RAJSHREE POLYPACK LTD (NSE: RPPL) Q2 2025 Earnings Call dated Nov. 06, 2024
Corporate Participants:
Ramswaroop Radheshyam Thard — Chairman and Managing Director
Analysts:
Nikhil Shetty — Analyst
Anand Shenoy — Analyst
Rajesh Jain — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q2 and H1 FY ’25 Conference Call to discuss Operational and Financial performance for Rajshree Polypack Limited hosted by Nuvama Wealth. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Nikhil Shetty from Nuvama Wealth. Thank you, and over to you, sir.
Nikhil Shetty — Analyst
Thank you. On behalf of Nuvama Wealth, I would like to welcome everyone to the Q2 and H1 FY ’25 earnings conference call of Rajshree Polypack Limited. Today, we are joined by the management team represented by Mr. Ramswaroop Thard, Chairman and Managing Director; Mr Sunil Sharma, the CFO.
I will now hand over the call to the management for their opening remarks, after which we’ll open the floor for questions. Thank you, and over to you, Ramswaroop sir.
Ramswaroop Radheshyam Thard — Chairman and Managing Director
Thank you Nikhil. Good evening, everyone, and welcome to Rajshree Polypack Limited Q2 FY ’25 earnings call. I’m delighted to have all of you join us today. I hope you all have had the chance to review the Investor Presentation we uploaded yesterday, which provides detailed insights into our performance.
Now let me take you through the key highlights for Q2 FY ’25. For the quarter, we achieved a turnover of INR88.28 crore, a 30.79% increase compared to INR67.50 crore in Q2 FY ’24. This growth is primarily driven by 24.6% rise in volumes, showcasing the strong momentum in our business and the significant potential ahead. Our EBITDA for Q2 FY ’25 stood at INR13.34 crores, an impressive growth of 46.43% compared to INR9.11 crores in the same quarter last year. This has translated into EBITDA margins improved from 13.5% to 15.11% year-on-year.
The profit-after-tax for Q2 FY ’25 was INR5.10 crores, making a substantial increase of 120% compared to INR2.31 crore in Q2 FY ’24. PAT margins have also improved to 5.78% from 3.24%, reflecting our solid performance. Looking at our half-yearly performance, we recorded sales of INR166.98 crores for H1 FY ’25, up 19.11% from INR140.19 crore in H1 FY ’24. EBITDA for H1 FY ’25 stood at INR24.93 crores, a growth of 39.74% over the previous year. The PAT for H1 FY ’25 was INR9.13 crores, reflecting a strong growth of 107%. I’m pleased to share that we have nearly matched last year’s full-year PAT in just half of FY ’25.
In terms of geographical performance, our export business showed steady growth with Q2 FY ’25 export sales at INR10.55 crore compared to INR10.02 crore in Q2 FY ’24. We are confident this segment will continue to grow with fresh export orders, which we have secured. On the product front, we saw significant growth in our sheet sales, which surged to 90% from INR17.97 crores in Q2 FY ’24 to INR34.2 crores in Q2 FY ’25, driven by increased demand in-balance sheets during the festive season.
Our Thermoformed Packaging Products grew by around 8% from INR41.73 crore to INR44.91 crore with a festive demand also supporting this growth. Although we saw a temporary dip in demand from key customers, we anticipate a recovery by the end of this quarter. The Injection Molding segment continues to perform well, growing by 57% from INR4.29 crore to INR6.73 crore, driven by increased export orders and expanded capacity.
Speaking of capacity, we have made substantial strides. We have added a new thermoforming machine increasing our installed capacity to 10,770 metric tons per annum with another machine installation process, which will take it to 11,520 metric ton per annum. Additionally, our new extrusion line, which will raise our extrusion capacity from 20,000 metric ton per annum to 24,000 metric ton per annum with commercial production set to begin in January ’25.
In our injection molding segment, we have successfully expanded our capacity to 3,300 metric tons per annum in partnership with our tool manufacturer. Demand in this sector continues to grow at a rapid pace. We have also made strong progress in product development, including over 20 new products in injection molding category during the quarter, expanding our food packaging portfolio.
We have added 16 new customers, both domestic and international and have participated in two major international exhibitions, Anuga Tech in Mumbai and Fine Foods in Australia. These exhibitions continue to strengthen our brand presence both domestically and internationally. Olive Ecopack has launched more than 125 SKUs and with production stabilized our focus is now on generating demand. We are expecting our first export order coming soon and we have already begun approaching large QSR brands with positive early responses.
