Ladies and gentlemen, good day and welcome to EPL Limited Q4 FY 2026 earnings conference call hosted by Systematix Institutional Equities. As a reminder, all p articipant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during 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.
Thank you, Nitesh. Good evening, everyone. On behalf of Systematix Institutional Equities, I welcome you all to the Q4 and full year FY 2026 earnings conference call of EPL Limited. Representing the management today we have Mr. Hemant Bakshi, MD and Global CEO, Mr. M. R. Ramasamy, COO, Mr. Deepak Goyal, CFO, and Mr. Onkar Ghangurde, Head - Legal, Company Secretary and Compliance Officer. We thank the EPL management team for giving us the opportunity to host this call. Without further ado, I will hand the floor to Mr. Hemant Bakshi to commence the proceedings. Over to you, sir.
Thank you. good evening, everyone, and thank you for joining us for EPL Limited's Quarter Four FY 2026 earnings call. This has been a landmark quarter for EPL. We announced our proposed merger with Indovida, a transformational move that will significantly enhance our scale and strengthen our position as a leading player in emerging markets. Together, the combined entity will create a nearly $1 billion consumer packaging platform with a broader product portfolio, stronger manufacturing and innovation capabilities, and an expanded presence across high growth markets, while also being margin and value accretive. We, as a management team, are very excited about this combination. I'm pleased to share at the same time we have delivered exceptional operating performance in a dynamic and challenging macroeconomic environment, reflecting the resilience of our business model and the strength of our execution.
Revenue for the quarter grew by 17.6%, with EBITDA growing by 17.2% and margins sustained above 20%. This is the highest ever revenue growth in the last five years. This is also the fourth consecutive quarter of double-digit revenue growth, reflecting the consistency and strength of our performance. The momentum was led by beauty and cosmetics, which delivered a record 30% year-on-year growth aligned with our strategic focus on this segment. Oral Care also showed a healthy recovery, growing 10% year-on-year. Growth during the quarter was broad-based, with all four regions delivering double-digit performance. EAP and the Americas led the way, growing 25% and 24.1% respectively, driven by a focused push in beauty and cosmetics, new customer additions and strong pipeline conversions. Europe also delivered a robust performance, growing 15.5%.
AMESA grew by 10.4%, while India standalone recorded a healthy 11.5% growth. EBITDA margin stood at 20.2%, with all regions within our guided operating range, marking the seventh consecutive quarter of 20%+ margins. PAT for the quarter, excluding exceptional items, marginally increased by 1%. On a full year basis, PAT grew by 15%. For the full year, we delivered a solid performance. The revenue grew by 13% in line with our commitment to deliver consistent double-digit growth. EBITDA increased by 15.8% with margins at 20.4%. Our strategic shift towards Beauty and Cosmetics is now translating into results, with the segment delivering fourth consecutive quarter of over 20% growth in this segment and an exceptional 30% growth during the year.
This helped us effectively manage temporary headwinds in Oral Care. Our personal care and beyond mix now stands at 53%. Beauty and cosmetics is now larger than Oral Care in most key markets, marking a clear shift towards a more balanced and diversified portfolio. Strong EBITDA and PAT performance combined with healthy cash flow generation have enabled a further deleveraging of our balance sheet with net debt to EBITDA improving to 0.52x. Return on capital employed also improved to 19%, expanding by 96 basis points. Sustainability and innovation. Sustainability and innovation continue to be integral to our growth agenda. During the quarter, sustainable tube formats contributed 38% of total sales, reflecting steady progress in customer adoption. We are also proud to have achieved the EcoVadis Platinum rating this year, placing us among the top 1% of companies globally on ESG performance.
We are the only packaging company from India to be globally certified. Innovation remains a key focus area with continuous progress across advanced tube formats and differentiated solutions aligned to evolving consumer needs. EPL was certified as a Great Place to Work across seven countries this year, a reflection of our co nsistent efforts to build an inclusive, engaging, and high-performance workplace. Looking ahead, let me first address the impact of current Middle East crisis on our business. The crisis has affected both the availability and cost of our key raw materials. We are proactively navigating the situation with a clear and structured approach. We are prioritizing supply security for our customers while ensuring that cost impact gets fully passed on. In these dynamic times, we realize that strength of our decades-long supplier partnerships and meaningful scale allow us to be a reliable partner for our customers.
