Ladies and gentlemen, good day and welcome to EPL Limited Q2 FY 2025 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 a sk questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. 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.
Yeah, thank you, sir. 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 2025 results. From the management side, we have Mr. Anand Kripalu, MD and Global CEO; Mr. M. R. Ramasamy, COO; Mr. Deepak Goyal, CFO; Mr. Srihari Karnam, President, AMESA Region; and Mr. Omkar Gane, 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.
Thank you so much, Pratik, and hello, everyone. And thanks for joining us for EPL Q2 FY 2025 earnings call. We are pleased to report a strong Q2 performance with improvements 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 a 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 & 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 were 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 R OE and ROCE expansion opportunity. We have delivered a strong EPS of 2.73 per share, an increase of 73% over prior years. Consequently, we are delighted to announce an enhanced interim dividend of INR 2.50 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 tubes, and our recyclable tube mix reached 33% in quarter two FY 2025.
We are pleased to report a retained and improved EcoVadis Gold rating, with our score advancing from 70 to 78, now placing us among the top 2% of companies globally, a testament to our reduced environmental 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 Print Week 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'm 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 & Beyond. The Personal Care & 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 NEOSeam 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 2025 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 augments 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 co ntinued success. With that, we will now open the floor for 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 touch-tone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question is from the line of Sameer Gupta from IIFL Securities Limited. Please go ahead.
Hi, good evening, and thanks for taking my question. 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, it 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?
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.
This is expected to then anniversarize, and this quarter it has anniversarized more or less?
It will annualize from Q3 onwards.
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 laminate 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?
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'll just give you my point of view, right? And it may not be the way that point of view plays out, right? I think that we have India and China
sourcing basis for our laminates. So today, for instance, most of the laminates we sent to the U.S. go from India because there is a penal rate of import duty from imports from China. Now, the probability that there'll 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, you know, 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 costs, and that will go into the pricing model with customers. 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 U.S. market.
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?
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 volume, 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.
Got it, sir. That's all from me at this point. I'll come back in the queue for any follow-ups. Thanks again.
Okay. Thank you, Sameer.
Thank you. Next question is from the line of Sudarshan Padmanabhan from JM Financial PMS. Please go ahead.
Thank you for taking my questions and congrats on the excellent numbers. Sir, you know, while all the regions have done extremely well as far as margins are concerned, you know, if I look at AMESA, I mean, you know, right from last six quarters, the margins have been coming down. You did talk about, you know, currency impact on Egypt. But ex FX, is there any cost pressure that you see, and how do you see the margins, say, in the next four to six quarters?
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 margins 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 are probably not out of range, by the way, on the India margins, 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 margins 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.
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, you know, from a strategic level, you know, we have a new plant today in Latin America and Brazil, and we are, you know, driving for volumes. In your thought process, I mean, today when you go and, you know, bid for business that you need to reinvest in your business, say, from a longer-term perspective, because as the, you know, 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, you know, margins are concerned? Because you also need to reinvest in the business and, you know, give the cost benefits to your clients to basically, you know, gain more market share.
So if you can talk a little bit more, the thin line between, you know, volumes taking market share and where you are comfortable as far as long-term margins are concerned.
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+ 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, you know, 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 has actually tracked very well, and I have to say we are 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, 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 INR 350 crores- INR 400 crores, right? And 60% of this amount goes into growth CapEx. So we have a sizable capability which is available to us to drive that growth on double-digit revenue, and we believe we will continue delivering on that promise.
Sure. Thanks a lot, Anand. Thank you.
Thank you. Next question is from the line of Vinamra Hirawat from JM Financial. Please go ahead.
Hello?
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'll move to the next question from the line of Harit Kapoor from Investec. Please go ahead.
Yeah, hi. Good evening. Congrats on excellent results. I just had two questions. One was, you know, you spoke about some, you know, carry forward negative pricing impact. 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, you know, how much would be that impact at a consolidated level? So that's the source of my question.
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 anniversaried by and large.
Got it. So just a follow-up, is that Q3 should see almost a complete anniversarization across the market space, okay?
Yes, that is correct.
Got it. And the second one is on Europe. I mean, you did answer the question on the margins, etc. But just on this 21% growth, you know, just if you could kind of double-click a little bit more on, you know, any new customer wins or, you know, significant change there, you know, etc., that's happened for this quarter? Because, you know, as the earlier participant was asking, it's 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 number specifically.
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 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 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 had 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 customer's demand and requirements, right?
I think that's the positive that's come out of that.
Got it. The 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 tubes. Would you just remind me in terms of, you know, what are the targets for, you know, what part of the portfolio, 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?
Yeah. In two to three years, see, we are currently at 33%. In the next two to three years, 60%+ for sure. Okay? Maybe even higher, right? And, you know, 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 who doesn't want to convert 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, for instance, right, and that's in the public domain, have made a commitment that there will be 100% recyclable fuel in the not-too-distant future. Okay? Now, obviously, we need to have the backend ready, which we do, right? And we're going to supply there.
