EPL - EPL LIMITED Share Price

In their earnings call on May 14, 2026, the management of EPL Limited provided an optimistic outlook, highlighting a transformative proposed merger with Indovida, which aims to create a nearly $1 billion consumer packaging platform. This move will broaden their product portfolio, enhance manufacturing capabilities, and expand their presence in high-growth markets. Management indicated that this merger is expected to be margin and value accretive.

For Q4 FY26, EPL reported a 17.6% revenue growth, the highest in the last five years, with EBITDA growth at 17.2% and sustained margins above 20%. Notably, Beauty & Cosmetics led this momentum with a record 30% year-on-year growth, while Oral Care grew by 10%. The regional performance was robust: EAP and Americas grew by 25% and 24.1%, respectively; Europe saw a 15.5% increase; AMESA recorded 10.4% growth; and India achieved an 11.5% lift.

Looking ahead, management emphasized their commitment to sustaining growth in Beauty & Cosmetics, underpinned by investments in capacity and innovation. They have secured supply availability amid the ongoing Middle East crisis and expect no lag in recovering costs due to their contractual pass-through agreements, which cover nearly 50% of their business.

They maintained guidance for low double-digit revenue growth of 11% to 13% for FY27 while focusing on margin discipline. Key priorities include continuing to drive growth in emerging markets like Brazil and Thailand and enhancing capital efficiency. Management expressed confidence in achieving robust absolute EBITDA growth despite external challenges.

Question 1: "How prepared are we in this scenario? How should we see FY '27 playing out for us?"

Answer: "We've secured supply availability for our customers and are managing costs effectively. We're well-positioned with long-standing supplier relationships and over 50% of our business under contractual agreements allowing for pass-throughs. We're confident we can navigate current challenges and maintain our performance."

Question 2: "Is the pass-through for raw materials only, or does it include logistics and other costs?"

Answer: "Our model currently employs a landed cost plus power pass-through structure, which effectively encompasses all relevant cost factors, including raw materials, logistics, and more. This evolution has enhanced our ability to manage cost pressures."

Question 3: "Are we seeing any shortages in raw material availability?"

Answer: "While availability overall is a challenge, we've successfully secured supplies across all necessary raw materials. We're actively expanding our inventories and have the agility to manage inventory levels, allowing us to potentially gain market share during this difficult period."

Question 4: "For AMESA, why has revenue grown 10%, but EBITDA only 1%?"

Answer: "Despite the revenue growth, quarterly margins were impacted by two one-offs, including CEO transition-related costs. However, our structural margins are robust, making us optimistic about recovery and performance in FY27 as we continue to see growth in Beauty & Cosmetics and Oral Care."

Question 5: "Given the strong year for Beauty & Cosmetics, why haven't margins improved more?"

Answer: "While we achieved a 50 basis point margin expansion year-over-year, we also chose to invest in growth-related initiatives within Beauty & Cosmetics. Our focus remains on long-term growth, which necessitates upfront investments that may delay immediate margin improvements."

Question 6: "Can you quantify the amount of inflation we're facing?"

Answer: "Inflation has been volatile and varies by region. We remain confident that we will recover all additional costs arising from the current crisis, although it may result in temporary optical fluctuations in margins. As a result, we have to navigate these changes with agility."

Question 7: "What are our capital expenditure plans for FY27?"

Answer: "We're increasing capex primarily to support our Beauty & Cosmetics growth, having invested over INR 480 crores recently. While our long-term capex will align with depreciation, we'll continue to phase investments to capture market opportunities effectively."

Question 8: "Could we expect no dividends for about two financial years due to the merger?"

Answer: "Yes, the merger process restricts dividend declarations until it's completed, which we expect to finalize by Q4 FY27. After that, we will follow our Board's guidance on dividends."

Question 9: "Can you provide insights on Indovida's performance in the beverages category?"

Answer: "Currently, we can't share details about Indovida's beverages. However, post-merger, we're committed to providing updates on their business performance, which we anticipate will align with our growth strategy."

Question 10: "Will we look to enhance our balance sheet and pursue acquisitions post-merger?"

Answer: "Absolutely, we're actively exploring acquisition opportunities that align with our strategic objectives. Post-merger, our financial muscle will enable us to pursue growth-enhancing acquisitions that help strengthen our overall portfolio."