Rajshree Polypack Limited ($RPPL)

Ladies and gentlemen, good day, and welcome to the Quarter 4 and Financial Year '26 Conference Call to discuss operational and financial performance for Rajshree Polypack Limited. [Operator Instructions] Please note that this conference is being recorded. Today, we have with us Mr. Ramswaroop Thard, Chairman and Managing Director; and Mr. Sunil Sharma, the Chief Financial Officer of the company. I will now hand over the call to the management for their opening remarks, after which we will open the floor for questions. Thank you, and over to you, Ramswaroop sir.

Thank you, Divya. Good evening, ladies and gentlemen, and welcome to the Rajshree Polypack Limited Earnings Conference Call for the Fourth Quarter and the Financial Year 2026. We extend a warm welcome to all our esteem shareholders, members of the analyst community and participants joining us today. I'm also accompanied by our CFO, Mr. Sunil Sharma. We trust that you have had the opportunity to review our investor presentation. During today's call, we will discuss the company's operational and financial performance for the quarter and the full financial year, followed by a Q&A session to address your queries. Let me begin with a quick overview of our annual performance. FY '26 was a steady year for the business where the revenues remained largely stable, owing to macroeconomic factors. We delivered a meaningful improvement in profitability through better product mix and operational efficiencies. Seeing through the numbers, revenue for FY '26 stood at INR 332.18 crore compared to INR 329.74 crore in financial year '25, representing a growth of 0.74%. However, EBITDA increased to INR 50.97 crore from INR 46.30 crore in the previous year, with EBITDA margins improving to 15.34% from 14.04%. At the same time, profit after tax for the year improved to INR 17.22 crores compared to INR 14.46 crores in financial year '25, while the PAT margins improved from 4.38% to 5.18%. Coming to the fourth quarter, the profitability momentum strengthened during the fourth quarter, with profitability improving significantly despite impact of the Middle East war on the raw material prices as well as exports. In quarter 4, our company delivered a revenue of INR 91.62 crore compared to INR 90.06 crore achieved in Q4 FY '25, with EBITDA increasing to INR 15.70 crore as against INR 12.31 crore and EBITDA margins improving from 13.67% to 17.14%. Further, the company reported profit after tax amounting to INR 6.38 crore for quarter 4 FY '26 as compared to INR 3.63 crore in quarter 4 FY '25, with PAT margins improved from 4.03% to 6.96%. Domestic and export market segments. Now turning to our domestic and export markets, exports remain the key growth driver during FY '26. Export revenues increased by almost 30% year-on-year to INR 70.08 crore from INR 53.87 crore in FY '25, reflecting strong traction across international markets despite last month headwinds of the Middle East war. During Q4 FY '26, exports revenue stood at INR 14.09 crore compared to INR 19.55 crore in the corresponding quarter last year. This was primarily due to geopolitical disruption. Despite these near-term headwinds, our export business delivered strong full year growth supported by sustained demand for our injection molded products from our existing customers, reflecting the strength of our long-standing customer relationships, product quality and reliable supply capabilities. On the domestic front, revenue stood at INR 262.10 crore in FY '26 compared to INR 275.86 crore in FY '25. Encouraging the domestic revenue increased in quarter 4 FY '26 to INR 77.53 crore from INR 70.50 crore in the corresponding quarter last year. Domestic business continued to be driven mostly from sheets and thermoform packaging products toward institutional customers and to our distribution network. On the product price performance during FY '26, the injection molded category, which we had started 4 years back, is now emerging as the strongest growth segment. Revenue from the injection molding category increased from INR 42.02 crore in FY '25 to INR 63.65 crore in FY '26, a strong 51.4% growth. At the same time, while thermoform packaging product remained stable at INR 199.73 crore due to weak demand from one of our key customers, sheet revenue declined to INR 65.99 crore from INR 84.5 crore, as we reduced our focus on low-margin sheet sale as a product category. Speaking of Q4 FY '26, while the quarter saw an increase of 9.72% in revenue from thermoform packaging products