EVEREADY - Eveready Industries India Ltd. Share Price

Management provided a cautiously optimistic outlook for FY26, emphasizing several forward-looking points. They expect a continuation of mid to high single-digit growth seen in Q3 and Q4 of FY25, supported by the positive effects of a strong monsoon leading to improved rural spending.

Key numbers and targets include:

1. A targeted 20% market share in the Alkaline Battery segment by the end of FY26, up from the current 14%.
2. Revenue growth anticipated during FY25, with both EBITDA and PAT reported to have improved by 8.6% and 23.5% respectively compared to the previous year.
3. The Jammu Greenfield Alkaline Battery plant is expected to commence operations by the end of FY26, with an anticipated cost reduction of 10% attributed to local production.
4. In terms of advertising and promotional expenses, management indicated that it will remain around 10% of sales for the upcoming fiscal year.

Additional highlights include:

• A steadfast gross margin retention strategy amidst fluctuating costs, with a goal to maintain margins within 100 bps of the previous year's levels.
• A focus on increasing cost efficiency through a completed route-to-market transformation, which management expects will enhance product availability and speed of delivery.
• Revenue from the Electrical Outlet Division has been pegged at approximately Rs.115 crore, with a growth target of 10%.

Overall, management stressed entering FY26 with clear priorities in place aimed at profitable growth across all segments, while preparing for long-term construction and refinement of product offerings.

Questions and Answers from the Earnings Transcript (Q4 FY25)

1. Q: What figure for A&P expenses can we expect going forward in FY26? A: I stated that A&P expenses will be around the same level as we had in the last year, which is approximately 10% of sales.

2. Q: In the alkaline segment, our market share has now reached 14%. Can we expect to capture more market share by FY26? A: Our internal target is to reach closer to 20% by the end of FY26.

3. Q: Regarding the Jammu plant, will the expected 10% cost reduction apply to all segments? A: The cost reduction will primarily benefit the battery segment, with a focus on optimizing costs across related products.

4. Q: Is there sustainability in flashlight growth, given the recent slower growth rates? A: Despite initial expectations, rural demand was sluggish. With new BIS certifications, we are confident this category will see improved growth levels.

5. Q: What is the current market size of the alkaline segment, and how long until we reach a 50%+ market share? A: The market size is approximately Rs.3,400 crore, with the alkaline segment at Rs.400 crore. Achieving a 50% market share could take another 3-4 years.

6. Q: What is the status of the 4th category of revenue? A: We've introduced adjacent products, like mosquito rackets, but haven't yet established a new Greenfield category.

7. Q: Can you share details on the route-to-market strategy and efficiency improvements? A: We revamped our distributor model to streamline operations, and while we faced challenges, we are now well-positioned to achieve our goals.

8. Q: What are the operating margins for FY25 across different segments? A: For FY25, operating margins were 15% for batteries, 8% for flashlights, and breakeven for lighting.

9. Q: What are the debt levels and interest costs expected going forward? A: Gross debt is around Rs.310 crore, with interest costs expected to remain consistent at approximately 8.7%-8.8%.

10. Q: What is the financial outlook for reaching Rs.1,800 crore revenue by FY27? A: We are optimistic about reaching this figure, contingent on overcoming recent value erosion and sustaining growth momentum.

Each answer stays within the character limit and captures essential details, including numbers and forward guidance provided in the responses.