Rajshree Polypack Limited (RPPL) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Rajshree Polypac Ltd Q1 FY27 earnings conference call. As a reminder, all participants will be in the lesson-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 an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ramswarupthar. Chairman and Managing Director. Thank you, and over to you, sir.

Thank you, Yusuf. Good afternoon, and thank you for joining us for the earning call. We hope you all had a chance to go through our investor presentation uploaded on the stock exchange. We will share our key operating and financial highlights for the quarter ended June 30, 2026. Joining us from Rajshree Polypack is our CFO, Mr. Shumil Sharma, along with me. For Q1 FY27, we reported our highest ever quarterly revenue from operations of Rs. 102.91 crores, compared to Rs. 82.52 crores in the corresponding quarter last year, reflecting a growth of 24.72%. A leadoff for the quarter stood at Rs.16.52 growth compared to Rs.12.08 growth in quarter 1 FY26. Registering a growth of 36.75%. While EBITDA margins improved to 16.05% from 14.64%, profit after tax increased to Rs. 7.25 crore compared to Rs. 4.10 crore in the same quarter last year. Reflecting a growth of 76.83% with pet margins improving to 7.04%. From 4.97%. The improvement in our performance was supported by better product mix, higher operating efficiencies, and continued focus on execution. In terms of geographical sales, the domestic business witnessed a strong recovery with domestic revenue increasing. From Rs. 69.12 crores in Q1 FY26 to Rs. 91.19 crores in Q1 FY27. Export revenue remains stable at Rs. 11.72 crores despite the continuing geopolitical uncertainties across several international markets. We continue to work closely with our existing customers while expanding our presence across new geographies to further diversify our export business. Looking at the product-wise revenue mix, packaging products continue to remain the largest contributor to our revenues. The injection molding business continues to be an important growth driver for the company, supported by expanding customer application and increasing demand across domestic and export markets. During the quarter, we further strengthen our value-added offerings by expanding our sleeving capacity from 1,275 lakh unit per annum to 1,675 lakh unit per annum, enhancing our integrated packaging capabilities. On the capacity front, injection molding capacity reached 5,800 metric ton during the quarter following an addition of 1,000 metric ton. Representing a 5.8 time increase since FY23. Our manufacturing operations continue to operate at healthy utilization levels and in HP molding, we have capacities available to support future growth. We also continue to strengthen our integrated manufacturing platform across extrusion, thermoforming, printing, sleeving, and injection molding. On the sustainability front, I am pleased to share that we have entered into group captive wind-solar arrangement of approximately 1.9 megawatt, and it remains on track and is expected to be commissioned in October 2026. Once operational, the project is expected to meet nearly 30% of our energy requirements through renewable sources, while generating annual savings of around Rs. 1.75 crores. Coming to Olive with PicoPack, I am pleased to share that the business continued to make encouraging progress during the quarter. Olive reported a healthy EBITDA margin reflecting continued improvement in operating performance. We continue to expand our presence in paper-based food packaging solution while broadening our product portfolio and customer base, creating an additional growth platform alongside our rigid plastic packaging business. On the marketing front, we continue to strengthen customer engagement by participating in leading domestic and international exhibitions, including Interpac at Germany, NRA at Chicago, and AHAW at Delhi. These platforms continue to provide opportunities to deepen relationship with existing customers while engaging with prospective customers across global markets. Looking ahead, we remain focused on strengthening customer relationship, expanding our product portfolio, and investing in manufacturing capabilities, innovation, and sustainability. The continued scale-up of our injection molding business, the progress at OLLI-VecoPAC, and our ongoing investments in renewable energy provide a strong foundation for long-term growth. With that, I conclude the business update for the quarter. We would be now happy to take your question.

Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

First question is from the line of Abhijen from AJ Capital.

Please go ahead.

Good afternoon. Hope I'm modeling. Yes, please go ahead. My first question is, first of all, congratulations on a steady set of numbers, and it's good to see that the company is back on the growth trajectory post-flattish F-26, so congratulations on that.

So my first question is, I wanted to understand the margin

profile in your injection molding business versus your packaging business, because that is not explicitly mentioned anywhere in the presentation or in the test now.

