Ladies and gentlemen, good day and welcome to the UFlex Limited Q1 FY 2027 results conference call hosted by Arihant Capital Markets Limited. As a reminder, all participant lines will be in the listen only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need any assistance during this conference, please signal an operator by pressing star and then zero on your touchtone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashvath Rajan from Arihant Capital. Thank you and over to you, sir.
Thank you. Good evening, everyone. On behalf of Arihant Capital Markets, I would like to thank all of you for taking time and joining us on UFlex Q1 FY 2027 results conference call. From the company's leadership team, we have with us Mr. Arun Kumar Sharma, President, Finance and Accounts and CFO, and Mr. Surajit Pal, Vice President, Head of Investor Relations. We will open the call with opening remarks by the management, followed by a Q&A session. I would now like to hand over the call to Mr. Surajit Pal to make the opening remarks. Over to you, sir.
Thanks, Ashvath. Good evening, everyone. Thank you for joining us today for the Q1 FY 2027 earnings conference call of UFlex Limited. Before we begin, I would like to briefly introduce Mr. Arun Kumar Sharma, our President, Finance and Accounts, and Chief Financial Officer. We are pleased to have him with us and look forward to his perspectives on the company's financial performance and outlook. Let me draw your attention to the fact that on this call, our discussion will include certain forward-looking statements, which are predictions, projections, and other estimates about future events. These estimates reflect management's current expectations about the future performance of the company. Please note that these estimates involve several risks and uncertainties that could cause our actual results to differ materially from what is expressed or implied. Thank you. Over to you, sir.
Thank you, Surajit. A very good evening to everyone joining us today. On behalf of entire UFlex team, I extend a warm welcome to all our shareholders, analysts, and other stakeholders on this call. I am pleased to report that we have started fiscal 2027 on a strong note, delivering a clear acceleration in our overall growth trajectory. Building on the momentum established in Q4 FY 2026, this performance reflects the resilience of our integrated global business model and operational execution. Now we will discuss on UFlex Q1 FY 2027 performance. Top-line and earning momentum. Consolidated revenue for Q1 FY 2027 grew 38% YoY to INR 53,972 million. EBITDA rose 92% YoY to INR 9,198 million, with EBITDA margin expanding 480 basis point YoY to 17%, marking our highest EBITDA performance in the last 21 quarters.
With 80% revenue contributed by overseas operations and 20% by India, our incremental revenue was INR 14,753 million in Q1. Packaging films including chips contributed INR 12,093 million of the incremental revenue, while INR 1,988 million was contributed by the packaging business. Normalized EBITDA post-adjustment of INR 825 million on forex derivative transactions reached INR 8,373 million, which is 78% growth year-on-year, expanded to 15.5%. Our overseas operations contributed around 91% of the INR 4,410 million incremental EBITDA, reflecting a significant improvement in overseas profitability and driving the consolidated EBITDA growth. Consolidated net profit after tax and non-controlling interest, PAT, was INR 4,233 million with a net margin of 7.8%, compared to INR 518 million at a net margin of 1.5% in Q1 FY 2026. Now we'll discuss on the drivers of growth. Overseas operations drive Q1 FY 2027 growth and profitability.
Margin expansion was driven by operational leverage, stronger realizations passed through of higher raw material cost, currency tailwinds, and localized sourcing premiums. Overseas operations, particularly in Egypt, Mexico, and Nigeria, alongside our India PET chips business, served as a key growth driver of our profitability. Total sales volume for the quarter reached 173,471 metric ton, which is 1.7% year-on-year growth. The expansion of volume by 136,186 metric ton, which is 4.9% year-on-year growth, supported by preference of sourcing by the converters from local regional producers of film across international markets. Overall packaging volumes shipped 8.4% year-on-year to 37,285 metric ton, primarily due to strategic shift towards high-margin products in India, flexible packaging business and softness in aseptic packaging due to duty-free import at aggressive prices in Indian market. While overseas volumes were impacted by larger pack sizes mix and delayed ship disruptions in consignment deliveries due to West Asia crisis.
Next, I will provide some inputs on geography-wise volume split. In India, packaging film sales volume increased 9.1% quarter-on-quarter to 29,323 metric ton. On the domestic front, packaging films demand improved sequentially as converters and brand owners gradually resumed purchases since price normalization in May and June. Our demand softened year-on-year as Q1 FY 2026 at a higher base due to temporary supply shortage in the industry. America sale volume increased 18% YoY to 31,724 metric ton. This was supported by the U.S. government push for domestic production and onshoring amid evolving trade policies. Transferred imports from West Asia and India are expected to sustain the positive volume growth outlook ahead. In Europe, sales volume was flat YoY and stood at 35,653 metric ton. Amid continued pressure from low-priced imports, with demand expected to moderate next quarter due to seasonal holidays.
