EPL Limited (NSE: EPL) Q2 2025 Earnings Call dated Nov. 11, 2024
Corporate Participants:
Anand Kripalu — Managing Director & Global Chief Executive Officer
Deepak Goyal — Chief Financial Officer
Analysts:
Pratik Tholiya — Analyst
Sameer Gupta — Analyst
Sudarshan Padmanabhan — Analyst
Vinamra Hirawat — Analyst
Harit Kapoor — Analyst
Sumant Kumar — Analyst
Akshat Bairathi — Analyst
Anish Jobalia — Analyst
Hemant — Analyst
Pushkar — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to EPL Limited Q2 FY ’25 Investors Conference Call hosted by Systematix Institutional Equities. 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. [Operator Instructions]. Please note that this conference is being recorded.
I now hand the conference over to Mr. Pratik Tholiya from Systematix Institutional Equities. Thank you, and over to you, sir.
Pratik Tholiya — Analyst
Yeah, Thank Yusuf. Good evening, everyone. On behalf of Systematix Institutional Equities, I would like to welcome all the participants who have logged into this conference call of EPL to discuss the second quarter and half year ending FY ’25 results. From the management side, we have Mr. Anand Kripalu, MD and Global CEO; Mr. M. R. Ramasamy, COO; Mr. Deepak Goyal, CFO; Mr. Shrihari K. Rao, President – AMESA Region; and Mr. Onkar Ghangurde, Head – Legal, CS and Compliance Officer. At the outset, I would like to thank the management for giving us the opportunity to host this call.
I would now like to welcome Mr. Anand Kripalu to take the proceedings forward and start with his opening remarks. Thank you. And over to you, sir.
Anand Kripalu — Managing Director & Global Chief Executive Officer
Thank you so much, Pratik. And hello everyone and thank you for joining us for EPL Q2 FY ’25 earnings call. We are pleased to report a strong Q2 performance with improvement across all four financial metrics reflecting the impact of our strategic priorities as well as consistent execution.
Our revenue for the quarter grew by 8.4% with an EBITDA growth of 19.7% and a PAT growth of 72%. Our EBITDA margin reached 20%, an improvement of 188 basis points and that is in line with our commitment of delivering more than 20% margin. We delivered an ROCE of 16.5%, which expanded by 260 basis points over the previous year. Revenue growth was driven by good demand in major markets. In the AMESA region, revenue grew by 3.7% with growth impacted by currency devaluation in Egypt. India reported 5% growth. The EAP region grew at 8.7% and the Americas recorded a solid increase of 9.4%. Europe demonstrated particularly robust demand with a high-double-digit growth of 21% on a year-over-year basis.
Our strategic focus on expanding the Personal Care and Beyond category yielded strong performance this quarter with these segments growing 10.2% and now accounting for 48.2% of total revenue. Our continuous EBITDA margin improvement has been driven by revenue leverage, operational efficiency and effective cost management. We saw continued improvement in Europe and Americas in line with our commitment. Europe margin reached 17% while Americas delivered a robust 18% margin. With nine consecutive quarters of steady growth, we are on track to reach our target of delivering more than 20% EBITDA margin on a sustained basis. Our PAT for the quarter grew by 72%. The depreciation and interest costs for the quarter was steady versus the prior year and the strong growth in revenue and EBITDA helped in delivering robust PAT growth. This is in line with our narrative that EPL presents a great ROE and ROCE expansion opportunity. We have delivered a strong EPS of INR2.73 per share, an increase of 73% over prior year. Consequently, we are delighted to announce an enhanced interim dividend of INR2.50 per share.
Moving on to sustainability and recognition, our dedication to sustainability and innovation continues to yield substantial recognition and results. We continue to support our customers in converting to sustainable tube and our recyclable tube mix reached 33% in quarter two FY ’25. We are pleased to report a retained and improved EcoVadis Gold rating with our score advancing from 70 to 78 now placing us amongst the top 2% of companies globally, a testament to our reduced environment impact and commitment to ethical practices.
Additionally, we surpassed our renewable energy sourcing goal by achieving a 25% share of global energy from renewable resources, positioning us as a leader in sustainable energy use. Our efforts in sustainability were further acknowledged through several awards. We received The Great Indian ESG Organization of the Year Award at the India Sustainability Summit, our Nalagarh factory was named Factory of the Year at the PrintWeek Awards 2024 for Operational Excellence and our community-oriented CSR initiative earned us the Project of the Year. Moreover, EPL was certified as a Great Place to Work, highlighting our commitment to a positive and inclusive workplace culture.
