Rajshree Polypack Limited (RPPL) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Rajshree Polypack Ltd. Q2 and H1FY27 Earnings Conference Call, hosted by Churchgate Advisory Private Ltd. As a reminder, all participant lines will be 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 an operator by pressing star, then zero on your touchstone phone. Please note, this conference is being recorded. I now hand the conference over to Mr. Ram Swaroop, sir. Thank you, and over to you, sir.

Thank you, Nazmi. Good afternoon, everyone, and welcome to Rashri Polypac's earnings call for the second quarter and first half of FY27. Joining me today is our CFO, Mr. Sunil Sharma. I hope you had an opportunity to review our results in this presentation and press release shared with the stock exchange. This quarter reflects our ability to adapt to changing market conditions while continuing to grow. Despite a sharp increase in raw metal prices and softer export demand amid geopolitical uncertainties, we were able to grow and maintain our operating margin compared with the corresponding quarter last year. Domestic demand more than offset lower exports. Reflecting the breadth of our customer relationship and the demand of our packaging solutions. Starting with our standalone financial performance, revenue from operations for Q2 FY27 was Rs. 102.90 crore compared to Rs. 86.43 crore in Q2 FY26. Representing growth of approximately 19%. Operating EBITDA increased to Rs. 13.05 crore from Rs. 10.94 crore with the margin maintained at 12.69% compared with 12.66% last year. Reported EBITDA was Rs. 13.60 crore by profit. After tax was Rs. 5.03 crores. In H1FY27, revenue from operations increased by 21.8% to Rs. 205.81 crore. Operating EBITDA grew by approximately 30.5% to Rs. 27.47 crore. With a margin improving by 89 basis points to 13.35%. Reported EBITDA reached Rs. 30.11 crore, with profit after tax increased to Rs. 12.21 crore from Rs. 8.71 crore in H1 FY26. Our performance reflects the benefits of a diversified product portfolio, better product mix, and continued attention to manufacturing efficiency. Maintaining our Q2 operating margin despite higher raw material cost is an important outcome. As we grow, our focus remains on improving the quality of earnings through value-added products, productivity, and disciplined execution. In terms of geographical sales, domestic demand remained the principal driver of growth during the quarter. Export revenue was Rs.14.46 crore in Q2 and Rs.26.18 crore for H1. While international demand remained affected by geopolitical uncertainty, Q2 exports improved sequentially from Rs.11.72 crore in Q1. We continue to work closely with overseas customers while expanding domestic applications, giving us greater flexibility to rebalance our sales mix as market conditions change. As a leader in rigid thermoforming food packaging in India, our vision is to build a diversified packaging business with technology, product innovation, and capital efficiency at its core. Our integrated capabilities across extrusion, thermoforming, printing, sleeving, and injection molding allow us to develop packaging solutions for a wide range of customer requirements. Looking at our product portfolio, we are focused on increasing the contribution of value-added packaging. Barrier packaging remains an important part of this approach, helping customers preserve product quality, extend shelf life, and reach wider markets. Our emphasis is on applications where our technical capabilities and product development expertise create lasting values for customers. Injection molding provides another avenue for expansion. Capacity is now at 5,800 metric ton per annum compared with 1,000 metric ton in FY23. We are expanding the product range with a specific focus on domestic sales building a broader customer base alongside our export business. With capacity available, our immediate priority is to increase utilization through new products and customer applications. Further additions will remain phased and aligned with visible demand. Coming to Olive Eco Pack, I am pleased to share that the business delivered considerable progress. Despite a flood-related disruption, revenue for Q2 was Rs 21.15 crore. Compared with Rs. 17.22 crore in Q1, EBITDA increased to 6.72 crore, with the margin improving to 31.78% from 26.77% in the preceding quarter. For H1F527, Olive reported revenue of Rs. 38.36 crore. and EBITDA of Rs. 11.33 crore with an EBITDA margin of 29.53%. Importantly, the business was profitable at the PBT level before the flood-related loss and the insurance claim is still under process. This marks progress in the underlying operating performance as business scales. Olive expands our presence in paper-put packaging and complements our rigid plastic packaging business. With more than 150 SKUs commercialized, we are focused on widening customer reach, improving utilization, and drawing on our joint venture partnership distribution network. Together, our plastic and paper packaging capabilities allow us to serve a broader range of customer needs. On sustainability, our group captive wind power solar arrangement of approximately 1.9 megawatt has been commissioned, and we have commenced using renewable energy. The project is expected to meet nearly 30% of our energy requirements. Our approach to sustainability also extends to packaging design and material use. Through recyclable, lightweight, and compostable solution, we aim to help customers meet their packaging objectives. While retaining product protection, functionality, and commercial viability. On financial discipline, cash flow from operations for H1 FY27 was to be 17.72 growth. Our debt-to-equity ratio improved to 0.53 times from 0.57 times at the end of FY26. We remain focused on cash generation, working capital management, and better utilization of existing assets as we prepare for the next phase of growth. Looking ahead will deepen customer relationship, expand our value-added product range, and improve manufacturing productivity. Our expansion approach will remain faced, guided by utilization and customer demand. The priority is to grow across thermoforming, injection molding, and paper packaging while maintaining discipline in capital allocation. The external environment remains uncertain, but our progress this quarter reflects our ability to respond through a flexible sales mix, integrated manufacturing capabilities, and a close customer engagement. With improving operating performance at Olive, the commencement of renewable energy supply, and continued cash generation, we are well-placed to build a more diversified, competitive, and profitable business. With that, I conclude the business update. Thank you for your continued interest in Rajshri Polypack. We would now be happy to take your questions.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Vishwinder Singh from Prudent Equity. Please go ahead.

