Prospect Consumer Products Limited (543814) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Prospect Consumer Products Limited H1 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. Before we begin, I would like to point out that this conference may contain forward-looking statements about the company, which are based upon the beliefs, opinions and expectation of the company as on the date of this call. These statements do not guarantee the future performance of the company and involve risks and uncertainties that are difficult to predict. I would now like to hand over the floor to Mr. Rishabh Rathod from ConfideLeap Partner. Thank you, and over to you, Rishabh.

Thank you. Good day, ladies and gentlemen. I extend a warm welcome to participants joining the Prospect Consumer Products Limited H1 FY '26 Earnings Conference Call. We are pleased to have with us today, Mr. Vimal Mishra, Promoter and Managing Director; Mr. Ronak Khambhati, Finance and Compliance Officer. I now invite Mr. Vimal Mishra to share his opening remarks and take us through the company's performance for the first half FY '26. Over to you, sir.

Thank you, Rishabh. Good afternoon, everyone. A warm welcome to all our investors, analysts and stakeholders joining us today. It is my pleasure to share with you the strong performance of Prospect Consumer Products Limited during the first half of FY '26, a period that marks a new phase of accelerated growth for our company. In FY '26, we have significantly expanded our manufacturing capacity from 1,200 metric tons to 4,800 metric tons, supported by a fully modernized and automated facility. Our capacity utilization is expected to reach 2,500 to 3,000 metric tons this year and further scale up, up to 4,000 metric tons in next financial year. This transformation has strengthened our operational capabilities and position us for the sustained growth. On the market front, our B2C segment has gained strong momentum in Ahmedabad and Delhi, driven by increasing consumer demand and successful initiatives such as influencer marketing, corporate gifting. These efforts are further enhancing our brand visibility and expanding our retail footprint under the DriFrutz brand name. From the financial perspective, the total income surged 125.4% year-on-year basis to INR 29.6 crores and EBITDA grew at 125.6% to INR 3.97 crores. And PAT has increased to 86.9% to INR 2.06 crores compared to the INR 1.10 crores in H1 financial year '25. This growth underscores the impact of our strategic investment in automation, capacity enhancement and market expansion. With a strong foundation in place, we are confident of maintaining our trajectory of profitability and sustainable value creation. Before we move to the question-and-answer session, I would like to take this opportunity to thank all our stakeholders, investors, employees and partners for their continued trust and support in our journey. With this, we can now open the floor for questions. Thank you once again for joining us today.

[Operator Instructions] We have [ Mr. Jayesh Shah ].

I have a couple of -- set of questions. So firstly, it's on margin. So as I see your margins have improved substantially. So what's driving this margin expansion? Like either it is efficient sourcing or is it higher mix of B2C? And can we expect margin expansion in coming future? Or will it sustain on current levels?

Thank you, Mr. Jayesh, for your question. Well, on the margin side, so we have done 2, 3 things, and it's a combination of all. So to just elaborate more on that. First, the new facility, where we have done the automation, it has helped us to reduce our lead time substantially, which has helped us to process our processing cycle in a faster way compared to what we used to do in our last facility. And secondly, the backward integration, what we have done on the procurement side. So it's a combination of both things. And same time, on a B2C segment, where we are pushing the things where our profit margins are a little bit on a higher side compared to the B2B level. So that is the combination of everything which has helped us to increase our profit margin, which we are showing in this result.

My next question is regarding volatility. So how you able to manage volatility in the prices of raw cashew? And do you have any long-term contracts for the same? Like do you resort to hedging mechanism or what is it like?

Well, for the volatility, actually, if you really ask for current financial year, so prices are settled at the moment for raw cashew and same time compared to the raw cashew, the finished prices are also settled at the moment. So in near future, let's say, for next 5 or 6 months, we can see the market level on a same level mostly. Next year, when the new crop will begin, so the prices will start coming once the new crop will arrive in the market. So we will take the call on a spot basis that particular moment only, where what we are getting if we are bringing the material directly import from Africa, what we can get actually if we are buying locally, if we are buying high seas, so what is the price benefit we will get. So we compare everything basis on the finished product market. And that is what actually helping us that we don't end up in blocking the much required working capital, actually, in bringing the import from Africa. At same time, we don't want to end up paying high cost to the local importers from whom we are buying. So it's a combination of everything, which is helping us to reduce the margin to reduce the volatility in the market because once the material will start coming from Africa, the market will get settled at the particular price. So it may end up that we may have to stock a material a little bit, maybe a period of a month or something. But so far, it has not been done because we are actually going for the forward orders. Once we have the order, we are starting actually basis on the procurement, basis on the orders what we have. And once we are ready with the material, we are arranging for the delivery. So we are trying to minimize the impact of volatility as much as we can.

And my last question is along with higher production, like how is -- how will your working capital cycle shape up for the remaining financial year, like for the 5, 6 months?

It will be the same way what we have utilized actually in first half at the moment. So it will be a combination of everything. The import will be there. Same time, we will buy from the local importers who are bringing the material regularly here. We will go for ICs as well. So again, actually, we have seen good result what we have utilized actually in the last 6 months. So we would like to continue in the same manner what we have done actually in the past.

[Operator Instructions] Next, we have Mr. Prameet Jain. Next, we have [ Mr. Abhishek Shah ].

Am I audible?

Yes, sir.

Vimal ji, [ Abhishek ] here, an individual investor. So I wanted to -- first, I wanted to ask, so currently what is the installed capacity that we have?

Well, we have installed 4,800 metric ton capacity in the plant. However, the utilization for this financial year, we are going with 2,500 to 3,000 metric tons.

So 4,800 is already installed.

Correct. We just need a minor upgradation in that with the supporting of a few more machineries like the supporting drier or something. Those are the minor investments. But we have actually the major portion of the investment, the CapEx has already been done according to 4,800 metric tons.

Okay. Okay. And so for this year, we will be using like 2,500 to 3,000 metric tons, correct?

That's correct.

Okay. And in terms of the outlook for FY this year, FY '26, so since we clocked around INR 30 crores in H1. So what are the expectations for H2? Usually, H2s are...

We are trying to actually go with the same numbers, nearby roughly actually around the same numbers because after this first half, we had a Diwali season. So we had a really good, actually, sale in that period as well, which is helping us. And right now, coming this festival -- marriage season is also already there. So we are very much optimistic till February for this year. And let's hope we are targeting roughly around in the same numbers for the next second half of financial year '26 as well.

Okay. And is there any kind of bifurcation how much of the revenue is coming from B2C and...

So the major portion is from the B2B segment only. B2C, we have actually recently started pushing the things strongly. So we have seen some good, actually, increase in the B2C segment as well. However, with the new capacity, the first priority is to stabilize the plant operation, which we are focusing. In next -- in last 3 to 6 months period, we have mainly focused on that particular activity where we had done so many changes internally for the process. We have gone through that. Now we are slowly steadily, we are going to stabilize that process in a more accurate manner. And at the same time, we will increase our B2C segment as well. So you can say roughly around maybe still 90% of the sales is coming from B2B, 10% is somewhere around B2C.

But going forward, we are kind of focusing more on B2C, correct?

We have focused on B2C segment very strongly because we know the brand presence and the approach directly towards the end customer is very much required, and we are committed for that.

[Operator Instructions] Next, we have Mr. Prameet Jain.

Am I audible?

Yes.

Prameet Jain From JM Financial. So firstly, congratulations for a good set of numbers. Actually, I just wanted to ask regarding more clarity on the -- especially on the distribution partnership, influencer marketing and offline retail expansion.