TCPL Packaging Limited (TCPLPACK) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the TCPL Packaging Limited Earnings Conference Call. As a reminder, all participant lines will remain in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal the operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I will now have a conference over to Ms. Jenny Rose from CDR India for opening remarks. Thank you. I'm over to you.

Good evening, everyone, and thank you for joining us on TCBL Packaging's Q4 and Q23 conference call. We have with us Kavshar and Udur Kanola, Executive Director, and Vivek Daveh, GM Finance of the company. We would like to begin the course brief opening remarks from the management, following which we will have a forum open for an interactive question and answer session. Before we start, I would like to point out that some statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the presentation shared with you earlier. I would now like to invite Rikish's opening remarks. Over to you, Akshay.

Good afternoon, everyone, and thank you for joining us today for TCPL Packaging Limited's Q4 FY26 Earnings Call. I will begin by taking you through our business highlights for the period under review, after which we will open the forum for a Q&A. FY26 was, of course, a challenging year for the industry, marked by a subdued global demand environment, continued volatility in international trade, and geopolitical disruptions in the Middle East during Q4. At the same time, domestic demand conditions remain relatively stable, supported by healthy consumption trends across key categories. In this environment, our domestic business performed well, with volume growth ahead of underlying consumer market growth trends in India. This helped mitigate softness in export markets, particularly in Q4 when shipments were affected by disruptions in the Middle East. During the year, we also made progress in strengthening our presence across other international markets and deepening global customer relationships, which should support improved export momentum as external conditions normalize. On the financial front, consolidated total income for Q4 26 stood at 465 crore, reflecting over 9% year-on-year growth. EBITDA, including other income, was 81 crore, translating to a margin of 17.4%. The inclusion of other income is primarily on account of operational forex gains arising from exports during the quarter. Cash profit for the quarter came in at 61 crore. For the full year, consolidated revenues reached approximately... 1,836 crore rupees, registering a growth of 3% year-on-year, while IPIDA stood at 317 crore rupees, with margins at 17.3%. Margin performance during this quarter was impacted by elevated RM costs and the timing lag in passing on cost inflation. We remain focused on calibrated pricing actions, product mix improvement, and operating efficiencies to support margin improvement over the coming quarter. Our flexible packaging business delivered a strong performance during the year with healthy capacity utilization across plants and the last commercialized line operating at optimal levels. In the paperboard segment, the Chennai Greenfield facility has scaled up nightly, supported by encouraging customer traction. The recently commissioned Gravure Cylinder facility at Silvasa has also ramped up well. Strengthening backward integration, improving operating efficiency, and supporting faster turnaround for customer requirements. From a balance sheet perspective, the company remains well positioned. On a consolidated basis, net debt stood at Rs.554.7 crore at the end of FY26, while leverage metrics remain comfortable with debt to equity at 0.77x and net debt to EBITDA at 1.75x. Importantly, our debt position is supported by the company's consistent operating performance, with EBITDA margins remaining within a stable range across several years. This provides us with the flexibility to invest in growth opportunities, operational capabilities, and sustainability initiatives, while maintaining prudent financial discipline. In line with our commitment to shareholder value and our consistent dividend philosophy, The Board has recommended a dividend of Rs.25 per share for FY26. This marks our 26th consecutive year of uninterrupted dividend payouts. During the year, we also made meaningful progress across innovation, sustainability, and people-focused initiatives. Innovation and customer centricity remain key differentiators for TCPS. And we continue to invest in advanced technologies and future-ready packaging capabilities to address evolving customer requirements across FMCG, food and beverage, pharmaceuticals, and consumer product sectors. On the sustainability front, DCPL was awarded EcoVad its Bronze Medal in its debut sustainability assessment, placing the company among the top 35% of companies assessed globally. We also formally became a participant of the UN Global Compact, reinforcing our commitment towards responsible business practices, ethical operations, and long-term sustainable growth. Our efforts during the year were also recognized through several industry accolades, as well as from several customers, such as Marico Industries, for industry-based practices. Six honours at the SIES SOP Star Awards, including the President's Award for Innovation and Sustainability, recognition as a most preferred workplace in the manufacturing category, as well as a Best Suppliers Award from our customer abort. Looking ahead, domestic demand conditions remain encouraging. Our focus is on expanding our footprint, broadening our product portfolio, and pursuing new growth opportunities across businesses. Our strong innovation and new product development capabilities enable us to deliver differentiated, value-added packaging solutions, while close customer collaboration helps us align these offerings with evolving market needs. Together with a strong balance sheet, prudent capital allocation, and continued investments in capabilities, we believe we are well positioned to drive healthy long-term growth and create sustained value for all stakeholders. With that, I would like to request the moderator to open the forum for any questions or suggestions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use their handsets while asking a question. One moment, please, while the question queue assembles. We take the first question from the client of Rohan Kale from INCRED Research. Please go ahead.