With that, I conclude my update for now, and I’ll be happy to take any questions.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] The first question is from the line of Anand Shenoy from EAS Capital. Please go ahead.
Anand Shenoy
Good afternoon, sir. Am I audible?
Ramswaroop Radheshyam Thard
Yeah, yeah, very much, Anand. Go ahead. Good afternoon.
Anand Shenoy
Sir, good afternoon. Congratulations, sir on very good numbers. Firstly is, first is on the overall seed sales have done very well and in that even barrier packaging is doing very well for us. So can you talk about where the demand is coming from and especially on the packaging, like how do you see the current year doing?
Ramswaroop Radheshyam Thard
Yeah. Like as I mentioned previously also in the call that the segment is growing at a good pace. So the demand is coming from basically the markets for Indian sweet and savory segments and being the seasonal period of the year, the demand was good for this particular year. And for the full-year, we look to close on the barrier packaging sales at around INR35 crores to INR37 crores on this particular segment.
Anand Shenoy
Okay. And in barrier packaging machine, now are we at the like — are we at the peak capacity or do you think there is further scope for in barrier packaging?
Ramswaroop Radheshyam Thard
Yeah. The overall revenue scope for barrier packaging is around INR60 crores to INR65 crores from the existing line. So we still have scope to grow further around INR20 crores to INR25 crores of revenue from the existing lines.
Anand Shenoy
Yes, yes. And overall, we are seeing good orders coming on the export side. So you have mentioned about conception of the order. And in the last call, you mentioned about one order for INR20 crores to a distributor. So like where are we on that? And like second-half and next year, like how do you see the exports overall between?
Ramswaroop Radheshyam Thard
Yeah. So that the deliveries for that particular customer has started, commercial production has begun and we have received the first purchase order for INR3 crores and we are expecting another orders coming in. We are month-on-month at this particular rate.
Anand Shenoy
Okay. So this is like this customer will be INR3 crores per month. Is it something like that?
Ramswaroop Radheshyam Thard
Yeah. The first order is at INR3 crores per month and we are expecting it to be roughly in that line.
Anand Shenoy
Okay. Okay. And one more, like you mentioned about someone more customer about confectionery in, we have supply some bolt to the customers. Like what is the scope there and how do you see that customer shaping up?
Ramswaroop Radheshyam Thard
Yeah. So we have received order from that particular customer where they have — first the process is to develop the mold for them as per their requirement because these are tailor-made products. So this supply should start somewhere in May ’25 or so. And there we are expecting a revenue of around INR5 crore to INR6 crores per annum from respective per annum. Yeah.
Anand Shenoy
Okay. And overall for this year, how do you see exports doing?
Ramswaroop Radheshyam Thard
Exports, for this year, we are looking at around — this should be around 15% to 16% of our overall revenue. So we are looking at somewhere around INR45 crores to INR50 crores of revenue coming from exports.
Anand Shenoy
Okay. And overall, for this year, like are we track for INR310 crore kind of numbers?
Ramswaroop Radheshyam Thard
Yes, looks intact as on date. We definitely feel we’ll be achieving those numbers.
Anand Shenoy
Okay. Okay. And on the JV side, the toll up of INR55 crore to INR60 crore this year and breakeven. Is it still on the?
Ramswaroop Radheshyam Thard
I would say is little slow in terms of what we were expecting on stabilizing the production and sales. So we are a little delayed by two, I will say one-to-one and a half quarter. So now production has got stabilized, 125 SKUs has been commercially launched. We have started dispatches and now we are hoping the sales to further pick-up for from this particular month onwards.
Anand Shenoy
Okay. So, for this year like what sales do you expect in, sorry,
Ramswaroop Radheshyam Thard
We are now looking at INR30 crores to INR35 crores of sale for this particular year.
Anand Shenoy
Okay, okay. Okay. And next year like how do you see it, like we were already talking about INR180 crores kind of number.
Ramswaroop Radheshyam Thard
Yeah. So next year, definitely we feel we should be able to do that particular number because the capacity is available for the plant to deliver that number. And in next one quarter, probably I’ll be in more better-positioned to comment on that, but it seems doable at the moment, like definitely.
Anand Shenoy
Okay. Okay. And last question is on the new plant. In the last call, you mentioned you are like thinking about not doing that plant or something like that. Can you?
