is important is that in Q1, we have recovered the entire cost impact, and we are absolutely confident that we will continue to do so in the future quarters as well.

Speaker #4: And when you say entire cost, you mean both raw material and the higher freight cost and currency depreciation all put together, right?

Sanjesh Jain: When you say entire cost, you mean both raw material, the higher freight cost, and currency depreciation, all put together, right?

Speaker #3: That is right. That's correct. So all our customer contracts Sanjay Sharon lended cost basis for currency depreciation also gets recovered. Freight also saw sharp increase and we have been able to recover that from the customers.

Hemant Bakshi: That is right.

Sanjesh Jain: That is correct.

Hemant Bakshi: All our customer contracts, Sanjay, are on landed cost basis, so currency depreciation also gets recovered. Freight also saw sharp increase, and we have been able to recover that from the customers.

Speaker #4: Very clear. So this time around, we are not struggling with the same problem that we faced in the post-COVID era, right?

Sanjesh Jain: Very clear. This time around, we are not struggling with the same problem what we faced post-COVID era, right?

Speaker #3: I think it's important to just reflect on what's happened in the past. And you're absolutely right; we did have a challenge when, in the past, we were hit by this crisis.

Hemant Bakshi: I think it's important to just reflect on what's happened in the past. You're absolutely right, we did have a challenge when in the past we were hit by this crisis. I think over a period of time, we've learnt our lessons, and we've built a muscle whereby we can recover price as we go forward. We've built strong tracking and review mechanisms around cost inflation and recovery. Our sales teams proactively have engaged with customers to ensure consistent supply, even during a volatile period, and have remained engaged with customers throughout. Our approach is anchored in a few clear principles, which is executing with agility, maintaining financial discipline, safeguarding customer relationships, and continuing to drive long-term value. We are confident that our business model has the strength to overcome volatile and uncertain commodity cycles, and in some ways is cyclical-

Speaker #3: I think over a period of time, we've learned our lessons and we built a muscle whereby we can recover price as we go forward.

Speaker #3: We built strong tracking and review mechanisms around cost inflation and recovery. Our sales teams proactively have engaged with customers to ensure consistent supplies even during a volatile period.

Speaker #3: And have remained engaged with customers throughout. Our approach is anchored in a few clear principles, which are: executing with agility, maintaining financial discipline, safeguarding customer relationships, and continuing to drive long-term value.

Speaker #3: We are confident that our business model has the strength to overcome volatile and uncertain commodity cycles, and in some ways is cycle-proof or cyclicality-proof.

Sanjesh Jain: Cyclicality

Hemant Bakshi: cyclicality proof. Yeah. We should be able to overcome business cycles as we go forward.

Speaker #3: Yeah. So we should be able to overcome business cycles as we go forward.

Speaker #2: And I would just kind of add, and Sanjay, if you recall, in the past we have always mentioned that one of our key focus areas is to make this business cyclicality-proof.

Deepak Goyal: I would just add, Hemant. Sanjesh, if you recall, in the past, we have always mentioned that one of our key focus areas is to make this business cyclicality proof, because the commodity cycles will come and go, and that's exactly what you see demonstrated in our numbers in the quarter.

Speaker #2: Because the commodity cycles will come and go. And that's exactly what you see demonstrated in our numbers in the quarter.

Speaker #4: Oh, that's clear. That's clear. And I think it's good to see those errors being or those issues being fixed. Just one last question. Do we receive anything?

Sanjesh Jain: No, that is clear. I think it is good to see those errors being, or those issues being fixed. Just one last question. Do we receive anything

Speaker #4: Yeah.

Sanjesh Jain: Yeah.

Sanjesh Jain: If I could please rejoin the queue. Thank you.

Speaker #1: Please rejoin the queue. Yeah. Thank you.

Speaker #4: Thanks.

Deepak Goyal: Thanks.

Speaker #1: Our next question comes from the line of Jaymin with Ardeco Asset Management. Before you go ahead, let me remind participants to restrict yourselves to two questions only.

