Ddev Plastiks Industries Limited — Q3 FY25 earnings call

Call held 12 Feb 2025

Management summary

DDev Plastiks delivered a strong Q3 FY25, with revenue and EBITDA growing 19% YoY, driven by robust domestic demand and strategic product mix. The company maintained healthy margins and achieved 79% capacity utilization. While facing challenges in HFFR adoption for residential use and past export headwinds, management is optimistic about future growth, driven by planned capacity expansions and a revival in export markets.

Highlights

  • Revenue for Q3 FY25 increased by 19% YoY to ₹661 crores, driven by strong trade volumes.

  • EBITDA for Q3 FY25 grew 19% YoY to ₹75 crores, maintaining an 11% margin.

  • Profit After Tax (PAT) for Q3 FY25 rose 17% YoY to ₹47 crores, with a 7% margin.

  • Capacity utilization stood at 79% as of December 2024, reflecting efficient operations.

  • Management is targeting a 15% CAGR volume growth for FY26, supported by planned capacity expansions.

Concerns

  • Gross margins reduced QoQ due to a product mix shift towards PVC and fill compounds, and lower export volumes.

  • HFFR adoption in the residential building wire segment remains slow due to pricing and production line issues, despite its safety benefits.

Key financials

3 periods

Headline

  • Capacity Utilization
    79%

Q3

  • Revenue
    ₹661 Cr
    YoY +19%
  • EBITDA
    ₹75 Cr
    YoY +19%
  • EBITDA Margin
    11%
  • PAT
    ₹47 Cr
    YoY +17%
  • PAT Margin
    7%

9M

  • Revenue
    ₹1,867 Cr
  • EBITDA
    ₹208 Cr
    YoY +9%
  • EBITDA Margin
    11%
  • PAT
    ₹134 Cr
    YoY +11%
  • PAT Margin
    7%
  • Volume
    1,39,000 tons
  • Revenue per ton
    ₹1,37,000
  • EBITDA per ton
    ₹15,599

What they filed

Q1 FY27: revenue up 28.6%, net profit up 23.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue580 661 737 769 680 +17%733 +11%766 +4%989 +29%
EBITDA64 70 76 73 64 +0%76 +9%74 −3%91 +25%
Net profit45 47 52 52 47 +4%48 +2%55 +6%64 +23%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex ₹70 Cr
    • Capacity expansion at existing and new sites
    • Addressing operational bottlenecks
    • Developing new greenfield sites
    • New HFFR capacity (5,000 tons)
    • New XLP capacity (one machine for East)
    • New PVC compounds capacity (12,000-15,000 tons)
    • Replacing smaller machines with higher capacity machines for efficiency
    Around 43 crores have already been deployed in the first 9 months and total commitment up to the first 9 months have been close to 70 odd crores. We are targeting CAPEX of close to 200 to 300 odd crores in the next couple of years, rather you can say in 2-2.5 years' time. But FY30 when you are talking about it will require another 250 to 300 crores odd of CAPEX.
  • Debt Debt disclosed
    So generally, if you see this interest cost came down last two quarters a bit. This particular quarter has a marginal increase because of the processing fees and everything. So, this quarter you cannot say that is in line with the regular but it is an exception because of the renewals and processing fees. Otherwise, the utilization levels have come down under average finance cost is expected to remain within 5 crores of payment.

Guidance & targets

Capacity

  • HFFR Capacity Utilization Capacity · end of this year · Medium confidence Full capacity utilization
    We hope that by the end of this year we will be reaching almost full capacity utilization of the HFFR capacity what we have today.

    — Narrindra Suranna

  • New HFFR Capacity Operationalization Capacity · H1 next financial year · High confidence Operational
    HFFR 5,000 tons is already in operation. Another similar capacity has been ordered and is expected next financial year. So, you can expect by the end of H1 of next year will be the operational timeline you can say.

    — Narrindra Suranna

  • New XLP Capacity Output Capacity · next financial year · High confidence Output from new capacity
    We have already ordered one machine for East and in process of installing the same. We will be able to get the output by next financial year.

    — Narrindra Suranna

Volume

  • Volume Growth Volume · next year · High confidence 15% CAGR
    definitely as we explained earlier that we will, we are targeting CAGR growth of 15% on the volumes and since we are maintaining the same for the last couple of years, we expect the same to be there.

