DDev Plastiks

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.

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.

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.

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.

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.

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.

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.