So, injection molding business for quarter one has given us an EBITDA margin of 13 to 14 percent, whereas the packaging business gives a margin of around 16 to 17 percent.

So, packaging is a higher margin, isn't it? So, is that a predominant reason that between 25 and 26, after 25 and 26, I'm seeing that the revenue contribution from the IAM or injection mode has gone down from between 0.64% to 12.3% despite you ramping up the capacity of IAM? You're mentioning about quarter one? So, as I'm looking at your presentation, right? Yeah. In the presentation, I am on slide number 10. Okay. So, if I look at your revenue mix, right? If I look at Q1, that's why 26 and Q1, that's why 27. The ingestion mode revenue contribution has gone down from 15.6% to 12.3%.

Yeah, in this quarter, specifically injection molding has gone down in this particular quarter, because 60% of our sales from injection molding is from exports, and exports were disturbed in this particular quarter due to these geopolitical issues. So, that's the reason why we see a drop in... The contribution from injection molding is a segment, but this is temporary, probably in the next one or two quarters, it will come back to 15-16% less.

One good thing was that because of you entering in this injection mold business, you know, there are bigger players out there in the industry, in the listed space. And they have been able to grab a larger share of the market in packaging business by being in injection mold. So that's a good sign. It's a bit margin dilutive as compared to the packaging business. But I just wanted to understand, sir, how do you see your growth trajectory from here? Because, you know, you had a fantastic time between FI21 to FI24, and there was a consistent growth, and the business was growing. But in FI26, you know, that sort of became stagnant. But just from a long-term perspective, I want to understand, how do you see yourself growing? Because it's fairly at a, you're still at a very small scale, right? So growth shouldn't be a worry for you. Thank you, everyone, and welcome to the call.

See, packaging business overall, if you say, remains very strong, and it has been growing in India at a rapid pace, whether it is online delivery or QSR formats or the requirement for daily packaging, they are all growing in India, and with that growth, we definitely see a good opportunity for our company. We had mentioned in past that in the current setup, we can reach around 420-430 crores of revenue, and then going forward, we have also invested in a land in the eastern part of the country, and sometime later, we will be definitely investing in that facility also to increase our manufacturing capabilities. So, the growth definitely is going to be there in this particular sector, and we are very bullish on this.

Any plans or any medium-term plans in terms of growth that you're looking at, there were periods where you had a 20% bigger growth, then it slowed down to 8-10%. So, do you think that this volatility will persist or do you see yourself coming out of this volatility in the near future?

I think so. We will be reaching to or utilizing our... Capacity within the next six months or a year, and definitely we will be looking for the group.

All right, sir. Sir, can you also help us understand how will the margin profile move from here? Because, you know, even in your packaging business, you were at 16, 17% EBITDA margin. But if you look at your entire history in the last six, seven years, your EBITDA margins have, you know, over between 12% and 13%. So, and the injection mold is obviously a lower margin business in terms of, you know, it's a 12, 13, 13, 14 kind of a margin profile business. So, going forward, what do you see as a consistent steady phase based on the income margins that you aspire to be at for the next two to three years?

See, as we scale up and utilize our capacity, it's what we have invested in, we see a margin in the range of 15 to 16%.

On a company, a control level?

Yeah.

All right. And for a final question, a bookkeeping hygiene question, this JD, all of JD, are the numbers controllability? How does it work right now?

No, no, it's a JV, so they're not consolidated.

Okay, so that remains out of the call. All right. Again, congratulations, sir. Good to see you back on the growth days. Anya, we'll track you and see. Thank you. Thank you.

Thank you. Next question is from the line of Nishita Sanklesha from Sapphire Capital. Please go ahead.

Yes. Hello. Am I audible? Yes, please go ahead. Yeah. So, I just wanted a clarification. You mentioned that from the current setup, we can reach the range of around 420 to 430 crore. So, is that just from the packaging facility or that also includes the injection mold facility?

It's including injection molding facility.

Okay, and, uh, so, like, uh, I assume that we can teach this to the written levels and read this with you by the end of August 27th?

Mr. Nishita, your voice is breaking in between.

Hello? Am I audible now? Yeah, sorry for that. So, just wanted to understand if we can reach this 420 to 430 crore of revenue level by F527, can we reach those utilization levels?