    — Ddev Surana

  • FY25 Total Volume Volume · FY25 · High confidence 1,85,000 tons
    So as of now for '25, we have already achieved close to 1,39,000 tons of volume versus the target of 1 85. So definitely we are on course of our targets.

    — Ddev Surana

Profitability

  • EBITDA per Kg Profitability · FY25 · High confidence Rs. 15
    we are constantly giving guidance of Rs. (+15) of EBITDA and close to 1,85,000 tons of volume. So, you can calculate yourself, but this is the guidance we have been giving in all the earlier calls.

    — Arihant Bothra

Revenue

  • Revenue Revenue · by 2030 · Medium confidence 4,500 to 5,000 crores
    Understood. And sir, one guidance which you have given for 2030 about 4,500 to 5,000 crores revenue.

    — Anand Mundra

Capex

  • CAPEX Capex · next 2-2.5 years · High confidence 200 to 300 odd crores
    total put together we are targeting CAPEX of close to 200 to 300 odd crores in the next couple of years, rather you can say in 2-2.5 years' time.

    — Arihant Bothra

  • CAPEX for FY30 target Capex · by FY30 · Medium confidence another 250 to 300 crores
    But FY30 when you are talking about it will require another 250 to 300 crores odd of CAPEX.

    — Arihant Bothra

Efficiency

  • Asset Turn for Fresh CAPEX Efficiency · going forward · High confidence 4x to 5x
    That is why you are seeing a higher asset turn whilst going forward for fresh CAPEX we are eyeing 4x to 5x of asset turn.

    — Arihant Bothra

Export

  • Export Share Export · next quarter · Medium confidence Improve
    So, we expect the same to improve from next quarter and accordingly the margins rather the gross margin is also expected to improve from next quarter.

    — Arihant Bothra

What to watch in Q4 FY25

HFFR Capacity Utilization

end of this year (FY25)
Current Improved Q-on-Q, but still 57% (as per analyst's question)
Target Full capacity utilization

Why it matters

Indicates the ramp-up and market acceptance of a key specialty product, crucial for future growth.

We hope that by the end of this year we will be reaching almost full capacity utilization of the HFFR capacity what we have today.

Risks & concerns

  • Slow HFFR adoption in residential building wire

    medium

    HFFR adoption in residential electrification is slow due to existing PVC cable acceptance, pricing, and production line issues for cable players.

    Analyst acknowledged

  • Competition from global players

    medium

    Competes with large global players like Dow, LG, Hanwha, and Borealis, but Ddev's faster expansion model (converter vs. integrated producer) provides an advantage.

    Analyst acknowledged

  • Global supply chain challenges (past)

    low

    Past challenges included rising freight rates and container shortages, which impacted export profitability, but these are now easing.

    Management acknowledged

Q&A highlights

8 direct
HFFR adoption and commercialization timeline Direct
HFFR 5,000 tons is already in operation. Another similar capacity has been ordered and is expected next financial year. So, you can expect by the end of H1 of next year will be the operational timeline you can say.

Clarifies the slow but steady progress and future capacity additions for a key product segment, including specific timelines for new capacity.

Asked by Dolly Choudhary

Gross margin reduction reasons Direct
Yes, it is mainly the product mix. There has been some increase in the PVC and the fill compounds in this particular quarter which has led to this. However, since on a broader sense the exports are down for this quarter again. So that is the major reason why it is so.

Explains the factors influencing margin compression in the current quarter, linking it to product mix changes and lower export performance.

Asked by Dolly Choudhary

Supply chain strategy and raw material availability Direct
See on the supply chain side if you look at the major segment is wire and cable and within that the major products are based on polyethylene... from today till 2028-29, we foresee that there will be no shortage of availability of the polyethylene.

Provides confidence in raw material security and stable supply for the core product segment for the foreseeable future, mitigating a key industry risk.

Asked by Sudarshan Padmanabhan

Export market opportunity and profitability Direct
Last year I would say that the export market was in difficulty because of high sea freight... sea freight rates are now much benign compared to what it was say two quarters back. So, we are gaining back our export share now.

Explains past export challenges and the current positive shift, indicating a potential boost to future revenue and margins from exports as conditions improve.

Asked by Sudarshan Padmanabhan

CAPEX plans for long-term revenue targets Direct
We are targeting CAPEX of close to 200 to 300 odd crores in the next couple of years, rather you can say in 2-2.5 years' time. But FY30 when you are talking about it will require another 250 to 300 crores odd of CAPEX.