Yeah, hi team. A few questions from my end. One is on the exports. So throughout the year, it's been under pressure. In terms of your expectations for the coming year, where do you see things move on the export side? And in terms of regions other than let's say the Middle East, are we expecting any of the other regions to meaningfully scale up in this year? That would be my first question.

Thanks, Rohan. Yes, so obviously this last year has been one thing after another, and currently we are still going through the Middle East crisis. But of course, post the ceasefire, things have improved with some more vessel sailing and a little bit of improvement. But, you know, the situation is highly uncertain and very difficult. to have any outlook as such. So we play things by year and hope for the best. However, if it normalizes, then I think the bounce back will be quite quick. So overall, we are fairly optimistic, whether it is the Middle East or outside of the Middle East, I think overall exports, we are fairly optimistic this year for some recovery. And apart from the Middle East, we are scaling up now in other regions like the UK, the US, other North American countries, as well as other European countries, and also some of our neighboring countries, Africa, Southeast Asia. Yeah, so overall, you know, a lot of groundwork has been done in the last few years. We are seeing some benefit coming in.

Understood. And on the domestic side, in line with your, you have done double digits this quarter as well. Do you expect that this momentum can continue going into FY27 as well? Any color you can provide maybe on how you see the first half panning out?

Yeah, so this first half...

So we can't discuss, but I will say generally speaking, momentum is looking okay. And we have no problem as of now in terms of the demand. But obviously, you know, the cost impact or the impact on consumers from fuel price increases and rupee depreciation led other inflation will play out over coming quarters, which will... Certainly, I mean, have some impact on the demand, but as of now, we are seeing it to be okay. So, we do expect to have a good year for domestic as well.

Understood. And just a follow-up on the domestic side, I mean, if you could maybe call out an end industry, which maybe in the last two quarters, we've seen meaningful growth in on the domestic side, that would probably be helpful.

It's fairly broad-based, not anything specific as such, and it's very customer-to-customer, sort of, it varies. It's not industry-specific, I would say. There has been a lot of problem in the last few years with these seasonal products, because the seasons are very difficult to understand nowadays. Planning has become very tough, you know, with the climate change. We have unseasonal rainfall, then record-high heat spells, then again unseasonal rainfall. So, it becomes a bit challenging on the seasonal front, but like general purpose categories are doing.

Sure, just the last one from my end, in terms of margins, we would be now passing on price height, which probably in the last quarter we weren't able to fully do. Where do you see margin setting, maybe for the full year, if some outlook you could give, that would be the last one for me.

Yeah, so I think we are quite comfortable.

I don't think there's any serious pressure right now on the margin front because... We're passing through increases as they come. But if these cost increases keep happening over and this crisis gets prolonged, then it will be tough to further pass on any price increase. So we hope that this is where it ends. Then I think we'll be okay. But so far, it's okay. But we hope that this is where it ends. That's my point.

Sure. All right. Thanks. Thanks a lot.

Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and 1. We take the next question from the line of Vipul Shah from RW Equity. Please go ahead.

Hi, thanks for this opportunity. Hope and order, please.

There's some background noise.

Okay, is this better?

Yeah.

Thanks, Akshay. You know, first of all, congratulations on maintaining a very stable and solid profile in the quarter, considering the situation, you know, the world is facing because of the Middle East crisis. Just a couple of questions. First is, you know, our finance cost for the year is, you know, seems to be pretty high considering the debt position which the company, you know, has. So is there anything else to read into it? Because, you know, despite the EBITDA being, you know, showing a marginal growth this year, you know, The interest actually has taken it down, you know, for the PVD and then the PAC.