Looking ahead, as we look to the future, we are well-positioned to build on our recent achievements and drive continued growth. Our strategic focus remains on four key areas that will shape our journey moving ahead. One, Brazil, I am happy to share that Brazil expansion is progressing very well. We gained one more multinational customer in the quarter and we have now three MNC customers in addition to the anchor customer. This progress demonstrates the tremendous potential of this exciting market. On margin, Brazil continues to have a positive impact and is accretive to our overall margin.
Second Personal Care and Beyond, the Personal Care and Beyond category recorded a solid 10% growth this quarter driven by strong growth in the EAP and the Americas. We have a robust B&C pipeline anchored by Neo-seam tube and superior printing capability which continue to see traction across markets. On a long-term basis, we remain confident of delivering consistent growth in this category. Third, sustainability. Our Q2 FY ’25 mix of recyclable products reached 33% versus 29% in the previous quarter and versus 21% in the previous financial year. All this driven by accelerated conversion to sustainable tubes. Our broad portfolio of sustainable solutions positions us strongly versus our competition so as to further gain market share.
And our fourth priority, margin improvement. Our EBITDA margin of 20% in the quarter demonstrates the effectiveness of pretty much everything that we’ve done. The Europe margin at 17% and the Americas margin at 18% are in line with our commitment to deliver operational efficiencies in these two regions. We will continue to drive cost optimization and operational productivity to deliver more than 20% margin on a sustainable basis. Further, our strategy of low increase in depreciation and interest costs augurs very well for consistent strong growth in profits after tax.
In conclusion, we remain focused on achieving sustainable double-digit growth while consistently delivering margins above 20%. Our commitment to innovation and sustainability will guide us as we navigate the future positioning EPL for continued success.
With that, we will now open the floor for questions.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] First question is from the line of Sameer Gupta from IIFL Securities Limited. Please go ahead.
Sameer Gupta
Hi, good evening, and thanks for taking my questions. Sir, firstly on the India growth of 5% now overall oral care space in India is doing well. We know the numbers Colgate and HUL have reported. So I just wanted to understand, I mean looks kind of subdued at an overall level. So is it primarily the beauty and pharma segments which are subdued in this category or your thoughts?
Anand Kripalu
Yeah, so I’ll give you just the overall perspective rather than getting into categories. So I just want you to know that the 5% growth for India is affected by negative price mix. And let me just explain that a bit more. In Q2 of the previous fiscal, we had amongst the lowest commodity prices and a positive overhang of pricing. In subsequent quarters, we corrected the prices downwards in line with commodity prices. And therefore in Q2 what I can tell you and why we don’t report volume because we do believe it does not reflect our strategy, our volume growth in India is ahead of the revenue growth that we have declared because of that negative price mix.
Sameer Gupta
And this is expected to then anniversaries in the — this quarter, it has anniversaries more or less.
Anand Kripalu
It will anniversaries from Q3 onwards.
Sameer Gupta
Got it. Secondly, sir, on Americas, now there is a lot of noise around with the new government coming in around more trade barriers and EPL exports from India and China to Americas, the laminates part. And I know we have gone through this journey before with Trump 1.0, but I guess that was more limited to China. Is there any risk that you see this time and any broad strategy to counter that?
Anand Kripalu
Now you know, I may be answering questions above my pay grade now because what Trump is going to do I really don’t know, right? And I’m not sure if anyone knows. Now I would — I will give you my point of view, right? It may not be the way that point of view plays out, right? I think the — we have India and China as sourcing bases for our laminates. So today for instance, most of the laminates we send to the US go from India because there is a penal rate of import duty from imports from China. Now the probability that there will be penal rates of import duty from both India and China at the same time I would reckon is probably low. If anything, I would say that India could have a point of global competitive advantage in a situation where imports from China become taxed more heavily. So that is the view and that is the tax really that is there on laminates and the import duty on laminates. Now the reality is this. If there are some taxes to some extent that whatever is there, I mean that will ultimately reflect in our landing cost and that will go into the pricing model with customer. Okay. So I don’t think we should assume that that will be out of pocket. And all I can tell you is that because as a company we have cost leadership in our operating model and our cost base, we will still be very competitive, right, even if we have to supply in the US market.