CIS BOPET film sales benefited from steady demand, while BOPP volumes were impacted by increased low-price imports. Middle East and Africa regional volumes increased 16.5% sequentially and 14.9% year-on-year to 39,486 metric ton, primarily driven by strong local and regional sourcing as customers de-risk their supply chain teams and West Asia crisis. Egypt led the growth while Nigeria benefited from robust export opportunities and improving domestic demand. On a strategic expansion and CapEx front, we have incurred INR 4,782 million in CapEx in Q1, primarily allocated across four key projects. Egypt aseptic facility INR 1,236 million, Mexico WPP bags INR 205 million, Noida Sector 155 recycling unit in India INR 320 million and Dharwad BOPP line India INR 215 million. We are making steady progress on key projects. 39,000 metric ton per annum recycling plant at Noida Sector 155 was successfully commissioned on April 30th, 2026.
80 million unit WPP bags plant in Mexico was commissioned on July 31st, 2026. Work on our greenfield aseptic project in Egypt, 12 billion packs, remain on schedule for commissioning in FY 2027. We enter FY 2027 with multiple growth levers getting traction, including headroom for incremental production in India, Nigeria, CIS, and Mexico. Additionally, we recently commissioned 39,600 metric ton per annum recycling facility in Noida Sector 155. An 80 million unit WPP bag facility in Mexico will progressively contribute to revenue and EBITDA as they ramp up. Higher utilization led by localized sourcing to de-risk the unscheduled supply chain disruption and a shift towards value-added packaging films will remain our key growth themes, supporting sustained profitable growth.
While Q2 is expected to see some normalization from the exceptionally strong relation in Q1, our underlying growth trajectory remains stacked, positioning us for FY 2027 growth and continued improvement in earnings quality. Now, we open the line for Q&A session.
Thank you very much, sir. Ladies and gentlemen, we will now begin with the question- and- answer session. Anyone who wishes to ask a question may enter star followed by one on the touchtone telephones. If you wish to remove yourself from the question queue, you may enter star followed by two. Participants are requested to please use only handsets while asking a question. We will wait for a moment while the question queue assembles. The first question is from the line of Kashmira from SM Advisory. Please go ahead.
Hi. Am I audible?
Yes, ma'am.
Yeah.
My first question is, how are the price realizations shaping up in India and the export market?
To price give you a very specific, it is a little bit difficult, but I can tell you that price realization is up 30% as compared to when the war started in West Asia. Our BOPET prices as well as BOPP prices have gone up almost BOPP prices have gone up by 25%, and BOPET prices have gone up by almost 30%, 35%. To be specific, from February 26 level to now, it is 25% higher on BOPP, and BOPET it is around 35% higher.
Okay. Got it. My second question is, how are the raw material price trends expected to move in the future? How correlated is that with the film spreads going forward?
The raw material prices are also moving up, but not to that extent what the finished wood prices are moving up, because it is being normalized now and prices are, I think, getting normalized as of now.
Okay. Are we planning for any new geographies, product lines or M&A opportunities beyond the current CapEx pipeline?
See, right now we do only greenfield projects, and our project in Egypt, aseptic plant, is up for commissioning, which will be done in H1, like we have said. We are hopeful that we will be able to announce it very soon, that project coming on stream. That will give us a big flip on our revenue as well as on our bottom line.
Got it. The last question from my side would be, given the relatively higher margin profile of liquid packaging with the peer reporting improvement from 5%-6%, do we see an opportunity to further scale its presence in the segment to support our overall margin expansion?
Yeah. Aseptic has been a little slower in expansion in this quarter. But going forward, that will be a key driver going forward. Because once our line comes up in Egypt, that will be a big revenue generator for us. Thus, we are also touching decent capacity in our existing Indian plant. So the aseptic plant, I think, we will have a good revenue and good EBITDA margin going forward from that.
Okay, got it. Thank you so much, sir.
Thank you. The next question is from the line of [Randhir Kumar Singh] from [Randhir HUS]. Please go ahead.
Thanks for taking my questions. Sir, I want to know if FY 2027 as a whole year, the top line and the EBITDA margin that has come, are they sustainable, sir?
Yes, it is absolutely sustainable because the revenue growth that has come and the margin that has come is not because of efforts of one quarter or two quarters. It is the efforts of last two, three years' CapEx, what you have done. Because you would know that CapEx takes time to come. It takes a lot of time in CapEx ramping up. Because any CapEx you put up, it takes three years to get to 100% potential. So whatever CapExes we are putting up now, you can see how those will unfold going forward. So whatever numbers we have achieved in Q1, they are very much sustainable. Going forward, I think the momentum is very strong, and we will continue to show better results because our CapExes are coming on stream now, and more and more capacity utilization is getting in business now.
Sir, FY 2027 as a top line and EBITDA margin, can you tell me some guidance?
Generally, we should not give guidance because guidance in this today market scenario is very difficult. Things change very fast because of this geopolitical situation. But you are asking a specific question to just respect as an investor. I think we are expecting 35% growth in our top line in this financial year. And similarly, EBITDA also, we will see the same growth coming up in this financial year as compared to last financial year.
Okay. Thank you.
Thank you. The next question is from the line of Saket Kapoor from Kapoor & Co. Please go ahead.
Yes, sir. Sir, in continuation to the earlier participant question. Like you said that quarter two will see normalization. If you could just dwell better, that means what should we work on in terms of normalization going ahead for Q2?