With nearly 50% of our business covered under contractual passthrough arrangements and capabilities built post-C OVID to effectively implement passthroughs across the balanced business, we remain confident of delivering robust absolute EBITDA growth. Our approach during this period is anchored in a few clear principles, executing with agility, maintaining financial discipline, safeguarding customer relationships, and continuing to drive long-term value creation. As we navigate this environment, our priorities for the future remain clear. First, to sustain the growth momentum in beauty and cosmetics. We have now delivered consistent performance, and with ahead of the curve investments in capacity, innovations, extruded solutions, front-end specialization, and new technologies, we see strong headroom to maintain this robust growth trajectory. Second, we remain committed to scaling in high-growth emerging markets. Brazil continues to outperform and deliver strong growth.
Our plant in Thailand is gaining traction, supported by a strong pipeline and new customer acquisitions. Thailand represents a large and attractive beauty and cosmetics market with significant long-term potential for us. We are strengthening our presence and capabilities to capture this opportunity while also exploring new markets that represent white spaces. Third, we remain focused on margin discipline and capital efficiency. We continue to focus on delivering profitable growth and improved margins through scale benefits and efficiency projects. In closing, FY 2026 has been a defining year for EPL, marked by consistent double-digit growth, resilient margins, and a transformative strategic milestone with the announcement of our proposed merger. As we move into the next year, we remain focused on sustaining this growth momentum, executing our strategy with discipline, scaling our presence in high-growth markets, and navigating near-term challenges with agility and a continued hunger for more.
Thank you for your continued support, and we will now open the floor for questions.
Thank you very much. We will now begin the question and answer session. Ladies and gentlemen, we will wait for a moment while the questions get assembled. We have first question from the line of Sanjesh Jain from ICICI Securities. Please go ahead.
Good evening, sir. Thanks. Thanks for taking my questions and for this opportunity. First, on the point, you did touch upon your initial remark. Post-COVID in an inflationary environment, we have seen a two year of struggle to reach back to the margin of 20%. You did made a point that you have taken a corrective measure in terms of contracts passthrough and all. How much are we prepared in this scenario? Because this appears to be very similar, higher logistic cost, higher raw material cost, higher power cost in Europe. It appears to be a very close scenario what happened for us between 2023 and 2024. How should we see FY 2027 playing out for us?
Yeah. Okay. Thank you very much, Sanjesh, for that question. Obviously very, very topical and something which is top of mind for everyone. Firstly, I think this is a significant event. There's no question about it. There are two important things that we are dealing with at this point in time. The first is to secure supply availability, which is something which is extremely important for our customers, and second is then to manage cost. As far as the first is concerned, as I mentioned, we have longstanding relationships with our supply partners, as well as the fact that we are a scale player, which gives us an advantage. We've made sure that availability is adequately covered till, at least at this point in time, till middle of July, and we continue to increase that on a weekly basis.
Therefore, on availability, we are in a strong position. I think on passthrough of our cost, our model is much more advanced and sophisticated compared to where it was at the time of COVID. We've learned a lot from that period as well. More than 50% of our business comes from contractual customers, where there is a clear agreement on pass-through. On the other customers, we've been very proactive by being in the market and making sure we are able to get price increases. At this point in time, we are very confident that we will be able to manage the cost impact that we will feel through this crisis.
When we say pass-through, contractual term, is this pass-through for the raw material, or this also include the logistic plus currency plus freight? How is this pass-through working as of now? I think in the past, the problem was that we were able to pass on the raw material cost inflation, but other operational cost inflation is what took a lot of time for us to recoup those costs and renegotiate the contract.
Yeah. Our model right now is a landed cost plus power pass-through model, and therefore it covers a lot of things which you've spoken about. That is something which we have covered for, and this has been something which we've also learned through and evolved over a period of time.
Got it. My second question is on the availability which you touched upon. Have you seen any, or have you been in a position that where we were not able to meet the requirement? Is the shortage a reality, and hence, if we are able to procure the raw material, we have an opportunity to grab some market share?
Availability, overall is a challenge. In our case, we've been able to secure supplies of all our raw materials, as I've already mentioned. We are being very agile at this point in time, where we are being able to expand our inventories and extend this on a weekly basis. At this point in time, across all our raw materials, we are secure. Having said that, this is a difficult time, challenging time, and we do feel that we have some competitive advantage in a situation like this, and therefore there would be some opportunity for market share gains as well.