Operator 2: Our next question comes from the line of Jaymin with Ardeo Asset Management. Before you go ahead, let me remind participants to restrict yourselves to two questions only. For further questions, you may rejoin the queue. Jaymin, please go ahead.

Operator: Our next question comes from the line of Jaymin with Ardeo Asset Management. Before you go ahead, let me remind participants to restrict yourselves to two questions only. For further questions, you may rejoin the queue. Jaymin, please go ahead.

Speaker #1: For further questions, you may rejoin the queue. Jaymin, please go ahead.

Speaker #4: Thank you so much for the opportunity for it. My first question is on if you look at the investment you are making in a new technologies and the customer acquisition infrastructure, how should we think about the split between the growth enabling OPEX, which is going to be temporary in nature, versus the structural addition to the cost base.

[Company Representative] (Ardeko Asset Management): Thank you so much for the opportunity, sir. My first question is on, if you look at the investment you are making in the new technologies and the customer acquisition for structure, how should we think about the split between the growth enabling OpEx, which is going to be temporary in nature, versus the structures additional to the cost base?

Speaker #3: Sorry, I wasn't clear. Can you repeat that, Jaymin? I couldn't hear your question.

Hemant Bakshi: Sorry. Wasn't clear. Can you repeat, Jaymin? I couldn't hear your question.

Speaker #4: Yes. So when you just look at your step-up investment, you are making on a new technology as well as I mean your manpower cost.

[Company Representative] (Ardeko Asset Management): Yes. So when we just look at your step-up investment you are making on a new technology, as well as any of your manpower cost, how should we think about a split between your growth enabling CapEx, which is temporary in nature, which is in your control to cut down in future, versus any structural additions which are adding to the cost base?

Speaker #4: How should we think about the split between your growth-enabling capex, which is temporary in nature and under your control to reduce in the future, versus any structural additions that are adding to the cost base?

Speaker #3: Yeah. So I think Jaymin a really good question. And let me address both the OPEX as well as the capex question you've asked. Our OPEX growth is in line with our plans.

Hemant Bakshi: Yeah. So I think, Jaymin, a really good question. Let me address both the OpEx as well as the CapEx question you've asked. Our OpEx growth is in line with our plans. Firstly, I want to be very clear on that. We've articulated a strategy of growing BNC discontinuously. We have also put in place investments to deliver on this strategy. While the quarter has other challenges, we've remained completely focused on our long-term strategy. This includes setting up of a full-service center of excellence for BNC, which we've set up in India. We've fully divisionalized our front-end sales team, which means that in the past, we had one sales team which would sell both all our categories. Now we have a separate team which sells BNC and a separate team which focuses on oral and large key accounts.

Speaker #3: Firstly, I want to be very clear on that. We've articulated a strategy of growing BNC discontinuously. We have also put in place investments to deliver on the strategy.

Speaker #3: So, while the quarter has other challenges, we've remained completely focused on our long-term strategy. This includes the setup of a full-service Center of Excellence for BNC, which we've established in India.

Speaker #3: We've fully divisionalized our front-end sales team, which means that in the past, we had one sales team that would sell across all our categories.

Speaker #3: Now we have a separate team which sells BNC and a separate team which focuses on oral and large key accounts. We've also made significant investments in embellishments and decorations, and some of these products are still being outsourced.

Hemant Bakshi: We've also made significant investments in embellishments and decorations, and some of these products are still being outsourced. You will see increases not only in OpEx but also in CapEx, where we've made investments ahead of the growth curve to ensure we are fully ready to service the additional demand that our business will generate. Having said that, our underlying costs, both in OpEx and CapEx, remain extremely efficient. While we are driving new capabilities, we are also making sure that our underlying margins remain at the target range of 20%, and whatever costs we incur are also managed. On a steady state basis, our EBITDA will grow faster than our revenue growth.

Speaker #3: You will see increases not only in OPEX but also in capex where we've made investments ahead of the growth curve to ensure we are fully ready to service the additional demand that our business will generate.

