Borosil Limited (BOROLTD) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q1 FY '27 Earnings Conference Call of Borosil Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Manan Goyal from ICICI Securities. Thank you, and over to you, sir.

Thank you. On behalf of ICICI Securities, we welcome you all to Q1 FY '27 Results Conference Call of Borosil Limited. Today, we have with us senior management represented by Mr. Rituraj Sharma, CEO; Mr. Anand Sultania, CFO; and Mr. Dhaval Patel, Head of Investor Relations. Now I hand over the call to the management for their initial comments on the quarterly performance. Then we will open the floor for Q&A session. Thank you, and over to you, sir.

Thank you, Manan. I'm ICICI Securities for this call. Good afternoon to everyone of you. The Borosil team is delighted to be communicating with you once again. I'm pleased to inform you that Borosil Limited Board has approved the financial results for Q1 FY '27 during our Board meeting on 14th August 2026. We have submitted our results and updated presentation to the stock exchanges, and they are available on the company's website for review. Some quick updates. We are pleased to inform you that the company through its wholly owned subsidiary, Stynndia Limited has successfully commissioned setting up of BIScompliant manufacturing unit with 2 double wall lines of vacuum insulated stainless steel glass, bottles and containers in the state of Rajasthan. The commercial production from 2 double-wall lines commenced on 30th June 2026, and the production from third double line is expected to commence during Q2 FY '27. With the introduction of new green energy open access regulations 2025, we are pleased to inform you that the company has successfully commissioned its third captive solar plant in [indiscernible] during Q1 FY '27 with a capacity of 20-megawatt peak integrated with battery energy storage system. This is the company's first project with battery storage and the first installation under the Green Energy Open Access Regulations 2025. As a result, solar power now meets about 61% of our overall energy requirement. The company has strengthened its retail footprint with the launch of its exclusive Borosil brand stores. The company launched its first exclusive brand outlets in Pune and Gurgaon thoughtfully designed to elevate the retail experience, the stores offer consumers an immersive destination to explore Borosil's complete range of kitchen, dining, home and lifestyle solutions under one roof. I'm pleased to report that Borosil Limited has delivered a steady performance in Q1 FY '27 with consolidated revenue from operations reaching INR 253.6 crores, up from INR 232.7 crores during the same period last year. This represents a 9% Y-o-Y growth. This steady growth achieved against challenging market conditions reflects the resilience of our business model, the strength of our execution and the continued trust and loyalty of our customers, placing us on a strong competitive footing alongside our peers. In Q1 FY '27, the company achieved an operating EBITDA of INR 35.9 crores against INR 40.2 crores. In Q1 FY '26, the EBITDA margin for Q1 FY '27 was 14.6% as compared to 17.8% in Q1 FY'26. The lower margins are primarily attributable to input cost inflation, particularly in fuel and packaging materials arising from the West Asia conflict. The overall net impact of the conflict on Q1 FY '27 was approximately INR 10 crores, which was partially offset through price increases implemented across multiple categories. Additionally, the company continued to face challenges in one of its key categories, Hydra, the vacuuministrated stainless steel flask and bottles category. These challenges adversely impacted the company's financial performance, both in terms of revenue and margins. pn Q1 FY '27, our further operating -- other operating income stood at INR 8.2 crores, primarily on account of shared service support income. with related expenses reflected in the total expenses and export incentives with other operating income of INR 6.2 crores in Q1 FY '26. Profit before tax for the quarter was INR 17.4 crores versus INR 23.5 crores in the same period last year. The current quarter includes royalty income of INR 4 crores and investment income of INR 1.2 crores, while the previous year benefited from interest income of INR 1.4 crores and a onetime stamp duty reversal of INR 7.2 crores, partly offset by professional fees of INR 1.6 crores. The net impact of onetime items in Q1 FY '26 was INR 5.6 crores. Depreciation and finance costs remained largely stable with a marginal decrease in depreciation to INR 21.9 crores from INR 22 crores in Q1 FY '26 and a slight increase in finance cost to INR 1.8 crores from INR 1.7 crores in Q1 FY '26. Consequently, profit after tax declined from INR 17.4 crores in Q1 FY '26 to INR 12.8 crores in Q1 FY '27. As on 30th June 2026, at the consolidated level, Borosil Limited maintained a strong balance sheet with investments, cash and bank balances of INR 56.2 crores against total debt of INR 155.2 crores, resulting into net debt position of INR 99 crores. Now let's take a closer look at our category-wise performance for Q1 FY '27. Borosil consumer business continues to expand across both glassware and non-glassware categories under the Borosil brand along with our Opalware range under Larah brand. The Larah Opalware segment reported sales of INR 83.6 crores in Q1 FY '27 versus INR 76.2 crores in Q1 FY '26. Larah's performance in Q1 FY '27, reflecting a 9.8% growth