Got it. One follow-up question on AMESA. The revenue appears to have grown 10%. I think a lot of pricing pass-through would have happened. EBITDA is still at just 1% growth, right? EBIT growth - 11%. We have seen volume recovery for some of the FMCG players as they have reported the result. How should we see AMESA? Are we expecting a recovery or a recovery in the EBITDA and EBIT for AMESA in FY 2027?
Yeah. I will cover one part of the, your question and then pass on to Deepak, our CFO, who can respond to the second half. I think you implied that in this volume growth, there might be some effect of the Middle East crisis. I just want to clarify, that's not the case. This quarter has not really been to that extent affected by the Middle East crisis. This is really underlying growth which we are seeing. I think it's made up of two very important factors. I think one is that beauty and cosmetics, which is something which we've spoken about in the past, which is a strategic priority for us, is gaining momentum in AMESA, especially in our large market of India, and we are seeing really good response there.
That continues to grow quarter-on-quarter. I think in addition to that, we've clearly seen recovery in the Oral Care category as well. When the two of them come together, we get good results on the top line as indeed you are seeing for India standalone as well as AMESA. I think on bottom line, I'll ask Deepak to cover that part.
Yeah. Hi, Sanjesh.
Hi.
AMESA margins remain structurally very strong. If you look at full year, our margins have improved from 18.5% last year to 18.7%. This quarter is particularly impacted because of two one-offs. One, we had CEO transition related cost. We had two CEO costs in this quarter, which impacted. Second is last year, margin included one-off reversal, because of which the base is high. If we equalize for both, then our margins are in the target range and that's reflected in the full year numbers.
Got it. one question on beauty and cosmetic. Earlier we used to tell that when as the beauty and cosmetic contribution increases, we will see a kicker in the margin. This year has been a exceptionally strong year for beauty and cosmetics, but that really didn't translate into the better margin. Though we are able to hold on to 20%, I thought there was a scope to increase further considering that there was a product mix tailwind with us.
If you look at our margin, Sanjesh.
Par don, please be on hold. Management line has disconnected. I'm reconnecting. Please wait. Pardon, management line has been reconnected.
Yeah. Hello?
Yeah. Deepak, we can hear you.
Yeah. Sanjesh, margins, let's look at full year to full year because that's the right benchmark. We have improved from 19.9% to 20.4%. Right, which is a 50 basis point expansion in a year on a already high base. Another thing is that we have got this margin improvement when we continue to invest in the beauty and cosmetics category. We are investing in the front line. We are investing in innovation. We are also investing in the capabilities across both back-end and front-end, right? Those investments, if you see some of our cost lines, et cetera, have grown. I have mentioned it in the past as well, that our priority is to drive growth, and we will resource the growth fully, because we believe that these are the good good costs. Hence the expansion is gradual, and that's how we expect it to continue.
No, Deepak, I was just looking at EBIT because some of the currency-led benefit would have come in EBITDA, while that get negated at the level of depreciation, right? You'll have higher EBITDA, you'll have higher depreciation. That's purely a translation effect. EBIT margin have not really grown. So my fear is that the growth what we are putting, I completely appreciate that we are focusing on growth. No doubt that's the priority for us. If I look at EBIT level, the growth really doesn't look like as strong as it appears at the level of EBITDA.
If I look at EBIT, again, I prefer to look at full year numbers versus the quarter when we are comparing as a structural business performance. Our revenue has grown at 13%, our EBITDA has grown at 15.8%, EBIT has grown at 18%, EBIT has moved from 11.8% to 12.3%. Even in EBIT we see 50 basis point expansion. You're right, if you look at our CapEx for this year, we have spent INR 480 crore +, which reflects the investment that we are making in B&C. There are investments in all the lines, but all of the investments are in the areas where we want to grow and the results are also reflecting.
At the same time, we are very, very conscious of our margin profile and how we are spending costs. I believe both EBITDA and EBIT are moving in the right direction.
No, I was referring to more Q4, Deepak.
Yeah. Q4, my request is, Sanjesh, that for these structural questions saying, are we really improving our EBITDA margin or not, a slightly longer term allows us to see how we're performing on a yearly basis.
No, that's fair enough. That's fair enough. Just one last question. With the improving volumes in India, are we hopeful of a better AMESA performance in FY 2027?
I think, as we've mentioned in the past, we are clearly seeing improvement on Oral Care, which had headwinds which we had faced last year. We feel confident that this year will be a much better year in oral, and we are sustaining our B&C momentum. We remain very, very optimistic about the AMESA region and more specifically India.
