Rajshree Polypack (NSE:RPPL) Q1 2026 Earnings Call

0:01 Ladies and gentlemen, good day, and welcome to Rajshree Polypack Limited Q1 FY 'twenty seven Earnings Conference Call. As a reminder, all participants will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Ram Saurabh Thad, Chairman and Managing Director. Thank you and over to you sir. Thank you, Yousuf. Good afternoon and thank you for joining us for the earnings call. We hope you all had a chance to go through our investor presentation uploaded on the stock exchange.

0:53 We will share our key operating and financial highlights for the quarter ended 06/30/2026. Joining us from Rajshree Polypack is our CFO, Mr. Shumini Sharma, along with me. For Q1 FY 'twenty seven, we reported our highest ever quarterly revenue from operations of INR102.91 crores compared to INR 82.52 crores in the corresponding quarter last year, reflecting a growth of 24.72%. EBITDA for the quarter stood at INR INR16.52 growth compared to INR12.08 growth in quarter one FY 'twenty six, registering a growth of 36.75%.

1:45 While EBITDA margins improved to 16.05% from 14.64%, profit after tax increased to INR 7.25 crores compared to INR 4.10 crore in the same quarter last year, reflecting a growth of 76.83% with PAT margins improving to 7.04% from 4.97%. The improvement in our performance was supported by better product mix, higher operating efficiencies and continued focus on execution. In terms of geographical sales, the domestic business witnessed a strong recovery with domestic revenue increasing from INR 69.12 crores in quarter one FY 'twenty six to INR 91.19 crores in quarter one FY 'twenty seven.

2:42 Export revenue remained stable at INR 11.72 crore despite the continued geopolitical uncertainties across several international markets. We continue to work closely with our existing customers while expanding our presence across new geographies to further diversify our export business. Looking at the product wise revenue mix, packaging products continue to remain the largest contributor to our revenues. The injection molding business continues to be an important growth driver for the company, supported by expanding customer application and increasing demand across domestic and export markets. During the quarter, we further strengthened our value added offerings by expanding our sleaving capacity from twelve seventy five lakh unit per annum to sixteen seventy five lakh unit per annum, enhancing our integrated packaging capabilities.

3:42 On the capacity front, injection molding capacity reached 5,800 metric ton during the quarter following an addition of 1,000 metric ton, representing a 5.8 times increase since FY 'twenty three. Our manufacturing operations continue to operate at healthy utilization levels and in HK Molding, we have capacities available to support future growth. We also continue to strengthen our integrated manufacturing platform across extrusion, thermoforming, printing, sealing and injection molding. On the sustainability front, I am pleased to share that we have entered into group captive wind solar arrangement of approximately 1.9 megawatt and it remains on track and is expected to be commissioned in October 2026.

4:32 Once operational, the project is expected to meet nearly 30% of our energy requirements through renewable sources, while generating annual savings of around INR 1.75 crores. Coming to OLED EcoPAC, I'm pleased to share that the business continued to make encouraging progress during the quarter. Olive reported a healthy EBITDA margin, reflecting continued improvement in operating performance. We continue to expand our presence in paper based food packaging solution while broadening our product portfolio and customer base, creating an additional growth platform alongside our rigid plastic packaging business. On the marketing front, we continue to strengthen customer engagement by participating in leading domestic and international exhibitions, including Interpac at Germany, NRA at Chicago and Ahab at Telney.

5:30 These platforms continue to provide opportunities to deepen relationship with existing customers, while engaging with prospective customers across global markets. Looking ahead, we remain focused on strengthening customer relationship, expanding our product portfolio and investing in manufacturing capabilities, innovation and sustainability. The continued scale up of our injection molding business, the progress at all OE Recopac and our ongoing investments in renewable energy provide a strong foundation for long term growth. With that, I conclude the business update for the quarter. We would be now happy to take your questions. Thank you very much, If you wish to withdraw yourself from the question queue, you may press star and two.

6:32 Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question is from the line of Abhijit Jain from AJ Capital. Good afternoon. Both are modeling. Yes, please go ahead. My first question is, first of all, congratulations on a steady set of numbers, and it's good to see that the company is back on the growth trajectory post flattish FY 'twenty six, so congratulations on that. So my first question is, I wanted to understand the margin profile in your injection molding business versus your packaging business because that is not explicitly mentioned anywhere in the presentation or in the press now.