All I can say is that, you know, last fiscal for the full year was 21, right? We're now at 33. This year's average probably will be mid to late 30s, maybe even touching 40. So it is converting at an exponential rate, at an accelerating rate, right? And I think this is here to stay.
Anand, last question from my end was, you know, are you seeing this as a source of competitive advantage from a market share perspective right now? Are you already seeing that, you know, given you have the backend, you can scale up small clients, big clients, etc., and you have all the, you know, you have the patents, you know, the ratings are also, you know, in your favor in terms of, you know, you 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, you know, market share gain, you know, leading, you know, outcome?
So I just want to frame this. So we are not the only people in the world who are doing sustainability.
Correct.
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 backend readiness, where over three years we have been investing in CapEx to ensure that we're 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're seeing some of that happening in India, right? There are opportunities in other places as well. Net-net, absolutely yes, we see this as a source of competitive advantage and an opportunity to gain wallet share.
Very clear. Wish you all the best. Thank you.
Thank you.
Thank you. Participants, to ask a question, you may press star and one. Next question is from the line of Vinamra Hirawat from JM Financial. Please go ahead.
Hi, sir. Can I speak?
Yes, please go ahead.
Mr. Hirawat I 'm sorry, I can't hear at all.
Hello?
Hello. Voice is breaking, sir.
Is it better?
Still breaking.
No, no, no. It is impossible. I'm sorry.
Request you to please disconnect and reconnect as you are not audible, sir.
Okay. Okay.
Next question is from the line of Sumant Kumar from Motilal Oswal. Please go ahead.
Yes, sir. When we talk about the Europe margin, you are talking about manufacturing alignment. So can you elaborate what is the manufacturing alignment? And second thing is for the margin expense, any other factors like operating leverage or product mix changes? What are the other factors driving margin for Europe?
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 spread your efforts 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 a project that is currently underway that will play out in the next four or 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.
Okay, and this margin is going to sustain?
I have said that mid-teens margin will sustain. Now, you know, mid-teens could be 100% or more or less here and there, but mid-teens margin will sustain. That's the guidance we've given.
Can you talk about Brazil, how Brazil's sales margin? And are we doing any CapEx in there?
Brazil is doing very well. Brazil margin, our margin is superior to the Americas and to our global margins. We have been pleasantly surprised with the kind of demand we are getting. We're getting demand not just from oral care, by the way. We're getting a lot of demand also for Beauty & Cosmetics, which is in line with our strategy. Beauty and cosmetics typically tends to be ASP accretives and margin accretives for the business. We are currently evaluating capacity expansion in Brazil, particularly to support the Beauty & Cosmetics demand that we are seeing.
Thank you so much.
Thank you.
Thank you. Next question is from the line of Akshat Bairathi from RSPN Ventures. Please go ahead.
Hi, sir. Thank you for taking my question. So I have just one bookkeeping question. So your other income has doubled from the previous quarter. So is there any one-off, or why has it increased?
Sorry, I missed the question. Other income has doubled.
From the previous quarter. So is there any one-off, or what has contributed to the increase in the other income?
It has two parts. One is that we get some incentive in Brazil, which is 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.
Just a follow-up, sir. Will this come in the coming quarters as well, or this comes in single quarters in any year?
See, the Brazil incentive will continue. The export incentive is dependent on the quantity of export that is done in a particular quarter and could go up and down, and hence, it could kind of go up and down accordingly.
Okay, sir. Thank you. Thank you. And all the rest.
Thank you.
Thank you. Next question is from the line of Anish Jobalia from Girik Capital. Please proceed.
Yeah. Hi, sir. Good evening. Hope I'm audible. So my question is related to the finance cost. So we are basically run rating at around INR 30-odd crores. So if we annualize this, we are paying around INR 120-odd crores of finance cost. And at the start of the year, our debt was around INR 800-odd crores. So just want to understand 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? It would be helpful to understand this, sir.
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, factoring, 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, INR 120 crores versus INR 800 crores are not like-to-like comparables.
Second is what you see is a closing date number, and hence, average for the quarter could be different. The third point is that we also have debts in countries like Brazil, Mexico, and Colombia. And these Latin American countries have higher rates 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.
Got it, sir. So is there any scope for restructuring in this high-cost country to show us to be able to reduce this interest cost going forward? Is there any strategic decision around this?
So if you look at our overall finance cost, 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 try our basic values, it seems that could we kind of borrow in India and then 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. The cost more or less fits there. However, having said that, we are consistently evaluating various options and will continue to do so.
Okay, sir. And my second question is, 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?
I mean, what I'll tell you is that on an eight-month 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. Right? 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 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 E-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 spitting 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 wait and see how it goes.
Thank you, sir, and all the very best for the next few quarters.
Thank you.
Thank you. Participants, to join the question queue, you may press star and one. Next question is from the line of Hemant, Individual I nvestor, please go ahead.