Speaker #3: Having said that, our underlying costs both in OPEX and capex remain extremely efficient. And while we are driving new capabilities, we are also making sure that our underlying margins remain at the target range of 20%.

Speaker #3: And whatever cost we incur, are also managed. On a steady state basis, our EBITDA will grow faster than our revenue growth.

Speaker #4: Understood, sir. And sir, on the innovation in the sustainability portfolio side, could you give us some color on which platforms are scaling faster commercially, and how—I mean, what customer response we are seeing on those platforms?

[Company Representative] (Ardeko Asset Management): Understood, sir. On the innovation and the sustainability portfolio side, could you give us some color on which platform was scaling faster commercially, and how the customer response you are seeing on those platforms?

Speaker #3: Yeah. So I think one of the things we've said always is that our core business is oral care. Which under normal circumstances should get high single-digit growth because it's a mature category.

Hemant Bakshi: Yeah. I think one of the things we have said always is that our core business is oral care, which under normal circumstances should get high single-digit growth because it is a mature category. In this quarter, we have seen a very significant increase in oral care, and this is coming from across all regions. There are multiple reasons behind it, but one significant reason is that during a difficult time when everyone is facing a crisis, our service and quality of engagement with customers has remained intact, and that has allowed us to win wallet share and gain share across many markets. Very well-performed at 24% growth. This will not be something which we will be able to deliver every quarter, but this quarter has been exceptional on oral.

Speaker #3: In this quarter, we've seen a very significant increase in oral care. And this is coming from across all regions. There are multiple reasons behind it.

Speaker #3: But one significant reason is that during a difficult time, when everyone is facing a crisis, our service and quality of engagement with customers has remained intact.

Speaker #3: And that has allowed us to win wallet share and gain share across many markets. I mean very strong at 24% growth. This will not be something which we'll be able to deliver every quarter.

Speaker #3: But this quarter has been exceptional on oral. However, on the other hand, BNC is a category where our shares are relatively low. And we believe we have the opportunity of doubling our market share in the next few years.

Hemant Bakshi: However, on the other hand, BNC is a category where our shares are relatively low, and we believe we have the opportunity of doubling our market share in the next few years. Currently, our market share is 8%. This, we believe, can go up to 16%. All our large BNC markets have performed exceedingly well, and that is resulting in the growth which you are seeing. So if I can summarize, our core category of oral has bounced back very strongly, and BNC, which is our growth category, is continuing to show momentum.

Speaker #3: Currently, our market share is 8%. This we believe can go up to 16%. All our large BNC markets have performed exceedingly well. And that is resulting in the growth which you are seeing.

Speaker #3: So if I can share I mean summarize, our core category of oral has bounced back very strongly. And BNC, which is our growth category, is continuing to show momentum.

Speaker #4: Understood, sir. Let me come back in the Q4 to follow. Thank you so much.

[Company Representative] (Ardeko Asset Management): Understood, sir. Let me come back in the queue for the follow-up. Thank you so much.

Speaker #1: Thank you. Our next question comes from the line of Sumant Kumar with Motilal Oswal. Please go ahead.

Operator 2: Thank you. Our next question comes from the line of Sumanth Kumar with Motilal Oswal. Please go ahead.

Operator: Thank you. Our next question comes from the line of Sumanth Kumar with Motilal Oswal. Please go ahead.

Speaker #4: Yeah. Hi. For Europe, the profitability impact because of transitional cost, apart from that, any other issue with the Europe profitability momentum and profitability likely to recover in the coming quarter?

Sumanth Kumar: Yeah, hi. For Europe, the profitability impact because of transitional costs. Apart from that, any other issue with the Europe? The profitability momentum and profitability likely to recover in the coming quarter?

Speaker #3: As I've mentioned earlier, I want to again state that our revenue growth in Europe has been very good, and that's something which has continued for the last couple of quarters.

