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    EPL Q2 FY26 earnings call

    EPL
    Capital Goods·12 Nov 2025
    Management Summary

    EPL Ltd delivered a strong Q2 FY26 with double-digit revenue growth and robust profitability, driven by the Beauty & Cosmetics segment and Americas region. The company achieved significant margin expansion and improved ROCE, while also receiving the EcoVadis Platinum Rating. Despite facing temporary headwinds in Europe and AMESA, management expressed confidence in sustained double-digit growth and future margin improvement, supported by strategic capacity expansions and innovation.

    Highlights

    7

    • Revenue grew 11% YoY, marking double-digit growth for the second consecutive quarter.

    • EBITDA margin expanded 91 basis points YoY to 20.9%, achieving the fifth consecutive quarter with 20%+ margins.

    • PAT increased by a robust 19.9% YoY, driven by strong operational performance and prudent financial management.

    • ROCE improved significantly by 217 basis points YoY to 18.7%, reflecting enhanced capital efficiency.

    • Awarded the prestigious EcoVadis Platinum Rating, placing EPL in the top 1% globally and as the only Indian packaging company with this certification.

    • Beauty & Cosmetics (B&C) segment continued strong momentum with 26.3% YoY growth, and Americas region delivered outstanding 27.4% revenue growth.

    • Thailand plant commenced operations in October, built in just 9 months, with customer supplies starting in Q3 FY26.

    Concerns

    3

    • Europe region recorded only 2.8% growth, impacted by temporary softness from a few large customers and destocking, leading to margin contraction.

    • AMESA region was largely flat due to Oral segment performance and GST impact, despite improving margins.

    • Other expenses increased by 12.4% this quarter, outpacing the 11% revenue growth, attributed to S&D investments, power/fuel inflation, and increased freight costs.

    What Changed3

    vs Q3 FY26

    Guidance items7 → 4 (-3)Risks discussed3 → 4 (+1)Q&A highlights8 → 6 (-2)

    Key financials

    Single quarter

    08 metrics
    1. 01Revenue Growth11%+11%YoY
    2. 02EBITDA Growth16.1%+16.1%YoY
    3. 03PAT Growth19.9%+19.9%YoY
    4. 04EBITDA Margin20.9%
    5. 05ROCE18.7%

    Segment breakdown

    Beauty & Cosmetics
    26.3% Revenue Growth
    Americas
    27.4% Revenue Growth
    East Asia Pacific (EAP)
    10.6% Growth
    Europe
    2.8% Growth
    AMESA
    0% Growth
    Personal Care & Beyond
    53% Share of Total Revenue
    List

    Order Book

    low confidence

    Pipeline

    deal pipeline tcv

    Pipeline of orders building for Thailand plant, strong business development pipeline.

    "Management noted a strong business development pipeline for the new Thailand plant and significant headroom for expansion in Brazil, implying future order potential rather than a quantified current order book."

    Source:
    Q&A

    Capital allocation

    3
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Debt

    0.5x EBITDA

    Dividend

    ₹2.5/share (interim)

    Guidance & targets

    3
    CategoryTargetPriority
    Profitability
    ROCE
    25%+
    		High
    Profitability
    Europe Margins
    mid-teens upwards
    		Medium
    Profitability
    EBITDA Growth
    faster than revenue
    		High

    What to watch in Q3 FY26

    5

    Europe Margin Recovery

    next quarter
    CurrentBelow mid-teens
    TargetMid-teens upwards

    Why it matters

    Recovery of Europe margins is crucial for overall profitability, as it was impacted by destocking this quarter.

    Now our guidance on Europe margins has always been mid-teens margins, okay? And therefore, our objective is to deliver mid-teens upwards. ... We need to quickly recover from here, and that is the objective.