over the same period last year. In our glassware segment, which includes Borosilicate microwarables, serving wear, glass tumblers, lunch boxes and storage solutions. We recorded double-digit year-on-year growth of 16.8% with revenues reaching INR 65.6 crores in Q1 FY '27 compared to INR 56.2 crores in Q1 FY '26. The non-glassware segment comprising a diverse portfolio of small home appliances included bottles and glass, cookware and other kitchen essentials registered a marginal growth of 4.2% with a turnover increasing to INR 98.1 crores in Q1 FY '27 from INR 94.2 crores in Q1 FY '26. BIS compliance requirements continue to impact sales of our Hydra range. The company has recognized these headwinds and has proactively shared its strategy to mitigate the impact. The successful commissioning of the Hydra plant with commercial production commencing on 2 double lines during Q1 FY '27 is a significant step forward. This will strengthen our supply chain and provide greater control over availability and compliance requirements going forward. Despite these challenges, the Hydra factory, the overall impact on the non-glassware segment was more than offset by strong growth in other categories, particularly domestic appliances and stainless steel cookware. Borosil is on a transformation journey to address key ESG opportunities and create long-term value for our customers. Strategic priority for us is lowering our operational carbon footprint and meeting decarbonization targets. In line with this, we have successfully commissioned 2 captive solar power plants in [indiscernible] Rajasthan, 8.6 megawatt peak in December 2023 and 7.2 megawatt peak in September '24. Building on this momentum and with the introduction of Green Energy Open Access Regulations 2025, we commissioned the third captive solar power plant in [indiscernible] during Q1 FY '27 with a capacity of 20-megawatt peak integrated with battery energy storage systems. As a result, solar power now meets about 61% of our overall energy requirement. We are further evaluating opportunities to set up an additional 6.5 megawatt plant at Borosil Limited and another 3 to 4 megawatt plant [indiscernible] India Limited to meet the power demand of our hit facility. These initiatives reinforce our commitment to sustainability, energy independence and long-term value creation. In Q4 FY '26, the Board approved a new glassware manufacturing project at Bharuch. The currently generates sales of approximately INR 100 crores through sourcing of drinking glasses, storage, and bottles from BSL the strong growth potential in categories such as jars and bottles the Board has sanctioned the establishment of a dedicated manufacturing facility at Bharuch, Gujarat. The project involves an estimated capital expenditure of INR 42 crores. This strategic investment positions us to strengthen our presence in high-growth glassware categories and capture greater value through in-house manufacturing. The project is progressing as per plan and expect to commission by end of Q3 FY '27. In Q4 FY '26, the Board also approved expansion of borosillicate glass furnace from 25 tonnes per day to 32 tonnes per day at Jaipur with an addition of third forming line. The existing borosillicate glass furnace was set up in Jan '24 and is due for rebuild in Jan '28 in the normal course of operation. whereas the current furnace utilization level is 90%. Hence, the Board approved expansion with third additional forming line with an estimated CapEx of INR 50 crores. This capacity expansion will help companies remove capacity bottlenecks, improve operating efficiency, lower production costs and enhance competitiveness. It will further help to improve product diversification and portfolio expansion. The project is progressing as per plan and expect to commission by end of Q4 FY '28. The [indiscernible] range has been introduced to cater to the needs of school and college students, offering convenient solutions for carrying beverages and meals from home. The collection includes a vibrant range of insulated bottles and lunch boxes designed for convenience, durability and style. Additionally, Borosil is expanding the category with insulated cathodes, especially crafted for new homemakers to help keep food warm fresh and ready to serve. Borosil is at the forefront of India's transition towards healthier eco-friendly kitchens. We are replacing plastic with microwave, [indiscernible] and stainless steel products that combine safety with sustainability. Rising incomes and increasing health awareness are accelerating adoption, while our aspiration designs, education marketing and emphasis on hygiene and elegance are helping us convert plastic users and set new benchmarks for the modern kitchen. This strategic focus not only strengthens our leadership but also aligns Borosil evolving customer lifestyles and values. Our omnichannel presence across general trade, modern retail, leading e-com platforms like Amazon, Flipkart and Borosil.com, leading quick commerce platforms like Blinkit, along with strong B2B and export channels has delivered deep market penetration. Today, with products available in over 24,000 retail outlets, we have built a diversified revenue base that connects with both urban consumers and global markets. In summary, despite near-term challenges, Borosil's strong brand equity, diversified portfolio, expanding manufacturing base and omnichannel reach positions us well for sustainable growth. With that, I would be happy to take your questions. Thank you.