See, we are very positive that we'll be very close to that, but probably, maybe by next year, surely we'll be reaching those numbers. But this year, we are positive, and if markets remain apparent as they are right now, then definitely we should be able to reach those numbers.

Okay, understood. And what is our utilization level currently?

We, across the different processes, there are different utilization levels, and this utilization level also keeps on changing on quarter to quarter basis, depending upon the seasonal demand of the products. But roughly, we are at around 80-85% utilization level for packaging and extrusion, and in injection molding, we are roughly at 55-60% utilization level.

So, do we have any further CAPEX plans? Like, in packaging, we are at around 80-85%, and you are mentioning that we are positive that we can reach peak utilization by the end of FY27 or MAX to MAX FY28. So, do we have any CAPEX plans to further increase our capacities?

Not for this particular year, but for next year, definitely, we'll be looking to see if we can start investing in our new facility in the eastern part of India. Because the land has been already procured, so at the moment, the investment is on hold, but as we reach this capacity utilization, we'll be definitely looking at investing over there.

Okay, so in the new facility, are we going to focus on packaging or injection molding?

It will be a combination of both.

Okay, okay, understood. Yeah, that is it from my side. Thank you so much.

Thank you. Next question is from the line of Amit Mehendali from Robo Capital. Please go ahead.

Thank you. So this is just a follow-up on the new facility that we were talking about to the earlier participants. So what type of CAPEX, you know, whenever we do it, maybe next year, what type of CAPEX we intend to do? Any ballpark number of what type of CAPEX and what type of facility, like what type of, you know, capacity expansion will it be?

Actually, the plan is not on the table as yet, but roughly we may start, we'll do it in phases, obviously, but the area is around three and a half acres, but we can... We can start with an investment of 25 to 30 crores to start with. Minimum, that will be the investment in phase 1.

Sir, Naisha, and what type of revenue will it generate? Any broad numbers?

In phase 1, as I said, nothing has been put on paper yet, but... Roughly, to start with in phase one, we can look at anywhere between 80 to 100 crores of revenue.

Right, sir.

And so will that also mean that to go up to 250-300 crores, then it will be like the full-scale capacity can reach up to 250-300 crores whenever it will be installed.

Right. So I'll just summarize the discussion just to clarify. So it will be essentially stage one will be about 25 crore capex, and that will do about 100 crore revenue. And we can keep expanding to, say, phase two or phase three. And ultimately, when the entire expansion cycle is complete, we can potentially generate 250-300 crores. Is that a correct understanding?

That's right.

Right, sir. And just lastly, on the debt side, I mean, since we may be doing CAPEX, so we'll probably not be repaying any debt, right, from the operating cash flow that we generate. Is that a fair understanding for a couple of years?

At the moment, I would say that the idea is for at least one year, we will try to reduce the debt at least by 15-20%, and then if the expansion starts, then it can be a combination of investment from internal accrual and long-term debt rather than increasing the working capital requirements.

Right, so the Fed will pay like 10-15 crores this year, FY27?

The reduction in the debt? Yeah.

Okay, sir, and lastly on the JV, can you just, you know, throw some light on how is the JV performing and how do you see the next two years, you know, on that business?

See, JV for this quarter has generated revenue of around 17.22 crores and it has generated EBIT of roughly 4.61 crores. We, as given guidance previously, we are looking at somewhere around 90 crores of revenue, plus minus 5 crores for this particular financial year, and we are very positive that in this financial year, we should be at PBT, at least break-even, that's what we are looking at. And for next year, we are targeting...

Right, sir. Thank you. That's it from my end.

Thank you. Before we move to the next question, a reminder to the participants to ask a question, you may press star and one. Next question is from the line of Augusta Dhavi from CAO Capital. Please go ahead.

Good afternoon, sir. Thank you very much for giving me the opportunity and congratulations on a pretty decent set of numbers given the volatility in the markets, especially on the raw material side. Sir, that's where my question is. Your raw material prices must have been all over the place during the quarter. And what is the current condition, sir? How do you see the situation as of now?

A month ago, the prices had dropped by 10% or so, but then again, as you are aware, the tensions again surfaced and prices have again gone up. So they are still on the higher side. We don't foresee to go any further up from here, but probably it may take another month or two before it starts coming down, provided there are no further escalations.

