Ddev Plastiks Industries Limited (543547) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q1 FY '27 Earnings Conference Call for Ddev Plastiks Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Saloni Ajmera from Go India Advisors Limited. Thank you, and over to you, ma'am.

Good afternoon, everyone. On behalf of Go India Advisors, I welcome you all to first quarter of FY '27 earnings conference call of Ddev Plastiks Industries Limited. Today from the management, we have Mr. Narrindra Suranna, Chairman and Managing Director; Mr. Dev Surana, Whole Time Director and CEO; Mr. Rajesh Kothari, Whole Time Director; and Mr. Arihant Bothra, the CFO. I now hand over the conference to Mr. Dev Surana for his opening remarks, and then we will open the floor for the question and answer. Over to you, sir.

Thank you. Good afternoon, everyone. Thank you for joining us today for Q1 FY '27 earnings call of Ddev Plastiks Industries Limited. We truly appreciate the continued interest and confidence of our investors, analysts and other stakeholders. During today's call, we will discuss the company's performance for the quarter ended June '26, along with the key strategic and operational and industrial developments that are shaping our growth trajectory. The financial results and statements and investor presentation for the quarter have been approved by the Board of Directors and available on the stock exchanges. FY '27 has commenced against a rapidly evolving global and domestic macroeconomic drop. While the world continues to navigate shifting geopolitical and economical realities, India remains one of the most few large economies demonstrating structural resilience, policy continuity and sustained growth momentum. The domestic macro environment continues to be supported by healthy public investment, improved private sector participation, more balanced corporate and banking sector balance sheets and resilient consumption demand. Recent policy measures, including rationalization of GST rates, reforms in personal income taxation and a more accommodative monetary policy environment are expected to provide further support to growth demand. In addition, India's expanding trade architecture, particularly the India-EU FTA, which is expected to provide preferential access to more than 99% of Indian exports, represents a meaningful opportunity for the Indian manufacturing, exports, employment and investment formation as well. These developments are closely aligned with the government's long-term vision of Viksit Bharat 2047 where infrastructure creation, productivity enhancements, industrial expansion and global competitiveness remain central pillars of transformation. At a sectoral level, we believe India is entering a multi-decade electrification and infrastructure expansion cycle. Globally, rising urbanization, industrialization, power consumption and digitalization are accelerating investments across electricity generation, transmission and distribution networks. India's installed power generation capacity is expected to nearly double from approximately 442 gigawatts in FY '24 to around 900 gigawatts by FY '32, supported by substantial investments of INR 9 trillion in the transmission infrastructure. This expansion across substations, power transmission lines, transformer capacity and grid infrastructure is expected to generate sustained demand for distribution, power and specialty transformers while also creating significant long-term opportunities and potential and demand for the wire and cable ecosystem. The rapid emergence of India's digital economy is creating an additional layer of structural demand. Investments in data centers, semiconductor ecosystems, renewable energy infrastructure, industrial corridors and advanced manufacturing are steadily increasing the need for high-performance, reliable and specialized cable solutions. This is driving a gradual but decisive shift from conventional low-voltage applications towards medium, high-voltage and extra high-voltage applications. These advanced applications require specialized polymer compounds stringent customer approvals and command superior realizations and create meaningful entry barriers for new and unorganized participants. This industry evolution plays directly to the strength of Ddev Plastiks with the legacy spanning over 4 decades and the leadership position as India's largest polymer compound manufacturer. The company is exceptionally well positioned to participate in the structural up-cycle. Our strong qualification credentials established by customer relationships, deep manufacturing expertise, global laboratory certifications and proven quality standards make us the preferred partner for leading wire and cable companies in India and overseas. Despite geopolitical disruptions in recent years with many wars, our exports has still grown at a CAGR of 16% between FY '22 and FY '26, reflecting the growing acceptance of our products in the international markets as well. Today, Ddev Plastiks stands as a scaled, diversified and innovation-led polymer compounding company. Over a journey of more than 4 decades, we have continuously expanded capacities, broadened our product portfolios and strengthened our leadership across key product categories. As of June 2026, our total installed capacity stands at 3,16,400 metric tons per annum. We offer more than 200 specialized compounds and continue to maintain strong positions in critical segments, including a market share of 50% in the Sioplas market and a leading presence in the HFFR compound market in India. Importantly, this growth has been achieved while maintaining 0 rejections, a robust balance sheet and a consistent record of sustainable value creation. Building on this foundation, we are also making a focused and strategic entry into the battery energy storage systems. We see that as a natural extension of our understanding of the power ecosystem and as a compelling opportunity emerging from India's renewable energy transmission. As the share of renewable energy in India's energy mix increases, storage solutions will become increasingly critical for grid stability, energy reliability and efficient power deployment. With the experience, financial discipline, operational capabilities and a flexible approach, we believe Ddev Plastiks is well placed to build a meaningful presence in this emerging business vertical over the long term. Our growth philosophy remains disciplined forward-looking and value accretive. In FY '27 and beyond, we remain committed to expand capacities, invest in product innovation and move further up the value chain in higher EV compounds, deepening our penetration in international markets. Simultaneously, we will scale the BESS business in a calibrated and disciplined manner, ensuring that growth is pursued with commercial prudence and balance sheet strength. Supported by powerful structural drivers such as infrastructure development, electrification, urbanization, renewable energy expansion and manufacturing growth, we remain firmly on track to achieve our top line ambition of INR 5,000 crores by FY '30. With that, now I invite our Chief Financial Officer, Mr. Arihant Bothra, to present the financial and operational highlights of the quarter. Over to you, Arihant.