Sameer Gupta
Got it, sir. That’s very, very clear. Thanks for answering that. Lastly, sir, if I may squeeze in, Europe, I understand there is a large growth and that is why the margin also has seen an uptick, historical high level of 17%. Now over the years, we have seen Europe has been kind of up and down both in terms of growth and margins. So just wanted to understand what is driving this growth and margins subsequently. And do you see this sustaining in the current ballpark or are there any one-offs that you would want to call out?
Anand Kripalu
So there are no one-offs first of all, okay? Now we have given a guidance that our Europe margins will be mid-teens, right? And we absolutely believe that mid-teens is absolutely sustainable. Now yes, Europe has benefited from high volumes, but what is the sustainable part is that there have been significant interventions whether it’s to do with key management changes and whether it’s to do with manufacturing realignment to make the whole manufacturing cost base more cost-effective, right? Now both are permanent. And all I’ll tell you is this, that the interventions on manufacturing realignment have not yet fully played out. There is more to come, right? So even if volumes were to temper to an extent, there are other cost interventions that will play out and that will help the overall margin. So net-net, mid-teens margin for Europe is absolutely sustainable.
Sameer Gupta
Got it, sir. That’s all for me at this point. I’ll come back in the queue for any follow-ups. Thanks again.
Anand Kripalu
Okay. Thank you, Sameer.
Operator
Thank you. Next question is from the line of Sudarshan Padmanabhan from JM Financial PMS. Please go ahead.
Sudarshan Padmanabhan
Thank you for taking the questions and congrats on a great set of numbers. Sir, while all the regions have done extremely well as far as margins are concerned, if I look at AMESA, I mean, right from last six quarters the margins have been coming down. You did talk about currency impact on Egypt. But ex of it, is there any cost pressure that you see and how do you see the margin say in the next four to six quarters?
Anand Kripalu
So you have visibility for India standalone numbers. So let’s remove the Egypt part and the currency impact in Egypt. I just want to say that Egypt in overall terms is doing extremely well as a business and we are very confident of solid growth and solid margin from Egypt, okay.
So let’s come to India. Now, if you look at India standalone, I explained that we had some low-cost commodity quarters with the benefits of price overhang and therefore the margins were probably a tad higher than our targeted range of margins for the India business. Today where we stand is we’re probably not out of range by the way on the India margin but probably at the lower end of that margin range. We actually believe that with certain interventions that the India margins will inch up from where we are now, right? But like I said, we are in the range. We are now at the lower end of the range and it will probably go towards the mid or the higher level of the range. But it is not as if the margin of the India business are below where we have targeted for it to be with an overall ambition, which is the only margin guidance we’ve given, of 20% for the company as a whole.
Sudarshan Padmanabhan
Sure. And sir, my second question, I mean there are two parts to it. It’s more strategic in nature. I mean if I look at from a strategic level, we have a new plant today in Latin America and Brazil and we are wiring for volumes. In your thought process, I mean today when you go, I mean, and bid for business as you need to reinvest in your business, say from a longer-term perspective because as the volume comes in, the growth comes in, the operating leverage comes in, the margin keeps going up. But what is it that you are comfortable with as far as margins are concerned? Because you will also need to reinvest in the business and give the cost benefits to your firms to basically mine more wallet share. So if you can talk a little bit more the thin line between volumes taking market share and where you are comfortable as far as long-term margins are concerned.
Anand Kripalu
I mean if your question is really focused on long-term margins, I have nothing more to say other than to say that we want to deliver 20-plus margins on a sustainable basis, okay. So we are not changing our margin guidance beyond that, right? Because we have given guidance on growth and margin and said we need sustainable double-digit growth and sustainable margins above 20%. And I need to make sure that we start delivering both these on a consistent basis. So I don’t want to go out of step and give any different guidance as far as margin is concerned. I think your other hidden question on that was really about growth and our ability to invest in growth. Now just as an example, for instance, the last major investment we made was the greenfield in Brazil, which I’ve already said in my opening comments is actually tracked very well. And I have to say we’re pleasantly surprised at the opportunity that Brazil presents and we are actually exploring the possibility of further expanding capacity in Brazil, okay. Now the other big opportunity we think could be an onshore production facility somewhere in Southeast Asia, right? That is where we see a bit of a gap in our global portfolio. And that is something that we are actively evaluating.