Got it. Great. Thanks for answering all those questions and best of luck for the coming quarters.
Thank you. We have next question from the line of Sameer Gupta from IIFL Capital. Please go ahead.
Hi. Good evening, sir. Congrats on a good set of numbers. Thanks for taking my question. Firstly, sir, can you just quantify the amount of inflation that we are facing in our cost basket? I know Sanjesh asked this question, but last time around we saw EBITDA margin bottoming at around 16%. With the current capabilities and sophistications around the passthroughs, where do you expect, you know, the margin to bottom out at this time? Your absolute EBITDA might not see a contraction, but a margin optically will still because the passthrough will just cover the absolute increase in prices. This is the first question, sir.
Yeah. Thank you very much for the question, Sameer. Obviously, as we said, this is a very uncertain and volatile time. We are managing it on a agile basis at this point in time. I think what we can say very confidently is that we will recover all the additional costs which comes on account of this crisis. That itself is a monumental task, but we've built the muscle to be able to do it, and we will do it both with our contractual customers as well as other customers. There might be some optical changes as a result of it, which we will see as we go along.
Do you still expect the non-contractual to come with a significant lag or any kind of guidance on this will be helpful?
Yeah. We don't see, even with non-contractual, we don't see any lag, any likely lag. Over a period of time, we are absolutely confident that we will recover all the additional costs.
Great, sir. Second question, I think Deepak mentioned this to Sanjesh, CapEx of INR 480 crore this year versus depreciation of INR 385 crore, slightly on the higher side. I understand there was a greenfield in Thailand, is there any other or maybe you can just give a breakup of the broad CapEx this year? A related question to that is I notice no dividend this time. Any particular reason for that? Are we planning on a big CapEx, or is this like an indication of any further, you know, inorganic activity that is in the plans?
Let me take that. First of all, CapEx is largely driven by the beauty and cosmetics investments. If you see that the beauty and cosmetic category has grown by 30% on a already higher base, and that requires certain investments. As we had said earlier, while over a period of time our CapEx will be closer to our depreciation, we will pull back. We will do the phasing of the CapEx investments to make sure that the growth is not constrained. For this kind of growth, we have invested ahead of the curve. We will continue doing that if we see that there are growth opportunities that we can capture. On the dividend, the dividend is actually because of the merger.
We are doing a share swap as per the proposed merger announcement. Both the companies cannot declare dividend till the time merger is completed, which is common in these kind of mergers to ensure that the valuation construct remains. At the same time, let me also talk about the inorganic. We continue to remain hungry for the inorganic because we believe that as a combined organization or as we are kind of going along, we have significant balance sheet muscle and also customer relationships that we can capitalize on. We continue to be on a lookout for an inorganic opportunity.
Just a follow-up here. Can you quantify the greenfield investment in Thailand that has gone?
$5 million.
Great, sir. Last question, if I may squeeze in, more of a bookkeeping one. Tax rate continues to be up and down. I understand there are nitty-gritties, but any kind of guidance here would be helpful.
I think our tax rate is a combination of country mix, where the tax rates continue to be very, very different. We have tax rates right from 0% because of certain exemptions going up to 34%, 35% in some countries, and hence the country mix plays a big role on the tax rates. Steady state, I expect our tax rates to be in the range of 18% to 22%. I know it's a large, wide range, but that's how differential or the variation in the tax rate exists in various countries. If you see this year, our tax rate is about 18%, which is at the lower end of the range.
That's all from me. Thanks, Deepak. Thanks, Hemant. All the best for the future. I'll come back in the queue if there are any follow-ups. Thanks.
Thanks, Sameer.
Thank you. A reminder to all the participants, please restrict yourself to two per question. Next question from the line of Mihir Shah from Nomura. Please go ahead.
Hi, sir. good evening. This is Mihir Shah from Nomura. First question on the revenue growth of 17.5% and across the geographies except for AMESA, the growth has been relatively super strong. Can you explain what is really driving the 17.5% revenue growth? Is there any pricing growth element in this, point one? Is there any because of the Trump tariff, any inventory push of sorts or any of one-off that was there sitting in this quarter?
Yeah. Mihir, thank you for your question. The first thing I want to clarify is that there is no one-off in this growth. you know, all the things you mentioned, whether it's the Middle East crisis or the tariffs, et cetera, this growth is not because of that. I feel that our strategy, which we've articulated many times, you are seeing the manifestation of that. We've said that we will get steady growth in Oral Care and we will get significantly higher growth in B&C. In this quarter, both of those categories have done well and have been on strategy. Let me first talk about B&C, which has grown 30%. We've made some very conscious strategic choices this year. We've invested ahead of the curve on CapEx. We have focused a lot in building our innovation capabilities.