Hemant Bakshi: Yeah. As I have mentioned earlier also, firstly, I want to, again, state that our revenue growth in Europe has been very good, and that has been something which has continued for the last couple of quarters. As we said earlier, we have mentioned in the last two quarters that there have been some operational challenges in Europe. These have been identified and are getting disproportionate focus from the team. We are confident that these will get fully resolved in the coming quarters. As operational efficiencies improve, we expect margins to progressively recover.

Speaker #3: As we said earlier, we have mentioned in the last two quarters that there have been some operational challenges in Europe. These have been identified and are getting disproportionate focus from the team.

Speaker #3: We are confident that these will get fully resolved in the coming quarters. As operational efficiencies improve, we expect margins to progressively recover.

Speaker #4: Okay. And can you talk on the volume growth for the quarter?

Sumanth Kumar: Okay. Can you talk on the volume growth for the quarter?

Speaker #3: Yeah. So as you know, Sumant, we generally talk about revenue growth because that is the best indicator of our business performance. However, this quarter, revenue growth also includes the Middle East pricing impact.

Hemant Bakshi: As you know, Suman, we generally talk about revenue growth because that is the best indicator of our business performance. However, this quarter's revenue growth also includes the Middle East pricing impact, and that is why we are also talking about the underlying growth. While the reported growth is 25.3%, excluding the Middle East pricing impact, the underlying revenue has grown 20%, which is very strong. The volume growth, I can tell you that this growth is driven by a very strong underlying business performance. However, volume growth still will not make too much sense because there is a significant mix impact given that the product prices differ strongly between categories and countries.

Speaker #3: And that is why we are also talking about the underlying growth. While the reported growth is 25.3%, excluding the Middle East pricing impact, the underlying revenue has grown 20%, which is very strong.

Speaker #3: The volume growth, I can tell you that we this growth is driven by a very strong underlying business performance. However, volume growth still will not make too much of sense because there is a significant mix impact given that the product prices differ strongly between categories and countries.

Sumanth Kumar: Oh, thank you.

Speaker #4: Okay. Thank you.

Speaker #1: Thank you. Ladies and gentlemen, to ask a question, please press star one. Our next question is a follow-up from Sameer Gupta with IISL Capital.

Operator 2: Thank you. Ladies and gentlemen, to ask a question, you may please press star and one. Our next question is a follow-up from Samir Gupta with IIFL Capital. Please go ahead.

Operator: Thank you. Ladies and gentlemen, to ask a question, you may please press star and one. Our next question is a follow-up from Samir Gupta with IIFL Capital. Please go ahead.

Speaker #1: Please go ahead.

Speaker #5: Hi sir. And thanks again for taking the question. Sir, from a cost perspective, would you say that worst is yet to hit the P&L in full terms given that we ended FY26 with a slightly higher inventory?

Sameer Gupta: Hi, sir, and thanks again for taking the question. Sir, from a cost perspective, would you say that worst is yet to hit the P&L in full terms, given that we ended FY26 with a slightly higher inventory? Also, the EBITDA margin from that perspective may still have some downside left. Or would you say that this was the worst quarter in any case, and going forward, Middle East is still going on, but going forward, things should be better from here on, from this base, which is already fantastic.

Speaker #5: And also, the EBITDA margin from that perspective may still have some downside left or would you say that this was the worst quarter in any case?

Speaker #5: And going forward, I mean Middle East is still going on. But going forward, things should be better from here on. I mean from this base, which is already fantastic.

Speaker #3: Yeah. Yeah. Sameer, so firstly, I want to say this is the worst quarter. It's actually quite a positive quarter for us. We feel very happy and confident with what we've done.

Hemant Bakshi: Yeah, Samir. Firstly, I won't say this is the worst quarter. It's actually quite a positive quarter for us. We feel very happy and confident with what we've done. As you remember, Samir, before the quarter started and when we faced the crisis, we said we have two key principles during this crisis. One is that our customers must get uninterrupted service from us, and they should see no dislocation on account of this crisis. The second thing we said is the entire cost which we incur, we'll recover through pricing. I'm very happy to report to all of you that we've met both these principles fully in this quarter. Therefore, we feel this quarter is a very satisfying quarter.