Ramswaroop Radheshyam Thard
Yeah. So what-if we have done is we have deferred investment in that plant for around six to eight months at the moment. And we have already done significant investment for capacity development for both injection molding and thermoforming at the existing locations. Plus we want to focus more on all it to scale it up. So we wouldn’t want to get distracted for another two quarter with any further investment. We want to stabilize all those investments which we have done and then we will look for looking into Orissa.
Anand Shenoy
Got it. Thanks a lot for answering my question.
Operator
Thank you very much. The next question is from the line of Nikhil Shetty from Nuvama Wealth. Please go ahead.
Nikhil Shetty
Yeah. Congrats on a strong set of numbers, sir. So my first question is regarding the revenue growth only. So based on the Q2 presentation, seed sheet volume has shown a substantial Y-o-Y improvement, that is almost 70% growth. I understand I mean a major portion would be from the barrier and when we look at the packaging side, the volume was only 6%. So could you explain the factor behind the shift in this volume mix?
Ramswaroop Radheshyam Thard
Yeah. So barrier packaging sales has given us that particular momentum in this particular quarter. And as mentioned like this is the time of the year when the demand for this sector goes up and that’s why we see those strong numbers in that particular segment. Generally, the — also the barrier packaging and the general packaging segment have grown by around 8% in terms of volume.
So that is also a growth sector, but Q2 is generally little slow than Q1, generally what we see because April, May, June are the peak months. And as I mentioned in my speech that one or two big customers were little slow in this particular quarter in-demand. So we were expecting around 12% to 15% in packaging sector also, but as one or two big customers went little slow, so the demand was little less in packaging.
Nikhil Shetty
Okay. Okay. And sir, when we talk about barrier packaging, what is the revenue we have generated and what is the peak revenue we can generate from this particular machine?
Ramswaroop Radheshyam Thard
Yeah. So we — in this year, we are expecting to generate around INR35 crores to INR37 crores of revenue from barrier packaging. And peak, we can do INR60 crore to INR65 crores of revenue from the setup which is there on date.
Anand Shenoy
Okay. Then roughly it is 50%, 60% utilization if I say in terms of okay. So over the last when we look at the historical numbers, so over the last 10 quarters, we have seen a consistent Y-o-Y growth in the — both revenue and volume terms, which is quite impressive. So with the strong client addition and expanding scale growing export opportunities, can we expect stronger H2 and FY ’26?
And if you can quantify in terms of numbers, I’m talking about the ’26 number as well because in a bottom-line front, if I look at, in first-half, we reported a loss in JV. And once it starts scaling up, probably we will see the improvement in the overall numbers of JV as well. So that will not impact our number in H2. So based on whatever we have achieved on the standalone basis, is it possible to grow at around 40% 50% in terms of profitability compared to last year, this year?
Ramswaroop Radheshyam Thard
Yeah, like as we have seen H1, we — the bottom-line has improved significantly as compared to H1 last year. So we should have at least 40% more profitability as compared to last year for sure.
Nikhil Shetty
Great, sir. And when we look at the overall now working capital cycle, it has improved a bit, but still, I mean, it’s higher than 100 days. So any initiative there as our injection molding is also doing well and most of the capacities are also operating at a decent level. So is there a possibility that reducing that going-forward?
Ramswaroop Radheshyam Thard
Yeah. As you can see from last year from 155 days, it has come down to 115 days. So we are aiming to bring it below 100 and it’s a continuous process, which is going on. So we’ll definitely — we should definitely see an improvement in next two quarters coming down below 100.
Nikhil Shetty
Great. Any targeted timeline for this?
Ramswaroop Radheshyam Thard
Two quarters.
Nikhil Shetty
Okay, okay, great. That’s it from my side. Thank you.
Operator
Thank you very much. [Operator Instructions] The next question is from the line of Rajesh Jain from NM Investment. Please go ahead.
Rajesh Jain
Good evening, sir. Thanks for the opportunity. Congratulations on the good set of [Technical Issues] wish you the Rajshree team a very happy Deepawali.
Ramswaroop Radheshyam Thard
Thank you. Wish you and Happy Diwali. Your voice is little echoing.
Rajesh Jain
Is it better, sir?
Ramswaroop Radheshyam Thard
Yes, yeah.
Rajesh Jain
Sir, my first question is regarding the tall manufacturing additional capacity. Now you said that you have already installed an additional and now the overall capacity is 3,000 metric tons and you have also received some additional export orders. So are you confident of doing around INR30 crores during the current year plus or will we turn positive at the PAT level from the tong manufacturing business.