7:25 So injection molding business for quarter one has given us an EBITDA margin of 13% to 14%, whereas the packaging business gives a margin of around 16% to 17%. So packaging is a higher margin business. Yes. Okay. That is that a predominant reason that between '20 five percent and '26, FY '25 and '26, I'm seeing that the revenue contribution from the I'm or injection mode has gone down from 15.64% to 12.31% despite you ramping up the capacity of IRON? You're mentioning about quarter one? So as I'm looking at your presentation.

8:10 Right? The Yeah. The presentation, I am on slide number 10. Okay. So if I look at your revenue mix, right, if I look at q one FY twenty six and q one FY twenty seven, the injection mold revenue contribution has gone down from 15.6% to 12.3% Yes. This this quarter No. Yes. Specifically, injection molding has gone down in this particular quarter because 60% of our sales from injection molding is from exports and export were disturbed in this particular quarter due to the geopolitical issues.

8:57 So that's the reason why we see a drop in the contribution from injection molding as a segment. But this is temporary, probably in the next one or two quarters, it will come back to 15%, 16% lift. So because one good thing was that because of you entering in this injection mold business, there are bigger players out there in the industry in the listed space. And they have been able to grab a larger share of the market in packaging business by being an index. So that's a good sign. It's a bit margin dilutive compared to the packaging business. But I just wanted to understand, sir, how do you see your growth trajectory from here?

9:43 Because you had a fantastic time between FY 'twenty one to FY 'twenty four, and there was a consistent growth and the business was growing. But in FY 'twenty six, that sort of became stagnant. But just on a long term perspective, I want to understand how do you see yourself growing because it's fairly at a you're still at a very small scale, right? So growth shouldn't be a worry for you. So I want to understand your thoughts. See packaging business overall, if you say, remains very strong. And it has been growing in India at a rapid pace, whether it is online delivery or QSR formats or the requirement for daily packaging, they are all growing in India. And with that growth, we definitely see a good opportunity for our company.

10:37 We had mentioned in past that we in the current setup, we can reach around INR $4.20 crores, INR $4.30 crores of revenue. And then going forward, we have also invested in a land in the Eastern part of the country. And sometime later, we will be definitely investing in that facility also to increase our manufacturing capabilities. So the growth definitely is going to be there in this particular sector, and we are very bullish on that. Any plans or any medium term plans in terms of growth that you're looking at? There were periods where you had a 20% CAGR growth, then it slowed down to around eight ten percent. So do you think that this volatility will persist? Or do you see yourself coming out of this volatility in the near future?

11:33 I think so. We will be reaching to or utilizing our capacities within next six months or a year. And definitely, we will be looking for the growth. All right, sir. Sir, can you also help us understand how will the margin profile move from here? Because even in your packaging business, you were at 16%, 17% EBITDA margin. But if you look at your entire history in the last six, seven years, your EBITDA margins have hovering between 1213%. And the injection mold is obviously a lower margin business in terms of it's a twenty thirteen, 13, 14 kind of a margin profile business. So going forward, what do you see as a consistent steady state basis EBITDA margins that you aspire to be added for the next two, three years?

12:23 See, as we scale up and utilize our capacity is what we have invested in, we see a margin in the range of 15% to 16%. On a company on control level? Yes. All right. And sir, one final question, bookkeeping hedging question. This JV, OLED JV, are the numbers consolidating? Or how does it work right now? No, no. It's a JV. So we they are not consolidated, yes. Okay. So that remains out of the focus. All right. Again, congratulations, Good to see you back on the growth days. Anja, we'll track you and see you. Thank you.

13:08 Thank you. Next question is from the line of Nishita Sanklesha from Safire Capital. Yeah. So I just wanted a clarification. You mentioned that from the current setup, we can reach the revenue of around $4.20 to $4.50 crores. So is that just from the packaging facility, or that also includes the injection mold facility? It's including injection molding facility. Okay. And so, like mean, assume that we can this the end of Feb twenty seven.

14:00 You're fine, Rajshree. Your voice is breaking in between. Hello? Am I audible now? Yes. Yes. Sorry for that. So just wanted to understand if you can reach this INR $4.20 to INR $4.30 crore of revenue level by FY 'twenty seven. Can we reach those utilization levels? See, we are very positive that we'll be very close to that. But probably, maybe by next year, surely, we'll be reaching those numbers. But this year, we positive as if markets remain current as they are right now, then definitely, we should be able to reach those numbers.