Speaker #3: As you remember, Sameer, before the quarter started and when we faced the crisis, we said we have two key principles during this crisis. One is that our customers must get uninterrupted service from us.

Speaker #3: And they should see no dislocation on account of this crisis. And the second thing we said is the entire cost which we incur will recover through pricing.

Speaker #3: I'm very happy to report to all of you that we've met both these principles fully in this quarter. So therefore, we feel this quarter is a very satisfying quarter.

Speaker #3: Having said that, as you've rightly pointed out, there was some old inventory old cost inventory in our overall repertoire. And as the quarter has gone through, some of it has passed on.

Hemant Bakshi: Having said that, as you rightly pointed out, there was some old cost inventory in our overall repertoire, and as the quarter has gone through, some of it has passed on. Equally, some of our customer pricing also had some lag. Therefore, if you keep both of these things in account, net-net, the entire cost has been recovered, and we feel very confident that as we go forward, the same principles will continue to apply.

Speaker #3: Equally, some of our customer pricing was also has some lag. And therefore, if you keep both of these things in account, net net, the entire cost has been recovered.

Speaker #3: And we feel very confident that, as we go forward, the same principles will continue to apply.

Speaker #5: Great. That is very clear. Another if I may just squeeze in. So Europe, this is a follow-up from the earlier question only. So Europe, if you are investing for growth here, it would also mean that we already have reached a good utilization level till FY26.

Sameer Gupta: Great. That is very clear. Another, if I may just squeeze in. Europe, this is a follow-up from the earlier question only. Europe, if you are investing for growth here, it would also mean that we already have reached a good utilization level till FY26, but the margin of the ROCE profile of the segment in Europe still was subpar. How should we read this?

Speaker #5: But the margin of the ROCE profile of the segment in Europe still was subpar. So how should we read this?

Speaker #3: Yeah. So Sameer, first of all, Europe remains a very exciting market for us. And we want to make sure that while the margin profile is being corrected, we capitalize on all the growth opportunities which are available in Europe.

Deepak Goyal: Yeah. Samir, first of all, Europe remains a very exciting market for us, and we want to make sure that while the margin profile is being corrected, we capitalize on all the growth opportunities which are available in Europe. We are expanding our capacities in extruded. We are expanding our capabilities on printing side and on multiple beauty and cosmetics capability like die and tooling, et cetera. We are investing in all of that. We want to make sure that our market share keeps growing. On the margin profile, we have identified there are two reasons. One is the investments that we are making in growth. As the growth continues, I think those costs will become normalized, and the scale leverage would come. Second is that we have identified certain cost inefficiencies which are there in Europe today. Those we are working through very specific cost programs.

Speaker #3: We are expanding our capacities in extruded we are expanding our capabilities on printing side. And on multiple beauty and cosmetics capability like DIA and tooling, etc.

Speaker #3: So we are investing in all of that. We want to make sure that our market share keeps growing. On the margin profile, we have identified there are two reasons.

Speaker #3: One is the investments that we are making in growth. As the growth continues, I think those costs will become normalized. And we scale leverage would come in.

Speaker #3: Second is that we have identified certain cost inefficiencies that are present in Europe today, and we are working through very specific cost programs to address them.

Speaker #3: And I think in the coming quarters, we will see Europe margins improving too. Our target range of mid-teens.

Hemant Bakshi: And I think in the coming quarters, we will see Europe margins improving to our target range of mid-teens.

Speaker #5: Thanks, Deepak. Just on this cost inefficiencies.

Sameer Gupta: Thanks, Deepak. Just on this cost inefficiency-

Operator 2: Sameer, sorry to interrupt. May we request you to please repeat if you have any further questions.

Operator: Sameer, sorry to interrupt. May we request you to please repeat if you have any further questions.

Speaker #1: Sameer, sorry to interrupt. Maybe request you to please reach out if you have any further questions.

Speaker #5: Sure. Sure. No worries.

Sameer Gupta: Sure. No worries.

Speaker #1: Thanks.

Operator 2: Thanks.

Operator: Thanks.