Ramswaroop Radheshyam Thard
Yes, you are correct. We are looking to do a revenue of around INR28 crores to INR30 crores from the injection molding segment for this particular year and we will definitely turn positive impact level at that particular number.
Rajesh Jain
Okay. Very good to know, sir. Sir, you’ve already said that you have added additional capacity both in thermal firming and printing all that. So — but at the same time, you have deferred the investment in the Orissa plant also. So just wanted to know with the current rate of growth in the revenues, don’t you see — is there any situation where we may run short of capacity or something?
Ramswaroop Radheshyam Thard
I would say like the idea was to first consolidate in the existing location and to abstract maximum utilization the same infrastructure to bring down the cost and improve the bottom line. So we were working in that particular direction and so definitely we may see one or two quarters of shortfall into capacity not that we have permanently delayed it, but just for another one or two quarters, we want things to get little consolidated and then think of further investment.
Rajesh Jain
Okay. So is there any provision to add some more capacity in the existing place at the? Hello?
Operator
[Operator Instructions] We have the management line with us. Mr. Rajesh, you can go ahead with your question, please.
Rajesh Jain
Yeah. Sir, what I was asking is, is there any more — any provision to increase the capacity of our regular — molding or the thermoforming and all that is existing place?
Ramswaroop Radheshyam Thard
Maybe another one more machine we can we can sneak in that sector, I will say, not beyond that at the moment.
Rajesh Jain
And this one machine means how much would be the capacity?
Ramswaroop Radheshyam Thard
Around 750 to 800 MT per annum.
Rajesh Jain
Okay. And this Orissa plant, as and when you take a decision to go ahead, how many months would it require to get it installed and running?
Ramswaroop Radheshyam Thard
14 to 16 months roughly we anticipate.
Rajesh Jain
Okay. Okay. So my next question is regarding the debt position. So there is not much improvement in the debt level. So you had given, of course, not much reduction in the debt, but by the year end, are we going to see some reduction in the debt?
Ramswaroop Radheshyam Thard
Yeah, that’s where we said like we will consolidate the things for next two quarters. So that should definitely bring down the debt for us like. We don’t foresee any investment going much into now in Olive also most of the expansion has been completed. So we don’t foresee any major investments at least for next two quarters?
Rajesh Jain
Okay, fair enough. And lastly, sir, see, you have given a revenue guidance of around 325 to 350 for FY ’25. So how much can we expect in ’26 now that all the planned new capacity would have been stabilized and up and running. So how much can we expect in FY ’26?
Ramswaroop Radheshyam Thard
Yes. So for this year, we had given guidance of INR315 crores to INR320 crores. And for next year, we can look at around 12% to 15% of further growth from this particular level.
Rajesh Jain
Okay. And I think we were earlier contemplating around INR475 crores or so. So it looks like it will be lesser than that.
Ramswaroop Radheshyam Thard
For the next year,
Rajesh Jain
Yes, sir.
Ramswaroop Radheshyam Thard
That looks possible with the revenue of olive, we have given that number with the revenue of olive. So if that we are able to do INR170 crore INR80 crores over there, so probably it will not be too far from what guidance we have given of INR475 crores.
Rajesh Jain
Okay. Now that you’re consolidating and the new capacities are coming in the existing plant, so what EBITDA or the net margin are you targeting for next financial year?
Ramswaroop Radheshyam Thard
I will say on the conservative side, we’ll keep the 14.5% plus-minus 0.5% is what EBITDA margin we will look to maintain
Rajesh Jain
Okay. So 14% is what — because we have been around 12% or so for last two, three quarters. So you say next year we could reach around 14% minimum?
Ramswaroop Radheshyam Thard
Yeah.
Rajesh Jain
Okay. Okay, sir, thank you very much and wish you all the best.
Ramswaroop Radheshyam Thard
Thank you.
Operator
Thank you very much. [Operator Instructions] As there are no further questions, I would now like to hand the conference over to the management for the closing comments. Thank you, and over to you, sir.
Ramswaroop Radheshyam Thard
Thank you for your valuable questions and taking your time to join us today. I hope I was able to address all your queries. Wishing you all the best good help everyone with this I’d like to hand over the call to Nuvama to conclude the session. Thank you.
Operator
[Operator Closing Remarks]