Yeah, so there was one MTM, 18 crore, which we had to mark to market the ECB. So that has driven the interest cost up. That is one of the reasons. But also the absolute debt. Has not gone down. That has grown. I mean, on a standalone basis, it's grown. On a console, it's come down marginally. But the absolute debt has not improved. So the absolute interest, therefore, is what it is. But on a ratio like debt to equity has improved.

I get the point. So what I just wanted to understand is that, you know, this ECB, which, you know, which came up last year as well, and in some of the earlier calls. So is the understanding that it is, you know, we don't have a complete hedge over that and hence we are exposed to the euro fluctuations?

More of an accounting issue because the profit that you get from export you don't see in the cost, but the loss that you have on the notional loss, not even cash loss, on the total debt that you take, that you have to market in the interest cost. So it's not a cash outgo.

Thank you.

And it's this year only.

Participants who wish to ask a question, please press star and 1. We take the next question from the line of Pawan Kumar from Ratna Triya Capital. Please go ahead.

Thanks for the opportunity. I had broadly three questions. One was regarding the margins. So, will we take a more calibrated approach going forward for RM price increase, or these will get adjusted in the next three months? Secondly, what would be the capacity utilization for the Chennai plant as of now? Lastly, some update on creative. How is it going on? How are we proceeding? I mean, what's the update on that operation?

On the margins, yeah, I mean, look, whatever we can pass through, immediately we are passing through. As and when these increases keep coming, you know, one can't have a... Running discussion with customers, sometimes you have to calibrate them over a period of time, so that is where one loses in an inflationary environment, but as long as it stops here, I think we'll be fine. It depends customer to customer. There's no rule of thumb. As far as the Chennai is concerned, we have more than 50% utilized now, and the outlook is quite positive, so we're quite okay. I mean, we have a lot of customer approvals that have just come through and expecting a good ramp up now. And as far as NOIDA is concerned, that's also done better this year, and we see further improvement in coming quarters. So it's steadily improving, slowly and steadily. Obviously, this current price impact on the raw material front is a challenge, and on top of that, the electronics industry is struggling because of the massive increase in the chip prices. So, you would have seen in the news that, you know, things like electronics volumes are falling. So, that is a headwind. But on the other hand, we've diversified into other areas of packaging. So, that was helping us. So, overall, it's doing fine, I'd say. Yeah, so I think I've answered it all.

Yeah, one particular thing I wanted to check, exports, they are under pressure, but have we run any new customers to which we can make up or grow going forward, creating new geography?

And we are quite bullish on several new geographies, and we have entered into several new customers, and we are also expanding further our export team. So, overall, we are quite positive, and we feel that long-term the export should grow. But obviously, there are so many mitigating factors which one cannot plan for, like these wars and all that. We don't know what the timeline is going to be. And every second week, you hear about a possible, you know, negotiated piece which collapses in two or three days after that. So, we have no real way to say what is going to happen. But overall, export is a bright spot for us, and we feel that long-term, it will keep growing.

Okay. Thanks, Akshay.

Thank you. Participants who wish to ask a question, please press star and one. We take the next question from the line of Vipul Shah from RW Liquidity. Please go ahead.

Sorry, you know, I got dropped off the call, so my apologies for that, you know, earlier. You know, it's... And one other question I had was, you know, this quarter and the year, there has been a huge delta in deferred tax, which again has brought our, you know, fat down because the tax expenses are pretty high. Any color you would like to provide on, you know, why is there such a high deferred tax?

It's a timing difference, mostly as in just annualize it and see.

Okay, because, you know, this is, again, one of the years where our, you know, optically, the EPS is far lower than what it was, you know, in the previous year, which hasn't happened too many times in TCPL's history.

I know, but, like, nowadays, these accounting rules are very unerous, and it is what it is. Overall, it will average out.

Is this primarily relating to the investment in Chennai and the Gravior facility?

Mr. Javi can answer.

See, the actual outgo of tax is rebating in the line. It is just like, I mean, for instance, we have to account as per accounting status. That's why the deferred tax is a little higher.

I understand that, Mr. Davai, and the question was that, was it related to, you know, primarily the timing difference, was it related to our investment in Chennai and the Graveo facility? Or, because otherwise...