Thank you. Good afternoon, everyone. For the quarter ended 30th June 2026, we are pleased to report a strong and resilient performance, underpinned by healthy demand momentum, disciplined execution and intrinsic strength of our operating model. Revenue for the quarter grew by 29% year-on-year basis, driven primarily by robust traction in the cables and wire segment in the export market. EBITDA grew by 27% year-on-year with margins at 10%, representing a commendable performance in the context of multiple industry headwinds, softer trade sentiment and ongoing geopolitical tensions in the Middle East. I would also like to add and highlight that this is the first time our EBITDA has crossed INR 100 crores as a benchmark. Profit after tax stood at INR 64-odd crores, registering a year-on-year growth of 22%, reflecting the company's sustained operational discipline, earnings quality and ability to protect profitability across market cycles. The quarter began amid a challenging global operating environment marked by supply chain disruptions, commodity price volatility and external uncertainties. Our Ddev Plastiks continue to demonstrate resilience, agility and execution discipline. Our ability to navigate such condition is supported by our strong customer franchisee, scale advantages, manufacturing depth, prudent working capital management and a leadership position in specialized polymer compounds. These trends are not easily replicable and continue to differentiate us meaningfully in the marketplace. During April 2026, we successfully commissioned our new facility in Bhiwadi with a capacity of 48,000 metric tons. It is a greenfield XLPE compound facility located in Rajasthan. With this addition, our installed XLPE capacity has increased to 2,14,500 metric tons per annum, further consolidating our leadership in the important product category. The company continues to hold an approximately more than 1/3 market share in the XLPE compound segment, and we expect that the new Bhiwadi facility will contribute incremental revenue of close to INR 500-odd crores as utilization levels scale up progressively. Our capital expenditure strategy is anchored not merely in the pursuit of scale, but in a clear and deliberate conviction around the long-term opportunity in India's cable and wire ecosystem. We believe the next decade will witness a step change in demand driven by power transmission upgrades, renewable energy capacity additions, smart city development, industrial corridor development, data center expansions and broader manufacturing-led growth. These applications will require cable and wire solutions of higher complexity, superior reliability and advanced specification, creating a more favorable environment for organized, technically capable and quality-driven polymer compound manufacturers. Ddev Plastiks is well positioned to participate in this opportunity. Our investments are designed to deepen market penetration, enhance product sophistication, strengthen leadership across categories and support customers as they transition towards more demanding applications. We believe only a select group of capable polymer compound companies will be able to meet the technical quality scale requirements of this evolving demand landscape. And Ddev Plastiks is among the companies best placed to do so. Operationally, our overall capacity stood at 3,16,400 metric tons during this quarter end with capacity utilization of average 66-odd percent. The modernization in utilization -- moderation in utilization is primarily attributable to the introduction of new capacity in Bhiwadi of around 48,000 metric tons, which had limited operating time during the period. As the new capacity stabilizes and progressively ramps up, we expect operating leverage and revenue contribution from this facility to improve meaningfully over time. To summarize, Ddev Plastiks enters FY '27 from a position of strength. We have a resilient core business, expanding capabilities and a differentiated product portfolio, strong customer relationships, growth export visibility and a healthy balance sheet and a strategic entry into emerging renewable opportunity through BESS. Our management team remains focused on disciplined growth, sustainable profitability, innovation-led differentiation and long-term shareholder value creation. With this, I conclude my remarks and open the floor for question and answer.

