EPL - EPL LIMITED Share Price

Management's outlook for EPL Limited indicates a positive trajectory based on recent performance and strategic initiatives. In Q4 FY '25, the company reported a revenue growth of 7.4%, with EBITDA expanding by 17.7% and PAT rising by 42.4%. Full-year results showed revenue growth of 7.6% and an underlying PAT increase of 44.6%. The EBITDA margin expanded by 169 basis points, reaching over 20%, driven primarily by operational efficiencies and an improved product mix.

Key forward-looking points highlighted by management include:

1. Beauty & Cosmetics Growth: The segment is expected to continue its momentum, with new customer wins across geographies and selective investments in extruded tubes. The company aims to achieve strong double-digit growth, leveraging capabilities in sustainability and innovation.

2. Expansion in High Growth Markets: Capacity expansion in Brazil is expected to add 40 million tubes annually. The Greenfield project in Thailand is progressing, with a contribution expected from the second half of FY '26.

3. Sustainability: EPL plans to increase the sustainable tube mix, which currently stands at 33%, up from 21% last year. This is anticipated to strengthen competitiveness among large global brands focused on ESG.

4. Margin Expansion: Continued focus on improving margins through cost optimization in Europe and the Americas, with expectations to deliver EBITDA growth ahead of revenue growth.

Management also noted that the EPS improved from Rs. 7.88 in FY '24 to Rs. 11.38 in FY '25, reinforcing their commitment to provide value to shareholders. Therefore, EPL Limited's strategy centers on driving growth across its categories, particularly in Beauty & Cosmetics, while focusing on sustainability and efficiency improvements to achieve long-term financial objectives.

1. Question: "In Brazil and Thailand Greenfield expansion, what is the total capacity addition this expansion will lead to as a company?"
Answer: "In Brazil, we are adding capacity for Beauty & Cosmetics, specifically about 40 million tubes a year. For Thailand, we plan to start small, establishing our factory on the ground. While it will positively impact our H2 numbers, we expect to expand quickly as we receive more customer orders from a healthy pipeline."

2. Question: "What was the underlying growth in India excluding laminates?"
Answer: "We do not split the numbers, but I want to clarify we materially trimmed our inventory, which positively impacted our working capital. The tube revenue growth was decent, reflecting the core of our business."

3. Question: "Is the tube revenue growth in India mid-single digit?"
Answer: "Yes, it's in the mid-to-high single digits. While the overall growth fluctuated, our tube revenue growth remained strong."

4. Question: "Any specific reason for the drop in EBIT margin in EAP?"
Answer: "EAP's fiscal Q4 traditionally has soft margins due to the Chinese New Year. It's better to evaluate the business on a year-on-year basis rather than quarter-on-quarter for accurate insights."

5. Question: "What gives confidence for double-digit EBITDA growth next year?"
Answer: "We still see margin improvement potential in various geographies. Beauty & Cosmetics growth is crucial; we expect to achieve mid-to-high teens growth there, driving our blended growth into the double digits."

6. Question: "What is your CAPEX guidance for FY '26?"
Answer: "We're looking at a CAPEX similar to the previous years, around Rs. 360-Rs. 380 crore, which is vital to fund our double-digit growth ambitions."

7. Question: "How are US tariffs impacting competitiveness, especially for laminates from India and China?"
Answer: "We believe we will maintain competitiveness due to our local production in the US and contractual pass-through mechanisms with customers. Most of our laminate sourcing already occurs from India."

8. Question: "Will intercompany laminates affect future margins?"
Answer: "It's misleading to view this as a long-term trend; quarterly variations due to inventory adjustments shouldn't overshadow the overall stable business fundamentals, which are positioned for margin recovery."

9. Question: "What is the expected tax rate for FY '26?"
Answer: "Our tax rate has been lower this year due to favorable conditions in Poland and higher technology benefits from China. We expect a steady-state tax rate around 18%-22% moving forward."

10. Question: "How is your raw material cost basket shaping up?"
Answer: "Raw material costs remain stable, with key commodities remaining range-bound. We have long-term agreements with major producers, ensuring supply continuity and optimal pricing."