See, it is very difficult to benchmark anything quarter-on-quarter because a lot of things change in a quarter. But if you benchmark against year-on-year, like I just said that whatever revenue we achieved in FY 2026, we are going to achieve at least 35% more revenue in FY 2027. Similarly, EBITDA also will be higher by the same margin in FY 2027. You should look more year-on-year basis because quarter-on-quarter fluctuations can be unpredictable also sometimes. Year-on-year gives a better perspective how the company is growing. Both top line and bottom line, you can expect a decent growth 30% + in coming year. Same growth will continue in FY 2028 also because these CapExes, what are coming on a stream this year, where two have come on stream, one is coming up in first half.
We will have a decent capacity utilization going forward. They will give a very high margin and revenue in FY 2028 as well as in FY 2029. You should look at a long-term perspective till FY 2029. We are seeing a visible and a very decent growth coming up because all the ingredients of growth are in place now. CapEx is in place, capacity utilization is increasing. Our operational efficiencies have come up. All these factors will deliver a very decent growth to the company in next two years' time. FY 2027 will be a good year for the company. FY 2028, FY 2029, we will see decent growth margins coming up all these three years.
Okay. Sir, as you mentioned that I am not taking a myopic view, but just to understand and dwell further, when we look at our FY 2026 revenue, it was INR 15,600 crore, I think it was INR 15,060 crore or something in that vicinity.
Yeah.
Our profit before tax was to the tune of INR 420 crore. Correct, sir? Now for this quarter itself, we have done PBT of INR 490 crore. Just to take that question forward, that 35% growth and the EBITDA part, we are already done with the EPS profitability in the first quarter itself. That was the reason I would like to understand when you spell out that there will be normalization going ahead, what is the bank that you are referring to that we must keep in mind in terms of factoring the word normalization?
What we mean by this is that you are right. A very valid question you are asking. This year, in first quarter itself, we are reporting a PAT of INR 423 crore, which is almost six times higher than, I think Q1 2026 year-on-year. Whatever growth we are getting in FY 2027, we are getting growth from all the geographies which are in a very optimal tax bracket margins. Our tax expense is also going down quite significantly because we are generating big margins from Egypt, a big margin from European and U.S. territory, plus Mexico, other places. Our tax expense will be much optimized because of these regions where we are present. That will give a big boost to our PAT margin going forward in FY 2027. Normalization doesn't mean that we are talking anything, something going down.
Normalization means is that this quarter has seen a tremendous growth, but what guidance we are giving is that we will grow by 35%, which is a very good growth in today's market conditions.
Okay. When investors will look and compare Q2 results from the previous Q2, we are eyeing a minimum 35% growth in both top and bottom line. That should be the understanding.
See, in the beginning of my remarks, I told you very clearly, don't benchmark any company quarter-on-quarter.
No, it's okay.
You should benchmark year-on-year.
Year-on-year. I just kept it year-on-year.
If you are benchmarking quarter-on-quarter, I can say that we'll not let you down. I think you are fully confident. We are also equally confident. But as a prudent and a long-term investor, you should always look year-on-year, because quarter-on-quarter, sharp shipment can get missed because of weather shift crisis, something can happen on a shipment, some shipment get delayed here and there. One shipment can make huge differences in a top line. Say, June 30th, we are not able to ship something we ship on July 1st, it will count it next quarter. So better you take year-on-year concept, that will be much better for you to analyze the company performance, which is going to be very healthy for next three years going forward.
Okay. Sir, now on the capital work in progress and the my voice is echoing.
No, we can hear you clearly. Please go ahead.
Okay, fine. Sir, on the capital work in progress closing balance, can you give some more color how is this number going to shape up with the Egypt PET unit getting capitalized? By September, what would be the closing balance and, going ahead, what are our projects for where we will be putting further money?
Yeah. Good. Valid question. I will tell you for this year, we have four CapEx which we have done in FY 2027 or planned in FY 2027. First is Egypt one, which is coming up with a capacity of 12 billion packs, where we have already done a CapEx of over $100 million. Now only CapEx what is remaining is $15 million. Not much CapEx is planned for Egypt now going forward. Similarly, Dharwad, India, which is a brownfield BOPP line, where we have done a CapEx of $10 million. There we plan a good CapEx of around $50 odd million, which we are planning for FY 2027 and 2028 put together. Something will go in Mexico also.
We have, I think WPP bag is already announced, but we have done a CapEx $54 million, and we are not expecting much CapEx to be done there now, so all CapEx is done. Noida Sector 155, we have done a CapEx of $32 million. We are all done with that CapEx. From this you can see our CapEx cycle for this financial year is almost 75% done. Whatever CapExes are remaining, which are new CapExes of around, if you put total all this will be around $100, less $80 million CapEx we will be doing going forward. You can see from that whatever CapEx we are putting up, we are putting with a very judicious understanding that they should start yielding results in next two years' time.