It's a total capex, you can say, we have done during the year.

Fair enough. So, it's pertaining to capexes only, right? That's the tax depreciation and the accounting depreciation. Thank you. Thank you. One more question, Akshay. You know, we earlier used to, you know, give on an annual basis the breakup of domestic and exports. Last year also we skipped that. I had mentioned that on the call as well. This year also is the same thing. Is that something which can be provided? Even if it can be provided offline, I'll be fine.

Okay, we'll consider it.

Thank you.

Thank you.

Thank you. We take the next question from the line of Pawan Kumar from Ratna Trier Capital. Please go ahead.

If you can please talk on if there is any pickup on the recyclable side or are the customers still backing off? And on the creative side, I think we have been stuck for two to three years. So, is there any way, I mean, any attempts that are being made to actually scale this up to a profitable level? I understand we are, I guess, are at EBITDA break-even. Correct me if I am wrong.

Yeah, so let Vidur answer the recyclables.

Basically, in the recyclable films, unfortunately, in India and for the domestic market, there's not been too much of a pickup because the government-mandated EPR rules only designate the use of recycled content. They don't have any, you know, designated use of recyclable packaging. They focus more on collection and recycled content adoption, which is not the product line that we have invested for. In any case, our production of recyclable films is up because we use it in export jobs. So, there, you know, we even sell film, and we also do the final conversion, you know, including printing and providing the final solution. So, the requirement is up because of export, and there's good value addition there as a result as well. The domestic market, which is obviously the bulk business so far, they haven't adopted it because there's an upcharge associated and the government doesn't mandate the use of it as of now. So we hope that it will happen in the future, but as of now, until the government does mandate it, it will not pick up significantly. But overall, the investment has done well, and we had some machinery issues earlier which are resolved.

As far as creative is concerned, last year it just about squeaked through on the EBITDA front, but this year there was a little bit further improvement, and in coming year we feel that it will further improve, and hopefully we can come to cash and net profit as well, and then we can start getting some actual return. So, it is scaling up, but... The wins have been there, which one by one we are addressing, and we are diversifying customer base, so it's improving one further. So, we continue to be positive, but, you know,

it was a long slog, yeah.

Okay, and the case for this year, TASA 27, is it an outline? What are the plans as of now?

So, for the coming year, we have a capex, which we are doing in our flexible packaging business, because there we are running quite well utilized, and in the rest of the business, on the cart-in front, our utilization is a bit lower, maybe more like there is some good double-digit scope for further growth in the current capacity. So, we don't have any immediate, major plans, but we are enhancing our factory areas in some of our plants, you know, like we are expanding the building and all of that. So, we are keeping some scope for further expansion as the market further picks up and our volume.

Yeah, can we quantify it? Maybe, how much?

Yeah, sorry, that would be about, similar to last year, about 100 odd CR, I think, is the expectation. But, you know, again, like every year, we do have the capability to expand faster and further, as in when the market situation requires it. But, you know, we are being... It's a little calibrated in our capex this year, considering all the...

Okay. Thanks, sir.

Thank you. Thank you. We take the next question from the line of Heta Wora from Monarch AIF. Please go ahead.

Hello. Yeah, hi. Yeah, hi.

Sir, I just have two questions. I wanted to understand, considering, you know, there has been, you know, some slight demand slowdown in some of our existing segments that we cater to, like electronics, you know, some inflationary pressures are also rising. So, are we considering catering to any new segments within India, any new sectors, or do we plan to stick to our existing, you know, clientele?

And we are not... Thanks, Des Moines. There is demand. We are constantly on that job. We don't give specific detail about customers because obviously we are in a competitive environment. There's no use in shouting about all our customers to our competition. We add more than one or two customers almost every month, so that's a constant process.

Understood. And so, if we could give you some understanding of what would be the revenue split from folding cart in a segment?

Yeah, we don't provide much. Our major segment is the consumer product, which is... This is our video segment, which is...

I was asking about the folding carton revenue split. You have to split between folding carton and flexible. Thank you, everyone. Aspiration of how the split would shape up see in the next three years between folding and flexible?

No. No such aspiration. We just want each segment to grow at a good double-digit clip and to do the maximum. Who has passed? And the share then will be static, but... It doesn't matter as long as the company is growing.