to INR 61.36 crore, the sheet sale and injection molding segment saw a decline of 14.63% and 10%, respectively. As I mentioned earlier, a key focus area during FY '26 was improving profitability rather than simply pursuing volume-led growth. During the year, we rationalized low-margin SKUs and low-value customers while depending -- while deepening engagement with key accounts and increasing our share of wallet. Combined with tighter capacity discipline and cost-optimization initiatives, it has helped us to improve margin despite relatively stable revenues. On the capacity front, we expanded our injection molded capacity by 45% from 3,300 metric tonne to 4,800 metric tonne. At the same time, we continue to strengthen our presence in the domestic market. We expand our customer relationship across key segments. We remain bullish on injection molding product category with addition of another 1,000 metric tonne per annum capacity under toll manufacturing agreement. This will take our total installed capacity to 5,800 metric tonne per annum and will be unable to focus on capturing both domestic as well as the export markets. In case of sheet and thermoform products, while we added some more capacities during the year, the primary focus remained on cost and profit optimization with better utilization of available capacities. We do not foresee any significant capacity addition in the category during FY 26-'27. Operationally, on the cost front, our gross margin during the financial year expanded to 41.35% as compared to 37.97% for previous financial year. However, manufacturing expenses increased from 9.75% to 10.55% of revenue, primarily due to setting up of unit 3, where we have transitioned from job work model to in-house manufacturing in case of extrusion and thermoform packaging products, especially PET, we expect the manufacturing expense to rationalize as we scale up unit 3. Update on Olive Ecopak, our joint venture company. Our joint venture Olive Ecopak continued to make encouraging progress and has emerged as one of the leading manufacturer in this segment. First, I'd like to run through the numbers. Looking at the financial performance of Olive Ecopak, the most important point to note is that the company turned EBITDA positive on the full year basis. Olive Ecopak delivered revenue of INR 52.67 crore for financial year '26 as compared to INR 16.37 crore for financial year '25. At the same time, EBITDA of the company stood at INR 2.2 crore for the financial year '25 as compared to EBITDA loss of INR 8.28 crore for the financial year '25. Further, the net loss of the company narrowed to INR 18.8 crore as compared to INR 22.6 crore in FY '25. In case of Q4 FY '26, revenue of Olive Ecopak increased by more than 90% year-on-year to INR 17.01 crore as compared to INR 8.9 crore in quarter 4 FY '25. With increase in the revenue, EBITDA turned positive to INR 2.85 crore as compared to loss of INR 1.05 crore in Q4 FY '25. While the optimization -- while the utilization remains below the optimal levels, they continue to improve quarter after quarter. The growth was majorly impacted by geopolitical destructions and war-related uncertainties, affecting demand and export momentum. We are witnessing strong traction from large domestic institutional customers alongside growing interest from customers from Europe and U.K. While we have also made meaningful progress in the U.S. market, the overall business environment remains challenging. Nevertheless, we remain confident of sustaining our growth momentum and continue our progress towards profitability. During the year, both RPPL and Olive actively participated in several prominent domestic and international exhibitions. This platform continued to provide strong visibility and generated encouraging customer interest across the markets. Going forward, our focus remains on translating these engagements into higher business volumes and deeper market penetration. Looking ahead, our priority remains clear: driving profitable growth, improving capacity utilization across businesses, expanding our export footprint and accelerating the scale-up of Olive Ecopak. While the external environment remains uncertain, we believe we are well positioned to capitalize on the opportunities ahead and continue creating long-term value for our shareholders. With this, I conclude my opening remarks, and we'll now be delighted to address your questions and hear your valuable perspectives. Anybody who wants to ask the question, can raise the hand. Kunal, you can take over.