Because whenever the CapEx is put up, first year it is just 20% capacity, second year it will be 50%, and third year it will be 100% capacity. To keep the company growing consistently over years, we have to put CapEx. You can see wherever we have put CapEx in Egypt, Dharwad, India, Mexico, they are all yielding very good results. Because of these CapExes, you can see our numbers are showing where they are right now. These numbers are not just because we have done some magic in last one year. The efforts are going on for last three years. That's why these numbers are coming up. When I am talking FY 2029, whatever efforts we are putting this year, they will show a good result in FY 2029.
It's a continuous process of putting CapEx, milking those CapEx and earning the revenue, because had this company been only present in India, then you would have seen we are doing very tough spot. But because we are geographically so diversified in this challenging situation also, in challenging times also, we are delivering a very good margins to our shareholders, a very good top line growth to our shareholders, which will continue till FY 2029.
Just to add to the Egypt part of the story, and I will join the queue. That is 12 billion packs. For this year, we will be ramping up the capacity and the contribution will be, sir, in what vicinity? Secondly, for the Noida recycling, it is INR 30 million or $30 million, sir? I missed your number, the investment.
Noida, we have done $30 million till now, which is the CapEx to be done, not more CapEx has to be done there now. If you are seeing Egypt, which will announce commissioning very soon, I think the trials are going on there. The first year, if everything goes fine, because plant, a lot of technical things to happen there. We can see around 30% capacity being utilized there. So out of 12 billion packs, what we annual capacity, we can do 30% in first year. Second year, certainly, we will reach around 60%-70%. Third year, we will reach around 100% capacity there. So you can see how the buildup will happen. But Egypt being our second largest manufacturing site from UFlex global perspective, we are very well, I think, prepared to launch it very soon now, you see the results coming up in Q3 and Q4 also.
Okay. Sir, about the book-
I am sorry to interrupt, sir. Can you rejoin the queue?
Yes, ma'am. I will rejoin. Thank you, sir. Will wait for my opportunity. Thank you, ma'am.
Thank you. The next question is from the line of [Rakesh Parekh] from NV Alpha . Please go ahead.
Sure. Thanks for the opportunity and congratulations on good set of number.
Thank you.
Sir, just want to understand this recent price in BOPP and PET price. Are they stable at this higher level or how is it like? How one should be looking at it?
These prices are quite stable as of now. We do not see any major correction in the prices. These are global situations evolving every day. Till this freight remains high and this crisis keeps on happening in West Asia, we see the prices being in the vicinity what they are currently. If everything normalizes, you may see some correction in the prices, but our raw material sourcing and our finished selling prices will have the same margin what we have now. We are not much concerned on the pricing front. We are concerned that whatever margins we make, we should continue to hold those margins. We are confident that we hold those margins throughout the year.
Sure. That is helpful. Secondly, what should be the EBITDA band we should be looking at on an adjusted basis ex of currency what we reflect around 15.5% current this quarter?
The currency is only INR 70 crore. It is not a big amount. In INR 70 crore on 5,000 + turnover is very minimal amount. So currency is not impacting much our margin. It is INR 70 odd crore which can go here and there in every quarter and you never know. So do not read too much in that currency because it can be negative also next quarter. I think you should read the margin as what I have given the guidance in the beginning that we will have 35% growth as compared to last year in the margins in FY 2027, and similarly on the top line also we will have that growth.
Okay. In terms of debt, should we consider this is the peak debt we have reached as of now from the immediate CapEx point of view?
See, first of all, let me just tell you, don't link CapEx and debt. CapEx we are doing for growth. If we don't do CapEx, how we grow? Whatever growth you're seeing in the company today has been a result of CapEx we've done three years back. Today, what CapExes we'll do, they'll give us a good growth in FY 2028, FY 2029. CapEx we have to do because we can't be restricting ourself in one geography. Otherwise, the company will not be able to sustain all these geopolitical pressures, competition and other things. We want to be near to the customers. Wherever we have a big market, like you see in Middle East, we cater through Dubai facility. In U.S. and other places, we cater through our Mexico facility. In Europe, we cater through our Poland and Hungary facility. In Nigeria, we cater to African customers.
All customers are catered. Mostly, we are trying to be near to the customer so that this geopolitical what is happening, when shipment becomes so difficult from one place to other places, it won't affect us. We're de-risking our top-line model in such a way that we are present at least 75% of our turnover should come from near to our customer policy. That is what we are adopting. That is on the CapEx front. On the debt front, I think we are very conscious of this that our debt was higher in FY 2026. Our debt-EBITDA margin was around 4.5 x, which you would see in this quarter itself, it has come down to 3.5x. Going forward also, we'll ensure that we retain the same kind of leverage what we have as of now.
This leverage will come down by end of FY 2028 much lower once all these capacities what are utilized not to the 100%, become 100% capacity utilization, then you see our leverage going even below 3x by FY 2028. We are very much conscious, aware of this fact that leverage has to be under control, which is under control because we are paying all loans on time, all interest on time. That is least of our worry. Our worry is that we have to grow with the complex environment, what we are operating in. We should give good growth to our shareholders, which is around 30% each year on bottom and top line. That is our first target now. I hope I've answered your question.
Yeah, sure. This is the last question. You mentioned that aseptic packaging, we are seeing some dumping and aggressive pricing in the imports. Is it normalizing now, or how is it like?
