Metrics raised 1
- FY27 EBITDA per kg guidance raised to ₹44-45 (from ₹42-43 earlier)
Metrics cut 1
- FY27 capex guidance cut to ₹90 crores (from ₹130-135 crores)
Event Participants
Executives
1 J. Lakshmana Rao – Chairman and Managing Director
Analysts
14 Akhil Parekh (360 ONE Capital), Amit Kumar (Determinant Investments), Arnav Sakhuja (Ambit Capital), Bhargav Buddhadev (Ambit Asset Management), Chirag (Keynote Capitals), Devang Mayur Bhatt (Spark PWM), Dipak Saha (Ashika Institutional Equities), Divyansh (Trinetra Asset Managers), Dhruvin Doshi (NV Alpha), Kaushal Sharma (Equinox Capital Venture Private Limited), Raj Shah (Fident AMC), Shaurya Yadav (GrowthSphere Ventures), Shirish Pardeshi (Motilal Oswal), Sandeep Modi (Individual Investor)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹300+ crores | Crossed ₹300 crore milestone, partially driven by raw material price pass-through; 19% YoY value growth vs 6% volume growth |
| Volume Growth | +6% YoY | Tempered by 17% decline in lube segment; would have been ~9% excluding lube impact |
| EBITDA per kg | ₹46.7 | +12% YoY from ₹40.7 (FY26 avg); driven by Hyderabad consolidation (5→2 units), improved efficiencies, better capacity utilization, and favorable product mix |
| Paint Volume Growth | +10.8% YoY | Revenue growth 31% due to RM price pass-through; IML share rising, Asian Paints volume growth strong |
| Food & FMCG Volume Growth | +24.2% YoY | High value-add segment driving margin expansion; Qpack + Food ~28-29% of sales |
| Pharma Volume Growth | +38% YoY | Revenue growth 41%; lightweight containers limit volume contribution but high per-kg EBITDA |
| Lube Volume Growth | -17% YoY | Base oil unavailability for private players due to Iran war; segment ~17-20% of sales |
| Qpack Volume Growth | +2% YoY | Sharp deceleration from 20% last quarter; edible oil/cashew price sensitivity, some reversion to tin packaging |
| IML Share | 75.8% (tons), 77.8% (value) | Incremental IML adoption by Asian Paints (25-30% of pails) and spreading to smaller players |
| Gross Margin | 41.31% | Down from 46.60% QoQ due to RM price inflation (RM cost ₹130/kg vs ₹107/kg in Q4 FY26) |
| Finance Cost | +20% QoQ | Driven by higher working capital needs from RM cost inflation (WC ₹125 cr vs ₹110-112 cr end-Mar) |
| Working Capital | ₹125 crores | Up ₹16-18 crores from March; may stabilize/decline slightly as RM prices ease from peak |
| Capacity | 67,000 MTPA | Utilization ~75%, targeting 78-80%; 10-12% annual capacity addition planned |
| Capex (Q1 FY27) | ₹20-22 crores | Full year guidance ₹90 crores (down from ₹130-135 cr); includes ₹25-30 cr for pharma/medical devices |
| Raw Material Cost | ₹130/kg (Q1 avg) | Up from ₹107/kg in Q4 FY26; peaked at ₹155-160/kg in Mar-Apr; currently ₹145-146/kg |
| Inventory Gains | ₹1-1.5/kg | Modest benefit from RM price increase on existing inventory |
| Pharma Revenue (Quarterly) | ₹11-12 crores | Projected to reach ₹14-15 crores by Q4; full year target ₹50-55 crores (vs ₹34 cr FY26) |
Geographic & Segment Commentary
Paints: 10.8% volume growth, 31% revenue growth driven by RM pass-through. IML share rising (Asian Paints at 25-30% of pails, Aditya Birla >25%). Management guides 10-15% volume growth for full year. No new client additions – growth from existing top brands. Segment share to decline from 50% volume to ~40% in 3-4 years as pharma/food grow faster.
Food & FMCG: 24.2% volume growth, driven by thin-wall and Qpack. Qpack grew only 2% due to edible oil/cashew price sensitivity and freight costs; some customers reverted to tin. North expansion (Panipat, Cheyyar) adding Qpack capacity – expecting double-digit Qpack growth in coming quarters. Food & FMCG targeted at 18-20% CAGR.
Pharma: 38% volume growth, 41% revenue growth. Current quarterly run-rate ₹11-12 crores, targeting ₹50-55 crores full year (50% YoY). Product portfolio: bottles, caps, EV tubes, effervescent tubes, canisters. Ophthalmic range: trial molds done, commercial molds in 5-6 months, launch early next calendar year. 20+ active pharma clients, 10 more scheduled for visits.
Lubes: 17% volume decline due to base oil supply disruption for private players (Iran war dependency). Segment contributes 17-20% of sales. Clients making alternative arrangements – recovery expected in Q2. EBITDA contribution ~₹35-40/kg.