Sir, congratulations on a very good set of numbers and seeing the oppo rtunity. Sir, I have one question. In H1 FY 2025, we have done an EBITDA of close to INR 410 crores and a revenue of INR 2,100 crores across. And our expectation for FY 2026 was INR 1,050 crores to INR 200 crores of EBITDA and revenue in the range of INR 5,400 to INR 5,800 crores. So are we sort of upping our aspirational target for FY 2027 given the kind of decent growth which we had in H1?
You are talking about the guidance we had done for FY 2027 when we did the investor roadshow and in the investor deck. Is that right?
Yeah. I had a look at a lot of investor presentations, old investor presentations. I think it was given FY 2024 investor presentation.
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 have set, right, that's great. But I think we have our work cut out to actually deliver whatever we have committed to 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 margin.
Anand, if I could just add, I think more important is that the initiatives that we called out in that presentation. We called out initiatives for double-digit revenue growth, sustainability-led competitive advantage, and continued margin expansion. I think those initiatives have played out quite well. 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 as management are continuously striving to achieve and beat those targets.
Because I think, sir, INR 410 crores of revenue in H1, even if I annualize it in FY sorry, 410 crores of EBITDA in H1 FY 2025. And if I just annualize it, it comes down to nearly 800 crores of EBITDA, right? And 1,050-1,200 crores of EBITDA is our special target for FY 2027. And we are hitting, maybe crossing 800 crores of EBITDA in FY 2024 only.
I think you're complimenting us for the good work that we have done.
Obviously, sir. Obviously.
We'll kind of do that. And then we kind of do our next set of, let's say, 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.
So, Anand, 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 it be in the late teens or something? Or maybe early teens?
I think we first need to get to double-digit growth.
Double-digit growth is, we are already at 9.5%, right?
No, we are at 9.5, but we are not at 10.5. 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 tricky, 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. Once we are there, I think we would revisit whether we are in a position to then raise our guidance. As of now, we can assume double-digit growth is 10+ .
So, sir, can we expect a sequential kind of growth from Q3?
So I'm not going to give more flavor than this, honestly. And we are not a sequential business either. Right? We are 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+ margins really as our guidance.
So I'll forget about the quarter, sir. I'll just talk about the H2. So H2 should be better than H1?
You're asking me to say things that we don't want to speculate beyond what guidance we have given.
Okay, sir. Okay.
I can't really give you short-term guidance beyond that.
Okay. Okay, sir. Thank you.
All right. Thank you.
Thank you. Before we move to the next question, a reminder to the participants to ask a question. You may press star and one. Next follow-up question is from the line of Sudarshan Padmanabhan from JM Financial PMS. Please go ahead.
Yes, sir. Sir, I would like to understand if there are exaggerated margins. I mean, we had talked about 20%+ . Can you give some color with respect to the raw material and crude? I mean, we should be working on a gross contribution per kg, which means that if the crude goes up or down, probably our absolute EBITDA doesn't change. Only the margin changes.
See, currently, most of the raw materials are range-bound. It's not going very high or very low. And as you know, 50%-55% of the 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 areas. That's where the growth is also at. And I'm just saying 10% growth in this year in this quarter has come from personal care and 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.
Sure. And my second question is on budgets. We talked about availability and further expansion potentially in business. I just wanted to understand how much is the capital we have put and how much is the land available for us to expand?
We explained in earlier calls it's a modular building, right? We have built things in such a way that we could continue to expand for the next one or two years. That's how the plan 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 in the capital. Our total capital guidelines will continue to be in our appropriate level. We invest in budget or we invest in that, but we will try and ensure that capital is well within that level. But we will prioritize where the opportunities are.
How much have you invested in Brazil till now?
25.
$25 million is what we have invested so far.
Sure.
So one final strategic question, sir, beyond FY 2027, your aspirational goal and your 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 adjacencies or additional businesses to grow further?
Actually, our stated position as of now is that we want to play in tubes 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 PBL 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're 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. All 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.
Sure. Thanks a lot, Deepak.
Thank you.
Thank you. Participants, to ask a question, you may press star and one. Next question is from the line of Pushkar from Sequent Investments. Please go ahead.
Hi, sir, congrats on doing 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 planning too?
Could you say that again? Please repeat that.
I think in the next couple of years, are we only planning maintenance CapEx or there is some CapEx for capacity addition or something, a huge CapEx in the next three years that we are planning?
Sure. I'll take that question, so we sell more than eight billion tubes kind of every year, and when we say double-digit revenue growth, it definitely means high single-digit volume growth as well, which means that we will be adding anywhere between 600-800 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-ordinary, extraordinarily large CapEx at this point in time? For 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.
Right, sir. Thanks. That explains a lot. Thank you a lot.
Thank you.
Thank you. Ladies and gentlemen, to ask a question, you may press star and one. Participants, to join the question queue, you may press star and one. 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.
Yeah, thank you, sir. 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 question. I'd like to hand it over to Anand, sir, for any closing comments.
No, I think, thank you, Pratik. And thank you, everyone, for participating and continuing to keep the faith in EPL. Thank you.
Thank you so much, sir.
Thank you. On behalf of Systematix Institutional Equities, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.