[Operator Instructions] The first question is from the line of Anu Parakh from Anand Rathi.

So my first question is on the Glassware division. So can you please bifurcate the 16.7% growth between how much is price led and the volume-led growth?

So frankly, the glassware portfolio is a large portfolio. It is very difficult to bifurcate for example, exactly the price and the volume-led growth. Like I said, we have passed on the cost increases to the market. But at this point in time to a portion in a manner would be quite difficult. Anand you want to comment?

So in the glass section during the first quarter, primarily this is led by the volume growth. The price pass-ons have been with a lag. So this particular category is all volume growth. So it's not driven from the price.

Okay. So as you said the price impact will come with a lag. So how much price hike has been taken in Q1?

If we compare this with respect to the West Asia impact probably, so the price that has compensated in the first quarter is very less. That's about a couple of crores versus the overall impact of about INR 12 crores in the overall affairs of the sales. So I think we have to wait and watch probably once the price is passed on. So there will be some lag that we will see. In the coming quarters, I think we will see the impact.

Yes, sir. But can you just give us a range of the price hikes that you've taken?

So it's like this, the entire cost, which has increased that we got, we have factored in the entire cost -- passed on the entire cost to the market. The question is getting it realized, there's always a lag. So that will come in time. So it ranges between 5% to 7% depending on the category. In some cases, it could be even more than 5% to 7%. So it's not a standard price increase, okay?

Understood. So sir, like we don't give margins separately. So did we face margin pressure in Q1 in the glassware division? And if so, then is it -- was it due to the input cost inflation or China dumping?

No. So it's like this. Yes, we did face margin pressure in the Q1. Essentially, like I said, it was on account of the Asia crisis. And like Anand mentioned, the impact from fuel and packaging has been the highest and that we will try to offset in terms of the price increase in the market.

Understood. So, in terms of AB on the Borosil glass products, so what is the status of the same?

So at the moment, the investigation is on, and it is pending before the appropriate authorities. So I think it will take some time.

Okay. Sir, next on the opalware. So opalware, can you bifurcate the revenue growth in terms of price-led or volume growth or it was also more of volume-led growth?

So in this category also, again, this was essentially volume-led growth. So we've been able to get higher volume growth in this category also, like the glassware category. There's hardly any price-led growth in this category.