[Operator Instructions] The first question is from the line of Arnav Sakhuja from Ambit Capital.

So my first question is that we had very strong improvement valuation year-on-year which I think you mentioned led by high improvement in the segment. [Indiscernible].

Mr. Sakhuja, your line is breaking.

Your voice is still not clear.

Arnav, may I please request you to rejoin the queue. The next question is from the line of from [ Apurva ] from White Stone Financial Advisors.

Sir, in the last con call, you mentioned that some of the revenue in the Q4 is settled in the Q1 because in the last few days in the March because of the -- we could export, right? So it settled was in Q1. So how much revenue in Q1 is part of the Q4?

See, it is majorly driven by the export revenue because the shipments were having issues with respect to availability of vessels and other things in the last week of March and the war just started, another emergent peak position, I will say. So if you ask in terms of numbers, technically, it may be around 1,000-odd tons, which has been moved, but the value has changed later on because of increase in freight and all. So this quarter, we have reported close to INR 300-plus crores of export revenue. Some part of it is contributed by the previous quarter's export quantities.

Okay. And sir, my next question is, sir, our new capacity at Bhiwadi. How much we would be realizing that in FY '27?

So we expect an average utilization of 50-plus percent from that. As of now, it is running at roughly 20%, 25-odd percent. And slowly, it will get ramped up over a period of time. So by end of this year, we consider 50% average utilization for this year. Next year, it will be higher.

The next question is from the line of Hardik Jain from White Stone Financial Advisors.

Sir, our EBITDA per ton, although has decreased in terms of percentage because the realizations overall has increased, but even in the absolute terms, the EBITDA per ton has increased. So if you can just let us know what could be the reason behind it?

Major reason is driven by the exports. If you see the export of close to INR 300-plus-odd crores, mainly to the MENA region, had been the main contributor. In volume terms, there has been no major growth in terms of export. It can be hardly few percentage in single digit or so. However, in terms of value, because there has been multiple issues. One, uncertainty over the freight rate, uncertainty over the availability of raw material prices. So we could get better prices as compared to other competition in the Middle East and other markets. And that is the reason in export, we have done better. And that is the reason the overall EBITDA per ton has moved almost by INR 3 in this particular specific quarter.

Yes. So the question was, do you think this EBITDA per ton is sustainable or as the things ease out on the logistics front in the export, this can again come back to the normalized level that we saw last year?

So it is very difficult to predict on this line. But definitely, we -- as a conservative approach, we can say that our targets of INR 16 to INR 17, or in percentage you can say 10% to 12% of EBITDA margin, is something which we always aim and we have focused approach to achieve that only. So maybe INR 19.6 something which has been achieved in this quarter may not be sustainable for each and every quarter, but probably it can be sustainable for a few months from here also.

Okay. And broadly, when we say EBITDA per ton, so in generally, we should look at it in terms of per ton basis or in terms of percentage? Because the realization can keep fluctuating.

See the realization prices have gone up by 30%. And the margin cannot go beyond 30% at the same time. So it is mainly pass-on business. We are a transparent supplier to most of the customers we have. And we pass on the prices which have come to us in an increased manner. And that is the reason. The percentage basis if you see, it is still looking good at 10% and better is the EBITDA per ton approach.