Right, sir. So quarter on quarter, we saw a decline in gross margin. So I'm trying to understand from a gross margin point of view, can we attribute that entirely to the escalations that we have seen in the raw material? Right. And so given that it looks like the war is over, so let's assume that it is over. Do you expect to go back to your Q3, Q4 gross margins? I'll just give you the numbers. Q3 was 43.6% and Q4 was 42.5%. So in that bracket, 42.5 to 43.5, do you expect to regain those numbers?

Yeah, ideally, it should be because as raw metal prices goes down, the gross margin should increase that further.

So, am I right in assuming that there was no significant change in mix between Q4 of last financial year and this particular quarter?

In terms of product mix or?

It's a product mix, product mix.

No, as I said, like from Q4 to Q1, our packaging product has grown in terms of, I will say, the contribution to the revenue. Injection molding has gone down. So packaging products have contributed more in Q1.

Sir, I was trying to understand the change in the gross margins here. So, I see a drop to 38%, 38.3%. So, I'm assuming the change in the mix won't be that significant, right? Because the numbers that you gave were not that significant to change your gross margins by this much. And you mentioned that there was a 10% spike. So, this 42.5% to 38% drop, it is kind of explained by just where the raw material prices. So, would that be right?

Yeah, because the raw material for injection molding as well as for packaging products mostly are common. They are polypropylene. So the base material remains the same for both of them. So definitely the raw metal prices have impacted the gross margin. But there was a change of the revenue mix, as I mentioned. Maybe we did more revenue from packaging products in Q1 as compared to Q4.

Understood. And sir, you mentioned that you'll be saving, making some savings in the power and fuel costs. So when will we start seeing those? Have you seen that in Q1? October. October 26. October 26. So, sir, that would be, let's say, approximately five months for this year and then full year next year onwards. Right. And so the savings will be one and a half close.

Yeah, roughly 1.5 to 1.75 crore is what we are anticipating.

That's the annual number, sir, assuming 12 million operations.

Yes, annual.

Right. So final question from my side, the way you are describing the way you are about to start your capex, so you have not really started it. So I was just wondering, so would we see if the environment continues to be as buoyant as you are seeing as of now and you run out of your capacity? So it will take you some time, right, to set up the new plant because it's a greenfield expansion. So should we assume like 18 months or two years of no volume growth?

As I mentioned, we can add some growth from injection molding because we are only at 55-60% utilization at the moment over there. And we can 5-10% as I mentioned, like 80-90 is the capacity today, but by adding little bit of capex, we can reach 430 odd growth in the existing setup itself. So, definitely, we can reach to that number within the next one, one-and-a-half year, and then we can, by that time, probably the new expansion can start contributing.

Right. So, one final question from my side. In the other expenses, in the most recent annual report that I could say, I don't have access to your 2026 schedules. But in the previous year's numbers, the job work expenses were 12.8 crores. So can you tell us the nature of this job work? Is it like basically outsourcing some of the capacity because you do not have the capacity and hence you are outsourcing work? And in case of future capacity constraint, you can look towards whoever these suppliers are to show the stuff of the production button from you? Or is it low-value addition stuff which you are just outsourcing because it's not worth it for you to actually manufacture such products?

See, our injection molding business is with a toll manufacturing agreement, and the job work charges measure what you see is on that account only.

This is just some outsourcing thing, right?

It's 100%, the unit works 100% for us, and there's an agreement that 100% of supplies are made for us.

Right, so what kind of capacity utilization are they working on? Thank you very much, sir. All the best.

Thank you. Ladies and gentlemen, to ask a question, you may press star and 1. Participants, if you wish to join the question queue, you may press star and 1 on your touchstone telephone. Ladies and gentlemen, if you wish to ask a question, you may press star and 1. As there are no further questions from the participants, I now hand the conference over to the management for the closing comments.

I would like to thank you, everyone, for joining on the call. I hope we have been able to respond to all your questions educatively. For any other information, we request you to please do get in touch with our investor relationship team. Stay safe, stay healthy, and thank you once again for joining with us.

Thank you so much, sir. On behalf of Rajshri Polypack Ltd., that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.