Q1 2027 Linc Ltd Earnings Call
Speaker #1: Good afternoon, ladies and gentlemen. Welcome to the Linc Ltd. Q1 FY27 earnings conference call. As a reminder, all participant lines will be in listen-only mode.
Operator 2: Good afternoon, ladies and gentlemen. Welcome to the Linc Limited Q1 FY27 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the management opening remarks. Should you need assistance during the conference call, 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. Ananth Narayan for SKP Securities Limited. Thank you, and over to you, sir.
Speaker #1: There will be an opportunity for you to ask questions after the management's opening remarks. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone.
Speaker #1: Please note that this conference is being recorded. I now hand the conference over to Mr. Anantha Narayan, SKP Securities Limited. Thank you. Over to you, sir.
Speaker #2: Good afternoon, ladies and gentlemen. It's my pleasure to welcome you all on behalf of Linc Limited and SKP Securities to this financial results conference call.
Ananth Narayan: Good afternoon, ladies and gentlemen. It's my pleasure to welcome you all on behalf of Linc Limited and SKP Securities to this financial results conference call. We have with us Mr. N.K. Dujari, Director of Finance and CFO, and Mr. Sanjeev Sancheti from Eutech Advisors LLP, the company's IR advisors. We will have the opening remarks by the management, followed by a Q&A session. Thank you, and over to you, Mr. Sanjiv.
Speaker #2: We have with us Mr. N.K. Dujari, Director – Finance and CFO, and Mr. Sanjeev Sancheti from Eurotas Advisors LLP, the company's IR advisors. We will have the opening remarks by the management, followed by a Q&A session.
Speaker #2: Thank you, and over to you, Mr. Sanjeev.
Speaker #3: Thank you, Anant. Good afternoon to all the participants. Before I hand over the call to Mr. Dujari for the opening remarks, I would like to draw your attention to the safe harbor statement in the earnings presentation.
Sanjeev Sancheti: Thank you, Ananth. Good afternoon to all the participants. Before I hand over the call to Mr. Dujari for the opening remarks, I would like to draw your attention to the safe harbor statement in the earnings presentation. I request each one of you to kindly go through the presentation either now or before the Q&A starts, so that you're well aware of the earnings presentation details as well as the safe harbor statement. Request you to go through the same very carefully. Over to you, Mr. Dujari.
Speaker #3: I request each one of you to kindly go through the presentation either now or before the Q&A starts, so that you're well aware of the earnings presentation details as well as the Safe Harbor statement.
Speaker #3: Request you to go through the same very carefully. Over to you, Mr. Dujari.
Speaker #4: Good afternoon, and thank you for joining us for the Linc Limited Q1 FY27 investor call. During the quarter, we delivered a stable performance despite a challenging operating environment, marked by geopolitical uncertainty and elevated input costs.
N.K. Dujari: Good afternoon, and thank you for joining us for Linc Limited Q1 FY27 Investor Call. During the quarter, we delivered a stable performance despite a challenging operating environment marked by geopolitical uncertainty and elevated input costs. Operating income stood at INR 13,895 lakhs, representing a YOY growth of 1.4%. Our business segment recorded varying trend during the quarter. Corporate sales declined by 14% against the high base in the previous year, while export revenue declined by 3% due to the continued impact of geopolitical uncertainty on global trade flows. At the same time, general trade grew by 8%, while e-commerce registered a robust growth of 32%, supported by sustained demand for our product portfolio and an increasing contribution from LincCon, our e-commerce focused subsidiary. Corporate sales are inherently requirement-based and influenced by the timing of order execution.
Speaker #4: Operating income stood at $13,895, representing a year-over-year growth of 1.4%. Our business segments recorded varying trends during the quarter; corporate sales declined by 14% against a high base in the previous year.
Speaker #4: While export revenue declined by 3% due to the continued impact of geopolitical uncertainty on global trade flows, at the same time, general trade grew by 8%.
Speaker #4: While e-commerce registered a robust growth of 32%, supported by sustained demand for our product portfolio and an increasing contribution from Linc on our e-commerce-focused subsidiary.
Speaker #4: Corporate sales are inherently requirement-based and influenced by the timing of order execution. Consequently, quarterly fluctuations are characteristic of this segment and do not indicate any structural change in the business.
N.K. Dujari: Consequently, quarterly fluctuations are characteristic of this segment and do not indicate any structural change in the business. The steady growth in general trade and the strong performance of e-commerce underscore the continued progress of our brand building and distribution initiatives. Operating EBITDA for the quarter stood at INR 1,209 lakhs with an EBITDA margin of 8.7%, representing a YOY contraction of 89 BPS. The margin pressure was primarily attributable to increased polymer prices, our principal raw material, driven by supply constraint and higher crude oil prices. This impact was partially offset by disciplined cost management. Looking ahead, we are seeing polymer prices ease, and we expect them to normalize over the coming quarters. Alongside this, we will continue to maintain a disciplined approach to cost management.