Sameer Gupta: I'll come back. Yeah.

Speaker #5: I'll come back. Yeah.

Speaker #1: Thank you. Our next question is from the line of Girira sorry, Giriraj Daga, with Visaria Family Trust. Please go ahead.

Operator 2: Thank you. Our next question is from the line of Giriraj Dada with Visaria Family Trust. Please go ahead.

Operator: Thank you. Our next question is from the line of Giriraj Dada with Visaria Family Trust. Please go ahead.

Speaker #4: Yeah. Hello, team. Just one clarification on Individa. Just basic number what you mentioned. Did you mention 383 crore of EBITDA?

Giriraj Dada: Yeah. Hello, team. Just one clarification on Indovida, just basic number what you mentioned. Did you mention INR 383 crore of EBITDA?

Operator: Yeah. Hello, team. Just one clarification on Indovida, just basic number what you mentioned. Did you mention INR 383 crore of EBITDA?

Speaker #3: Yeah. Yeah. That is correct. That's correct. This is publicly available information.

Hemant Bakshi: Yes. That is correct. This is publicly available information.

Speaker #4: Okay. And just clarification, there is no one-off here, right?

Giriraj Dada: Okay. Just for clarification, there is no one-off here, right?

Hemant Bakshi: Okay. Just for clarification, there is no one-off here, right?

Speaker #3: We are not able to comment on the underlying reasons for the results Giriraj because we are in a period where we are still seeking approval on the merger.

Hemant Bakshi: We are not able to comment on the underlying reasons for the results, Giriraj, because we are in a period where we are still seeking approval on the merger. What we can share with you is information which is in the public domain, and that is what we have done.

Speaker #3: What we can share with you is information which is in the public domain. And that's what we've done.

Speaker #4: Okay. Thank you from my side.

Giriraj Dada: Okay. Thank you from my side.

Hemant Bakshi: Okay. Thank you from my side.

Speaker #1: Thank you. Our next question comes from the line of Sanjesh Jain with ICICI Securities. Please go ahead.

Operator 2: Thank you. Our next question comes from the line of Sanjesh Jain with ICICI Securities. Please go ahead.

Operator: Thank you. Our next question comes from the line of Sanjesh Jain with ICICI Securities. Please go ahead.

Speaker #6: Yeah. Thanks. Thanks for taking my question as I gave. I just have one question. What happened with Americas? Because sequentially, though revenue has been stable, I think largely because of inflation, the EBITDA and EBIT has fallen quite sharply.

Sanjesh Jain: Yeah, thanks. Thanks for taking my question earlier. I just have one question. What happened with Americas? Because sequentially, though revenue has been stable, I think largely because of inflation, the EBITDA and EBIT have fallen quite sharply. Is it just seasonality or there is more to it?

Speaker #6: It's just seasonality or there is more to it?

Deepak Goyal: There are two reasons for it. One is that the revenue growth still includes the pricing impact, and hence, when we look at the EBITDA number, the underlying EBITDA margin is higher. It is, in a way, March and June EBITDA margins are sequentially not comparative. Neither is revenue growth. Second is that the investment that we are making also then are rubbing off in Americas because we are seeing exciting opportunities both in Brazil as well as in the US markets, and we are investing in our capabilities there.

Speaker #3: There are two reasons for it. One is that the revenue growth still includes the pricing impact. And hence, when we look at the EBITDA number, the underlying EBITDA margin is higher.

Speaker #3: And it is in a way March and June EBITDA margins are sequentially not comparative. Right? And neither is revenue growth. And second is that the investments that we are making also then are rubbing off in Americas because we are seeing exciting opportunities both in Brazil as well as in the US markets.

Speaker #3: And we are investing in our capabilities there.

Speaker #6: When we say capability, is it more operating? Because I thought when we say capability, it's more capex.

Sanjesh Jain: When you say capability, it is more operating because I thought when you say capability, it is more CapEx.

Speaker #3: Both actually. So we are investing in capex. But at the same time as Hemant mentioned during his comments earlier, we are splitting our sales team making them specific to Oral and beauty and cosmetics.