    Risks & concerns

    4
    RiskSeverity

    Europe Margin Pressure due to Destocking

    Europe's 2.8% growth and margin contraction were due to temporary softness from large customers and destocking by a major Oral Care customer, impacting scale. — Management acknowledged

    medium

    AMESA Flat Growth due to Oral and GST Impact

    The AMESA region was largely flat, primarily due to the Oral segment and the lingering effects of GST, though margins improved. — Management acknowledged

    low

    Increased Other Expenses

    Other expenses grew 12.4%, outpacing revenue, driven by S&D investments, power/fuel inflation in the West, and increased freight costs due to customer mix. — Management acknowledged

    medium

    US Tariffs on Imported Laminate

    The US tariff on imported laminate is a challenge, but management is actively mitigating it through production shifts, pricing adjustments, and sourcing partnerships, with news suggesting tariffs may temper. — Management acknowledged

    medium

    Q&A highlights

    6

    “The margin drop essentially has been because of loss of scale of the business on top line. ... But our objective is absolutely to get quickly back to mid-teens. I would say, this quarter is less than what we would have liked, right and certainly less than our mid-teens guidance. We need to quickly recover from here, and that is the objective.”

    Analyst challenged the explanation for margin contraction given slight revenue growth, indicating potential underlying issues beyond scale.

    asked by Kashyap Javeri

    2 min read6 chapters

    Detailed Narrative

    01

    Robust Financial Performance and Margin Expansion

    EPL Ltd reported a strong Q2 FY26, achieving 11% double-digit revenue growth and a robust 16.1% increase in EBITDA. The company's EBITDA margin expanded by 91 basis points year-on-year to 20.9%, marking the fifth consecutive quarter with margins above 20%. This strong operational performance also translated into a 19.9% growth in PAT and an improved ROCE of 18.7%, up 217 basis points YoY, demonstrating enhanced capital efficiency.

    02

    Beauty & Cosmetics and Americas Drive Growth

    The Beauty & Cosmetics (B&C) segment continued its strong momentum, reporting a 26.3% year-on-year growth and contributing significantly to the overall revenue. This segment, along with Personal Care & Beyond, now accounts for 53% of the company's total revenue. Geographically, the Americas region delivered an outstanding 27.4% revenue growth, driven by broad-based double-digit growth across all countries, including Brazil, which is in its third year of strong operation.

    03

    Regional Headwinds and Recovery Strategies

    While B&C and Americas performed strongly, Europe experienced temporary softness📎 with 2.8% growth, primarily due to destocking by a major Oral Care customer and a strong base effect from the previous year, leading to margin contraction. The AMESA region remained largely flat, impacted by Oral segment performance and GST. Management expressed confidence in a quick recovery for Europe to mid-teens margins and has plans to accelerate momentum in AMESA through Oral Care recovery and B&C growth.

    04

    Strategic Capacity Expansion and Innovation

    The company successfully commissioned its Thailand plant in October, completing construction in just nine months, with customer supplies starting in Q3 FY26. This greenfield operation is built modularly, with plans for further expansion already underway. Innovation, particularly in EAP (China), with products like the tube-in-tube format for Oral Care, is driving higher ASPs and revenue, contributing to the region's 10.6% growth.

    05

    Sustainability Leadership and Capital Efficiency Focus

    EPL Ltd achieved the prestigious EcoVadis Platinum Rating, placing it in the top 1% globally and as the only Indian packaging company with this certification, which is expected to drive more business from sustainability-focused customers. The company also maintained a healthy net debt-to-EBITDA ratio of 0.52x and aims to achieve 25%+ ROCE by FY29 through continued focus on capital efficiency and disciplined operational management.

    06

    Investment in Sales Capability and Employee Expenses

    Employee expenses increased to INR 233 crores in Q2, up from INR 200-205 crores previously. Management clarified this was not due to the new Thailand plant but a 'conscious increase in investment of people in sales' to ramp up B&C capabilities globally. This strategic investment aims to cater to value-added, smaller volume customers and drive higher revenue and margins, especially given B&C's favorable average selling prices.

    This is an AI-generated summary of a publicly available earnings call transcript.