What has happened in aseptic, we are getting a lot of duty-free imports from Indonesia, where India has signed a treaty where duty-free imports keep on coming. But Indian market, its consumer market is growing at least 5%-8% each year now. The demand is also increasing. We are hopeful that even despite this dumping by Indonesia, the volumes requirement in India and other markets will be much higher. This quarter, of course, our volumes have not grown so much, but value-wise, we have grown because whatever value-addition price we are getting, because now we are moving from normal films to value-added products, which can give us a better relation. Those are being done very aggressively now. From Q3 onwards, you see aseptic coming back on track, which was little, I think, volume-wise, not the price-wise.
It was a little slow in this quarter. Next quarter will pick up, and then because all this packaging industry is more linked to the consumer growth or FMCG growth in India, which we are seeing very good growth coming forward now. Because middle class income is expanding from INR 20 crore -INR 30 crore now. They will be buying all this material. Packaging is something which is very integral to our growth in India, and everything in India is getting dispatched now. It is not people do not go and buy from the market. They order. Packaging becomes a very critical thing now. You see aseptic packaging is going to be a big driver of growth for the company going forward because it improves the quality of the product, it improves the life of the product, it improves the aesthetic appeal of the product.
All these are going to help, and we have a capacity, installed capacity of almost 24 billion there. I think we will be using much of the capacity by the year-end now.
Sure. Thanks. That is it from my side, and all the best for the future.
Thank you.
Thank you. The next question is from the line of Chirag Singhal from First Water Fund. Please go ahead.
Yeah. Thanks for the opportunity, and congrats on great set of numbers. First question on the Egypt Asepto. So by when do you see this plant getting commissioned, and have we received all the necessary approvals and accreditation from customers already?
Yeah. Those things are in progress, and we are very advanced on those things as of now. That is why we are confident that in H1 this should be commercialized.
Okay.
I think we have got almost all the approvals now. Seeing the geopolitical scenario, we are saying H1, it can be a little bit here and there, so one or two weeks here and there, but we are targeting H1 as of now.
Okay. You mentioned 30% utilization for the current year, so 30% for six months or it was 30% annualized?
It will be annualized now because we do not talk of a broken period. We should always take annualized numbers into account. I think maybe once we again get assembled in Q3, you will see the impact of the numbers.
You are expecting close to 2 billion packs in terms of volumes from the Egypt facility in the current year?
Yeah, should be around that. 2 billion.
Okay. Thanks.
Yeah.
Chirag, Surajit here. Basically, what Arun is mentioning is that 12 months, in one year-
Yeah.
post commercialization, that will be the number we are targeting.
How much volume should we expect from Egypt for this year? Egypt in total, like total aseptic volumes and coming from Egypt.
See, if only Egypt is to see, we are setting up a 12 billion capacity there. If we start operating on October 1st, this is what we are saying, then six months operation is there. In six months, the facility becomes 6 billion. Out of 6 billion, you say if we use capacity utilization is 30%, you can very well say, let's say around 2 billion will be used up in this financial year.
Okay. Second question is on the utilization of the operating profits. You mentioned that the growth that we have seen in Q1 this year and even through FY 2029, we are seeing good growth because all your CapExes are now coming to fruition. Broadly, what is the split that you see in terms of utilization? How much do you see will go towards debt reduction? How much do you think will go towards CapEx? If you have any number for, let's say, rewarding the shareholders in form of buybacks and dividends, how much would that number be? Because in the past, what we have seen is that you have taken all these huge CapExes debt and internal accruals using both debt and internal accruals. Going forward, what is your plan in terms of utilizing the cash flows?
What percentage of it will go to CapEx, debt reduction, and rewarding the shareholders?
Chirag, in any company, if you see, if there's no growth opportunity, we do buyback of shares. You have seen in IT industry, when IT industry was really under pressure, they did buyback of shares. But in our industry, growth opportunity is so much that even if we don't reward our shareholders by buying back the shares, they'll get rewarded by increasing their wealth. So either we reward shareholders by increasing their wealth or by doing buyback, is one and the same thing. Our policy is that we should reward the shareholders by increasing their wealth. Which you'll see in next three years, I think wealth creation will happen, so that shareholders will not have any point to complain, and we hope that we'll grow more than the benchmark. Second, you asked how much debt reduction will happen. So I have given you number already.
We have reduced our ratio from 4.5 x - 3.5x. So one time is a big reduction, 30% reduction in our leverage. Going forward, what I'm saying is FY 2028 will be at 3x, which is further reduction. I'm not going beyond 2028. By 2029, you can see if the same trend continues, there'll be much more reduction. So whatever debt reductions do happen and surplus cash we generate, they'll go for reduction of debt only, and the shareholders' value will keep on increasing. So be patient. Whatever we are doing, we are very conscious of the fact that we have to reward our shareholders either by way of generating the wealth or by buyback. But buyback is something which is for the industry where there's no growth plan.
We have a growth plan, so we'll always reward our shareholders by generating a good wealth for them.
Got it. You mentioned FY 2029 a couple of times on today's call as something that we should be looking at for growth.
Yeah.
