Q1FY23 concall notes
- Aiding in ban on single use plastics. Sustainable flexible packaging solutions.
- Single use plastic ban. Packing no ban yet. Move towards recyclable plastic packaging. Most of packaging is non recyclable.
- Barrier requirement plastic fulfils which paper cant in some cases.
- Involves a cost. Shift is happening, but slowly. Consumer preference for recyclable.
- Volume growth for paper industry is quite substantive.
- Flexible packaging ramping up in march. Very high growth. Doubled capacity.
- Mobile market has been rocky in last 6 months. Seeing Improvement. 50% of its potential. By end of year, much higher. Depends on how market evolves.
- Capacity utilization: Paper/Carton packaging: 80%. Flexible: 50-60% range.
- Flexible: 10-15%, 80% carton.
- Ordered 1 new line for carton. Debottlenecked existing lines. Expect to grow carton capacities 10-15% for next FY.
- FMCG is having single digit volume terms. Price inflation. Value opportunity. Low double digit volume growth.
- Maintaining historic growth rate is our target. 17-18%. 15-20% / year.
- Innofilms: 2cr depreciation / year.
- Term debt is moderating.
- Last 2 Q had worst commodity inflation. Inflation flattening out now. Margins improved. Partly led by higher operating leverage : capacity utilization. RM being passed on to customers.
- July-Sep is highest volume Q. Q1 is normally weakest Q.
- Competition is entirely in private sector.
- Mobile: Very low revenue currently. We can quadruple our revenue in mobile packaging revenue. Very big growth opportunity here.
- EBITDA for carton is higher margin. Flexible EBITDA can improve. ASset turnover is much higher in flexible. Carton biz is more mature.
- Innofilm capacity is only 1% of total capacity. Line can get booked out easily. There is a huge scope.
- No greenfield needed for carton. Even for flexible not too challenging to add capacities.
- Innofilm is technologically challenging material. Backward integration. Will look to sell film for exports. TCPL would be a customer for innofilm. WIll sell in market as well.
- Looking at 3 digit revenue over next few years for rigid packaging.
- Exports has grown at 25% CAGR for last 3-4 years. 25% of business now.
- Big silver lining for us. Another sub in middle east. Marketing office there. Middle east & africa.
- Western world is looking at opportunities beyond china. We are nowhere near there. Havent gotten benefit of china+1 yet. Potential is there. Both carton & flexible.
- New customers being added, more biz from existing customers.
- Focus on india as a geography.
- Consolidation will happen. But slowly.
- Dont need to do more capex to inc rigid film revenue.
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