And so just lastly, on the margin fund, I understand that FY27 could see some, you know, margin pressures because of certain factors that are beyond our control. Let's say for FY28, considering that Chennai's plant will be at higher utilization and also a gravier cylinder will be, you know, should be helping with cross-margin. Higher than the margin for FY28 if the geopolitical reasons were to not be a factor anymore?

I can't tell you what's going to happen in three months, so I'm not going to speculate about one and a half years down the line where anything can happen. As we've seen, who can imagine what can happen nowadays? So we don't have any guidance, but overall our margin scenario we feel is fairly... Okay, considering all the circumstances and all. Obviously, if circumstances are better and the utilization is better, the margin will improve. And if this war continues for another six months, one year, then God knows what's going to happen. But, you know, ideally, if everything is going well and the company is growing, obviously, the margins will be better. But then we'll also have new capex, which we'll be doing or some new projects. So we are not going to sit steady and just We don't enjoy having less capex to do, is my point. I mean, we want more capex and more pressure on the growth, so there is no... It's tough to give an outlook.

All right. Thanks so much.

Thank you. We take the next question from the line of Resham Jan from VVD Asset Managers. Please go ahead.

Hi. Hi, Akshay. Good afternoon. So, a couple of questions. So, first is, we have seen paper prices consistently going up. Last three, four months, there has been a consistent increase. Are you seeing any kind of momentum breaking or that the price is consistently still going up?

No, there is no momentum. So, it's still going up, and particularly on the virgin board side, there is a big increase, and even on the recycled board price, there is a steady drip of price increases happening. So, when there is a sudden increase of a very large magnitude, we find that it's better. But when there's a steady drip-by-drip increase, then it's more difficult because it's harder to pass through because you already negotiate and argue and you get the increase for the first increase and then by that time, then the second comes along. So that's the pain factor. So we are seeing further increase in the anvil, but obviously these things are completely dependent on the global scenario, which can change at any moment. So, we don't have an outlook as such, but yes, the pressure is still there.

And the anti-dumping duty on the board segment does lead to a higher increase in the domestic prices.

So, there's an anti-dumping duty, there's a minimum import price.

MIP, sorry, MIP.

MIP, so that is there, but that is going to expire in some time. Then, I don't know whether there's going to be a renewal. So, that does give the paper mills domestically some room for maneuver, but it's not like they are doing very well. I mean, they are also under a lot of cost pressure. So, I think some increase is inevitable.

Understood. The second question is, with respect to your overall capex, I think the last two years, we have done a very, like, good capex, 150 crore plus, three years actually now. And this year, you're riding for just 100 crore capex. So, I remember, like, in a period when your EBITDA was much lower, you used to do this kind of capex. So, if there's been any change in... The CapEx intensity or any thoughts around this would be excellent.

No, we are looking for more avenues and we would love to do more CapEx. So far, what we are telling you that we have planned is what is quite firm, you know, meaning there's not much downward. We have a lot of initiatives which we are planning, and as and when those get realized, then that will lead to further capex. So, we are certainly having the intention to do more, but right now, given the current demand scenario and all that, this is what is needed. So, as there is more need, we will do more capex. And it's more like a timing thing.

And the last one is with respect to the capexes which has been done and which you're planning to do this year, given that most of it is brownfield and more ramp-up will happen. Do you expect any operating leverage to play out, especially in flexible, given that one more line is getting added this year?

So, in flexible, it will take several months for this to get done and then get commercialized by the end of the year. That will be the fourth line in that unit. We don't expect that that capex will take too long. That comes in, then there will obviously be a good improvement. One, two quarters down the line, we should have even higher utilization, then it will further improve.

Okay, thanks and all the best.

Thank you.

Thank you. Participants who wish to ask a question, please press star and 1. As there are no further questions from the participants, I now have the conference over to the management for their closing comments.

I hope we've been able to answer all your questions. Should you need any further clarification or you'd like to know more about the company, please feel free to contact us or CDR India. Thank you again for taking the time to join us on this call. We look forward to interacting with you next quarter.

Thank you. On behalf of PCPL Packaging Limited, this concludes today's session. Thank you for joining us, and you may now disconnect your line.