Vibe (JV): 3 products patented, 6 components in pilot stage. Commercial production expected Q3 FY27, few crores revenue in Q4. High value-add (EBITDA ≥ pharma). Partner contributing $50k to mold costs. Decent scale expected FY28.
Company-Specific & Strategic Commentary
Hyderabad Consolidation: Reduced from 5 to 2 units (Sultanpur printing under one roof). Permanent overhead reduction (power, supervisory staff), eliminated inter-unit transfers, lowered rejection/wastage in printing. Primary driver of EBITDA per kg improvement from ₹40.7 to ₹46.7.
Automation & Lean Manufacturing: Team planning China visit to study lean manufacturing at partner facilities. Implementation expected in next couple of quarters to further reduce manpower, improve accuracy, reduce rejection rates.
Medical Devices Expansion: Dosing pens (semaglutide, diabetes) – exploring IP partnerships to cut development from 2-3 years to 1 year. Minimum 1M pens/month capacity, ₹25-30 cr initial investment (land + machinery). EBITDA/kg estimated 2x pharma (₹150-200). Semiconductor trays – longer horizon, high-end accuracy/temperature requirements, seeking technology partner.
North India Capacity Utilization: Panipat: thin-wall test marketing successful (₹70L-1Cr/month), doubling from August for festive season. Qpack already ₹1-1.5Cr/month. Cheyyar: adding Qpack and paint molds for better fungibility. Target: utilize 75%→80% capacity.
Product Mix Shift: Paint share declining from 50% volume to ~40% in 3-4 years. Pharma targeting 40-50% CAGR, Food & FMCG 18-20% CAGR vs Paint 8-10%. EBITDA per kg becoming primary profitability metric over volume growth.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Volume Growth (FY27) | 10-12% | 10% minimum achievable; pharma/food growth offsets lube volatility; paint 10-15% |
| EBITDA per kg (FY27) | ₹44-45 | Surpassing earlier ₹42-43 target; consolidation benefits permanent, automation to add more |
| Paint Volume Growth (FY27) | 10-15% | Asian Paints momentum strong; IML adoption accelerating; war resolution could push to 15% |
| Pharma Revenue (FY27) | ₹50-55 crores | 50% YoY growth; quarterly run-rate ₹14-15 crores by Q4; 40-50% CAGR for 3-4 years |
| Food & FMCG CAGR | 18-20% | Structural shift to value-add packaging; North expansion supporting growth |
| Capex (FY27) | ₹90 crores | Down from ₹130-135 cr; ₹25-30 cr for pharma/medical devices, balance for maintenance/replacement |
| Capacity Addition | 10-12% annually | Focus on Cheyyar, Panipat, Mahad utilization; new land for medical devices |
| Working Capital | Stabilize/decline slightly | Currently ₹125 cr; RM prices off peak (₹145 vs ₹160); may ease 5-10% if geopolitics stable |
| Vibe Revenue | Few crores in Q4 FY27 | Commercial launch Q3; meaningful scale FY28 |
| Ophthalmic Launch | Early CY2027 | Trial molds done; commercial molds 5-6 months; 25,000 sq ft facility at Sultanpur completing in 6 months |
Risks & Constraints
| Risk | Context |
|---|---|
| Geopolitical/Raw Material Volatility | Iran war disrupted base oil supply (lube -17% volume); PP copolymer prices swung ₹107→₹160→₹145/kg; US Senate bill on Russian crude may add volatility. Availability currently adequate but pricing uncertain. |
| Lube Segment Concentration Risk | 17-20% of sales dependent on few private players' base oil procurement; single geopolitical event caused 17% volume drop. Recovery dependent on clients' alternative sourcing. |
| Qpack Price Sensitivity | Edible oil/cashew customers highly price-sensitive; 2% growth vs 20% prior quarter; some reversion to tin packaging when RM prices spike. North expansion may mitigate but structural sensitivity remains. |
| Medical Device Development Timeline | Dosing pens: 2-3 years if own IP, 1 year if IP partnership (not yet secured). Ophthalmic: 5-6 months for commercial molds. Semiconductor trays: multi-year horizon. High investment (₹25-30 cr minimum) before revenue. |
| Working Capital Pressure | RM cost inflation increased WC from ₹110→₹125 cr (+15%), driving 20% finance cost increase. Sustained high RM prices could keep WC elevated, pressuring ROCE. |
| Competitive Intensity in Qpack | Low switching costs for edible oil packagers; tin and alternative packaging compete on price. Mold-Tek's Square Pack differentiation tested during RM spikes. |
| Capacity Utilization Ceiling | At 75% utilization, further volume growth requires capex. 10-12% annual addition planned but execution risk exists. Medical device land separate from packaging capacity. |
Q&A Highlights
Volume Growth & Mix Shift
- Question: What is the ideal revenue mix beyond decorative paints over next