14:49 Okay. Understood. And what what is our utilization level currently? We... Across the different processes, there are different utilization level, And this utilization level also keeps on changing on quarter to quarter basis depending upon the seasonal demand of the products. But roughly, we are at around 80%, 85% utilization level for packaging and extrusion. And in injection molding, we are roughly at 55%, 60% utilization level. So do we have any CapEx plans? Like in packaging, we are at around 80%, 85%. And you are mentioning that you are positive that we can reach peak utilization by the end of FY twenty seven or max to max FY twenty eight. So do we have any CapEx plans to further increase our capacities?

15:46 Not for this particular year, but for next year, definitely, we'll be looking to see if we can start investing in our new facility in the Eastern Part of India because the land has been already procured. So at the moment, it is the investment is on hold. But as we reach this capacity utilization, we'll be definitely looking at investing over there. Okay. So in the new facility, are we going to focus on packaging or injection molding? It will be combination of both. Okay. Understood. Yes, that is it from my side. Thank you so much.

16:34 You. Next question is from the line of Amit Mehendale from Robo Capital. So just a follow-up on the new facility that we were talking about to the earlier participant. So what type of capital whenever we do it, maybe next year, what type of CapEx we intend to do? Any ballpark number of what type of CapEx and what type of facility, like what type of capacity expansion will it be? Actually, the plan is not on the table as yet. But roughly, we may start we'll do it in phases, obviously, but we the area is around 3.5 acres, but we can we can start with investment of INR 25 crores to INR 30 crores to start with, minimum that will be the investment in Phase one.

17:37 And what type of revenue will it generate? Any broad numbers, I mean? In Phase one, it's as I said, like this nothing has been put on paper as yet. But roughly to start with in Phase one, we can look at anywhere between INR 80 crores to INR 100 crores of revenue. Right, sir. And so will that also To mean go up to INR $2.50 crores, INR 300 crores, when will be then it will be like the full scale capacity can reach up to INR $2.50 crores, 300 crores whenever it will be installed. Right. So I'll just summarize the discussion just to clarify. So it will be essentially Phase one will be about INR 25 crore CapEx and that will do about 100 crore revenue.

18:27 And we can keep expanding to say Phase two or Phase three. And ultimately, the entire expansion cycle is completed, we can potentially generate INR $2.50 INR 300 crores. Is that correct in the That's same right. Right, sir. And just lastly, on the debt side, I mean, since we may be doing CapEx, so we'll probably not be repaying any debt, right, from the operating cash flow that we generate. Is that a fair understanding for a couple of years? See, at the moment, I would say that the idea is for at least one year, we will try to reduce the debt at least by 15%, 20%. And then if the expansion starts, then it can be a combination of investment from internal accrual and long term debt rather than increasing the working capital requirements.

19:26 Right. So is it fair to assume we'll pay like INR 10 crores, 15 crores this year, FY 2027? The reduction in the debt? Yes. Yes. Okay, sir. And my lastly on the JV, can you just throw some light on how is the JV performing and how do you see the next two years on that business? See, JV for this quarter has generated revenue of around INR17.22 crores, and it has generated an EBITDA of roughly INR4.61 1 crores. We as given guidance previously, we are looking at somewhere around INR 90 crores of revenue, plusminus INR 5 crores for this particular financial year.

20:21 And we are very positive that in this financial year, we should be at PBT at least breakeven, that's what we are looking at. And for next year, we are targeting 140 crores to 150 crores of revenue. Right, sir. Thank you. That's it from my end. Thank you. Before we move to the next question. Next question is from the line of Rajshree from CAO Capital. Please go ahead. Congratulations on a pretty decent set of numbers given the volatility in the markets, especially on the raw material side.

21:11 Sir, that's where my question is. Your raw material prices must have been all over the place during the quarter. And what is the current condition, sir? How do you see the situation as of now? A month ago, the prices had dropped by 10% or so. But then again, as you are aware, the tensions again surfaced and prices have again gone up. So they are still on the higher side. We don't foresee to go any further up from here. But probably, it may take another month or two before it starts coming down, provided there are no further escalation.

