TCPLPACK - TCPL Packaging Limited Share Price

Q&A Session Summary

Q1: "As per our estimates for the quarter, we would have done a high single-digit growth in the domestic business. How is it like panned out let us say, from October onwards, considering September would have been weak? Are you seeing, let us say higher orders from existing customers due to the GST-induced pack size changes?"

A1: "In October, there were disruptions with inventory corrections still happening. However, post-Diwali, demand has stabilized, though we lost the permanent sales opportunities associated with Diwali. Customer reactions varied based on individual product lines, leading to adaptations around GST changes that caused temporary disruptions."

Q2: "On the export side, the first half has broadly been subdued for us. Are you expecting it to recover in the second half and from your read of the situation, is it temporary? Are we confident of crossing the FY25 levels for the full year this year?"

A2: "We're cautious about forecasting near-term export trends, as several external factors are unclear. After strong years, a correction is occurring this year. If conditions improve, particularly tariff situations within the U.S., we hope to recover in the next quarter or two."

Q3: "In terms of our medium-term growth outlook, what would that be and which segments do you think would drive it? Would it come more from cartons or flexible packaging?"

A3: "While we don't provide specific numbers, we aspire for mid-double-digit growth, with both carton and flexible segments growing similarly. Flexibles have trended faster, but improving domestic demand should help cartons contribute better going forward."

Q4: "You mentioned that the revision in GST slabs led to some short-term recalibration. Could you quantify the impact of this transition in terms of volumes or value if possible?"

A4: "Quantifying this is complex due to varying customer reactions to GST changes. It resulted in opportunity losses, many customers are still adjusting, and the Diwali season loss complicates measuring the exact impact."

Q5: "Can you outline the capacity utilization within cartons and packaging films separately? Also, what is the reason for the higher financial expenses?"

A5: "Carton business utilization is about 70%, allowing for significant expansion without capex. We maintain bank borrowing rates between 8-9%. As top-line growth does not translate immediately, the interest portion rises slightly, but overall debt ratios remain manageable."

Q6: "Can you provide insight into how Innofilms and Creative Offset are performing?"

A6: "Innofilms is progressing well, especially with R&D on specialized products supporting flexible packaging growth. Creative Offset revenue is increasing but still below expectations; we're working on new customers and product lines for improvement."

Q7: "What capex do you foresee for this year and next?"

A7: "This year, we budgeted over INR 100 crore, focusing on land and building for future needs, along with commissioning a new cylinder factory. Just over half of this capex has been completed so far."

Q8: "Has the recent gross margin pressure affected the EBITDA margin significantly?"

A8: "The margin pressure is due to minor inventory fluctuations and slight raw material price increases but isn't significant. We expect margins to normalize in coming quarters, with no severe changes in operating conditions."

Q9: "Regarding the Chennai facility, can you update us on the ramp-up?"

A9: "The Chennai facility is progressing well with stable operations. We are transitioning to new customers, and full utilization is expected in the coming quarters; currently, utilization is around 40-50%."

This summary captures the key questions and detailed responses related to TCPL Packaging's performance and outlook discussed in the earnings call.