And any price hikes taken in this category?

We have taken price hikes in this category also. But like I said earlier, the realization of the price hikes will come in going forward from Q2 onwards.

So like we are seeing that the margins were under pressure even for like [ La Opala ] in Q1. So are we facing similar pressure in this segment? And if so, then what could be the reasons and what will be the sustainable margins going forward?

So look, the margins are under pressure due to West Asia conflict. The reason remains the same across the categories, whether it is Opal or glass. And even in the steel and cookware, like you see the pricing, the commodities all have had a pricing issue. So it's been across the category, not only for one category we have.

Understood. And sir, the sustainable margins in the opalware category?

We don't margins. At an overall level, we are still confident that barring the West conflict impact probably, we are good to maintain about 18% to 20% EBITDA margins on the overall business.

[Operator Instructions] The next question is from the line of Akshat Mehta from Seven Rivers Holding.

Thank you for the opportunity. I have a few questions here. So as we said earlier that we are looking to maintain 18% to 20% margin [indiscernible] impact. But what is the kind of expectation that we should have for the current year in FY '27 and what is the kind of CapEx that we're going in FY '27?

Sorry, so you have 2 questions. One is on the margins. Are you seeing of the EBITDA margin.

The EBITDA margins.

I can't hear you. You're saying expect 18% to 20%, right?

Is medium term, right? I'm asking for FY '27.

You are asking for?

I'm asking for FY '27.

For FY '27, it remains about 18% EBITDA margin. So the group on CapEx for FY '27 is estimated to be about INR 125 crores, which is for the 2 blast projects. One is the expansion of borosilicate last furnace. And second is the outfit for the glass -- and also, we might do some solar projects further going forward and some maintenance CapEx on the forest rebuild for open class furnaces, which is going to come for rebuilding this year. So the overall CapEx would be roughly INR 125 crores to INR 150 crores.

Okay. My next question is on the depreciation front. So what is the level of depreciation that we should expect for the current year.

So current year, overall depreciation would be approximately INR 92 crores, including sides at the control level.

Okay. so you insert utilization from last around 90%, what was the utilization for opalware and how do you see other revenues for both of these segments faring out for the rest of year? [indiscernible] We expect growth to happen in both the segments, both glassware and in Q1 volume similar was the case of glassware. So we expect to maintain the momentum. 15% growth for the year -- should we see a 15% kind of a growth for both these segments for the year?

No, we cannot have the same thing for both. I would say, for example, [indiscernible] out 9% in Q1. So I think a fair estimate would be around the same going forward, we'll see how the market goes, but we would continue to grow for...

The next question is from the line of Jasdeep Walia from Clock Capital.

Sir, in the last quarter's call, you had mentioned about Chinese competition dumping products in the market on the borosillicate glassware side. So what's the status on that? Have you seen a reduction of competition given that rupee has depreciated? And maybe in China, we have seen the government scaling back export incentives. So if you could comment on that?

You're right. Actually, this is what last quarter also we had shared. And unfortunately, this continues to happen. And despite depreciation of the rupee as well as the shipping freight rates going up, I would say in the market, we are not seeing much of a difference as far as the Chinese dumping is concerned, if that answers the question.

Got it, sir. Sir, if that's the case, do we see, let's say, scale down of the normalized margins that you are expecting in the borosillicate glasses business when you scale up to, let's say, 90%, 100% kind of utilization levels at your furnace. I believe earlier our estimate was that this business would achieve 25%, 30% kind of EBITDA margins. So would you be able to achieve those kind of margins at reasonable levels of utilization or because of this incremental competition, there is a significant reduction in the normalized margins that we used to expect from this business?

So it's like this, it's not about 1 quarter. If you look at our performance, so we have been -- the primary objective of ours has been to expand the glassware market, right, unlike the other players. So in that case, significant investments also we have made. So it's not only on account of the price is only one part of it, but we have been building this market to -- in terms of adoption by the end consumer. So -- and of course, in the call, it was mentioned that the investigation on the antidumping thing is going on. It depends upon a lot of other factors, and we'll see how it goes.