Speaker #4: The steady growth in general trade and the strong performance of e-commerce underscored the continued progress of our brand-building and distribution initiatives. Operating EBITDA for the quarter stood at $1,209, with an EBITDA margin of 8.7%.
Speaker #4: Representing a year-over-year contraction of 89 basis points. The margin pressure was primarily attributable to an increased polymer crisis, our principal raw material, driven by supply constraints and higher crude oil, partially offset by disciplined cost management.
Speaker #4: Looking ahead, we are seeing polymer prices ease, and we expect them to normalize over the coming quarter. Alongside this, we will continue to maintain a disciplined approach to cost management.
Speaker #4: For Q1 FY27, tax stood at $581,000, translating into a PAT margin of 4.2%, representing a year-over-year decline of 93 basis points. Our balance sheet remained strong, with a net cash position of $1,194,000 as of 30 June 2026.
N.K. Dujari: For Q1 FY27, PAT stood at INR 581 lakhs, translating into a PAT margin of 4.2%, representing a YOY decline of 93 BPS. Our balance sheet remains strong with net cash position of INR 994 lakhs as on 30 June 2026, reflecting continued financial discipline. Asset productivity remained healthy with fixed asset turnover of 3.72 times, indicating efficient utilization of the asset base. The cash conversion cycle stands at 65 days. Our international growth initiative continues to progress broadly in line with our previously outlined plan. UNI Linc, our JV with Mitsubishi Pencil Co. Ltd., Japan, remains operationally stable with exports accounting for more than 50% of its revenue during the quarter. Operations at our JV in Turkey continues to progress steadily.
Speaker #4: Reflecting continued financial discipline, asset productivity remained healthy, with fixed asset turnover of 3.72 times, indicating efficient utilization of the asset base. The cash conversion cycle stands at 65 days.
Speaker #4: Our international growth initiative continues to progress broadly in line with our previously outlined plan. Unilink, our JV with Mitsubishi Pencil Company, Japan, remains operationally stable, with exports accounting for more than 50% of its revenue during the quarter.
Speaker #4: Operations at our JV in Turkey continue to progress steadily. The development of our subsidiary with Maurice of Korea remains linked to the commissioning of the upcoming manufacturing facility in West Bengal, which is expected to become operational by Q3 of FY27.
N.K. Dujari: The development of our subsidiary with Morris Co. Ltd. of Korea remains linked to the commissioning of the upcoming manufacturing facility in West Bengal, which is expected to become operational by Q3 of FY27. Sales momentum at our Kenya subsidiary has begun to improve, and we expect this positive trend to strengthen over the coming quarters. Mincon has remained stable in the current quarter and is expected to gain momentum in periods ahead. While the ramp-up of these initiatives has taken a little longer than initially envisaged, we believe the foundations being established are robust and well-considered. The benefit of an improving product mix, disciplined execution, and deepening strategic partnership are expected to become increasingly visible as near-term input cost pressures moderate. We remain committed to strengthening the business and creating a platform for sustainable long-term growth.
Speaker #4: Pace momentum at our Kenya subsidiary has begun to improve, and we expect this positive trend to strengthen over the coming quarters. Linc has remained stable in the current quarter and is expected to gain momentum in periods ahead.
Speaker #4: While the ramp-up of these initiatives has taken a little longer than initially envisaged, we believe the foundations being established are robust and well considered. The benefit of an improving product mix, disciplined execution, and deepening strategic partnerships are expected to become increasingly visible as near-term input cost pressures moderate.
Speaker #4: We remain committed to strengthening the business and creating a platform for sustainable, long-term growth. Given the current uncertainties, we believe it will be prudent to await another quarter to gain better visibility before providing formal guidance on our outlook.
N.K. Dujari: Given the current uncertainties, we believe it will be prudent to await another quarter to gain better visibility before providing formal guidance on our outlook. We remain focused on maintaining financial discipline while executing our long-term growth initiatives. With that, now I open the floor for the questions.
Speaker #4: We remain focused on maintaining financial discipline while executing our long-term growth initiatives. With that, I will now open the floor for questions.
Speaker #2: Thank you. We will now move to the question and answer session. Each participant is requested to limit themselves to a maximum of two questions.
Operator 2: Thank you. We will now begin the question and answer session. Each participant is requested to limit himself or herself to a maximum of two questions. Time permitting, we shall revert for any further questions that you may have that remain unanswered. 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 use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants who wish to ask a question, please press star and one. Participants who wish to ask a question, please press star and one. Participants, a reminder, if you wish to ask a question, please press star and one.
Speaker #2: Time permitting, we shall revert for any further questions that you may have that remain unanswered. Anyone who wishes to ask a question may press star and one on their touch-tone telephone.
Speaker #2: If you wish to remove yourself from the question queue, you may press star two. Participants are requested to use their handsets while asking a question.
Speaker #2: Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants who wish to ask a question, please press star then one.
Speaker #2: Participants who wish to ask a question, please press star one. Participants, a reminder: if you wish to ask a question, please press star one.