We've started participating in the extrusion segment, which we hadn't done as actively in the past. In addition to that, we are bringing in a lot of premiumization and new technologies in the B&C market. It's a faster-growing market. We start with lower market shares, we are gaining market share across all markets. Some of our big markets are really getting to scale, they are driving growth. B&C, our strategies clearly worked, you've seen the results this quarter. I think it's also important to look at oral. Oral Care did have some headwinds last year, which we've spoken about. In this quarter, we've seen a very healthy return to growth in oral. Oral has grown by 10%. Therefore, both our categories have done well. In addition to that, B&C now has scale.
40% of our business comes from B&C, 49% of our business comes from oral. When a large category which has scale starts growing at this rate, you get the growth which we've delivered this quarter. I feel very confident that our strategy, which we've articulated, where we've invested behind and really gotten behind it, is now delivering, and you can see the results in this quarter.
Understood. The 25% growth in EAP is largely Thailand-led. The 24% in Americas and 15 in Europe is broadly category-led or any specifics you can share out there?
Very happy to share that. Firstly, I must start by saying that Thailand is a very attractive market. It's a large B&C market. We feel very excited about what we can do in Thailand. We have a strong pipeline. To also be fair, our plant was set up only in November. We've since then been working on validation with our customers. There's a lot of certification which has to be done, and you will see significant growth coming out of Thailand in the future. However, in this quarter, I must say that bulk of the growth, if not the entire growth, is because of a very strong performance which we've got in China. Therefore, Thailand, we are very excited about, very optimistic, but that has not contributed to growth in this quarter. This is coming from our core market of China.
As far as Americas is concerned, again, Brazil's been a standout performance. It's a blockbuster for us. Since the three years we've gone there, we've made a significant impact in Brazil. We started with a single customer, but we've got multiple customers there. Brazil, again, a standout performance. What I'm even happier about is that every country in Americas has grown double digit. Therefore, a great performance in Americas, but it is because of U.S., Mexico, Colombia and Brazil all four growing double digit. you know, a really good performance there. Again, in Europe, it's a growth which we are getting as a result of a strong category performance across different markets. you know, it's not because There's just no one-off in this growth.
Understood. Sounds like a all-round performance. How should one think about the sustainability of this growth, sir? I mean, should one expect this kind of elevated growth to continue given that these structural changes have happened? Any light you can share on that one?
If you look at our full year growth, Mihir Shah, is 13%. W e've so far guided to a low double-digit growth in the range of 11%-13%. For a longish period of time, we will hold on to the same guidance. Therefore, you can expect a low, double-digit growth from us. Our range remains between 11%-13%.
Understood. Sorry, I am asking a few more questions. Pardon me for that. Just on the West Asia crisis, if you can share what is the element of price increases that you will have to take and that will be sitting in the growth in the coming quarters, and the impact on margins, if at all, how should we think about that in the near term? I'm sure 50% is covered. 50% you will have to take a hit initially, and then it will be recovered later on. Just how the walkthrough of the West Asia crisis, pricing growth and the margins, I'll stop here for my questions.
Yeah, Mihir Shah , on West Asia crisis, we've spoken earlier as well. The first thing is that we are confident that we will recover the full cost impact, and we do not think that there will be a lag in recovery of the cost. Your question implies that with 50% of our customers there'll be a lag. We are making sure that our price increase is proactive, we do not have a lag. We remain confident that the full cost will be recovered. As far as how much will be the pricing, it's very difficult to give one number because it's different by market. Every geography is behaving differently, the situation changes on an ongoing basis.
As I said earlier, we'll remain agile, we will act quickly, and we'll make sure that our model is resilient to this crisis which we face. I again want to reiterate that we will recover the entire cost increase which we see.
Got it. Wishing you all the very best. That's all from my side. Thank you very much.
Thank you.
Thank you. Your next question from the line of Shubham Shegar from SIMPR. Please go ahead.
Hello. I'm audible?
Yeah. You're audible.
Yeah. Thank you for the opportunity. My first question is, previously we had mentioned that, you know, to focus on increasing our gross margins and our operating margins, the management has monthly meetings where I think, the discussion is mainly about where all we can take the price hikes and the price increases. First part is that, are we still doing these, you know, proactive monthly meetings? What kind of, price increases to our customers have maybe been put?
