TCPL Packaging Limited (TCPLPACK) Q3 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to DCPL Packaging Limited's Earnings Conference Call. 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 this conference call, please signal an operator by pressing start and zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Jenny Rose from CDR India. Thank you, and over to you, ma'am.

Good afternoon, everyone, and thank you for joining us on TCPL Packaging's Q3 and 9M FY26 Earnings Conference Call. We have with us today Akshay Tanuria, Executive Director, and Mr. Vivek Davek, GM Finance of the company. We would like to begin the call with brief opening remarks from the management, following which we will have the 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 results presentation shared with you earlier. I would now like to invite Mr. Akshay to make his opening remarks. Over to you, Akshay.

Good afternoon, everyone, and thank you for joining us on our earnings call. I will begin by taking you through the business highlights for the period under review, and then we can open the forum for Q&A. After a measure start to the quarter, demand improved gradually across key segments, enabling us to deliver healthy double-digit growth in the domestic market. This domestic performance helped offset the decline in export volumes, which remained subdued amid continued softness in international markets. In this environment, we remain focused on strengthening customer relationships across geographies while taking a calibrated approach. Coming to our financial performance, consolidated revenue for Q3 stood at 471 CR. On the profitability front, we reported a strong improvement, with EBITDA increasing by about 15% year-on-year to 81 CR. This expansion was primarily driven by better gross margin supported by favorable product mix and tighter cost control. During the quarter, we recognized an exceptional loss of 11 crore 57 lakh rupees related to the implementation of the revised labor code framework. This represents a one-time impact. Reported FAT for the quarter stood at Rs.25 crore, while cash profit was Rs.56.5 crore. I would also like to highlight the commissioning of our Riviere Cylinder Manufacturing Facility at Silvasa, established under our wholly owned subsidiary Acura Technic Private Limited. This marks an important milestone in our backward integration journey. By bringing this critical input in-house, we enhanced process control, improved print precision and quality consistency, and reduced dependence on external sourcing. The facility has been designed with surplus space, providing flexibility to address external demand over time and further strengthening our integrated capabilities. Alongside our operational milestones, we were honored to receive important recognitions during the quarter. We were awarded the Most Preferred Workplace Award 25-26 in the Manufacturing Category, reflecting our continued focus on building a strong, inclusive, and performance-driven organization. In addition, TCPL secured six wins at IPCA Star Awards 2025, reaffirming our commitment to creativity, innovation, and excellence in delivering differentiated packaging solutions. These recognitions reflect the strength of our people, processes, and product capabilities. To close, domestic demand continues to remain healthy and is expected to be a key driver of growth, supported by policy measures aimed at boosting consumption and strengthening manufacturing competitiveness. In addition, recent trade developments involving the EU and the US as well as some other markets are expected to improve export sentiment and to create a more favorable operating environment over time. With our expanding manufacturing footprint, diversified product portfolio, and disciplined capital allocation approach, We believe we are well positioned to capture growth opportunities as the industry continues to consolidate towards organized players. Before we move to the Q&A session, I would like to acknowledge that the board conferred the honorary title of Chairman Emeritus on my grandfather, Mr. K.K. Kanoria. As the founder of PCPL Packagee, he laid the foundations of the company and shaped its early growth trajectory. Over the years, he has served the organization in various capacities, including as chairman, and has been instrumental in building a strong institution anchored in values, governance, and long-term strategic thinking. The guidance and principles he has instilled continue to shape the company's culture and direction. The board has also approved the appointment of my father, Mr. Saket Kanoria, as Chairman and Managing Director. Over the years, Mr. Kanoria has been instrumental in shaping the company's strategic priorities and enhancing operational excellence. We look forward to his continued leadership as he guides the company into its next phase with a strong emphasis on sustainable growth and innovation. On that note, I would request the moderator to open the forum for any questions or suggestions that you may have.

Thank you very much. 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 remove yourself from the question queue, you may press star and 2. Participants are requested to use answers 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 Nishan Pagreja from InCrit Research. Please go ahead.

Thank you for the opportunity, sir. So I have two questions on domestic business and a couple of on experts. So firstly, on domestic business, again, sir, with the GST-related trade disruptions largely behind us now, so how is the domestic business currently performing and what growth outlook are you setting for the next year?

Yeah, so... There was a disruption of about two months, I'd say, and then there was a bump because of restocking. So now we'll see how the performance pans out this quarter and in coming quarters. So far, it's okay. I wouldn't say there's any issue as such. But we'll see how it goes now over the next few months.

Sure, sir. And second, with respect to the sharp price hike underway in cigarettes, what kind of volume or realization impact are we expecting on that portfolio?