When all your CapExes will be commissioned, then you will be running at full utilizations. If you were to put numbers to it, for this year, you have mentioned 30%+ , 35% top-line growth and similar number you are expecting in the bottom line. But till FY 2029, if you look at FY 2026 as a base, what is the CAGR that I should be keeping in mind in terms of top line and bottom line? Any metric that you can provide, which can give a better idea about what we are looking at in terms of FY 2029.
See, why we are talking FY 2029 more prominently as of now is because the aseptic facility in Egypt will be 100% utilized by that time. You can see 12 billion packs coming in market and giving the full returns to us. Our recycling facility in Noida will be 100% up and running that time. WPP also will be 100% running up that time. Even these three facilities will give a very good CAGR to the business as a whole. But if you want to look at these CAGRs, I think we have to calculate these numbers. Because I do not want to quote any number as of now. I can quote 10% or something, but that will be misleading. What I will request Surajit to share the number with you once we have the calculations.
All these three facilities, when 100% come up online, you can see what kind of top line and what kind of bottom line will be there in the system at all. That will give a big flip to our top line as well as bottom line, and see a very good growth. I think CAGR from 2026 to 2029, four years, at least you should see 10%. That is what I feel. But we will reconfirm to you these numbers. Surajit, you can confirm the numbers.
Sure.
Yeah.
Okay. Just a follow-up on the utilization of cash flow. I understand that you want to keep reinvesting because I agree that's how you will see growth. But maybe if you can guide me in a different way, which is, incrementally, whatever cash flow you will generate and whatever you will apportion it towards CapEx, what percentage of it will go towards packaging films and what percentage of it will go towards non-packaging films? Because I think in the last three, four years, there has been a clear shift towards high margin, high ROE businesses. Most of your capital has gone towards the high ROE segments, such as Asepto, now WPP bags, recycling. These three are your, I believe, high margin, high ROE verticals.
Incrementally, do you have any number that you have kept for yourself that, okay, this is the total CapEx that we are going to spend, and out of that, this much will go towards packaging films and the rest will go towards all these high margin verticals.
See, right now, whatever growth you're seeing in margin is primarily coming from the value-added product what we are making. It's but natural that capital allocation will happen to these new sectors only. Whatever CapEx we do going forward, at least 60%-70% will go into value-added products only. And balance can go into maintenance or regular products. Because like you see WPP is coming up, Noida Sector has come up, even Egypt is coming up. All this capital allocation has already been decided that we have to move from general product to value-added product to enhance our acceptability in the market. Plus margin also will get improved because of that. Major CapEx will happen in these value-added products, and capital allocation also will happen accordingly.
60% -7 0% of the total CapEx, that will go towards.
Yeah.
Okay. That's very-
Value-added products, yeah.
Yeah. That's very great. In terms of margins and ROE, I think it will be very good going forward. Next question.
I'm sorry to interrupt, sir. Can you please return to the question queue?
Sure. I'll do that.
Thank you. Participants, a request, please limit your questions to two questions per participant. The next question is from the line of Tisha Shah from Equentis. Please go ahead.
Yes, go ahead, ma'am.
Hi. Congratulations on a great set of numbers. I just wanted to know, the 15.5% margins that you've given in this quarter, are they sustainable going forward, the normalized EBITDA margins?
See, in the beginning of the call, we said these margins are very sustainable going forward, and not sustainable for this year, but going forward for next three years. Let me just add that 15.5% margin is something which we are working on it. What guidance we have given for FY 2027 is 30% top line and 30% bottom line growth. Similar growth we will have next year also. You can see what kind of margins we will be able to generate going forward. These are very margins which can be achieved with the kind of CapEx we have done, kind of focus we have on the value-added products now, and I think what market perception is and what market is treating us like this, it is going to happen in a long tenable.
If I calculate 35% growth on the EBITDA from March 2026 numbers, it comes to INR 2,500 odd crore, and from that we have already given INR 840 odd crore in Q1. Then if I divide it in the rest of the quarters, it will come to only around INR 550 crore. Then these EBITDA margins.
No. See, everything is not mathematics in business. Everything is not mathematics. You have to look from a full financial year perspective, and that is why I am saying we will deliver for FY 2027 good results, and you can see 14% + margin. As of now what we can perceive that that will happen, but if things remain as good as they are currently, and no untoward incident happens on the geopolitical front, we will give you better results than this.
Okay.
Do not calculate on mathematics-wise because it does not work that way in our business.
Okay. Thank you.
Thank you. The next question is from the line of Garvita Jain from Seven Islands PMS. Please go ahead.
Hello. Am I audible, sir?
Yeah. Hi. Yeah, please go ahead.
Hi, sir. My question is on the lines of volume growth. I wanted to understand that you also noticed that the revenue growth this quarter
Voice is not clear. Garvita, your voice is not audible.
Do you hear me clearly now?
Yeah.
Hello.
Yeah, please go ahead.
Yeah. I wanted to understand one thing. You noticed that revenue growth this quarter was primarily value-driven, correct? Volume expansion was very limited. Could you please disaggregate this volume growth? What I want to understand is what percentage was driven by cost pass-throughs and inflationary pricing actions versus a structural expansion from a richer product mix or operating leverage?