Deepak Goyal
And if I could add, Anand to this, Deepak here, we have always kind of maintained that this business needs consistent growth investment. We invest a capex equal to our depreciation or amortization every year, which is a sizable amount. It’s about, let’s say, anywhere between INR350 crores to INR400 crores, right? And 60% of this amount goes into growth capex. So we have a sizable kit, which is available to us to drive that growth on double-digit revenue, and we believe — we will continue delivering on that promise.
Sudarshan Padmanabhan
Sure, sir. Thanks a lot. I’ll come back in the queue.
Anand Kripalu
Thank you.
Operator
Thank you. Next question is from the line of Vinamra Hirawat from JM Financial. Please go ahead.
Vinamra Hirawat
Hello?
Operator
Yes, please go ahead. Vinamra Hirawat, your line is unmuted. Please go ahead with your question.
As there is no response from the current questioner, we will move to the next question from the line of Harit Kapoor from Investec. Please go ahead.
Harit Kapoor
Yeah. Hi, good evening. Congratulations on great results. I just had two questions. One was you know, you spoke about some carryforward negative pricing impact and the base was high in India on the pricing side. Any other markets where you faced a similar kind of deflationary impact? I just wanted to gauge how much would be that impact at a consolidated level. So that’s the source of my question.
Anand Kripalu
Yeah, actually, the only one that was material in terms of negative pricing was really India, right? Other than that, I think everything has got anniversarized by and large.
Harit Kapoor
Got it. So just a follow-up, is that Q3 should see almost a complete anniversarization across the markets, basically.
Anand Kripalu
Yes, that is correct.
Harit Kapoor
Got it. And second one is in Europe, I mean, you did answer the question on the margins, etc. But just on this 21% growth, this if you could kind of double-click a little bit more on any new customer wins or significant change there, etc. that’s happened for this quarter? Because as the earlier participant was asking its not been very common to see this kind of a number in the European market. So while the cost side is obviously well appreciated. I just wanted to get a sense of also this 21% odd growth? And what’s kind of driven that in that number specifically?
Anand Kripalu
Yeah, so we have called out that the Europe growth is somewhat exceptional, right, at 21%. What has fundamentally happened is that there is some new business that’s come our way, but that may not have come into Q2 but will come as we speak around the corner. Q2 some of the existing customers have actually given us solid orders and therefore, an improvement in their wallet share. I think what is — what is really important is that our teams have been able to significantly step up our ability to produce and our ability to provide service and quality at the right standard. So historically, right, if such windfall volumes have come, we might have struggled to supply it fully and convert that into sales. This time, I think the team has really done a good job in making sure that production volumes and service levels meet the customers’ demand and requirements, right? And I think that’s the positive that’s come out of that.
Harit Kapoor
Got it. And last thing was on sustainability. So I think I read in your presentation that a third of the portfolio is now in terms of sustainable [Indecipherable]. Could you please remind me in terms of what are the targets for what part of the — how much percentage of the portfolio will be on sustainable products, maybe in the next two to three years? Is there some stated intent there?
Anand Kripalu
Yeah, in two years to three years, see, we are currently at 33%. In the next two years to three years, 60% plus for sure, okay? — maybe even higher, right? And as you would appreciate, the percentage will be a combination of customers wanting to convert and our ability to supply, right? And both these conditions need to be met, right? I mean a customer doesn’t want to convert, he is not going to convert, right? But I think what we are seeing is accelerated conversion demand from customers, right? Some of the customers out there in India instance, right? And that is a public domain, I made a commitment that there will be 100% recyclable tubes in the not too distant future, okay. Now obviously, we need to have the back-end ready, which we do, right? And we’re going to supply them. All I can say is that last fiscal for the full year was 21% [Phonetic], right? We’re now at 33% [Phonetic], This year average probably will be mid- to late 30s maybe even touching 40% [Phonetic]. So it is converting at an exponential rate — at an accelerating rate, right? And I think this is here to stay.
Harit Kapoor
And last question from my end was are you seeing this as a source of competitive advantage from a market share perspective right now? Are you already seeing that given you have the back end, you can scale up small clients, big clients, etc.? You have all the — you have the patents, the ratings are also in your favor in terms of we mentioned EcoVadis Gold, etc. Are you already seeing that within existing customers or new customers, this is becoming a source of kind of competitive advantage in market share winning, market share gain leading outcome?