Speaker #2: Participants, if you wish to ask a question, please press star one. We will take the first question from the line of Sapna Devi from Renaissance Investment Managers.
Operator 2: Participants, if you wish to ask a question, please press star and one. We take the first question from the line of Sapna Devi from Renaissance Investment Managers. Please go ahead.
Speaker #2: Please go ahead.
Speaker #5: Hi, good afternoon. I have three questions. The first is related to market share. Has the market share strengthened? Have there been any market share gains or dips?
Sapna Devi: Hi, good afternoon. I have three questions. One is related to the market share. How has the market share trended this quarter? Have you seen any market share gains or dips? What's the long-term revenue growth guidance? Have you taken any price hikes considering the commodity inflation? How much of the price hike has been passed on to the customers vis-à-vis how much is yet to be passed on? How much of the price hike has passed through as reflected in the margins this quarter? Question two would be, what is the steady-state margin guidance you are expecting?
Speaker #5: And what's the long-term revenue growth guidance? And have we taken any price hikes, considering the commodity inflation? How much of the price hike has been passed on to the customers with the risk?
Speaker #5: How much is yet to be passed on? And how much of the price hike has passed through and is reflected in the margins this quarter?
Speaker #5: And what is question two? It would be: What is the steady-state margin guidance we are expecting?
Speaker #4: Yes, madam. Market share, as far as market share is concerned, there's no change during the quarter. Because the whole industry was facing this raw material availability issue and the higher input cost to across the granule, as well as a few other inputs.
N.K. Dujari: Yes, madam. As far as market share is concerned, there is no change during the quarter because the whole industry was facing this raw material availability issue and higher input costs across the granular as well as a few other inputs. As far as price hike is concerned, we could pass on around 50% of the price hike to the clay, but we have not passed on the entire increase, and we don't intend to do that also immediately. We have to take a call after observing the market raw material price scenario for another quarter. Probably we will take a call whether we go for another price hike or not. As far as the current situation is concerned, the raw material prices have come down, and we don't expect any further. We feel the worst is behind us, but still, the future is always uncertain.
Speaker #4: Regarding the price hike, we were able to pass on around 50% of the increase to the trade. However, we have not passed on the entire increase.
Speaker #4: And we don't intend to do that immediately, either. We have to take a call after observing the market raw material price scenario for another quarter.
Speaker #4: Then probably we will take a call on whether we go for another price hike or not. But as far as the current situation is concerned, the raw material prices have come down.
Speaker #4: And we don't expect any further—we feel the worst is behind us. But still, the future is always uncertain, so we will take a call maybe in another few months regarding what is the scenario on the raw materials front.
N.K. Dujari: We will take a call maybe in another few months, what is the scenario on the raw material front. As far as margin guidance and overall guidance is concerned, since the situation is quite volatile, we would like to wait for a few months. Maybe in the Q2 call, if we have some better visibility, we will be sharing something on that in the Q2 concall. Right now, the situation is very volatile, so it is better to be prudent and just take the matter as it comes in the future. I hope I have not left out any question from your end.
Speaker #4: As far as margin guidance and overall guidance is concerned, since the situation is quite volatile, we would like to wait for a few months—maybe in the second quarter call, if we have some better visibility, we will be sharing something on that in the second quarter concall.
Speaker #4: Right now, the situation is very volatile, so it is better to be prudent and just take the matter as it comes in the future.
Speaker #4: I hope I have not left out any questions from your end.
Speaker #5: Yeah, I think that briefly answers my question. Thank you so much.
Sapna Devi: Yeah, I think that completely answers my questions. Thank you so much.
Speaker #4: Okay. Thank you, ma'am.
N.K. Dujari: Okay. Thank you, ma'am.
Speaker #2: Thank you. Participants who wish to ask a question, please press star one. A reminder: if you wish to ask a question, please press star one.
Operator 2: Thank you. Participants who wish to ask a question, please press star and one. A reminder, if you wish to ask a question, please press star and one. As there are no further questions from the participants, I now hand the conference over to Mr. N.K. Dujari for his closing comments.
Speaker #2: As there are no further questions from the participants, I now hand the conference over to Mr. N.K. Dujari for his closing comments.
Speaker #4: Thank you for joining us today. As we navigate an evolving global environment, we remain committed to building a stronger, more resilient business and creating sustainable, long-term value for all our stakeholders.
N.K. Dujari: Thank you for joining us today. As we navigate an evolving global environment, we remain committed to building a stronger, more resilient business and creating sustainable long-term value for all our stakeholders. Thank you. Thank you very much.
Speaker #4: Thank you. Thank you very much.
Sanjeev Sancheti: Thanks. Thanks a lot.
Speaker #6: Fine. Thanks a lot. Thanks a lot.
Operator 2: Thank you, sir. On behalf of SKP Securities Limited, that concludes this conference call. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.
Speaker #2: Thank you, sir. On behalf of SKP Securities Limited, that concludes this conference call. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.