Yeah. Shubham, your voice is volatile, going up and down, so we couldn't hear you fully. What I understand, I think you are ref erring to our customer.
Should I repeat the question?
Are you referring to our customer GM review that we had spoken about?
Are you able to hear me properly now?
Yes, we can hear you now.
Yeah, yeah. I'm just asking about the monthly meetings that we had mentioned, about taking price hikes throughout our customers wherever we can, you know, to support our margins and increase our margins. My question was, are we still conducting these monthly meetings with the management and, you know, where we are taking proactive decisions to increase prices across the customers? Like, if we are doing it, what all have we achieved through it? That's my first question.
Let me clarify. What we had mentioned was that we have post-corona, we have developed a muscle on pricing. We now review our customer-wise GM on a monthly basis to make sure t hat if there are any deviations, any abnormal margins, et cetera, we go and initiate conversations at an early stage. In times like this, that muscle becomes very, very important. Today, we are even more focused on customer-wide margins and what is the price increase that we have to take to absorb all the costs that we are getting, and that we are doing very, very regularly. That is why Hemant has mentioned that we remain confident that we will be able to recover all the cost increase that will come to us.
Yeah, I just want to say that we are not doing monthly meetings. We are doing more likely weekly or even more frequent meetings. This is a time where we have to be significantly agile. We can't wait for a month. Within our business, in this crisis, it's all hands on the deck, and we are being significantly more agile than what you would have expected in the past.
Sure. Got it. Thanks for the answer. My second question was, could you provide any color on Indovida's operating margin? Like, are we able to maintain the operating margins there for Indovida?
I think the first thing I want to say is that we are very excited about the opportunity we have of this merger. It's in line with our strategy. It takes us into more emerging markets. It helps us expand our portfolio. In addition to that, it's margin accretive. It'll lead to faster growth for us. You know, it has lots of positives. One thing which I think we did mention in the past, is that they are completely debt-free, and therefore, with our, you know, ratio of debt also being very low, we now have a very healthy balance sheet, which will allow us to invest both for growth as well as acquisition. We are very excited about this opportunity, the merger which we have spoken about.
At this point in time, we are seeking a regulatory approval for it. The work which needs to be done for that is also on track. We are hopeful that we will have the approval within a year of us filing for it. Till such time, as per the regulation, we have to remain extremely careful that there is no sharing of information of any kind between the two companies, because we remain independent companies till such time as we get approval. We neither have any knowledge of, nor can we share, obviously, any information about Indovida now.
Okay. Got it. Just lastly, two short questions. The oral growth, we have finally seen recovery, good growth we saw this quarter. Firstly, how are we seeing the oral segment going forward? What do you believe? Will we still continue this kind of growth or what exactly is going on, if you could provide some color? The second question being, as you mentioned, that we know already we have gotten good growth through our Thailand plant, and we are still in order to get good growth from there. What could be the roughly the, you know, capacity utilization at our Thailand plant? These are just last two questions.
Shubham, I just want to clarify the Thailand question first. What I had said earlier as well, that we are very optimistic of what Thailand will deliver in the future. At this point in time, the plant was set up in November. Since then, we've been doing certification in the plant, validation with customers, and building a pipeline. All of that is going very well and on track. At this point in time, in these numbers, there's not much volume from Thailand because it's still at a stage where it's being set up and will be ready. Therefore, we are very optimistic about it. I think it'll be wrong to assume that there is a significant volume of Thailand in our numbers which we declared so far.
As far as Oral Care is concerned, it's a very big. Our core is in Oral Care. 49% of our business comes from Oral Care. It's a very steady category, and globally we have very strong relationships with leading customers, and therefore we feel that this will be a category which will deliver as expected results in this year. We are optimistic about Oral Care as well.
Okay. Okay. Got it. Thailand plant, you mean to say that, we can expect the growth coming in FY 2027, or will it take much more longer for all the validation to clear? All of that has happened and now we are ready for it?
FY 2027, we will start seeing volumes of from Thailand in the next couple of quarters, and it will scale gradually. You know, as you've seen, Brazil after three years is giving us fantastic growth, which you are all aware of, and we see no reason why Thailand will not repeat the same example. We will see growth over an extended period of time. I just want to also say that, you know, the expectation that in the quarter which has just gone by, we would have got significant high volume is unrealistic.
Got it. Thanks for the clarification. All the best.