Anand Kripalu
So I just want to frame this. So we are not the only people in the world who are doing sustainable tube. Having said that, I think we have sources of competitive advantage which are to do with our laminate structure and therefore the amount of polymers that goes into a laminate that delivers the right barrier properties and our back-end readiness where over three years we have been investing in capex to ensure that we are able to deliver sustainable and recyclable tubes, okay. So we are ahead of others in the game. Now, as a result of this, we have seen wallet share gains happening, right, in multiple markets around the world. Now we believe this source of competitive advantage will stay and play out in the times to come. And our objective is to stay one step ahead of this game, right? I can tell you that in Europe, we are going to see shifts and therefore wallet share gains. We’ve seen some of that happening in India, right, and there are opportunities in other places as well. So net-net, absolutely yes. We see this as a source of competitive advantage and an opportunity to gain wallet share.
Harit Kapoor
Wish you all the best. Thank you.
Anand Kripalu
Thank you.
Operator
Thank you. [Operator Instructions] Next question is from the line of Vinamra Hirawat from JM Financial. Please go ahead.
Vinamra Hirawat
[Indecipherable]
Operator
I request you to please disconnect and reconnect as you are not audible, sir.
Next question is from the line of Sumant Kumar from Motilal Oswal. Please go ahead.
Sumant Kumar
Sir, when we talk about Europe margin, you are talking about manufacturing alignment. So can you elaborate what is the manufacturing alignment? And second thing is for the margin expansion, any other factors like operating leverage product mix changes, what are the other factors driving margin for Europe?
Anand Kripalu
I mean all the factors obviously are contributing to driving margin for Europe. But just on the cost standpoint, what we have done is we have realigned some production capacity from Germany to Poland. When you move lines from Germany to Poland, a, the labor costs are lower in Poland. Second is you can actually run seven days whereas in Germany, you run five days. So you get 40% more capacity from the same machine. So you can actually stretch our assets far better. There has been some rationalization in terms of organization structure. And like I said, there is another intervention in terms of manufacturing realignment of project that is currently underway that will play out in the next four, five months, okay? So apart from that, of course, like I said, the volumes have helped. I mean, less so the mix, but the volumes have certainly helped and our pricing has helped. The ASPs have helped as well. But the cost part is fully sustainable, right? And as I said earlier, we aim to build on that with a few more interventions.
Sumant Kumar
Okay. And this margin is going to sustain?
Anand Kripalu
Well, I have said that mid-teens margin will sustain. Now mid-teens would be 100 basis points more or less here in there, but mid-teens margins will sustain. That’s the guidance we’ve given.
Sumant Kumar
Can you talk about the Brazil, how the Brazil is sales margin and are we doing any capacity expansion there?
Anand Kripalu
So Brazil is doing very well. And Brazil margins are margin accretive to the Americas and to our global margins. We have been pleasantly surprised with the kind of demand we are getting. And we’re getting demand not just from oral care by the way. We’re getting a lot of demand also for beauty and cosmetics which is in line with our strategy. Beauty and cosmetics typically tends to be ASP accretive and margin accretive for the business. We are currently evaluating capacity expansion in Brazil particularly to support the beauty and cosmetics demand that we are seeing.
Sumant Kumar
Thank you so much.
Anand Kripalu
Thank you.
Operator
Thank you. Next question is from the line of Akshat Bairathi from RSPN Ventures. Please go ahead.
Akshat Bairathi
Hi, sir. Thank you for taking my question. So I have just one bookkeeping question. So why — your other income has doubled from the previous quarter. So is there any one-off, why has it improved?
Anand Kripalu
Sorry, I missed the question. Other income is doubled.
Akshat Bairathi
From the previous quarter. So is there any one-off or what has contributed to the increase in the other income?
Anand Kripalu
It has two parts. One is that we get some incentive in Brazil which was linked to our investment in Brazil. It’s a long-term incentive and that kind of goes in there. And then second is our export-linked incentives are kind of higher and that also goes in there. So those are the two factors.
Akshat Bairathi
And just a follow-up, sir. So will this come in the coming quarters as well? Or this comes in a single quarter [Indecipherable]?
