Revenue
Margin
Demand
Guidance
Tone
Event Participants
Executives
2 Amit Gupta, Kamal Taneja
Analysts
9 Ajit Darda, Akshay Ajmera, Anushree Mandana, Gunit Singh, Hitesh Dhawa, Ketan (KB Investors), Naitik (NV Alpha Fund), Nathmal Modi, Shital Shah
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Net Sales | ₹723 crore | +23.1% YoY; H1 sales up ~12% YoY. Broad-based growth across domestic and export; roughly equal contribution from price, volume and product mix. |
| Volume Growth | High single digit YoY | Just short of double digit; balanced between domestic and exports. Growth came largely from existing customers; some customer inventory build-up due to Middle East crisis. |
| EBITDA | +55% YoY | Q2 margin improved to 10.5% from 8.3%; H1 margin also 10.5%, up ~200 bps YoY. Driven by portfolio mix, pricing and productivity offsetting commodity cost pressure. |
| EBIT | +71% YoY | Q2 EBIT margin at 8.5%, among highest in last five quarters. H1 EBIT margin impacted by one-time prior-period depreciation cross-charge of ₹8.8 crore; excluding this, H1 EBIT margin was 7.6% and H1 EBIT grew 37%. |
| Profit Before Tax | ₹55.9 crore (transcript states ₹559 crore) | +77% YoY; consistent with Q2 EPS growth of 77.3%. Finance cost grew only ~10% YoY. |
| EPS | H1: ₹9.18 per share | +36% YoY for H1; management called it one of the strongest H1 performances. |
| Cash & Investments | Bank balances ₹270 crore; liquid mutual funds ₹125 crore | Unutilized fund-based bank limits of ₹427 crore; cash generation supported by higher PBT. |
| Net Debt | Nil | Gross debt stable; includes intercompany borrowing which company plans to repay early. |
| Working Capital | Inventory and receivables higher in absolute terms | DSO and DSI broadly constant; higher inventory was a conscious call to avoid out-of-stock amid raw material and Middle East supply volatility. |
| Market Growth | 4%-5% | End-market growth remained robust but competitive; Middle East crisis disrupted supply chain and caused raw material cost variation. |
Geographic & Segment Commentary
- Domestic Market: Domestic net sales grew at roughly the same ~23% pace as exports. Growth was broad-based across customers rather than concentrated. Management noted faster-growing FMCG categories such as liquid and home care, plus a strong beverage season aided by delayed monsoon onset. Festival season is expected to support demand in coming months.
- Exports: Exports account for ~30% of sales volume and grew broadly in line with domestic. Company already supplies Southeast Asia, Africa, Europe and Americas. Import tariff/duty instability was an initial challenge but is showing signs of stabilizing.
- Product Segments – Blueloop and Sustainable Packaging: Blueloop adoption in customer products remains below 30%, though Blueloop-dedicated assets are >70% utilized for other products. The company continues to promote mono-material sustainable packaging; label plants use Forest Stewardship Council (FSC)-certified material. Innovation focus includes recycled plastic packaging and lightweighting.
Company-Specific & Strategic Commentary
- Profitable Growth Strategy: Management reiterated commitment to selective market participation, customer selection and disciplined capital allocation. The strategy is now delivering consistent results, reflected in 23% sales growth, 55% EBITDA growth and 71% EBIT growth in Q2.
- Sustainability & Safety: Total incident rate reduced 40% year-to-date. A captive solar power plant is coming online in Q3 CY2026 and will supply ~50% of Khopoli plant power. Decarbonization roadmap for Scope I/II commitments is on track; Taloja plant has implemented mechanical vapor recompression for full water recycling toward Zero Liquid Discharge.
- Capacity & Productivity: Productivity improvements over recent quarters have created enough headroom to support growth for at least the next two years. Capital expenditure is directed toward modernization and organic growth, not large inorganic acquisitions at present.
