EVEREADY - Eveready Industries India Ltd. Share Price

The management of Eveready Industries India Limited provided an optimistic outlook for FY '27, highlighting stronger visibility on demand recovery, improved operating discipline, and strategic investments. Key points from their outlook include:

1. Revenue Growth: The company experienced an 8.2% revenue growth in FY '26, driven by a 9.3% increase in the battery segment. Management anticipates continuing this growth trajectory in FY '27, particularly through the ramp-up of their new Jammu manufacturing facility, which has a projected capacity of 360 million alkaline batteries annually.

2. EBITDA Margins: For FY '26, the EBITDA margin was 11.5%, supported by disciplined cost management and pricing interventions amidst rising commodity costs. The management is optimistic about maintaining similar margins in FY '27 despite ongoing macroeconomic headwinds, particularly higher zinc prices.

3. Investment in Manufacturing: The newly commissioned Jammu facility, inaugurated on April 22, 2026, represents a strategic milestone, expected to enhance supply resilience and improve margin efficiencies as it ramps up production. The management targets over 100 million units produced in the first year from this facility.

4. Debt Management: The company successfully reduced its debt by over INR 100 crores in FY '26 and aims for further reductions in FY '27, utilizing proceeds from the sale of its Noida plant land to strengthen its balance sheet.

5. Market Positioning: Eveready is positioned to increase its market share in alkaline batteries from 16% to around 20% within the next year, capitalizing on a rapidly growing segment projected at over 20% CAGR.

Overall, the management conveyed confidence in navigating challenges posed by commodity volatility while pursuing sustainable growth and maintaining strong financial health.

Questions and Answers from the Q4 FY26 Earnings Call

Question: How well are we prepared with the rupee at INR94.5-95 levels and crude prices above $100? What's the outlook for EBITDA margins?
Answer: We faced significant volatility in currency and commodity prices in FY26. Our strategic hedging and procurement initiatives helped us navigate these challenges effectively. We expect to maintain EBITDA margins around 11.5% despite continued pressure. While the exact trajectory is uncertain, we remain vigilant and will adapt our pricing strategies as needed.

Question: Can you elaborate on the Jammu facility's contribution and the timeline for breaking even?
Answer: The Jammu plant is strategically vital for transitioning from imported to local alkaline battery production. We anticipate it will achieve operational breakeven within the first year. Full payback, however, is targeted in 5-6 years, as the plant ramps up production to meet the growing demand in the alkaline segment.

Question: How do you foresee alkaline and carbon zinc battery sales evolving over the next few years?
Answer: Alkaline batteries are experiencing an annual growth rate exceeding 20%, while carbon zinc is flattening. We estimate that alkaline could constitute 20-25% of our battery sales, leading to some cannibalization of zinc battery sales, but also higher overall market value due to alkalines' premium positioning.

Question: What are the adequate A&P expenses and how will they affect growth?
Answer: We maintain A&P expenses around 10% of sales, which we believe is vital for sustaining our growth trajectory. The efficiencies from initiatives like Bain & Co. have enhanced our market position, allowing us to navigate recent volatility successfully and drive consistent revenue and profit growth.

Question: Are there any tax incentives for the Jammu plant, and when do you expect approval?
Answer: We anticipate GST-linked incentives for the Jammu plant, but approvals are still pending. Once secured, they can significantly enhance operational efficiency and cost-effectiveness, supporting our overall funding strategy for capital projects.

Question: What is your market share target for alkaline batteries in the near future?
Answer: Currently, we hold approximately 16% market share in alkaline batteries, up from less than 10% last year. Our aim is to expand this to around 20% as we ramp up production from the Jammu facility and capitalise on growing demand.

Question: What are your plans for further debt reduction?
Answer: We successfully reduced debt by over INR100 crores in FY26 and plan to continue this trajectory. Our focus remains on utilizing proceeds from asset sales to further cut debt, enhancing our financial flexibility and funding future growth initiatives.

Question: Can you clarify your position on product pricing in light of recent cost increases?
Answer: We've already implemented price hikes in response to soaring costs, particularly in our battery segments. We monitor costs closely and may need to adjust prices again based on the inflationary landscape as we enter FY27.

Question: What factors could potentially impact urban demand in the future?
Answer: Urban demand is recovering, but geopolitical tensions could introduce uncertainty that might affect consumer sentiment. If conditions remain stable, we are optimistic about sustained growth in our sales.

These responses encapsulate key aspects of operational strategy, market insights, and fiscal outlook while addressing shareholder concerns for Eveready Industries.