TCPL Packaging Ltd Q1 FY27 Earnings Call Summary

Event Participants

Executives

4 Saket Kanoria, Akshay Kanoria, Vidur Kanoria, Vivek Dawe

Analysts

12 Darshita (DSP Asset Managers), Danish Mistry (Eternity Investment Management LLP), Bhavish (Givi Investment Advisors), Heta Vora (Monarch AIF), J. Shroff (CAS Capital), Nishant Bagrecha (InCred Research), Nitesh Rege (Chris Capital), Pawan Kumar (Ratna Traya Capital), Pulkit Singhal (Kalmus Capital Management), Raman KV (Sequent Investments), Richa Agarwal (Equity Master), Rohan Kalle (InCred Capital)

Financials & KPIs

Geographic & Segment Commentary

• Folding Cartons (Domestic): Grew at a good double-digit clip with both volume and value contributing; utilization at ~70%+ with some plants capacity-constrained, room to add capacity in 1–1.5 quarters at Chennai.
• Flexible Packaging: Strong growth, fastest-growing segment; existing facility fully utilized; new high-speed line (approximately 30% capacity addition, ₹50–60 crores capex) expected operational by January–February 2027.
• Exports: Steady YoY growth but slower than domestic; last year's Q1 was a weak base; remains cautious on near-term global environment; UK/EU FTA sentiment positive for sourcing from India; exporters seeing shift in customer preference toward India.
• Battery Separator Film (New Venture): Proposed entry via subsidiary; Phase 1 investment ₹125 crores; 70 mn sq m p.a. capacity (6–8 GWh equivalent); commercial production targeted Q4 FY28; long-term scale plan of 500 mn sq m p.a. (50 GWh).

Company-Specific & Strategic Commentary

• Battery Separator Film Entry: TCPL announced entry into the lithium-ion battery separator value chain through a subsidiary. Investment ~₹125 crores over 18 months; Phase 1 capacity 70 mn sq m p.a.; phased approach—coating/conversion first, backward integration into base film later depending on demand. Technology being developed in-house via R&D; no external tech transfer. Phase 1 revenue potential ₹150–200 crores; full-scale potential ~₹1,200–1,300 crores. Management sees strategic fit with existing polymer processing and precision manufacturing capabilities; returns expected to exceed existing business thresholds (management cited ROCE threshold of ~20%).
• Flexible Packaging Capacity Expansion: New high-speed line adding ~30% capacity, ₹50–60 crores capex; operational by January–February 2027; will cater to existing and new customers in same sectors.
• Monolayer Recyclable Packaging (BOPP films): Technology now fully resolved; adoption by brand owners slower than initially expected due to margin/growth pressures and no regulatory mandate in India; positioned as differentiator with strong export demand for recyclable packaging; government mandate expected eventually.
• Packaging Remains Core: Management reiterated packaging is the principal investment focus; adjacent opportunities evaluated where existing capabilities provide a foundation.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Flexible Packaging Expansion

• Question: What capacity addition and capex for the new flexible packaging line? (Heta Vora, Monarch AIF)
• Answer: Approximately 30% capacity increase with ₹50–60 crores capex; existing flexible facility is fully utilized, line expected operational by Jan–Feb 2027. It will serve existing customers and target new clients in the same sectors. (Vidur Kanoria, Akshay Kanoria)

Battery Separator Entry – Rationale & Technology

• Question: How did you narrow down to battery separator film, and do you need a tech partner? (Heta Vora, Monarch AIF)
• Answer: Group evaluated opportunities over years, avoided commoditized BOPP/polyester films; battery separator fits the "value-added materials" philosophy. TCPL's track record of entering specialized businesses (tipping paper, shrink sleeves, inks) gives confidence. Technology is being developed in-house with own R&D, using internal competencies in polymer processing and precision manufacturing; no external tech transfer required. (Saket Kanoria, Akshay Kanoria)

Separator Margins & Returns

• Question: What asset turns and margins for the separator Phase 1? (Heta Vora, Monarch AIF; Raman KV, Sequent Investments)
• Answer: Land being bought upfront for future scale (500 mn sq m vision) distorts asset turn comparison; Phase 1 revenue potential ₹150–200 crores with good double-digit margins and double-digit ROIC; full scale could support ~₹1,200–1,300 crores. Returns expected to exceed existing business hurdle rates. (Saket Kanoria, Vidur Kanoria, Akshay Kanoria)

Interest Cost Decline

• Question: Was lower interest a function of lower debt? (Danish Mistry, Eternity Investment Management LLP)
• Answer: Prior-year same quarter had a one-time forex mark-to-market loss; current quarter reflects normalized cost. (Saket Kanoria, Akshay Kanoria)