Hi, sir. I'm audible.

Yeah, you're audible very much.

Hi, sir. I wanted to ask on the olive operation. Since the flood has disrupted that, so what sort of revenue guidance will you be looking at since we previously mentioned 90 plus minus 5 crores for that operation?

Yeah, we still maintain same guidance. So, we are looking at 95 plus minus 5 growth for this financial year.

Okay, so, like, flood has not disrupted, like, all of the operations. Is that correct?

No, there was a disruption of 12 to 14 days. That's it. Apart from that, there was no major disruption and such.

Okay. And in the press release, you mentioned that excluding exceptional losses, you were looking at a PVT positive for olive. So, considering the operations were not very long, so can we expect some contributions from next quarter or like in the second half?

Yeah, definitely. Because this exceptional loss is due to flood losses only, and once we receive the claim, definitely this will also be reversed.

Okay. Any major ballpark number you can figure out for that contribution, sir, from olive only?

See, we are operating, I can only say that in terms of revenue, we will be definitely looking at another 25 to 30 percent jump in the revenue. And we will be able to maintain EBITDA numbers in this range of 28 percent.

Okay. And another on the phase one topics that you mentioned in the last call, what is the current status of that and what is, like, soft commitment on the commissioning of that phase, sir?

You're asking about the project Turisa?

Yes, sir.

No, that is still in deferred stage, as I mentioned, like, if it happens, it will be in phases. That is what I had explained. But at the moment, it is deferred, and it does not move forward. We are keeping a close watch on this. Maybe in another one or two quarters, we will have a more concrete decision on that.

Okay. So, like, in a nutshell, can you explain what can be a growth driver for our H2? Because most of our capacities are almost running at near-to-peak utilization. So, what will be driving the growth for top-length-up, as we, like, a target?

In action-molding, we are having substantial capacity still available to be utilized. So, we can definitely look at revenue of around 40 to 50 growth. Still left out in our injection molding segment, and another 30 to 40 crores revenue we can still look at coming from our existing thermoforming setup, with little fine-tuking and adding of a few ancillary machines.

Good. Lastly, on the margin side, what are you seeing on the ground right now, and what can be the rough estimate of margin for the second half and FY28, considering the current conditions prevail?

Yes, so we will be maintaining this EBITDA margin of around 15% plus minus 0.5%, so that's the level we are looking for our plastic business.

Okay. Thank you, sir. That will be all. Thank you.

Thank you.

Thank you. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. Next question is from the line of Ankit Agarwal, Yellowstone Equity. Please go ahead.

Yeah. Hello, Ram Swarubji. Thank you for taking my question. Good afternoon. Actually, I was just looking at the key customer slide. And there are a lot of new names in the presentation. So, just wondering, like, is this because of our new products, like injection molding and olive eco-pack, or is it also for our, you know, thermo-forming products?

No, here, mostly the customers are from our plastic business only. So, for PayPal division, we have not added any customer list, but yes, this addition of customer has been over a period of time, both related to our barrier packaging as well as our regular thermoforming business and injection molding. So, we have been adding customers regularly in this segment.

Okay, okay. And the second question is, we have some debt in Japanese Yen, if I'm not mistaken. What is the amount of debt, and are we hedging the currency, or is it benefiting us?

Yeah, so we are not hedging it, but the amount is roughly around, in terms of INR, it is around 18 crores. So, we have this at a lower interest rate of around 2.5% against conventional interest of 8.5% on IANF. So, we have not hedged this, and looking at the history of EAN, we feel like at the end of the tenure, probably we should be able to gain from this exposure.

Okay. Okay. Understood. And the solar and the wind, that capacity that we, that is operationalized right now?

Yeah. In October, it got operationalized. So, they had some trial run of 15 days, and from November, we are expecting it to be full-scale operation.

Okay, so probably like next quarter we'll see some benefits, like Q4, Q4 will see some benefits.

Yeah, definitely we'll see benefits. There will be some in Q3 also, but major will come in Q4.

Okay, and injection molding, are we looking to expand capacity further? How is the demand there?

No, at the moment, we will be looking more to expand the product portfolio range. And add more customers in domestic, that would be the strategy, and to reach, to first utilize the capacity of 5,800 trunk watches there, and then maybe we can look at further expansion.

Okay. Okay. Understood. Okay, that's all I add. Thank you. Thank you.

Thank you. Next question is from the line of Harshit Khadka from RoboCapital. Please go ahead.

Hello, sir. Thank you for the opportunity. Am I audible?

Yeah, yeah, audible, sir.