So, very valid question I think you've asked. Let me tell you, in our business, we don't carry much inventory in our books of accounts because prices fluctuate too often here. Whatever gain you are seeing in our volume as well as in our prices, they are the prices which have been passed on to the customers.
Whatever prices we achieved in this quarter, the prices may little bit differ in next quarter also. But I think we are seeing quite stable pricing going forward because things have become so complicated that anyone who can supply goods to the customers in a regular fashion. They look for an integrated player like UFlex, which is backward and forward integrated player. We get the first opportunity to supply to the customers, and they are willing to pay reasonably good price to us to sustain their supply chain. Our supply chain is very strong. We are able to procure the raw material at a good price. We are able to supply the material to them from our various geographical locations.
All this pricing is not something which is one-off, but we have made in such a way that our business is commanding this pricing, and we hope that we'll continue to have this pricing going forward also. If volume growth also happens, you will see the icing on the cake.
Okay. Are you saying that these prices which were there in quarter one, we can consider that as a base price and 35% growth which we are targeting for full year, that is going to be the volume growth for that?
I said 35% from FY 2026 numbers.
Yeah, correct.
Take that into account, FY 2026 numbers. From that you can take 35% growth.
Okay, sir.
Yeah.
Thank you.
Thank you. The next question is from the line of Kaushik Poddar from KB Capital Markets. Please go ahead.
Yeah. See, if I divide your result between domestic and international. In domestic, the top line is up by 40%, whereas your bottom line is 15% of the total consolidated amount as far as domestic is concerned. So when do we see a turnaround in this figure so that this EBITDA or a PAT is on a proportionate basis to the turnover? That's number one question. Question number one. And the second question is that, you are talking of the higher profit and profitability in the international operation because customers prefer local sourcing and you are forward and backward integrated. If you can expand on this also a little bit so that we have a better understanding of the same.
See, our 60%-65% business is coming from overseas now.
Okay.
When we set up these facilities which are-
Exactly.
very good and operating margins are much more overseas as compared to Indian business.
Yes.
Because in India, the passing of pricing to our customers is slightly difficult, whereas prices can be passed on much easily to our overseas customers. That is one.
But can we-
We'll always generate-
higher margin in India?
Overseas business. Overseas business will always give a higher margin because-
Okay.
the price at which we sell the product in overseas market is, if I can give you ballpark figure, it is almost 2.5 x of what we sell in India. India, the cost is also lower base. There, the cost is also higher base.
Despite the higher cost in overseas market, we get a better price relation and better margin there because customers are willing to pay that price. In India, we are too very conscious of the competition, of the pricing, what customers are willing to pay. The good part in India is that India is expanding at a very good pace in FMCG market. If FMCG market continues to grow 5%-8%, what is expected as per the reports, then the packaging industry will also grow. If packaging industry grows, then UFlex is the leader in that, we will also grow here. Your very valid question that if India also catches up with whatever revenue and whatever margins we get in overseas market, you can see much, much better results. We are just keeping things as it is right now.
60%-65% growth will come from overseas market, rest will come from Indian market. India, the volume will be much higher. Prices can be little softer here. Whereas overseas, the prices and volumes are growing at a very good pace. It is a company which has been de-leveraged from one geography now. We are represent in India in a big way, Egypt in our second largest facility. Then we are in North America, we are in Africa, in Nigeria region, we are into European region, we are into CIS region. You see all the regions we are covering now, and we expanded very meaningfully in all these regions where availability of raw material is there, and we can cater to every continent depending on the requirement.
That is how, because this is an industry which has to be near to the customers, which we are always striving to achieve. I think we have achieved quite a few, but till FY 2029 we will keep on expanding in this fashion so that even if something goes wrong in one territory, other territory performs and our results are not impacted by just one territory impact.
Okay. Secondly, if we look at the volume YoY, the volume is up only 1.7%. Can you give an indication how the volume you are expecting since you are talking of FY 2029 for three years, so 2027, 2028, and 2029?
If you add up the capacities what are coming up, if I can add up. We should double our quantity in next three years' time. Whatever capacity.
In three years' time, you are talking of doubling in volume, right?
Volume. Yes.
Okay.
As of here right now, 173,000 tons.
Yes.
In three years, we should be doubling the volume because our WPP will be fully utilized by that time. Egypt will be fully utilized by that time.
Okay.
Our India recycle facility, which is just a little bit fully utilized. So by FY 2029 end, you can see much bigger volume going forward.
Okay. Now what we are. The takeaway is that
I am talking of FY 2029. Okay.
Yes. So doubling of volume by FY 2029 from what FY 2026 was there.
Yes.
Surajit, you said something I just missed.
Hello.
No, I didn't say. I mean-
No.
Arun is only addressing.
No, he didn't say anything. Surajit, do you want to say something?
No. It's fine.
Okay.
See, Kaushik, there are a lot of opportunities. If you look into our utilization graph this year, even domestic is currently only 70%-73%.
Absolutely.