Domestic vs Export Growth Profile

• Question: How was domestic growth and exports trending in terms of volume vs price? (Rohan Kalle, InCred Capital)
• Answer: Both domestic and export grew; domestic was much higher at good double-digit clip. Volume/value split favored value slightly; volumes were high single digit. Export was a normalization from a particularly weak base last year. (Akshay Kanoria)

Separator Qualification & Market Potential

• Question: What is the qualification timeline, and is there an export angle? (Rohan Kalle, InCred Capital)
• Answer: Separator qualification is faster than anode/cathode materials, but at least one year to scale up; FY29 will be occupied with qualification/testing before commercial supply. Primary focus is domestic cell manufacturers under the ACC ecosystem; exports possible later once proven. (Vidur Kanoria, Akshay Kanoria)

FY27 CapEx Breakdown

• Question: What is the non-separator CapEx for FY27 and FY28? (Pawan Kumar, Ratna Traya Capital)
• Answer: Packaging CapEx budget for FY27 is ~₹100 crores, with enabling investments for next year's expansion; separator land adds ~₹30–40 crores in FY27, with machinery spend mostly in FY28. FY28 CapEx expected to be at least similar, dependent on carton business. (Akshay Kanoria)

Margin Trajectory & Mix

• Question: How should we think about margins over 3–4 years as flexible packaging (lower-margin) grows? (Nishant Bagrecha, InCred Research)
• Answer: Flexible packaging has lower EBITDA margins but similar ROCE; mix so far has remained healthy with cartons also growing. No structural drag or uplift visible; margins should follow the top line. (Akshay Kanoria)

Separator Competitive Landscape

• Question: Who are the global and domestic players in the separator space? (Bhavish, Givi Investment Advisors)
• Answer: No domestic manufacturer of lithium-ion battery separators exists today; no announced plans either. Global market is fragmented, led by China, Korea, and Japan; China has many players, not dominated by 1–2 firms. (Akshay Kanoria, Vidur Kanoria)

Recyclable Packaging (Monolayer Film) Update

• Question: What is the status of the Enofilms mono-material recyclable packaging line? (J. Shroff, CAS Capital)
• Answer: Technology issues resolved; line is performing well and justifying the investment. Brand owners are not adopting as quickly as expected due to post-COVID margin/growth pressures and lack of regulatory mandate in India. Exports of recyclable packaging are growing; India adoption expected when regulations arrive. (Akshay Kanoria, Saket Kanoria, Vidur Kanoria)

PLI & Policy Support for Battery Materials

• Question: Will the separator subsidiary get PLI benefits? (Nitesh Rege, Chris Capital)
• Answer: PLI for battery materials has been discussed in media but not formalized; will evaluate when scheme is opened. (Akshay Kanoria) Separator project currently the only announced domestic lithium-ion separator capacity.

Chennai Plant Ramp-up

• Question: How is Chennai plant utilization trending, and will another line be added? (Darshita, DSP Asset Managers)
• Answer: Ramp-up on track, closer to ~70% utilization; management satisfied. Additional line can be added very quickly given space and infrastructure already in place; decision to be taken in coming months. (Akshay Kanoria)

Pan Masala Packaging Ban Impact

• Question: Does the pan masala plastic ban affect TCPL? (Richa Agarwal, Equity Master)
• Answer: Plastics were already banned for pan masala; latest notification targets other structural changes. TCPL is not a major supplier to the segment, so impact is marginal and short-term. (Saket Kanoria)

Key Takeaway

TCPL Packaging delivered a record Q1 FY27 with consolidated total income of ₹495 crores (+16% YoY), EBITDA of ₹88 crores (+17%, 18% margin), and PAT of ₹40 crores (+79% YoY, off a weak base due to prior-year forex losses). Growth was broad-based, led by domestic demand in folding cartons and a strongly performing flexible packaging business now at full utilization, prompting a 30% capacity expansion (₹50–60 crores, operational Jan–Feb 2027). The headline strategic move was the announcement of entry into lithium-ion battery separator films via a subsidiary with ~₹125 crores Phase 1 investment (70 mn sq m p.a., Q4 FY28 commercial production, ₹150–200 crores revenue potential) and a long-term 500 mn sq m vision (₹1,200–1,300 crores). Management maintained packaging remains the core focus, with FY27 CapEx of ₹100 crores for packaging. Near-term caution persists on global export environment and raw material pass-through lags, while separator qualification timelines (1 year) and PLI policy uncertainty remain key watch points.