Anand Kripalu
See the Brazil incentive will continue. The export incentive is dependent on the quantity of export that is done in a particular quarter and should go up and down. And hence, it could kind of go up and down accordingly.
Akshat Bairathi
Okay, sir. Thank you. Got it. Thank you and all the best.
Anand Kripalu
Thank you.
Operator
Thank you. Next question is from the line of Anish Jobalia from Girik Capital. Please proceed.
Anish Jobalia
Yeah, hi, sir. Good evening. Hope I’m audible. Sir, my question is related to the finance cost. So — so we are basically run rating at around INR30-odd crores. So if we annualize this, like we are paying around INR120-odd crores of finance costs, then at the start of the year, our debt was around INR800-odd crores. So just wanted to understand like why our finance cost as a percentage of debt runs in high double digits. And what can we expect going forward in the next few quarters? Would it be helpful to understand this, sir?
Anand Kripalu
Yeah, so there are two points here. One is the finance cost is not only the interest cost, it also includes our bank charges and things like, let’s say, [Indecipherable]. So — which does not come in the debt. However, factoring is the invoice discounting, right? However the cost of that comes in the financing cost. So dividing, let’s say, INR120 crores versus INR800 crores are not like-to-like comparison.. Second is, what you see is a closing date number and hence, average for the quarter could be different. The third point is that our — we also have debt, but in countries like Brazil, Mexico and Colombia. And the Latin American countries have higher rate of interest. So like-to-like, we are amongst the lowest cost kind of companies because of our AA+ rating that we have. So in India, our cost of interest would be very, very competitive. But because of our global presence, we also borrow in countries where the cost of borrowing is quite high. So it’s a combination of these three things because of which it appears like that.
Anish Jobalia
Got it, sir. So there is — is there any scope for restructuring in these high cost countries so as to be able to reduce this interest cost going forward? Is there any like strategic decision around this?
Anand Kripalu
So if you look at our overall finance cost, right, it has grown versus prior year only at about 5% while the revenue has gone up, etc. And it is our consistent effort to optimize the cost. Unfortunately, when we — prima facie while it seems that could we kind of borrow in India and then land in — invest in let’s say Latin American countries etc., the moment you add the forward cover cost. And we don’t want to take currency risk, we are a conservative organization because more or less fits there. However, having said that, we are consistently evaluating various options and will continue to do so.
Anish Jobalia
Okay, sir. And my second question is, sir, I mean do we expect to do double-digit growth rate for the full year given the visibility that we would be having in the business?
Anand Kripalu
I mean what I’ll tell you is that on an H1 basis, we are at 9.5% growth, right, if you add Q1 and Q2, okay. Now our effort absolutely is to deliver double-digit growth. Now we play an overall portfolio of regions and countries and we are hoping that if something goes up, something else may go down and vice versa. What we do not know therefore is really what — how this will play out really in India and China, where there is some flavor of softness that seems to be emerging, right, not so much in our business, but in terms of what we can see. So what we are doing to try and securitize double digit growth is to make sure that you have a strategy to compensate, right, for any softness that comes in this key market. Now whether that will definitely total up to 10% in this fiscal or not is really hard for me to say, but at the end of H1, we are within fitting distance of that. But how exactly things will play out in H2 is really a little hard for me to see right now. And I think we’ll have to just tuck and see how it goes.
Anish Jobalia
Thank you, sir, and all the very best for the next few quarters.
Anand Kripalu
Thank you.
Operator
Thank you. [Operator Instructions] Next question is from the line of Hemant [Phonetic], an Individual Investor. Please go ahead.
Hemant
Sir, congratulations on a very good set of numbers and giving me the opportunity. Sir, I have one question. Like in H1 FY ’25, we have done an EBITDA of close to INR410 crores and the revenue of INR2,100 crores approximately. And our estimation for FY ’27 was [Indecipherable] of EBITDA and revenue in the range of INR5,400 crores to INR5,800 crores. So are we sort of, I mean, up in our aspirational target for FY ’27 given the kind of decent growth which we had in H1?
Anand Kripalu
You are talking about the guidance we had done for FY ’27 when we did the Investor Roadshow and in the investor deck, is that right?
Hemant
Yeah, I had a look at the one of investor presentations — old investor presentations. I think it was in FY ’24 investor presentation.
