TCPLPACK - TCPL Packaging Limited Share Price

In the Q1 FY26 earnings conference call, TCPL Packaging Limited reported consolidated revenues of Rs. 424.7 crore, marking a year-on-year growth of nearly 5%. EBITDA for the quarter was Rs. 72.6 crore, resulting in a margin of 17.1%, which was slightly lower by 50 basis points compared to the previous year, driven by higher costs. The company also incurred a Rs. 10 crore loss due to forex mark-to-market adjustments on Euro-denominated loans.

Management highlighted the successful operationalization of its new greenfield manufacturing facility in Chennai, which is projected to be a key driver of future growth and regional penetration. They expressed confidence in their strategic agenda, focusing on enhancing operational efficiency, accelerating innovation, diversifying growth avenues, sustainability, and expanding both domestic and international markets.

For future guidance, the company aims to maintain a growth trajectory of mid-teens to high-teens in revenue over the next few years. They have been consistently achieving Rs. 100 crore to Rs. 150 crore in annual capex and maintain a stable debt ratio at around 1:1. The management remains cautiously optimistic about recovering export demand and anticipates an improvement in domestic demand, especially with the upcoming festive season.

Overall, management is confident in its ability to navigate macroeconomic challenges thanks to a robust balance sheet and ongoing strategic investments. They are exploring multiple new markets and may consider increasing leverage for attractive investment opportunities, indicating a proactive approach towards growth and innovation in the coming quarters.

Q&A Section Summary from TCPL Packaging Limited Q1 FY26 Earnings Conference Call

Question 1: "Can you talk on how the trend was this quarter, specifically in exports and where the weakness could have come from?"

Answer: We have seen some slack in exports recently, mainly due to economic factors affecting our end consumers. We don't anticipate any contraction as there are no fundamental issues. We believe this weakness is temporary, and demand is expected to return.

Question 2: "Is it fair to assume a mid-teen kind of growth in the domestic segment this quarter? Is it sustainable?"

Answer: Yes, domestic growth has been strong this quarter, and we see demand improving, especially with the upcoming festive season. There's room for further growth as domestic consumption levels are still below potential.

Question 3: "Do you expect any more lines this year at the Chennai facility, and will you add flexible packaging lines?"

Answer: For now, we don't foresee additional capital expenditure this year. We aim to fill the current line's capacity before considering new lines or diversifying into flexible packaging, as it requires significant scale.

Question 4: "Could you give some color on the volume and pricing split in terms of domestic demand?"

Answer: Our growth typically consists of a mix of volume and price increases. This quarter, we have seen encouraging volume growth, though we don't provide a specific split between the two.

Question 5: "What would be the value of the Euro-denominated loan on the balance sheet right now?"

Answer: We don't disclose exact breakups of our loans, but the Euro-denominated loan is relatively small compared to our overall loan book and represents a mark-to-market adjustment, not a cash outflow.

Question 6: "What is the broad, average logistics cost as a percentage of sales in India?"

Answer: Logistics costs can range from 2% for local deliveries to 5%-7% for longer distances. While cost is a factor, lead time and customer comfort are also significant considerations for us.

Question 7: "What percentage of the Chennai plant's capacity do you expect to fulfill by shifting from other plants?"

Answer: Most of the capacity will cater to new customers and existing customers in the region, with a minimal shift of around 10%-20% from other plants.

Question 8: "Could you share the capacity utilization percentage for this quarter?"

Answer: Our capacity utilization for this quarter stands at approximately 70%.

Question 9: "Could you provide specific details on growth in the Middle East segment?"

Answer: We cannot disclose specific sector details or margins, as our operations in the Middle East function primarily as a trading company for ease of transactions.