- Pricing & Raw Material Pass-Through: Pricing follows index-based or periodic review contracts with customers, with transparent sharing of inventory cost positions. Most raw material inflation from the Middle East/Asia crisis was passed on through pricing; increases and decreases are adjusted dynamically.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Top-line growth | No numeric target; expects to grow broadly in line with market | Management does not expect 23% growth every quarter; market growing at 4%-5%. Focus remains on profitable growth rather than volume at any cost. |
| Q3 volume trajectory | Clarity expected in Q3 CY2026 | Q2 benefited partly from customer inventory build-up in anticipation of price escalation; exact quantum unknown. Festive season may support demand; inventory normalization will be clearer next quarter. |
| Blueloop adoption | Below 30% of relevant product volume; asset utilisation >70% | Adoption expected to rise gradually as customer awareness and regulation evolve. Company believes investment is the right long-term bet; no timeline committed. |
| Capacity | Sufficient for next ~2 years | Productivity improvements plus modernization CapEx cover future growth; no exact utilisation disclosed due to competitive sensitivity. |
| Market outlook | Confident of near-term growth | Underlying market remains robust at 4%-5%; geopolitical and raw material challenges persist but are being managed through pricing and supply security. |
Risks & Constraints
| Risk | Context |
|---|---|
| Geopolitical / Middle East crisis | Caused significant supply chain disruption and raw material cost escalation during Q2. Management secured materials via scale and global relationships, but continued instability could pressure margins and working capital. |
| Raw material cost volatility and pass-through lag | Price changes are frequent; pass-through depends on contract terms and transparency. While most Q2 cost increases were recovered, future sudden spikes could temporarily compress margins. |
| Customer inventory destocking | Part of Q2 volume growth came from customers building inventory in anticipation of price hikes. If demand normalizes or customers destock, volumes could taper; Q3 will provide better visibility. |
| Export duty / tariff uncertainty | Export competitiveness was initially hurt by import duty instability; situation is stabilizing, but regulatory changes remain a potential risk to export growth. |
| Blueloop / sustainable packaging adoption | Adoption remains below 30% despite investment. If regulatory push and customer acceptance are slower than expected, ramp-up of the USPs could be delayed, though assets are being used for other products. |
Q&A Highlights
Volume Growth & Strategy
- Question: What was the exact volume growth and the split between domestic and exports? Are you going back on your earlier stance of sacrificing volume for profit? (Hitesh Dhawa)
- Answer: Volume growth was high single digit, just short of double digit; domestic and exports grew at almost the same rate. The company has not abandoned its profitable-growth principle; product/customer mix has now stabilized and growth is coming from customer intimacy, share of wallet, innovation and sustainable products. (Kamal Taneja)
EBITDA Margin Sustainability & Blueloop
- Question: Are the ~10% EBITDA margins sustainable? What changed versus last year, and is Blueloop contributing? (Gunit Singh)
- Answer: Management cannot commit to a fixed margin level due to external factors, but remains committed to profitable growth. Margin improvement came from portfolio mix, volume, pricing and offsetting commodity cost pressure. Blueloop adoption is still below 30%, but asset utilisation is above 70% as the same assets produce other products. (Kamal Taneja)
Land Monetization & M&A
- Question: Are there plans to monetize land assets such as Daman or Thane, and to acquire or merge Huhtamaki Foodservice Packaging India? (Ajit Darda)
- Answer: Management declined to comment on specific land assets beyond noting Thane was completed; future monetization would be disclosed in annual filings. Cash is deployed in market instruments generating benchmark-or-better returns; no specific inorganic acquisition plans are being announced. (Amit Gupta, Kamal Taneja)
Pricing Model and Raw Material Pass-Through
- Question: Is pricing based on maintaining EBITDA per kilogram or EBITDA margin? Is the pass-through complete? (Ketan, Anushree Mandana)
- Answer: Contracts are index-linked, reviewed monthly or quarterly; pricing adjustments work both ways. The company transparently shares inventory positions with customers and passes on increases/decreases when due. Pricing remains dynamic because raw material markets are still volatile. (Kamal Taneja)
Structural Volume Drivers & Exports
- Question: Why is volume growing despite a competitive market? Can India become a low-cost export hub? (Anushree Mandana, Ajit Darda)
- Answer: Large customers value Huhtamaki’s supply contingency, raw material security, scale and global footprint during crises. Home care is growing faster than food and beverages, and the beverage season was strong. The company already exports ~30% of volume to Southeast Asia, Africa, Europe and the Americas. (Kamal Taneja)
Working Capital, Inventory & Receivables
- Question: Inventory almost doubled and receivables are ~50% of six-month turnover. Is there a collection risk? (Nathmal Modi)
- Answer: Absolute increases reflect higher pricing and volumes; DSO and DSI are broadly unchanged. Higher inventory was a deliberate move to avoid out-of-stock during supply disruptions. There are no aging or realisation issues in receivables. (Amit Gupta)
Revenue Run-Rate & Capacity Utilisation
- Question: Should we assume a ₹750 crore quarterly revenue run-rate? What is capacity utilisation? (Gunit Singh, Akshay Ajmera)
- Answer: Management declined to guide on quarterly run-rate; growth depends on market growth, customer growth, product mix and raw material pass-through. Capacity utilisation is not disclosed, but productivity improvements over recent quarters provide enough headroom for growth for the next couple of years. (Kamal Taneja)
Blueloop Pricing & Realisation
- Question: How much higher is Blueloop realisation versus non-Blueloop products, and is the cost proportionately higher? (Naitik)
- Answer: Blueloop is a premium mono-material sustainable solution; production costs are higher due to capital investment, but selling prices are set to protect margins. Customer willingness to pay varies. Adoption remains below 30%, though curiosity and requests are rising. (Kamal Taneja)
Key Takeaway
Huhtamaki India delivered a robust Q2 CY2026, with net sales rising 23.1% YoY to ₹723 crore, supported by roughly equal contributions from price, volume and mix; volume grew high single digits. EBITDA grew 55% with margin expanding to 10.5% from 8.3%, while EBIT grew 71% to an 8.5% margin; PBT and EPS each grew ~77%. H1 sales rose ~12%, with EBITDA margin at 10.5% and H1 EPS at ₹9.18. Management attributed results to its profitable-growth strategy, selective participation, pricing discipline and productivity gains despite Middle East-driven supply and cost disruption. Balance sheet remains strong with bank balances of ₹270 crore, mutual funds of ₹125 crore and nil net debt. Blueloop adoption is still below 30%, though assets are >70% utilised for other products. Management expects the market to grow 4%-5%, does not expect 23% growth every quarter, and will get clearer read on customer inventory destocking in Q3 CY2026. Key watch points remain geopolitical volatility, raw material pass-through and export tariff stability.