Yeah, so this is a big increase in the tax. I think this has happened after, I think, almost five years, if I'm not mistaken, that there's been this kind of an increase in the tax. So definitely, it's a negative sentiment for the domestic cigarette business. However, being a very inelastic consumption kind of item, I'm not sure what the, you know, end of the day the volume impact is going to be. So, we have to wait and watch. But, yeah, certainly if there was a growth happening, it will hit that. But whether there will be a negative effect on the volume, we'll have to see, I suppose.

For sure. And secondly, on the export business, export remained under pressure in CQ as well. But now that the trade deal has been made with U.S. and Europe, and both of them were low to mid-single-digit contributors each to our export business. So how are we looking at this region going forward? And can we expect a significant ramp-up from this region?

Yeah, so, you know, people had asked me this in previous quarterly calls as well, that, you know, if it gets resolved, then how fast we can ramp up. So, I would say that now the inquiries will start coming or have started coming. So, for it to translate into business will still take a little bit of time. And in some cases, customers do their planning well in advance. So, then, you know, once they've already. We have done their developments for the coming quarters and that gets locked. But overall, it's very positive and there will be some good momentum coming out of this. But it will take some time to play out. It's not that it will just suddenly restart the momentum which was there earlier.

Okay, and sir, on the Middle East also, how is the demand from the Middle East shaping up for us? By when, again, can we expect a meaningful recovery, particularly in the Middle East?

Yeah, so we can't comment on specific markets or customers, but overall, I'd say it's a bit choppy and sometimes up, sometimes down, but no major cause of concern as such.

And lastly, particularly on the January month, so how has January month been for us for exports? Would we have come back to double-digit growth in January?

I can't comment on month by month.

Sure, no problem.

That's it for myself.

Thank you. Participants who wish us to ask a question, please press star and 1. The next question is from the line of Anupama from Ratantharaya Capital. Please go ahead.

Yeah, could you kindly give us the numbers for your domestic growth volume as well as ASP?

I didn't get your name and company name. Can you repeat that, please?

Yeah, Anupama from Ratantharaya Capital. Yeah, so I just wanted to add domestic numbers for volume and ASP.

So there is a low double-digit growth in the domestic volume.

Low double-digit growth in the volume. Okay, so ASP also has declined, you could say, because...

I don't understand.

What?

The selling price has also declined, or is that flattish?

Have you taken a hit on the realisation? Flatish, flatish, flatish. Okay, okay.

And also on the Chennai plant, what is the utilisation and, yeah.

Chennai utilisation is less than 50% right now, but we are expecting some good improvement in coming quarter.

Right.

Most of our audits and all are done, so we should start improving.

Okay, and, like, what kind of timeline are you looking at, like, for it to scale up?

Next few months.

Sure. Okay, and could you also give us the utilization for your overall capacity and flexible packaging and the paper part also?

Overall, about 70, 75%, I'd say.

Right, and both flexible packages?

Like higher than that.

Right, okay, yeah. That's it. Thank you so much.

Thank you.

Thank you. The next question is from the line of Ranjan, an individual investor. Please go ahead.

Good afternoon, sir.

I would like to know total gross block capital expenditure for the next two years. How much will it be? And what will be the turnover likely in the next three years? And what will be the current year's capitalization of the gross block? I would like to know that. And what is the market size of the packaging in your industry in this line? And what is your market share? Is it growing or is it static? I would like to know that.

That's all.

Thanks.

Yeah, just a second. Last year, we were about 150 crore of capex, aprox. How much was capitalized in that year versus the, it's pretty much the same number. The total gross block is over 1100 crore gross fixed asset, and about 150 CR was the capex last year. 24, 25.

25, 26?

How much? Another 100 odd will be added on top. Okay.

For the next two years, for every one rupee you put it, how much turnover will be, I mean, will be generating?

We're adding about 150 CR, I think, to the top line, year on year.

That means 1.5 times only, really, yeah? Like that, for every rupee you put it.

Yeah, basically.

What is the cash conversion ratio? It is 60 or 90 days, or is it going, extending, actually?

90 odd. Oh, I can't.

You're able to add the... Tell me, sir.

Tell me.

We are able to add more customers from Chennai plant?

Yeah.

Chennai plant will be very good, I think. Looks like that.

Yeah, it's positive. We are quite happy.

We are quite happy. Very good. I am also from Chennai. I am happy. Thanks, sir.

Thank you. The next question is from the line of Shreejana from MS Capital. Please go ahead.

Hi, thank you for the opportunity. I have two questions. One is a clarification of something you mentioned earlier. You said that the volume growth for the domestic business is low double digit. Was that for nine months or for this particular quarter?

Both.

