EPL - EPL LIMITED Share Price

Management's outlook for EPL Limited is optimistic, reflecting a robust financial performance and strategic growth initiatives. For the first quarter of FY '26, the company reported a 10% increase in consolidated revenue, supported by a 55.8% rise in profit after tax (PAT) and an 18.1% growth in EBITDA, leading to an EBITDA margin expansion of 20.5%, up by 140 basis points year-on-year. Notably, the underlying earnings per share rose from INR 2.02 to INR 3.13.

Key forward-looking points include:

1. Continued Double-Digit Growth: Management is committed to maintaining double-digit revenue growth, driven by strong performances in the Beauty & Cosmetics segment, which saw a 35% year-on-year increase.

2. Regional Focus: The Americas and Europe have shown significant growth, at 13% and 15% respectively. However, AMESA's growth was modest at 1.7%, attributed to macroeconomic challenges. Management expects a recovery in oral care by the second half of the year, which should enhance AMESA's performance.

3. Sustainability Initiatives: The company aims to position sustainability as a key competitive differentiator. It reports that sustainable tube formats accounted for 38% of total sales, supported by innovation and partnerships with customers to develop recyclable formats.

4. Expansion Plans: EPL is investing in high-growth markets, with the Brazil capacity expansion already exceeding expectations and the Thailand greenfield project on track to contribute in the latter half of the year.

5. Investment Discipline: The company will maintain strict capital allocation discipline, focusing on reducing debt and improving capital efficiency. The net debt-to-EBITDA ratio stands at 0.45, providing flexibility for future growth investments.

6. M&A Strategy: EPL is considering strategic acquisitions in the Beauty & Cosmetics sector to enhance market presence, citing readiness to leverage its balance sheet for medium-sized or larger targets.

Management remains confident about capitalizing on market opportunities and delivering long-term value to stakeholders through strategic execution.

Q&A Section of EPL Limited Q1 FY '26 Conference Call

Q1: What are the factors contributing to the weakness in AMESA and when do you expect recovery? Anand Kripalu: While we have noted some softness in oral care volumes, tube revenue in India remains robust. Our beauty and cosmetics segment has shown accelerated momentum, helping to offset oral care challenges. We are seeing initial signs of recovery in oral care, and we expect AMESA's growth to improve as those volumes bounce back in H2.

Q2: Can you provide guidance on the tax rate for the full year? Deepak Goyal: We expect the tax rate to remain in the 18%-20% range, but it may fluctuate based on the geographic mix of profits. This could lead to a slightly lower effective rate in the current year compared to the steady-state range.

Q3: What is driving the recent strong growth in personal care? Is this sustainable for the next 12 months? Anand Kripalu: We've implemented aggressive customer acquisition and innovative products like Neo-seam. Improved backend capacity and efforts in M&A in beauty and cosmetics support our confidence in sustaining this growth trajectory beyond the recent quarter's 35% increase.

Q4: Can you elaborate on the growth drivers in Europe? Anand Kripalu: Significant structural changes and investments in sales resources have led to our improved performance. We've also enhanced our profit structure, which has allowed us to seize market opportunities that we previously couldn't capitalize on.

Q5: Can you discuss the topline and EBITDA guidance? Anand Kripalu: Our ambition is to deliver double-digit revenue growth, with EBITDA and PAT growing at a faster rate than revenue. Long-term trends in oral care support our confidence, alongside our performance in beauty and cosmetics.

Q6: What is the vision regarding Indorama's strategic investment? Anand Kripalu: Indorama's role is to support long-term growth. They've already helped expedite our Thailand project. While I can't comment on future stake increases, their investment is aimed at fostering sustainable value creation.

Q7: What is the current utilization level of the Brazil facility and its revenue contribution? Anand Kripalu: Our Brazil facility has been operating at high utilization, leading us to double our capacity in beauty and cosmetics, significantly enhancing our overall performance in this segment.

Q8: What will be the contribution from the Thailand capacity once it ramps up? Anand Kripalu: We're not providing specific numbers yet, but we aim to start small and accelerate quickly, leveraging the strong pipeline in beauty and cosmetics to increase contributions over time.

Q9: What is the capex for the Thailand facility? Anand Kripalu: We're initiating our Thailand operations with approximately $5 million in capex within a leased facility. Our strategy is to scale quickly as business demands increase.

Q10: Are there plans for significant capex in geographies other than Brazil and Thailand? Deepak Goyal: Our capex typically matches depreciation, aimed at supporting ongoing volume growth. While Brazil and Thailand are highlighted, we are also increasing capacity across our other global facilities as needed.