Anand Kripalu
Yeah, so let me say this. I don’t think we are upping anything right now. Okay, now if we are a little ahead of the curve versus the medium-term ambition we expect, right, that’s great. But I think we have our task cut out to actually deliver whatever we have committed till now. But as we have said, we are doing everything we can to get to those aspirations, right, both in terms of growth and of course in terms of absolute EBITDA and margins.
Deepak Goyal
And Anand, if I could just add, I think more important is that the initiatives that we called out in that presentation and we called out initiatives for double-digit revenue growth, sustainability like competitive advantage and continued margin expansion. I think those initiatives have played out quite well and we can see those initiatives reflecting in our results. So if everything goes well, hopefully, we will achieve and kind of beat those results. But I think we are continuously — we as management are continuously striving to achieve and beat those targets.
Hemant
Because I think, sir, INR410 crores of revenue in H1 even if I annualize it in FY — sorry, INR410 crores of EBITDA in H1 FY ’25 and if I just annualize it, it comes down to nearly INR800 crores of EBITDA, right? And INR1,050 crores to INR1,200 crores of EBITDA is our aspirational target for FY ’27 and we are hitting maybe crossing INR800 crores of EBITDA in FY ’24 only?
Anand Kripalu
I think you’re complimenting us for the good work that we have done, right?
Hemant
Obviously, sir. Obviously.
Anand Kripalu
[Indecipherable] investor presentation. We will come and talk about how the future is looking. But at this point in time, I think we are very happy with the progress that we have made, how we have delivered on the initiatives that we spoke about. And I think our effort is that we continue making this progress.
Hemant
And sir, will it be possible for you to quantify the double-digit revenue growth? I mean quantify numbers, a range maybe or any ballpark number, will it be in high teens? Will we in late-teens or something? Or maybe early teens?
Deepak Goyal
I think we first need to get to double-digit growth. Okay.
Hemant
Sir, we are already at 9.5%, right?
Anand Kripalu
No, we are at 9.5% but we are not at 10.5%.
Deepak Goyal
So listen, I don’t want to raise our guidance. Our guidance is what we have given. Once we consistently start delivering, and I can tell you a lot of the initiatives we’ve taken on growth will start bearing fruit. Because in this business, customer acquisition, once you get it is sticky. But it also takes time to get new business. But all the initiatives we have put in, right, we are confident we’ll start delivering higher levels of growth, particularly through beauty and cosmetics. And once we are there, I think we will revisit whether we are in a position to then raise our guidance. But as of now, we should assume double-digit growth is 10 plus.
Hemant
So, sir, can we expect a sequential kind of growth from Q3?
Anand Kripalu
No, I’m not going to give more flavor than this, honestly. And we’re not a sequential business either, right? We’re in a year-on-year business. For instance, in Q3, right, you’ll see that in our base numbers as well, some of the regions have a softer quarter because of Christmas. So the western world tends to shut for a week or two weeks because of Christmas and therefore the quarter is softer. So we don’t want to give sequential guidance of any kind. Please stick to double-digit growth with 20-plus margins really as our guidance.
Hemant
So I’ll forget about the quarter, sir. I’ll just talk about the H2. So H2 should be better than H1?
Anand Kripalu
You’re asking me to say things that we don’t want to commit beyond what guidance we have given.
Hemant
Okay, sir. Okay.
Anand Kripalu
So I can’t really give you short-term guidance beyond that.
Hemant
Okay. Okay, sir. Thank you.
Anand Kripalu
All right. Thank you.
Operator
Thank you. [Operator Instructions] Next follow-up question is from the line of Sudarshan Padmanabhan from JM Financial PMS. Please go ahead.
Sudarshan Padmanabhan
Yes, sir. Sir, I would like to understand if I look at your margins, I mean we had talked about 20% plus. Can you give some color with respect to the raw material and crude? I mean, should we be working on a gross contribution for KVs which means that if the crude goes up or down, probably our absolute EBITDA doesn’t change, only the margin changes?
Deepak Goyal
See, currently most of the raw materials are ranged bound. It’s not going very high or very low. And as you know 50%, 55% of our business is contractual business. They will catch up with the price in the next quarter. So we don’t see a big risk. Then you also have that all our efforts are on beauty and cosmetics which is the margin accretive, right? So we will get much better absolute margin on those area and that’s where the growth is also as Anand was saying 10% growth in this year — in this quarter has come from personal care products. So I think we don’t see a big risk, but we will continue to be in the range of 20% globally is our objective. Yeah.