For both. Okay, understood. And second one, can you understand that the gross margin for this quarter particularly has expanded by 2.5%, close to 2.5%, from 40% to 42.7%. So, what would explain that when, just based on our understanding of what you mentioned, the export business has not grown as much, and export tends to be a higher growth market. So, what would explain the...

I would advise not to get into it on a quarterly basis because these things change based on the stock changes from quarter to quarter can vary quite a lot. It's not really going to help you to look at it quarterly. It's just too granular. I would not look at it quarterly.

Thank you. The next question is from the line of Pulgit Singles from Dalmas Capital Management. Please go ahead.

Yeah, thank you for the opportunity. First question is on the domestic side. We seem to have done quite well if it's a double-digit growth, nine months and last three months. But the commentary from FMCG companies has shown like, you know, quite a bit of pick up. So, is that something that we are also seeing and therefore the growth could pick up for us as well?

You're saying the commentary is showing quite a bit of pick up or quite less pick up?

Pick up to be good. From FMCG companies, the commentary is better this quarter. The delivery is also better and commentary is also better. So, to that extent, if we've already done double digits for nine months and even the last three months. Then, is it fair to assume that whatever would be the growth rate, it will take off for us as well?

I hope so, but we don't know. We will see how it goes. But it varies, you know, customer to customer. Some customers are doing very well. Some in similar category are not doing that well. I mean, if you want to say that, is there like a broad base, all our customers have just suddenly picked up post this thing, I would not say that. But there are pockets where there's been a very good pickup, and then there's pockets where it's not really showing much. So, I just don't understand. It's a bit funny.

Yeah, it's overall, yeah, I get it, okay.

There's like some horizon kind of thing.

For the exports, I mean, the overall numbers are impacted by exports, which suggests a high degree of decline in exports, because, you know, if you have done double digits in domestic, the only way it gets offset is if exports is down significantly, which is a bit surprising given that we've done very well in the last five years. What has led to this, and how much time would it take for it to stabilise at a certain level in your opinion?

I think it's a bit too much reading of tea leaves, but basically we've done very well over the last several years. And last year in particular, there was a very big growth in our exports in general. So, it's a bit of a... I don't know. And is there any greater underlying factor or cause, or is it just customer to customer, sort of incidental? That is the point. So, I mean, there's not too much detail we can get into on a public call, but I mean, I would not say there's some...

I understand. Lastly, I mean, these various FTAs, I mean, US, EU, which one are you most excited by? Where could we see, like, you know, in two, three years? How big could these regions be for you? What is the sense to be asked?

Okay, so obviously the U.S. is the one which was the most... It's a troubling block to any work happening. Because at 50%, you just can't do any business. Or you can do just for the sake of, like, the customer waiting for the tariff to come down, so he's keeping you alive. But with 18%, you can do business. So at least that opens a door which was completely closed. So that's positive. With the EU, Our folding carton was already at zero, so there's no impact there. Flexible packaging side, we save a few percent on the tariffs. That's positive. And then with both markets, the upshot is on other industries exporting from India, which will require packaging. So where we get a sort of second order benefit. So that is the main positive. Textiles, those kind of things. Now that, how long it takes to play out and all that, it really depends customer to customer and brand to brand. And then what benefit we get out of it also versus other.

Yeah, but direct customer sales, we don't anticipate much like in the sense, this is second order impact as you're rightly saying.

Direct customer sales also the main benefit will be with the US but even the EU like with flexible packaging is very positive. The UK also had a high tariff on flexible packaging. So that's also come down. So all these things are very positive but they take time to play out. It's not that there's like orders. I'm sitting and waiting for me, for the tariff to reduce, and then they just come in one fine day. Like, the development starts.

So it's a 528-story list, that one. I mean, the US-EU reflecting in our numbers significantly.

See, now you're asking very specific.

Okay, all right. Thank you and all the best.

Thank you.

Thank you. Ladies and gentlemen, to ask a question, please press star and one. The next question is from the line of Harimi Dedhia from Tangora Investment Managers. Please go ahead.

Hi, Akshay. Thanks for taking my question. Just one question. Should a FY18-19 kind of scenario play out in paper prices? Is there something that we've built differently into our… Business style and operations now that our margins would, you know, cave but not cave as much or would, like, just trying to understand the resilience of these margins should a scenario like that play out again.

Talking about that post-COVID boom in the paper prices?

No, no, pre-COVID, 18-19, when we saw China coming and, you know, really dumping a lot and then we had that, you know, severe margin compression of 400 basis points. Just trying to understand, you know, what happens if we see a very similar kind of scenario happening in paper prices again?

