UFLEX Limited Q1 FY23 Earnings Conference Call Insights

Key highlights from UFLEX Limited (UFLEX) Q1 FY23 Earnings Concall

Q&A Highlights:

• [00:07:51] Subham Agarwal from Aequitas asked about the current market capacity and growth outlook  of the new line commissioned  in the Aseptic packaging division. Rajesh Bhatia, Group CFO said the current rated capacity is 7 billion packs per year. UFLEX is not looking at any fresh investment, but will debottleneck the existing facility to optimize production between 8-9 billion packs a year.

• [00:08:46] Subham Agarwal of Aequitas enquired about the current market share in Aseptic packaging division with the new commissioning. Rajesh Bhatia, Group CFO replied that the company will have close to between 22-25% market share. And the sustainable growth expected is 18-20%.

• [00:09:18] Subham Agarwal with Aequitas asked about the total turnover expected with the new capacity at 7 billion pack. Rajesh Bhatia, Group CFO answered that UFLEX can do a topline of between INR1,200-1,400. And the margin should be 20% EBITDA level.

• [00:14:57] Chirag Singhal from First Water Capital enquired if there was any one-off expenses in the P&L due to currency depreciation in Russia for 1Q23. Rajesh Bhatia, Group CFO said that due to currency impact UFLEX’s loan book swelled by about INR163 crores. And UFLEX also added that there was an impact on P&L, but the exact numbers cannot be shared.

• [00:21:12] Chirag Singhal from First Water Capital asked about the capex and the payback period. Rajesh Bhatia, Group CFO answered that a typical plant depending on the location and the cost of civil work will cost between $10-12 million and the payback should ideally be between about 4-5 years.

• [00:29:16]  Yash from Dante Equity enquired if the Nigeria plant has turned EBITDA positive in 1Q23. Rajesh Bhatia, Group CFO replied that UFLEX did turn EBITDA positive in 1Q23.

• [00:29:56] Yash from Dante Equity also asked that what kind of topline the Dharwad expansion add on full capacity utilization. Rajesh Bhatia, Group CFO clarified that Dharwad expansion, on producing 4,000 tons, could give about INR50 crores per month PAT.

• [00:32:23] Yash from Dante Equity asked about operating margin expansion, if the company is comfortable with 18%. Rajesh Bhatia, Group CFO answered that a range of 17-19% is a good comfort zone for the company.

• [00:33:08] Yash from Dante Equity enquired about the demand situation in Europe and US. Rajesh Bhatia, Group CFO replied that demand currently in Europe is a bit soft as it’s struggling with its own energy issues. However, on an annual basis, UFLEX should be able to outperform last year performance.

• [00:39:45] Shivam Saxena from ICICI asked about the impact of plastic ban from 1Q23 onwards.  Rajesh Bhatia, Group CFO said there is no impact on UFLEX due to plastic ban as none of the items in the banned list effect the company.

• [00:43:43] Rushabh Shah from Anubhuti Advisors enquired when the new facility is expected to be commissioned. Rajesh Bhatia, Group CFO replied that the company is targeting later 3Q23 or beginning of 4Q23.

• [00:56:12] Subham Agarwal with Aequitas asked about the company’s vision over the next 3-5 years and areas of focus. Apoorvshree Chaturvedi Director answered that the company wants to grow more on the film business, along with growth in the Aseptic business.