Sudarshan Padmanabhan
Sure, sir. And my second question is on Brazil. You talked about available further expansion potentially in Brazil. I just wanted to understand how much is the capacity of growth and how much is the land available for us to extract.
Deepak Goyal
See, we explained in earlier calls, it’s a modular ruler, right? We can — we have built in such a way that we could continue to expand for the next one or two years. That’s how the brand is built. So we don’t need to add any additional cost and utility and buildings and things like that. However, we need to invest on the capex. Our total capex guidelines will continue to be in our depreciation level. Whether we invest in Brazil or we invest in there, but we will try and ensure that capex is well within that level, but we will prioritize where the opportunities lie.
Sudarshan Padmanabhan
Okay, sir. Sir, how much have we invested in Brazil till now?
Deepak Goyal
$25 million is what we have invested so far.
Sudarshan Padmanabhan
Sure, sir. Sir, one final strategic question. Sir, beyond FY ’27, your aspirational goal and achievement, do we have enough on the plate on the current set of businesses or with the cash that we are generating, should we be looking at any adjacent fees or additional businesses to grow further?
Anand Kripalu
Actually, our stated position as of now is that we want to play in tube and in no other area of packaging. We don’t want to play in aluminum tubes, so we want to play in all forms of ABL and PPL and recyclable tubes. Okay. That’s our business. Now our market shares actually are just about 10% odd in pharmaceuticals and in beauty and cosmetics. So we believe the headroom for growth through beauty and cosmetics within tubes is huge while we continue to inch up on our shares on oral care. Now we believe that this construct of the market opportunity will allow us to deliver sustainable double digit growth. I think if and when we start seeing diminishing opportunities for double-digit growth coming out of our existing space or our chosen strategic areas, that’s when we will think about whether we should use cash to go into any kinds of adjacencies. But what I want to say is that we have already — we are an end-to-end integrated business, starting from polymers all the way to the finished tube. And one of the things we are doing is actually to increase the amount of in-house manufacturing of caps for instance, which is a captive business. Now you may call it an adjacency, but it goes snug with the tube, right? So those are the things we’re doing. But do we want to go into other kinds of laminate? Do we want to go into paper packaging? Honestly, right now that’s out of scope.
Sudarshan Padmanabhan
Sure, sir. Thanks a lot. I’ll join back the queue.
Anand Kripalu
Thank you.
Operator
Thank you. [Operator Instructions] Next question is from the line of Pushkar [Phonetic] from Sequent [Phonetic] Investments. Please go ahead.
Pushkar
Hi, sir. Congrats on great set of numbers. My only question is for the next couple of years we are only planning maintenance capex or there is some capex in like planning [Indecipherable]?
Anand Kripalu
Could you say that again? Please repeat that?
Pushkar
Asking in the next couple of years or two, three years, are we only planning maintenance capex or there is some capex for capacity addition or something — huge capex in the next two, three years that you are planning?
Deepak Goyal
Sure. I will take that question. So we sell more than 8 billion tubes kind of every year. And when we say double-digit revenue growth, it definitely means single-digit volume growth as well, which means that we will be adding anywhere between 600 million to 800 million tubes every year. That is more than the capacity of most players in this business. To deliver that kind of volume growth, we consistently do capacity expansions, right, and that is built into our double-digit revenue model or the cash flow model that we have been talking about. Do we foresee any out-of-the-order extraordinarily large capex at this point in time? or the organic business growth? No, that kind of capex is not foreseen. If there is any M&A opportunity comes in etc., that would come on top, but for that even growth would be on top.
Pushkar
Right, sir. Thanks. That explains a lot. Thanks a lot.
Anand Kripalu
Thank you.
Operator
[Operator Instructions] As there are no further questions from the participants, I would now like to hand the conference over to Mr. Pratik Tholiya for the closing comments.
Pratik Tholiya
Yeah. Thanks, Yusuf. On behalf of Systematix Institutional Equities, I’d like to thank the management for their candid replies to all the questions. Thanks to all the participants for asking the questions. I’d like to hand it over to Anand sir, for any closing comments.
Anand Kripalu
No, I think, thank you Pratik, and thank you everyone for participating and continuing to keep the faith in EPL. Thank you.
Pratik Tholiya
Thank you so much sir.
Operator
[Operator Closing Remarks]