Outlines the significant multi-year capital expenditure plan to achieve ambitious revenue targets, providing insight into future growth drivers and investment scale.

Asked by Anand Mundra

Asset turnover for new CAPEX Direct
the existing assets were much over older in terms of physical infrastructure. That is why you are seeing a higher asset turn whilst going forward for fresh CAPEX we are eyeing 4x to 5x of asset turn.

Clarifies the expected efficiency and return on new capital investments, indicating a disciplined approach to growth and capital allocation.

Asked by Abhishek

Competitive intensity in the polymer compound space Direct
We compete with people like Dow, LG, Hanwha and Borealis on the global front... But in terms of capacity, they will be much smaller in terms of capacity than us.

Provides a clear picture of the competitive landscape, distinguishing between global and domestic competition and highlighting the company's relative scale and strategic advantages.

Asked by Abhishek

Raw material price progression and blended realization Direct
The RM prices have started to move on. It has bottomed out, and this quarter there has been some revival and that is reflecting in our average realization as well. If you see the blended realization for the third quarter, it is standing at close to Rs. 137 odd versus the last quarter of 130.

Indicates a positive trend in raw material prices and realization, suggesting potential for margin recovery and improved profitability in subsequent quarters.

Asked by Arnav Sakhuja

3 min read 7 chapters

Detailed narrative

Strong Q3 FY25 Performance and 9M Overview

DDev Plastiks reported a robust Q3 FY25, with revenue growing 19% YoY to ₹661 crores and EBITDA also up 19% YoY to ₹75 crores, maintaining an 11% margin. PAT increased 17% YoY to ₹47 crores, with a 7% margin. For the first nine months of FY25, revenue stood at ₹1,867 crores, EBITDA at ₹208 crores (11% margin), and PAT at ₹134 crores (7% margin), with a total volume of 1,39,000 tons and 79% capacity utilization as of December 2024.

Strategic Product Mix and Margin Dynamics

The company's gross margins saw a slight reduction QoQ, primarily attributed to a shift in product mix towards PVC and fill compounds, alongside a temporary dip in export volumes. Exports, which typically contribute 2-3% higher EBITDA margins, were down to 18% of revenue this quarter compared to an average of 25% last year. Management expects margins to improve from the next quarter as export volumes are anticipated to recover, supported by benign sea freight rates.

Capacity Expansion and Future Growth Drivers

DDev Plastiks is actively expanding its manufacturing capabilities, with ₹43 crores already deployed in the first nine months and a total commitment of ₹70 crores. The company plans a CAPEX of ₹200-300 crores over the next 2-2.5 years, with an additional ₹250-300 crores targeted for its FY30 revenue goal of ₹4,500-5,000 crores. This expansion includes new HFFR and XLP capacities, with new HFFR capacity expected to be operational by H1 FY26 and XLP capacity by next financial year, targeting a 15% CAGR volume growth for FY26.

HFFR Segment Performance and Challenges

While HFFR adoption is growing in public places and power cable jacketing, its penetration in the residential building wire segment remains slow. This is primarily due to existing PVC cable acceptance, pricing issues, and the need for cable players to align production lines. The company currently derives about 20% of its cross-linkable variety sales from applications like solar power, where HFFR is highly suitable due to its weather ability and fire protection properties.

Export Market Outlook and Raw Material Stability

After facing difficulties last year due to high sea freight rates, the export market is showing signs of revival with more benign freight costs, and DDev Plastiks is regaining export share. The company benefits from a robust supply chain for polyethylene, its major raw material, with no anticipated shortages until 2028-29. An instant pass-through mechanism for raw material price volatility ensures stable margins, as product prices adjust immediately to changes in raw material costs.

Competitive Landscape and Operational Efficiency

DDev Plastiks competes with global players like Dow, LG, Hanwha, and Borealis, but differentiates itself with a faster capacity expansion model as a converter, requiring less time than integrated producers. The company is also focusing on operational efficiencies, including replacing smaller machines with higher-capacity ones and implementing sustainable practices like rainwater harvesting (1 crore liters at Surangi plant) and solar power to reduce costs and environmental impact.

Value Chain Upgradation and Product Development

The company is progressing on its goal to move up the value chain, with prototype testing for 132 KV products completed. Trials with two key customers are scheduled for Q1 FY26, with full commercialization anticipated by calendar year 2027 after a 9-month testing period. This initiative aims to enhance the product portfolio and cater to higher voltage cable applications, reflecting the company's commitment to innovation and excellence.

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