Thank you. Reminder to all the participants, please stick to two per question. Reminder to all the participants, please stick to two per question. We have next question from the line of Akshay Chheda from Canara Robeco MF. Please go ahead.
Thank you for the opportunity. Just on your guidance, the question is related to the guidance that you have given about 11%-13%. Sir, if I just see the RM inflation, I'm referring to the slide 27. Even if I assume, say, the 40%, that is our COGS, if that has gone up by around, say, 20%, you can correct me what is the blended inflation that we are seeing at the company level. Even if I assume a 20% inflation, 40% goes up by 20, 8% would come from Cost inflation itself. Still, why we are guiding for 11%-13%?
Shouldn't it be a mid-teens kind of a number because even your Thailand plant has to start kicking in, and if you are anticipating a strong growth in B&C, which I assume is a better ASP product, so still why 11%-13%, sir? Yeah, that is the only question that I have. Thank you.
I think guidance is a long-term guidance, therefore, for us to look at it every quarter and all will be challenging. If you look at our full year delivery this year, it's 13%. We are guiding in the long run that we will continue to deliver low double-digit growth. Having said that, there will be quarters where if the pricing I mean, costs go up, pricing, you know, is much higher, there could be some change from there could be a variation from that. I think we just want to make sure that we are guiding for the long run. In the long run, we are guiding that we will grow in the range of 11%-13% consistently, and our EBITDA growth will be slightly ahead of our revenue growth.
Deepak, you want to add anything on specific inflation question?
I would just say that the situation in Middle East is very, very volatile, and hence we don't know for how long would it continue. Hence, right now what we can guide, which is a steady state guidance, et cetera, cannot include the inflation aspect. That will come probably in, on a temporary basis in a quarter.
Any blended inflation that we are seeing on the raw material at a company level, if you could quantify? I know it will be difficult, but still any blended number?
I would say it is actually different by region, right? I can tell you that India impact is different from China impact, while both are in South Asia, Southeast Asia, and Europe and U.S. are behaving differently. This impact is actually changing almost by week. The pricing is changing by the week. The availability challenges are there, and hence it's very difficult to quantify to a common global number.
Okay. Thank you.
Thank you. We have the next question from the line of Smith Gala from RSPN Ventures. Please go ahead.
Thank you for the opportunity, and congratulations on the good set of numbers. My first question is on a book picking question. Our depreciation has grown by INR 7 crores-INR 8 crores on sequential basis, and INR 385 crores for the full year. What has gone along this quarter, and what is the steady state CapEx, what is the CapEx will we be looking at for FY 2027? Will the depreciation be in line with the CapEx? Secondly, have we booked all of our merger expenses in this quarter?
Yeah. First on the depreciation, there were some large equipments which we got in Q4 and capitalized, and hence the depreciation in the quarter has grown sequentially. As I said, when the B&C is growing at 30%, we had to make investments in capacity, innovation and flexibility at our back end, and that is reflected in our CapEx as well as depreciation. For FY 2027, I think we will continue at a slightly elevated level of CapEx, because we are seeing the opportunity in the marketplace, gain market share, and we will continue capturing that. On the. Your second question was on?
On the merger expenses. Have all the expenses been booked already?
Yeah. On the merger, we have taken almost all costs in this quarter.
Okay. That was all comment.
Thank you. We have next question from the line of Tushar Talwar, Individual Investor. Please go ahead.
Hi. Thank you for taking my question. I have a limited question on the dividend point, which was raised earlier. I just wanted to understand that when are we expecting the merger to be complete? Because I assume that for that period, we will not be able to issue any dividends.
Yeah. We had said, Tushar, that merger would take about 12 months from the date of announcement, which was end of March. It could get completed, let's say in Q4 of this financial year.
Right, sir. The typical timeline generally tends to extend to at least 18 months, practically. Should we be looking at, no dividend for roughly the next two financial years, this one and the next one?
Right now, as we understand, we expect the merger to get completed by Q4 of next financial year. However, obviously, it is dependent on multiple approvals happening at multiple levels. We are always working rapidly on all the processes. We have already filed for SEBI approval. We have already filed for CCI approval. We are antitrust approvals, et cetera, in multiple countries. We have done all that. We are moving at fast pace. However, the timeline is not in our hand.
[Parthshan], please hold. The management line has disconnected. Please be on. I'm reconnecting.
No problem.
Hello.
Yes, sir, you are already welcome.