Got it. Sir, let's say, if this current status quo persists, what kind of margins -- EBITDA margins can we expect in the borosillicate glassware business?

Sorry, we don't share category.

Got it, sir. Also, sir, on the solar power side, what kind of incremental savings do you expect in FY '27?

So FY '27, the overall savings from the solar with the Phase I implementation that we have done so far, that will be about INR 27 crores, INR 28 crores at EBITDA...

Got it. And should we assume it would be straight away addition to EBITDA or maybe you could use those savings to, let's say, give reduced prices to drive growth in some of your other businesses?

So some of the projects we have done earlier also. It is only the Phase 3 that has been added this year from quarter 1. So [indiscernible] has always been there. But definitely, we will leverage this opportunity in terms of getting more competitive as well as basically increasing our margins also.

Got it. So what kind of net savings we should assume for next year out of this INR 28 crores?

See, at the moment, I think it's too hard to comment on this. We'll have to see how the market behaves probably. And accordingly, we have to see that what needs to be passed on and what needs to be retained.

Got it, sir. And sir, does first quarter have any contribution on growth side because of inventory stocking by the channel because of all this input cost inflation, you have taken price increases and maybe the channel has stocked up before the price hike. So this first quarter growth, which we are seeing has some benefit on account of that. And maybe in the forthcoming quarters, the growth will be lower. Is that the right way to interpret?

No, I don't think that's the right way to interpret because we -- like I said, the price impact will come in Q2. So there is no question of like a forced sale or retailers adding up to the inventory. So that would not be the correct way to view it...

Got it, sir. And also, sir, last question, could you give us an idea of what kind of movement have we seen on the inventory levels from fourth quarter to first quarter? Has there been liquidation of inventory?

So typically, you see the inventory gets added, inventory goes up primarily for the reason that we are heading into the season now, the Diwali season. So that is the addition to inventory. And the reason is that you build up the inventory for new products and portfolio gets enhanced expansion happens. So typically, that's every year, that's what happens.

Got it, sir. And sir, this final question, sir, you mentioned your guidance of around 18% EBITDA margin for the overall business in this year. Have you assumed any contribution from, let's say, favorable antidumping duty investigation by the government? Or this is if the status quo persists...

I mean like Anand, the investigation is going on. So that would not be a reason to attribute to it.

The next question is from the line of Mehta from Edge

EBITDA margin guidance, does that include...

Sorry, we can't hear you. You're breaking out.

Your voice is cracking. Can I please request you to rejoin the queue? The next question is from the line of from Anand Rathi.

Sir, you said that we'll be doing an EBITDA margin of 18% for FY '27, which implies an ask rate of more than 20% margin for the remaining 9 months of FY '27, whereas historically, the margin has been in the range of 15%, 16% over the past 4 years. So sir, what gives us the confidence of this 18%?

Yes. I think the way to read this Sorry, the lady -- sorry, can I just get the lies name once again sorry, that you yourself mentioned that historically, it's been about 14% to 15%, right? This is what you mentioned. And what I meant was that we can look at about 18% in a steady-state business without the West Asia impact. So this is what -- this is how it should be taken because -- and you're right, I mean, broadly, it's been 14%, 15%. And without the West Asia impact in a steady state kind of business is what we would look for. So hopefully, that...

Got it. So given the price hike that you've taken in glassware and Oalwear in Q1 and given the current raw material prices, how much margin improvement can we expect over the next 2 quarters?

It is very hard to put a number to it, like -- but the fact remains that we have passed on the price hikes, and we expect Q2, Q3 onwards the realizations to kick in. And also depends a lot of other factors, like we have definitely seen gas prices coming down, the fuel prices coming down. There has been improvement there. But to put a number to it immediately would be very hard to...