Am I audible?

Yes, yes, you're audible.

So first question is regarding our food container products. Those black food containers that we have, the FMCG segment. right? So one of the peers in our industry who is specifically operating in that segment. So they said that you require proper qualification and standards like HACCP and FASC for you to export the products outside and have better margins. So can you just elaborate like what kind of margins do you make on those products?

See, overall, on injection molding, we operate in EBITDA margins of roughly 12% to 13%. That's the average margin we operate at for injection molding products. For thermoforming products, we operate in the EBITDA margin of 15% to 16%.

[Operator Instructions]

Yes, sorry. I think something happened with the connection. So sir, regarding my previous question. So that player is making margins at around in the range of 18% to 20%, and they are selling those black container food products that 4 boxes. So just wanted -- I just wanted some color on that, are those -- can we make those kind of margins ourselves as well? And do we have those certifications?

We have all the certifications in the place because we definitely cannot export without those certifications in place. But there are different applications, different materials, so we need to know specifically what exactly is that. So in this particular business, depending upon the applications, the margins do vary from 12% to 16%, 18-odd percent, depending upon the various application and the customer segments.

Right. Understood. And sir, second question is regarding revenue and EBITDA for the next 2 years. And what sort of outlook do you have over there?

So for the financial year '26-'27, we are looking at roughly INR 370 crore to INR 380-odd crore of revenue at the moment, so -- and EBITDA in the range of 15-odd percent. So that's what we are looking at for this particular financial year.

And sir, anything for FY '28, the broad range, not exact numbers, but broadly?

We have -- with some capacity expansion, we should be able to go to INR 420 crores to INR 430 crores.

With similar EBITDA, right?

No, EBITDA, maybe with scaled up this thing, we should be able to reach 16%.

Right. Because now we are already doing 15% as of now.

Yes.

[Operator Instructions]

Am I audible?

Yes, yes.

Sir, I wanted to ask on the Olive. So are we looking to be breakeven at PAT level in FY '27 for Olive?

Yes, definitely. So as I mentioned, like we need revenue of roughly around INR 90 crores, INR 95-odd crores. So we will be definitely looking to break even in this particular year for...

So what sort of PAT contributions from Olive are we expecting?

We are seeing that we look at breakeven for this particular year. And from next year, probably it will start contributing to that.

Okay. And on the sheet segment, I believe that our sheet contribution in total revenue and injection molding is down quarter-on-quarter. So is it intentional? Or is something driven by demand?

As I mentioned, there are a few low value-added products, which we are coming out of and focusing on higher margin product.

Yes, sir. And lastly, on the margin side, so our margins have improved significantly, both quarter-on-quarter and year-on-year. So any major reason behind that?

As I mentioned, like it was a change in the product mix and moving away from low-margin products. That's one of the major reasons, I would say.

So can we expect similar margins going ahead for the full year?

Yes.

[Operator Instructions]

I wanted to understand like the current capacity that we have right now, what can be the peak revenue that we can achieve just from the current capacity?

Around to INR 390 crores to INR 400 crores.

INR 390 crores to INR 400 crores, right? And the CapEx that we are doing, the expansion that we're having, which is underway. So like when that is added, what can be a peak revenue?

We are not looking for any major CapEx expansion, maybe around INR 5 crores or INR 6-odd crores in few molds here and there and maybe optimizing few -- 3 machines that maximum CapEx we are looking for this year, but gradually with this small CapEx, we can, as I mentioned, go up to [ INR 24 crores, INR 30-odd crore ] maximum with the exit standard.

Right. Understood. And what is the debt outlook for FY '27?

We intended to reduce it by INR 10 crores to INR 15 crores on the working capital requirement. That's what we are looking at.

Okay. Understood. So the debt level won't increase substantially, right?

No. From here, we are looking to reduce it.

Okay. So we are seeing INR 10 crores to INR 15 crores of repayment of debt in next year?

Yes, from the term loan account, we intend to reduce around INR 8 crores to INR 10 crores and from some lesser utilization of cash credit by around INR 5 crores to INR 7 crores.

Okay, understood. And what is the capacity utilization?

Across different processes there, different. Like for extrusion, it is in the range of 90% -- summer farming is in the range of 85%, 86%. Printing and saving is almost at 97%, 95%.

Okay. So from INR 330 crores to INR 400 crores of top line that we are targeting, the incremental INR 60 crores, INR 70-odd crores we are looking at -- like the current capacities will have incremental volumes, right?

Yes. So as we announced like we have just added 1,000 tonnes in injection molding. So the major portion will definitely come from injection molding in this INR 60 crores, INR 70-odd crores. And balance will come from existing sector by fine-tuning the efficiencies of existing machines.

[Operator Instructions] And there are no questions. Divya, over to you.

Thank you so much. As there are no further questions, I would now like to hand over the conference call to the management for the closing comments. Over to you, Ram sir.

Thank you, everyone, for joining us today and for your questions. We sincerely appreciate your continued trust and support in Rajshree Polypack. We remain committed to deliver sustainable growth, strengthening our market presence and creating long-term value for our stakeholders. Thank you, everyone.