Yes, sir. Sir, just wanted to understand, like, given our current capacity, what can be the peak revenue that we can achieve?

From the plastic business, we... Can look somewhere around 450 to 460 crores. That's the number we can achieve.

Alright, understood. And so what is the guidance for FY27 for the entire year and also for FY28 for the top line and EBITDA?

Top line, we should be looking at somewhere around 390 to 400 crores. And EBITDA will be in the range of 15%. And for the next year, we will be looking at 450, 460, the full capacity what is available with us. Right.

So, are we going to increase the capacity going forward? Like, do we have any plans this year or next year?

Yeah, as I mentioned, like, we have a land available in the eastern part of the country, so maybe after one or two quarters, we will take a final call whether we are going to take any expansion over there. That's the idea that we will increase the capacity in that part of the country.

Okay, sir. And final question, what is the utilization as of right now? Capacity utilization.

Across different processes, it is different, but roughly around 75 to 80 percent.

All right, I understand. Thank you. All the best.

Thank you. Reminder to all the participants, anyone who wishes to ask a question may press star and 1 on their touchtone telephone.

Participants, you may press star and 1 on your touchtone telephone to ask a question.

Next question is from the line of Vishwinder Singh from Prudent Equity. Please go ahead.

Hi, sir. I just wanted to comment on the debt reduction part you mentioned in the last call that you will be looking at 10 to 15 crore of debt requirements. So, is that on track?

Yeah, I would say due to this increase in the RM prices, we were not able to do this, but as things get normalized, definitely we should be able to do that particular thing.

Okay, and on the margin fund, you mentioned that you are looking at somewhere around 15% or percentage. So, our current H1 margin came at 13%. So, what will be driving the margins in the second half to attain the 15% target?

So, I would say, you see, the H1 number, we are roughly at 14.5%. So, quarter four generally is good for us again, and in quarter three also, since Diwali is in November, October, we had a good run on barrier packaging. So, looking at all those aspects, we feel that we should be able to maintain that particular margin.

I believe in your presentation, you mentioned 13% of every margin. So, is this 15% guidance including other income as well?

Yeah, I'm saying gross, gross EBITDA.

Got it, got it. Okay, sir. And on the Japanese yen debt, that previously one of the participants, so what is the total amount that debt is in yen currency?

18.5 crores. 18.5 crores. That will be rough. Thank you.

Thank you.

Anyone who wishes to ask a question may press star and 1 on their touchtone telephone.

Reminder to all the participants, anyone who wishes to ask a question may press star and 1 on their touchtone telephone. Next question is from the line of Vishwinder Singh from Prudent Equity. Please go ahead.

Yes, I just wanted to confirm, is there like any incentive from the state government for the Odisha CapEx that we are looking in FY28?

There are various benefits which the governments are giving, especially on food packaging. It comes under the priority sectors. So, there is subsidy in electricity.

Okay, so any quantifiable number that you want to put out for the GS in rental life, you will look like that?

So, capital subsidy as such. So, I would say electricity, I think, so they have 2 rupees per unit. Subsidy on electricity. GST benefit I think it is 110% of the capital investment. Those are a few of the numbers which I could record.

Okay, you will be getting incentive of the input and not directly monetary terms?

No. Got it. And on the volume... That is on the same sales basis and it will be divided over certain period I think.

Okay, got it. And on just a confirmation on the olive one, this is accounting, so if the CFO can jump in, it will help us. So how will we like utilizing the contribution from the olive one since we have booked our extent of the losses? So first, will we recovering our losses or do we like simply contributing olive in our PVT level?

I think first we will adjust the losses and then we will start adding the profits.

Okay, so is it fair to assume that the contributions actually in the profit before tax at the consumer level will be coming in FY28?

Probably in second half of FI 28, it should start coming.

Gorgeous. That will be helpful. Thank you.

Thank you. Next question is from the line of Harshit Kharka from RoboCapital. Please go ahead.

Hello, sir. Thank you for taking my question again. So, just wanted to understand that you said 15% EBITDA margin, that includes other income. So, what would be, you know, if we just remove other income, what would be the EBITDA margin? Would it be around 13-14%?

Yeah, 13.5% to 14%.

Right, understood. And secondly, what will be the loss from Olive right now?

In this year, it is 1.76 overall, so 50% of that is in our account.

1.72. All right, sir. And, like, how do you see the profitability, you know, going forward for all this? Like, do we have any vision or outlook for that?

Yeah, as we can see, in quarter two, we have turned PPT positive up if we remove this exceptional loss. So, we definitely foresee that from the next quarters, we will be generating profits from all of us.

That's positive, right? All right. Thank you.

Thank you. Reminder to all the participants, anyone who wishes to ask a question may press star and 1 on their touchtone telephone. I repeat, anyone who wishes to ask a question may press star and 1 on their touchtone telephone.

As there are no further questions, I now hand the conference over to the management for closing comments.

I would like to thank everyone for joining on the call. I hope we have been able to respond to all your questions adequately. Before we conclude, I would like to wish you and your families a very happy Diwali. May the festive season bring happiness, good health, and prosperity to all. For any further 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. On behalf of Churchgate Advisory Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.