EVEREADY - Eveready Industries India Ltd. Share Price

Management's outlook for Eveready Industries India Limited reflects confidence in sustainable growth and strategic positioning. For Q2 FY26, the company reported revenue growth of 6.7%, supported by stable gross margins across segments, leading to an EBITDA margin of 12.7%. The management highlighted resilient consumer demand, especially in rural areas due to a good monsoon and improvements in agricultural indicators.

Key forward-looking points include:

1. Market Growth: Management expects continued growth momentum, with battery segment sales projected to benefit from stable demand, particularly for the alkaline battery line. The Ultima range achieved a market share increase to 16.3%, up from 15.3% in Q1.

2. Capacity Expansion: The Jammu greenfield facility is scheduled for completion by the end of FY26, enhancing production capabilities to meet rising alkaline battery demand.

3. Strategic Investments: Advertising and promotional expenditure, over 10% for the quarter, will support brand visibility, particularly around key events like the T20 Asia Cup.

4. Innovation Focus: The company is committed to a strong innovation pipeline in flashlights and lighting to maintain market leadership across segments.

5. Operational Efficiency: The management has undertaken steps to improve operational efficiency, including a strategic separation of 150 workers in Noida, with long-term financial benefits expected.

6. Forward Guidance: Expecting H2 FY26 performance to align with H1, management targets a revenue growth of around 6-7% year-on-year for the second half of the fiscal year while maintaining operational stability.

7. Financial Health: With a debt-equity ratio around 0.7, the company emphasizes internal funding capabilities to support growth moving forward.

Management remains optimistic that strategic rationalization of operations and a focus on innovation will continue to enhance shareholder value while navigating potential market challenges.

Question and Answer Summary from the Earnings Call Transcript

1. Question by Arnav Sakhuja:
"Are we expecting any more payments for the ex-gratia nonrecurring payment in the next couple of quarters?"

Answer:
Currently, we do not foresee any additional payments coming up in the next two quarters. However, we remain open to opportunities that might arise, yet there is nothing on our agenda at this moment.

2. Question by Arnav Sakhuja:
"Could you provide more detail about the ex-gratia payment?"

Answer:
The payment pertains to realigning our workforce due to changes in demand and the upcoming alkaline factory. We separated 150 workers at the Noida facility for efficiency, which is part of our cost-optimization strategy.

3. Question by Vikas Shrivastav:
"Is the Noida factory still operational after reducing the workforce?"

Answer:
Yes, the Noida factory remains operational. We're in the process of consolidating manufacturing and have made adjustments based on our operational efficiency strategy.

4. Question by Vikas Shrivastav:
"Can we expect a double-digit revenue growth in the coming year?"

Answer:
We aim for steady growth around 6-7% in the second half, considering current market conditions and the impact of the GST adjustments. Hopeful trends indicate that we can reach or exceed these benchmarks.

5. Question by Bhargav:
"What's the expected capacity utilization for the new alkaline factory?"

Answer:
Our new Jammu facility is designed to operate at 360 million capacity. We anticipate significant growth in the next fiscal year, especially as we've seen a strong upward trend in the alkaline battery segment.

6. Question by Bhargav:
"Will alkaline margins eventually match carbon zinc margins?"

Answer:
Currently, alkaline margins are lower, but we anticipate improvement through local production and increased market penetration over the next 2-3 years.

7. Question by Slade Alexander:
"How will you manage rising costs against revenue growth?"

Answer:
We will tactically manage rising costs by considering price adjustments in light of substantial cost increases in raw materials. However, we will maintain competitive pricing where necessary to avoid market share loss.

8. Question by Vipul Shah:
"What benefits does the non-executive director bring to Eveready?"

Answer:
The director provides valuable insights and market understanding that have been instrumental to our strategic direction. This guidance has proven useful, particularly as we navigate operational changes post-takeover.

9. Question by Mithun Aswath:
"Will Eveready consider entering new product categories post-capital constraint relief?"

Answer:
Yes, we're exploring opportunities in complementary categories that leverage our brand strength. We plan to pilot these new products over the next year without compromising our core business.

10. Question by Saket Kapoor:
"What's the timeline for commissioning the Jammu factory?"

Answer:
We expect the factory to be fully commissioned by the end of the current financial year as we continue to closely monitor progress and necessary approvals.

This summary captures major questions and responses from the earnings call, providing insights into the company's outlook and strategies moving forward.