Deepak Goyal: Both actually. We are investing in CapEx. At the same time, as Hemant mentioned during his comments earlier, we are splitting our sales team, making them specific to oral and beauty and cosmetics, being served by separate teams. We are equally investing in things like beauty and cosmetics capability, where we outsource certain high-capability items which we cannot still produce ourselves. Those kind of things are being done.

Speaker #3: Being served by separate teams. We are equally investing in things like beauty and cosmetics capability where we outsource certain high capability items which we cannot still produce ourselves.

Speaker #3: So, those kinds of things are being done.

Sanjesh Jain: These margins are supposed to improve with the revenue or do you think this will remain subdued until the revenue completely offset this?

Speaker #6: Okay. So these margins are supposed to improve with the revenue or do you think this will remain subdued until the revenue completely offset this?

Sanjesh Jain: These margins are supposed to improve with the revenue or do you think this will remain subdued until the revenue completely offset this?

Speaker #3: Some of these are ahead of the curve investments. Sanjesh and as the revenue keeps growing, we will see the markets margins normalize. But let me still again make that Americas margin remain very strong even in these times.

Deepak Goyal: Some of these are ahead of the curve investments, Sanjay, and as the revenue keeps growing, we will see the margins normalize. Let me still again make that Americas margin remain very strong even in these times. The underlying margin is better than the reported margin because the revenue growth still includes the pass-through pricing impact.

Speaker #3: The underlying margin is better than the reported margin because the revenue growth is still includes the pricing impact.

Speaker #6: Got it. Got it. Thanks. Thanks, Deepak, for all those answers. And best of luck for the coming days.

Sanjesh Jain: Got it. Thanks, Deepak, for all those answers and best of luck for the current quarter.

Speaker #1: Thank you. Participants to ask a question, you may please press star and one. Our next question comes from the line of Jayesh Gandhi with Harshad H.

Operator 2: Thank you. Participants, to ask a question, you may please press star and 1. Our next question comes from the line of Jayesh Gandhi with Harshad H. Gandhi Securities Private Limited. Please go ahead.

Operator: Thank you. Participants, to ask a question, you may please press star and 1. Our next question comes from the line of Jayesh Gandhi with Harshad H. Gandhi Securities Private Limited. Please go ahead.

Speaker #1: Gandhi Securities Private Limited. Please go ahead.

Jayesh Gandhi: I have only one question on your taxation. If we see at last two years, it is at 14% and 18%, and this quarter, I think we have more than 20%. Can you guide on the entire year's taxation percentage?

Speaker #5: So I have only one question on your taxation. If we see the last two years, it is like 14%, and 18% on this quarter.

Speaker #5: I think we have more than 20%. Can you guide on the entire year's taxation percentage? Hello?

Operator 2: Hello? Ladies and gentlemen, please stay with us. The line to the management seems to have disconnected. Ladies and gentlemen, we thank you for your patience. We are now reconnected with the management. Jayesh, may I request you to please repeat your question?

Operator: Hello? Ladies and gentlemen, please stay with us. The line to the management seems to have disconnected. Ladies and gentlemen, we thank you for your patience. We are now reconnected with the management. Jayesh, may I request you to please repeat your question?

Speaker #1: Ladies and gentlemen, please stay with us. The line for the management seems to have disconnected. Ladies and gentlemen, we thank you for your patience.

Speaker #1: We are now reconnected with the management. Jayesh, may I request you to please repeat your question?

Speaker #5: Yeah. Sir, I have only one question on the taxation. If we see last two years, our taxation has I mean, tax rate has been closer to like 14% and 18%.

Jayesh Gandhi: Sir, I have only one question on the taxation. If you see last two years, our tax rate has been closer to 14% and 18%. This quarter, we are more than 20%. Can you guide on the entire year's taxation rate that we may have to pay?

Speaker #5: This quarter, we are more than 20%. Can you guide us on the entire year's taxation rate that we may have to pay?