The next question is from the line of Bhagwat from Prosperity Wealth Management.

On the BESS business, could you please comment on the intended business model like whether the company plans to operate primarily as EPC model or follow a BOO that is asset owning model? Like, what's the management view on both these type of business model? If you could comment, please.

So I would like to update 2 things. One, this business is getting shifted from West to East. So it may get delayed by a couple of quarters from here. And specifically to your question, to start with, it will be supply and mix of EPC over a period of time. BOO and BOOT, both models are something which, as of now, we are not eyeing on an immediate start basis.

Okay. And what is the EBITDA margin should we expect from this BESS business? And how do you see the margin profile evolving over the next few years as we scale up in this particular business?

So when we scale up, we have -- since it will be initially a supply model, we expect an EBITDA margin of 6% to 8%, which we have mentioned in our presentation as well. With passage of time when we adopt EPC and when we adopt other models, then slowly and gradually it may improve.

And it's a question of what percentage you can expect as the [indiscernible] margin potential?

Generally, when you add EPC, there is an addition of from 2% to 5% something you can get. Then there is an opportunity of becoming a system integrator where it is practically more than EPC and less than a BOO model. So there, you can add a couple of more percentages also. So in each stage, practically, if you ask me, there are 2% to 3% where you can keep on adding on the EBITDA levels.

And then peak, you can expect around 13%. Is that achievable, sir?

Sorry, your voice is not clear.

I think, can we consider 13% is achievable at this stage [indiscernible]?

Yes, long-term target is in the range of, I will say, 11% to 15-odd percent. When we have better utilization, we become system integrator and we do a lot of other activities as well, do backward integration of some parts, which is possible, smaller parts, then we eye that it will be in the range of 11% to 15-odd percent.

Okay. And my last question is what are the funding requirements for this particular BESS business? And how much debt does management expect to raise for this business [indiscernible]?

So as of now, we have expected that the overall requirement will be within INR 200-odd crores in the first phase. And entire money for the same is being deployed from our internal accruals. And going forward, once we do the next phase, then it will change, which we will be able to highlight once we follow it. It will be market-driven, so we cannot comment, all the accruals today, all the requirement today.

Yes, I think the numbers that you have mentioned are CapEx amount, if I believe. But what will be for the business, let's say for 1 gigawatt, what is the expected dates we can consider?

You can consider mid-FY '29.

Mid-FY '29. And what is the expected date, if we, let's say, 1 gigawatt hour to execute EPC model, let's say?

And can you be a bit detailed in the query, because I have lost your voice.

Yes, so I am trying to understand, like, let's say for 1 gigawatt hour, BESS EPC we are trying to execute. So for that particular 1 gigawatt hour EPC project, what is the expected dates that will be added in our books?

So, as I mentioned that, as of now, what we expect is that the amount of investment will be comparatively limited and will be within the range of INR 150 crores to INR 200 crores, both considering CapEx and working capital margin. Now additional debt in terms of working capital may be in the range of another INR 100 crores to INR 150-odd crores. However, since the first phase of business is driven towards supply, so we expect the debt should not be going up substantially. It will be more the internal accruals, which will be applied.

[Operator Instructions] The next question is from the line of [ Drishti ] Shah, an individual investor.

I just had one question that I wanted to understand the margin profile in our export revenue and our domestic revenue because gross margins have seemed not to have increased too much despite our exports increasing so much. So just wanted to understand that bit.

See, in domestic scenario, there is no uncertainty as far as freights are concerned, as far as availability of vehicles are concerned. But in case of export, due to this war situation, there were many uncertainties. So while quoting your prices, you can only get an indicative rate and indicative time line. So you don't know what will be the actual price. And on top of it, the raw material prices were so volatile that prices were changing every week and sometimes twice or thrice in a week also. So it is very difficult to predict what will the price change in this particular week. So we have to take a calculated risk and top up some, I will say, volatility or war-risk premium to quote to our customers. And that is the reason there has been some additional EBITDA per ton derived on an overall quantity, which we have sold.