Because we have a lot of unutilized specialty segment things, something like metallizer, something like ultra-high barrier films, where we have quite a bit opportunity, and we are currently utilizing around 30%, 35%, 40%.
Okay.
Those things will come up quite strongly. Dharwad will another thing which will come next year. As a result of it, as Arun said, we have pretty much de-risked our business model. If one geography is down, another geography goes up. For example, West Asia crisis. Because of that, what happened is that, there are definitely a crisis of chips. Now, what happened is that we have chips both in domestic market as well as in Egypt market. That Egyptian plant is supplying to all our subsidiaries. Be it in Europe, be it in Africa, be it in Mexico. So we are supplying everywhere. As a result of it, we have our own system, which is not dependent on others.
As a result of it, our clients depend on us about our assurity, about our security of supply, and respecting the timeline to provide the film. So that is why they are ready to pay premium. That is why they are ready to continue with that.
Okay, thanks.
If you look into our peers also, I mean.
That is fine.
There are a lot of inventory gain which is not there actually with us.
That I told in beginning.
Yeah.
We do not carry much inventory in our books, yeah.
Thanks. Now I have a fair share of your, of the-
I am sorry to interrupt, sir. Can you repeat the question please?
Thank you. No more question from me.
Okay. Thank you. The next question is from the line of [Lakshmi Narayanan] from [Fleet Management]. Please go ahead.
Hello, sir. Am I audible?
Yeah.
Yes.
Please go ahead.
Sir, congratulations. I just want to know this, you have said in presentation, your interest cost come down by 0.5%, and now the results are even much better. How you were able to reduce it, and whether your rating improved or we can negotiate even better rate going forward?
See, our rating is AA- as of now, and we are dual rated by CRISIL as well as by India Ratings . Whatever interest rate we are paying as of now, and whatever rating we are enjoying, I am hopeful that we should reduce our interest cost by 1% in next one year's time. You will see that even if we reduce by 1% going forward, there will be a great reduction. That is why you can see the reduction of 0.3%, 0.4% in this quarter itself. But by next one year, we will reduce our interest cost by at least 1%.
Yes, sir. Great. Sir, couple of, I do not know, one year or two year back, we were thinking about listing our overseas arm in U.S.A. Will it be a good opportunity now?
No, I think we are developing a good business model now. Once the business model becomes more robust and we are able to deliver what we said till FY 2029, then our management will decide what to do because the business has to evolve every year basis now. Whichever territory, whichever region, whichever market gives us a good value, we can evaluate. As of now, I do not think we have any such thought to sell. By FY 2029, certainly we will again evaluate everything that which market is good for us because we are in India, we have subsidiaries in Dubai and subsidiaries all across the globe. We will see how does it pan out because as of now, saying something out, that is very, I think too early to say that.
On your interest part, I think I appreciate your question, and we will strive to reduce it by at least 1% going forward in one year's time.
Great, sir. Sir, regarding this, you said Egypt plant supplying, but recently this Bab el-Mandeb also become a flashpoint. Any update on that? Of course, your ship is not coming from Saudi.
That is what I said, we are running a de-risk model now. India caters to mostly India demands and other areas cater to other areas' demand. If somebody who is dependent on Indian export only will have a difficulty in supplying the material. But we have all across geographies and fully integrated, fully backward and forward integrated. That is why we are able to walk through these difficult times and give you the results what are there in this first quarter. Going forward also, we are talking so confidently just because of this de-risk model what we started working on last three years. Going forward, this will be very much in place in next three years also. We should appreciate our strategy that we are trying to work out in all geographies near to the customers.
Sir, if I can squeeze one more. Recently our articles have been amended. I see a lot of new unrelated things, like paper, electronic device, software, hardware, infra, all added. Is there any thought process going on in particular field?
No, no thought process going on. Basically, we see government is trying to upgrade the packaging industry also in a big way. We are also trying to upgrade the packaging industry. We are also adding in the value-added products now, which can be paper, which can be other materials. Just to enable that, whatever R&D is doing, it should not remain in the R&D, it should come as a commercial thing for us. We are enabling those things, because in next three years, you may see lot many products coming out from paper, all this packaging, everything. We are preparing ourself for that, and it is good to prepare in advance and do things so that we are not caught up on the wrong foot when the decision comes out.
It is just a very thought-out process going forward to meet the demands of world over and to the industry what is evolving in this scenario.
Okay, sir. You said some good news about-
I am sorry to interrupt, sir. Can you please listen to the question?
Okay.
Thank you. Next question is from the line of Kilesh Tahu from JBFinserve. Please go ahead. As there is no response from the participant, we will now proceed to close the call. Ladies and gentlemen, we will now hand the conference over to Mr. Surajit for closing comments.
Thank you for joining us today. We appreciate your time, questions, and continued support. The transcript of this call will be made available shortly on our website at www.uflexltd.com. We value this platform as it enables us to engage meaningfully with our investors and stakeholders and look forward to keeping you updated on our progress in the coming quarters. Wish you all those present here thank you.
Thank you, sir. We thank the management for this call. On behalf of Arihant Capital Markets Limited, that concludes this conference. Thank you for joining, and you may now disconnect your lines. Thank you.