Yeah. Tushar, basis what lawyers are guiding us, we believe that Q4, FY 2027 is a fair timeline, post which, we will operate as a merged entity and then dividend payout will happen as per the board guidance and approval.
Understood, sir. You've mentioned, you know, a few times, and we've actually mentioned it over the years also that, you knw, we are always open to the right acquisition. given, you know, we could have, you know, up to one and a half years where we are going to be accumulating a substantial amount of cash. Are we seriously looking at any opportunities or should we simply, I mean, just from a conservative perspective, just consider that there's going to be a new dividend policy after the merger, and we should just look at this cash being used at that point in time?
No, we are very actively looking for acquisitions. We've said this in the past that inorganic growth is a clear part of our strategy. Having said that, we always say that when we are looking for a new acquisition, it should get us either into a new geography or get us a new capability. Those are the two key criteria we use. As we've said, very often in the past and many times today, B&C is a priority for us. That's a strategic choice we've made. We will look for acquisitions which will strengthen our position in B&C. If they get us into new geographies and help us get new capabilities, that would be ideal. We also always maintain internal guideline that any acquisition we do should be growth and margin accretive.
Those are the conditions and criteria we have, but we are very actively looking for acquisitions. As soon as we have something which is in place, we will come back to you and inform you about it.
Just one last follow-up question. Are we looking especially hard now that we don't have any dividend payout obligations for the next year or so?
No, I don't think that's influencing our decision. As we've said, and we've said this even before the merger, announcement that we are actively seeking acquisitions. After the merger, actually, our desire as well as our ability goes up, because as I have mentioned, Indovida is debt-free. Our debt to, you know, EBITDA ratios are very low. We have a very strong balance sheet, so we have the capability to do acquisition. In addition to that, you know, the Indorama Ventures has strong capabilities in this space, which should again help us, and it's clear part of our strategy. We've sought acquisitions in the past. We continue to seek acquisitions now very, very actively, and the dividend policy has no material impact on that.
Would we be maybe looking to pay down our debt further? Is that on the cards or are we comfortable with what we have?
That is the ongoing cash management. So far, we keep seeing growth opportunities. All our CapExes are organically funded. B&C is kind of growing well. If we need to invest in CapEx, we will not our group will not be resource-constrained. If we have excess cash, then we'll pay off the debt.
All right, sir. Thanks. That is enough from my side.
Thank you. We have next question from the line of Nishant Sharma from Nuvama Wealth PCG Research. Please go ahead.
Thank you for the opportunity, sir, and congratulations for the great top-line growth that we achieved. Sir, while I understand that we can't share any details related to Indovida, but it would be great help if you can share some sense on how the beverages category where they are strong, that has done well, because going forward, that would also be an important factor to look at it. Just wanted to have some comfort on that front that how is the performance, how is the industry growth over there?
We don't have any customers in the beverages industry. It's not a category we track. You know, we are not in a position to be able to give you any information or insights about the beverages category.
Sure, because, just wanted to sense going forward, we would also be closely tracking how is the performance because that is going to get merged with us. Broadly, what we are targeting 11%-13% kind of a growth, that is precisely for EPL. As a consolidated entity, just wanted to have some sense on that front. That's why I was just looking at that number.
Post-merger, once the merger is completed, we'll give you as much information as possible on the beverages category. At this point in time, we have no knowledge or information on what's happening on the Indovida business, their market, their market shares, et cetera. I think it'll be, we are not in a position to be commenting on the beverages category at this point in time.
Hemant, if I could add, that at the time of acquisition, this is the information that we've shared with the investor. Indovida will grow in high single digits on a steady-state basis because it's a very strong business with number one or number two position in all the markets that it plays in. They have a very strong new geography expansion strategy and hence have very solid growth plans in place. It's a business which we, at least from a historical performance basis, we looked at very, very closely, and we realized that it's, it's accretive to our growth strategy, it's accretive to our margins, it's accretive to our balance sheet, and that's how we decided on the merger.
Oh, sure, sir. Thank you very much and all the very best. Thank you. I'll call back. Thank you.
Ladies and gentlemen, that was the last question. I now hand conference over to management for closing comments.
No, I think, thank you for a very engaging conversation. As we've said earlier, we are very excited about, what lies ahead for this business, and we look forward to your continued support. Thank you very much.
Ladies and gentlemen, on behalf of Systematix Institutional Equities, that concludes this conference. Thank you for joining us. You may disconnect lines. Thank you.
Thank you.