Got it. And sir, I see in our presentation that our FY '27 target revenue increase is expected to be 13%, while our capacity addition has been 25%. So if you could just highlight that or are we being conservative over here or what?

Yes. It's both. We are conservative in our approach. While making the estimates, we have considered the average prices which we have achieved in the last fiscal year. We haven't considered or factored the increased prices, which we are as of now experiencing. This is point number one. Point number two, when you see the growth rate in terms of capacity utilization, the new capacity will ramp up on a slower basis. And I mentioned just to the previous question that current year, we are considering almost 50% utilization on an average capacity utilization for the entire year. So if we'll consider the same, then out of INR 500 crores or so of revenue to be generated from that particular unit, we'll be able to generate around INR 200 crores to INR 250-odd crores of revenue. That is the reason we have considered a conservative 13%, though in the first quarter itself, we have surpassed due to the average increase in prices by almost...

And how long do we expect the rise in the price of resin to continue?

It is comparatively much more stabilized as compared to what was there in the month of March and April. Now once the war and the Hormuz situation is clear, then we expect the prices to slowly gradually come down. It may not happen overnight, but it will take 3 to 6 months of time for price to gradually come down to the earlier levels.

The next question is from the line of Hardik Jain from White Stone Financial Advisors.

Sir, sorry, I just wanted to ask one more question on BESS. So in this first phase of BESS, our capacity is going to be 1 gigawatt hour, is it with this INR 200 crore CapEx?

Yes.

And because we are going into the supply mode in the first phase, and in this, we can generate INR 900 crores of annual turnover from this 1 gigawatt hour facility, is it?

Yes. Depending on the sell prices, yes.

[Operator Instructions] The next question is from the line of Jainam Ghelani from Svan Investment.

Congratulations for a good set of numbers. One question from my side is that since we are guiding almost 13% to 14% growth in FY '27, how much would it be volume led and how much would be mainly because of realizations?

So see, if you consider the guidance we have given in the presentation, we haven't considered any increase in prices in that particular because we feel that on an average by end of this fiscal year, the prices should be more than downward towards the pre-war level. So average, we have considered the same last year of INR 145-odd. So on a volume basis, we have considered a growth of 15%. So most important, I will say, aspect of tracking the growth will be to track the volume growth.

Okay. So, sir, when you are saying 15% growth year-on-year for this quarter, we've grown only by 1%. So you are still confident of maintaining the 15% growth guidance?

Yes, yes. Because the new capacity which we have added in this particular fiscal year has just got operational, and it is slowly and gradually ramping up. It will take some time to ramp up, probably another couple of months, and then it will have a higher level of utilization.

Okay. And sir, for the new facility, what would be the approval time from our client for our products?

See, generally, it is more towards supply of product on a standard design basis. So...

Arihant? Sorry. See both the points, we are confident of achieving 15% volume growth this year despite the first quarter being low on the growth having just 1% growth because this first quarter was full of uncertainty because the local demand went down because of very high prices in the first quarter. And also the volume growth in export was not big, as Arihant has explained. Only the prices went up and the margins improved. So we could deliver better EBITDA. But going forward, we see that as the uncertainty on the price front subside, the volume pickup will be back. And second part, as Arihant just said, that the new site will start contributing in a big way in the second half of the year. So both these things will help us to achieve this 15% volume growth target. And as far as the approval process is concerned from the new site, it is no special or new approval is required. Our products are already approved by the customer. So whether we supply it from our existing plant or new plant, there's no new approval is required. We continue to enjoy that approval across our facilities.

The next question is from the line of Saket Kapoor from Kapoor & Co.

And my questions are all based out of the inputs that you have provided to us. I'll just refer to the slide. But firstly, as again Arihant was mentioning about we are shifting the base from West to East, and that will result in delay of a few quarters as mentioned. So if one could first explain -- and do we have our CEO, Rakeshji -- Rakesh Kumar also on the call here, or -- yes. First, my point. Okay, sir. So, firstly, on the relocation part of the story, if you could just explain to us and then what would this translate into, some rationale that, sir?