21:58 Right, sir. And sir, the so quarter on quarter, we saw a decline in gross margin. So I'm trying to understand from a gross margin point of view, can we attribute that entirely to the escalations that you have seen in the raw material? Yes. Right. And so given that it looks like the war is over, so let's assume that it is over, do you expect to go back to your q three, q four gross margins? I'll just give you the numbers. Q three was 43.6%, and Q four was 42.5%. So in that bracket, 42 and a half to 43 and a half, do you expect to regain those numbers? Yes. Ideally, it should be because as raw material prices goes down, the gross margin should increase up further.

22:49 Right. So sir, am I right in assuming that there was no significant change in mix between Q4 of last financial year and this particular quarter? In terms of product mix or? It's a product mix, product mix. No. As I said, like from Q4 to Q1, our packaging product has grown in terms of, I will say, the contribution to the revenue. Injection molding has gone down. So packaging products have contributed more in Q1. Sir, I was trying to understand the change in the gross margins here. So I see a drop to 38%, 38.3%.

23:37 So I'm assuming the change in the mix won't be that significant. Right? Because the numbers that you gave were not that significant to change your gross margins by this much. And you mentioned that there was a 10% spike. So this 42 and a half to 38 drop, it is kind of explained by just by the raw material prices. So would that be Yes, exactly. Because the raw material for injection molding as well as for packaging products mostly are common, they are polypropylene. So base material remains the same for both of them. So definitely, the raw material prices have impacted the gross margin. But there was a change of the revenue mix, as I mentioned, maybe we did more revenue from packaging products in Q1 as compared to Q4.

24:26 Understood, sir. And sir, you mentioned that you'll be saving making some savings in the power and fuel cost. So when will we start seeing those? Have you seen that in in q one? October 26. October 26. So, sir, that would be, let's say, approximately five months for this year and then full year next year onwards? Yes. Right. And so the savings will be INR 1.5 crores? Yes, roughly INR 1.5 crores to INR 1.75 crores is what we are anticipating. That's the annual number, assuming twelve months of operations. Yes. Annual. Right. So final question from my side. The way you are describing the way you are about about to start your CapEx, so you have not really started it.

25:12 So I was just wondering, sir, would we see if the environment continues to be as buoyant as you are seeing as of now and you run out of your capacity. So it will take you some time, right, to set up the new plant because it's a greenfield expansion. So should we assume, like, eighteen months or two years of low volume growth? No. As I mentioned, like we can add some growth from injection molding because we are only at 55%, 60% utilization at the moment over there. And we can 5% to 10%, as I mentioned, like $380,000,003 90,000,000 is the capacity today. But by adding a little bit of CapEx, we can reach INR $430,000,000 odd crores in the existing setup itself. Definitely, we can reach to that number within next one, one point five years.

26:04 And then we can and by that time, probably, the new expansion can start contributing. Right. Sir, one final question from my side. In the other expenses, in the most recent annual report that I could say, I I I don't have access to your two thousand two thousand twenty six schedules. But in the previous year's number, the job work expenses were 12.5... 12.8 crores. So can you tell us the nature of this job? Or is it, like, cap... Basically outsourcing some of the capacity because you do not have the capacity, and hence, you're outsourcing work. And in case of future capacity constraint, you can look towards these... Your... Like, whoever these suppliers are to show the some of the production burden from you? Or is it low value addition stuff which which you are just outsourcing because it's not worth your...

26:57 It's not worth it for you or you to actually manufacture such products? See, injection molding business is with the core manufacturing agreement and the drop off charges major what you see is on that account only. So this is just some outsourcing thing, right, It's 100%. The the unit works 100% for us. And there's an agreement that 100% of supplies are made for us. Right. So what kind of capacity utilization are they working on? 55, 60%. Okay. Okay. So... Okay. I am not capacity is for us. Understand. Right. I understood, sir. Thank you very much, sir. All the best.

27:44 Thank you. Ladies and gentlemen, to ask a question, you may press 1. Participants, if you wish to join the question queue, you may press 1 Ladies and gentlemen, if you wish to ask a question, you may press 1. As there are no further questions from the participants, I now hand the conference over to the management for the closing comments. Yes. I would like to thank you, everyone, for joining on the call. I hope we have been able to respond to all your questions adequately.

28:33 For any other information, we request you to please do get in touch with our Investor Relationship team. Stay safe, stay healthy, and thank you once again for joining with us. Thank you so much, sir. On behalf of Rajshree Polypack Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.