Speaker #3: Yeah. So our ETR as we have always maintained is a combination of tax rate across multiple countries. On a steady state basis, it will remain in the range between 18% to 22%.

Deepak Goyal: Yeah. Our ETR, as we have always maintained, is a combination of tax rate across multiple countries. On a steady state basis, it will remain in the range between 18% to 22%. While the range is a little wide, it is also a function of the profitability delivery by various countries, and hence, we have to live with that variability. Last year was at the lower end of this range, at 18% for the full year, and this quarter is at the higher range, at the 22% of this quarter. I think this year, on a full year basis, we should land anywhere between 20% to 22%. That's how we are looking at it.

Speaker #3: While the range is a little wide, it is also a function of the profitability delivery by various countries. And hence, we have to live with that variability.

Speaker #3: Last year was at the lower end of this range at 18% for the full year. And this quarter is at the higher range at the 22% of this quarter.

Speaker #3: I think this year on a full year basis, we should lend anywhere between 20% to 22%. That's how we are looking at it.

Jayesh Gandhi: And post Indovida's merger, you think it will be similar or it can go up to more than 25% or something like that?

Speaker #5: And suppose IndoVita's merger, you think it will be similar or it can go up to like more than like 25% or something like that?

Deepak Goyal: I think at this point in time, it may not be the right thing to comment on the consolidated financials, given we are still in the approval process. However, I can tell you that Indovida, and these are publicly available number or the due diligence that we did, that Indovida also generates very strong PAT. Their PAT is actually in line with EPL's PAT, and hence it's a very accretive merger.

Speaker #3: I think at this point in time, it may not be the right thing to comment on the consolidated financials given we are still in the approval process.

Speaker #3: However, I can tell you that IndoVita—these are publicly available numbers from the due diligence we did—that IndoVita also generates very, very strong PAT.

Speaker #3: Their PAT is actually in line with EPL's PAT. And hence, it's a very, very EPS accretive merger.

Speaker #5: I understand. Thank you very much. And good luck for future.

Jayesh Gandhi: I got it, sir. Thank you very much, and good luck for future.

Speaker #1: Thank you. We have no further questions. Ladies and gentlemen, I would now like to hand the conference over to management for closing comments.

Operator 2: Thank you. We have no further questions, ladies and gentlemen. I would now like to hand the conference over to the management for closing comments. Over to you, sir.

Operator: Thank you. We have no further questions, ladies and gentlemen. I would now like to hand the conference over to the management for closing comments. Over to you, sir.

Speaker #1: Over to you, sir.

Speaker #2: Yeah. I don't think we have any lengthy comments. We just want to reiterate that we are very happy with our performance in this quarter.

Deepak Goyal: Yeah. I don't think we have very lengthy comments. We just want to reiterate that we are very happy with our performance in this quarter. While our overall growth is 25%, the underlying growth, if you take away the pricing impact on account of the prices, is 20%, which is a record growth in terms of revenue. We've never had a quarter like this, and we've maintained underlying margins in line with our guidance. That's why we feel confident of raising our guidance on revenue from low double digits to high teens, while retaining our margin guidance. So we feel very confident on where we are, and we are looking forward to getting approvals on the merger, which will allow us to move to the next step in our very exciting journey. Thank you very much for your time and your engagement.

Speaker #2: And while our overall growth is 25%, the underlying growth, if you take away the pricing impact on account of the crisis, is 20%, which is a record growth in terms of revenue.

Speaker #2: We've never had a quarter like this, and we've maintained underlying margins in line with our guidance. That's why we feel confident raising our guidance on revenue from low double digits to high teens.

Speaker #2: And while retaining our margin guidance. So we feel very, very confident on where we are. And we are looking forward to getting approvals on the merger which will allow us to move to the next step in our very exciting journey.

Speaker #2: Thank you very much for your time and your engagement.

Operator 2: Thank you. On behalf of Systematix Institutional Equities, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.

Operator: Thank you. On behalf of Systematix Institutional Equities, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.

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Q1 2027 EPL Ltd Earnings Call

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