No, paper price going down is not necessarily bad for us, but only thing is that when there's a very down market in commodities, then the differentiation between the larger player and the smaller player tends to go down, which is not good. The difference between that period and now... You know, apart from our own company being bigger and scale and all that stuff, the difference would be now there's a lot more protectionism in the world. So it's not so easy for people to dump. Like right now, even in India, there is a minimum import price that's been imposed on virgin paper boards. So there is, therefore, no dumping possible. So, that negative effect is not really felt. Yeah, okay, if there is dumping, it affects the global market. And it's not as easy to win new orders. But, I mean, I don't know how transient these things are. And there is a lot of commentary coming from China about this anti-involution. And cutting down on excess capacity in many industries. But it's easier said than done. But at least the government over there is cognizant of the fact that this is now a problem. The Chinese government reacts to these things is very complex and cannot be... But, I mean, I don't think the scenario can get much worse. Otherwise, these mills have to start shutting down over there. Generally, this protectionism trend is there, so it is protecting the market to some extent. But that's mainly protecting our suppliers rather than us.

Got it. And so, if there was a flip scenario where we had a significant acceleration in paper prices, You know, how much of it would we have to absorb? How much would we be able to pass on? Because I'm also asking this that, you know, two of our larger competitors have gone through some issues, otherwise a largely unorganized sector domestically. Do we have a little more ability to stand our ground, you know, in such a scenario, or we'll still have to bite the bullet?

Um, see, I would point you to our history. There was a significant increase in paperboard prices in 2022. And we dealt with that. So I think there's no reason why we can't. Yeah.

Okay.

But I don't see that happening right now because that was because of the COVID and massive disruption.

Yeah.

That can happen again if there's some sort of a war or something, but... Things are now beyond anyone's ability to predict, right?

Thank you. Thank you. The next question is from the line of Reisham Jain from VVD Asset Management. Please go ahead.

Hi, Akshay. Good afternoon. So, just on this last question, further extending. So, MIP has been introduced on paperboard from August. And obviously, if there is an import, If price parity is not there, then competing in the global landscape becomes a little difficult. So, is there any exception for… So, it's not uncomparative for us, even if MIP is there.

No, but then the domestic market otherwise would have been softer, so we would have just bought domestic. Okay. I think overall, it's fine.

Okay. The second one is with respect to creative, now that you have acquired it 100%, and you have full control, you had control earlier as well, but is there anything which you are planning because that was something which was looking quite exciting in India, especially the electronics, packaging, and stuff like that. So, any thoughts?

We have a lot of plans and things in motion, but in the past also, I've sounded too upbeat, and then investors were disappointed. So then this time, we'd rather just keep it to ourselves until something actually happens.

Okay, okay. But things are moving in that direction. Obviously, We're constantly trying something or the other.

It's just whether it has its own time or not.

Okay, perfect. Thank you. Okay, thank you. All the best.

Thank you. The next question is from the line of Heta from Monarch AIS. Please go ahead.

Hello. Am I audible? Okay, so I just had one couple of questions. I want to understand, from a domestic business, are we heavily dependent on the tobacco segment? No. Or is it diversified, you know, amongst other segments as well?

Yeah, it's quite diversified.

Okay, so even if there was a volume impact, it wouldn't be substantial on our, you know, top line? No. Okay. All right. So, could you also please just help me? You mentioned that Europe had high tariff on flexible packaging, which has now reduced. Could you just help me understand what was the tariff earlier and what is the tariff now?

It was a high single digit. Exact numbers not coming to mind, but it was not a double digit, but a high single digit. That is now going to come to zero from, I think, next year. That will be positive.

All right, understood. And are we still looking to, you know, proceed with any mergers, any acquisitions that we were earlier, you know, constantly?

Yeah, we are constantly working on something or the other, but then we are very unforgiving in our assessments. So, every time it's not possible always. But we keep trying something or the other in motion at any point of time. So, yeah, nothing I can tell you right now on the call.

Okay, understood, understood. So, going ahead, considering this Chennai facility now, you know, will start seeing operating damage and with the gravel cylinders also, you know, commissioned. Do we anticipate any margin expansion led by these initiatives? And this year. And sir, what would be our estimated APEX for next year, FY27?

It should be along the similar lines of this year, about 100 CR odd.

All right. That's just from my time. Thank you.

Thank you.

Thank you. The next question is from the line of Anupama from Ratnat Raya Capital. Please go ahead.

Yeah, I just had a question on your outlook on the exports, like, from now onwards, where do you see growth coming from and what countries, like, Europe, U.S. specifically, like.

I believe I have answered this, but broadly we are positive on all these markets, and apart from that, our immediate neighborhood and Africa, these are also positive. Yeah, definitely Europe, U.S. would be amongst the top priority.

Right, and what percentage do they contribute right now? I can't add all of it. Okay, okay, yeah, that's it, thank you.

Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to management for closing comments.

I hope we've been able to answer all your questions, but should you need any further clarifications or 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 TCPL Packaging Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.