Yes. So the biggest rationale beyond this is that there is an opportunity in East. As of now, there are no player in East. And we considered West only because there was a lot of players coming in West, and we had our warehouse availability in West. Now post the elections, we also look for better warehouses in East and now we have started locating a few warehouses over here. So there is an opportunity. So there is no time lost as far as the warehouse identification is concerned. Now the time line which is getting extended is only because the installation time line will get delayed because of this. Second, as far as the project opportunity is concerned, if you see today, most of the bids which have gone in the market are all of low prices and everybody is now forfeiting -- getting their EMDs forfeited and those are going to be retendered. All the bids -- all the projects which were tendered are supposed to be getting into retendering. So there will be opportunity. So those projects are also getting delayed. And all this happened only because of increase in sell prices. So if you calculate both the things together, then practically we haven't lost the market, nor the opportunity. It is only the time line, which is -- even if our plant was ready and there was low demand in the market, our growth would have been slow. So rather we have used the time and we have shifted to a better base. Now Bengal is an opportunity. And with Bengal government now coming up with their own industrial policy in the next 5 to 6 days, it will give us more leverage to shift our project over there and get the benefit out of it.

Arihant, sir, when we look at our EBITDA number, which you mentioned that historically first time we have posted INR 101 crores of profitability, that is 3-digit mark. So taking into account the factors of the higher export for this quarter, do we see that there's a likelihood of maintaining this run rate with the enhanced capacity also getting at better utilization and operating leverage kicking in the second half? How should this number should be trending, sir, for the remaining part of the year on a ballpark basis?

See, currently, the uncertainty is still there, specifically with the Hormuz and the availability of material and the prices specifically. So it is very difficult to comment that how long this type of export business will continue month-on-month basis. As of now, whatever orders we have in hand, July is already over, August, we are in, and we can comment up to here. As far as the overall conservative annual guidance is concerned, we continue to maintain that whatever guidance we have given, we will definitely surpass it given that first quarter has been, a proportionate basis, is much better than what we expected.

Okay. Sir, on the export front, can you comment for this quarter, this 330-odd number which we have for the first quarter with reference to the deliverables schedule for Q2. Are we in likelihood that these numbers we will be able to post because we are already 2/3 done?

I have some correction in this number because the prices marginally came down in the interim in the month of July. And accordingly, the exports have also comparatively will -- as far as the average selling price is concerned, will be comparatively lower. So from that perspective, I can only comment that 300 may not be the right number. But in terms of volume, last quarter, whatever volume we have done in this particular June quarter, the next quarter comparatively will be better.

Okay. So sir, coming to the tonnage part, I think so we did 52,163 for Q1. And taking into account the volume and the new capacity, what should be the run rate for this year?

So we targeted 2,31,000 tons for this entire fiscal year. First quarter is lower, as Kothariji explained because of the uncertainties involved, whether that is in the export market or in the domestic market. And we are confident that the differential roughly 1,80,000 tons, which gives a proportionate rate of 60,000-odd tons per quarter, is something which is achievable.

Okay. And on the CapEx part also, [Foreign Language] INR 76 crores to INR 77 crores [Foreign Language]. So...

We have already incurred, invested only.

We have already done. So for the year as a whole, what will be the balance amount? And I think so in the presentation you have mentioned the addition of 2 capacities, HFFR and one another compounding also that will get kicked into. If you could just explain the benefit of those?

We are building our capabilities in East for medium voltage cables. So as of now, we used to manufacture in West and we used to get the material for the Eastern customers. Now we are building those capacity. It will be happening by end of this fiscal year or by first quarter, but investment is already committed. Second, HFFR, as we committed earlier, we are increasing our capacities, and we target to increase it to 20,000 tons as we originally targeted for FY '27. Now these 2 capacities are being added. Our new site is already located in near Vapi, which will be built and developed. So there will be some investment for that. And then there will be investment in the BESS business. Overall, we expect the year's committed investment will be in the range of INR 150 crores to INR 175-odd crores.