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    Borosil

    BOROLTDGood
    Consumer Durables·11 Feb 2025
    Management Summary

    Borosil Limited delivered a robust performance for Q3 and 9M FY25, showcasing strong revenue growth across all key segments. Despite challenges from new pharmaceutical marketing practices impacting B2B sales and higher e-commerce customer acquisition costs, the company maintained healthy operating EBITDA margins. Management expressed confidence in long-term growth potential, driven by domestic manufacturing expansion, new product launches, and a strategic focus on premium and healthy product categories.

    Highlights

    8

    • Revenue from operations for 9M FY25 reached INR 837.6 crores, marking a 17.1% YoY growth.

    • Operating EBITDA for 9M FY25 stood at INR 140.2 crores, up 17.4% YoY, with a margin of 17% (vs 16.7% in 9M FY24).

    • Profit Before Tax (PBT) for 9M FY25 was INR 86.3 crores, a 6.3% increase from INR 81.2 crores in 9M FY24.

    • Profit After Tax (PAT) for 9M FY25 was INR 63.1 crores, up 3.8% from INR 60.8 crores in 9M FY24.

    • Larah Opalware segment revenue grew 9% YoY to INR 292.6 crores in 9M FY25.

    • Glassware segment revenue saw strong growth of 22.9% YoY, reaching INR 190.9 crores in 9M FY25.

    • Non-glassware segment revenue increased 17.8% YoY to INR 340.9 crores in 9M FY25.

    • Net debt as of December 31, 2024, was INR 20.4 crores.

    Concerns

    2

    • Impact of Uniform Code for Pharmaceutical Marketing Practices 2024 (restricting gifts)

    • Supply chain challenges and BIS issues for non-glassware/appliances

    What Changed2

    vs Q4 FY25

    Guidance items11 → 9 (-2)Risks discussed6 → 5 (-1)

    Key financials

    Single quarter

    06 metrics
    1. 01Revenue₹837.6 Cr+17.1%YoY
    2. 02Operating EBITDA₹140.2 Cr+17.4%YoY
    3. 03Operating EBITDA Margin17%
    4. 04PBT₹86.3 Cr+6.3%YoY
    5. 05PAT₹63.1 Cr+3.8%YoY

    Segment breakdown

    • Larah Opalware₹292.6 Cr35.5%
    • Glassware₹190.9 Cr23.2%
    • Non-glassware₹340.9 Cr41.4%
    Donut· Share of Revenue

    Guidance & targets

    9
    CategoryTargetPriority
    Overall Growth
    Medium-term CAGR
    15-20%
    		High
    Profitability
    EBITDA Margin
    >20%
    		High
    Profitability
    Steady-state EBITDA Margin
    20-22%
    		High
    Ad Spend
    Ad Spend as % of Sales
    6%
    		Medium
    Capacity
    Glassware Capacity Utilization
    100%
    		High
    Capacity
    Opalware Capacity Increase (Debottlenecking)
    10% (from 100 to 110 units)
    		High
    Capacity
    Opalware Capacity Increase (Further Debottlenecking)
    10% (from 110 to 120 units)
    		Medium
    Capex
    Capex for bottles manufacturing in India
    INR 50-70 crores
    		Medium
    Sourcing
    Non-glassware Made in India %
    70-80%
    		High

    Risks & concerns

    7
    RiskSeverity

    Impact of Uniform Code for Pharmaceutical Marketing Practices 2024 (restricting gifts)

    This regulation impacted B2B sales and was identified as the 'biggest impact from a sales perspective' for the year, though management expects it to eventually reverse. — Management acknowledged

    high

    Higher customer acquisition costs due to shift to e-commerce sales

    The increased marketing expenses for online channels contributed to pressure on overall margins. — Management acknowledged

    medium

    General consumer slowdown and muted growth in kitchen appliances

    A broad-based consumer slowdown was observed across the industry, impacting various product categories, including kitchen appliances, and specifically affecting Borosil's B2B channel. — Management acknowledged

    medium

    Supply chain challenges and BIS issues for non-glassware/appliances

    The vendor ecosystem for some non-glassware products does not yet exist in India, posing challenges for domestic sourcing and compliance with new BIS norms. — Management acknowledged

    high

    Increasing competitive intensity in the opalware/dinnerware segment

    Management noted that a fourth player is expected to enter the opalware segment, prompting them to evaluate strategic focus within the broader dinnerware category. — Management acknowledged

    medium

    Areas of Evasion(2)

    • Channel-wise sales mix data
    • Specific margin impact of India vs import sourcing for bottles

    Q&A highlights

    3

    “So we have, frankly speaking, no alternative but to decide to make this product in India. And I think very shortly, we'll be doing that. We do see some short-term challenges in terms of revenue growth... But I think these are short-term challenges.”

    This question addressed a significant regulatory change (BIS) and revealed management's strategic pivot to domestic manufacturing for steel products, acknowledging short-term revenue challenges but highlighting long-term opportunities.

    asked by Aniruddha Joshi

    2 min read6 chapters

    Detailed Narrative

    01

    Robust 9M FY25 Performance Driven by Key Segments

    Borosil Limited reported a strong 9M FY25 with revenue from operations reaching INR 837.6 crores, a 17.1% year-over-year growth from INR 715.1 crores in 9M FY24. Operating EBITDA grew by 17.4% to INR 140.2 crores, with margins at 17%, slightly up from 16.7% in the prior year. PAT for the period stood at INR 63.1 crores, compared to INR 60.8 crores last year, despite increased depreciation and tax impacts.

    02

    Segmental Growth and Strategic Sourcing Shifts

    The glassware segment demonstrated exceptional growth of 22.9%, reaching INR 190.9 crores in 9M FY25. Non-glassware also performed strongly with 17.8% growth to INR 340.9 crores, while Larah Opalware grew 9% to INR 292.6 crores. Management highlighted a strategic shift towards domestic manufacturing, aiming for 70-80% of non-glassware to be made in India within the next three years, up from the current 30-35%.

    03

    Margin Pressures from Channel Mix and B2B Headwinds

    Despite improving gross margins (up 2 percentage points across categories), operating EBITDA margins faced pressure due to a shift in channel mix towards e-commerce, leading to higher customer acquisition and advertising expenses. The new Pharmaceutical Marketing Practices 2024, restricting gifts, significantly impacted B2B institutional sales, which are typically more profitable, contributing to margin reduction.

    04

    Capacity Expansion and Utilization Plans

    Opalware capacity utilization is currently around 85%, with plans for debottlenecking to increase capacity by 10% (from 100 to 110 units) in the coming year, and potentially another 10% (to 120 units) in the subsequent two years. Glassware (press) utilization is at 55-60%, with a target to fully utilize capacity within two to three years (by FY27), supported by new product development.

    05

    Future Growth Drivers and Capex Outlook

    Borosil is actively working on launching new products in the dinnerware segment (beyond opalware) and other non-glassware categories within the next 3-6 months to drive future growth. The company anticipates a capex of INR 50-70 crores in the next year, primarily for setting up manufacturing capacity for bottles in India, aligning with the domestic sourcing strategy.

    06

    Competitive Landscape and Market Outlook

    Management acknowledged increasing competitive intensity in the opalware segment, with a fourth player expected to enter the market. However, they remain confident in the overall medium-term outlook, targeting a 15-20% CAGR for the company and aiming to achieve an EBITDA margin of over 20% in the next two to three years, potentially reaching 20-22% overall.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.