Ester Industries Limited — Q4 FY25 earnings call

Call held 23 May 2025

Management summary

Ester Industries delivered a strong Q4 and full FY25, marked by a significant turnaround in profitability with consolidated EBITDA surging 485% YoY to ₹164 crores. Both Specialty Polymers and Polyester Films segments contributed to growth, with the former seeing a 72% revenue increase. While foreign exchange fluctuations and predatory imports from China impacted Q4 film margins, the company is addressing these challenges and expects improved capacity utilization and product mix in FY26.

Highlights

  • Consolidated total income for FY25 stood at ₹1,298 crores, reflecting a strong revival across both businesses.

  • Consolidated EBITDA for FY25 surged to ₹164 crores, a remarkable 485% increase from ₹3 crores in FY24, with EBITDA margin expanding to 13%.

  • Specialty Polymers business segment saw strong growth of 72% in revenue and a 164% rise in EBIT for FY25, driven by demand for marquee products MB03 and Innovative PBT.

  • The film segment recorded a healthy 15% increase in FY25 revenue, with improved margin profile due to sustained demand growth and a larger portion of high-margin value-added films.

  • Net debt to EBITDA improved substantially to 3.61, and the company maintains adequate working capital limits with current ratios of 1.71 for EIL and 1.68 for EFTL.

Concerns

  • Ester Filmtech's Q4 FY25 EBITDA was adversely impacted by a foreign exchange fluctuation of ₹7.1 crores on foreign currency loans, with a full FY impact of ₹4 crores.

  • Profitability in the film segment was affected by a surge in imports from China and Thailand at predatory pricing, leading to a ₹10/Kg drop in value addition from December to March quarter.

  • Management noted that while current trends are slightly better, they are not yet back to December quarter numbers for film segment profitability.

Key financials

  1. Consolidated Total Income ₹1,298 Cr
  2. Consolidated EBITDA ₹164 Cr +4,850%YoY
  3. Consolidated EBITDA Margin 13%
  4. Consolidated PAT ₹14 Cr
  5. Standalone Total Income ₹1,085 Cr +23%YoY
  6. Standalone EBITDA ₹134 Cr +485%YoY
  7. Standalone EBITDA Margin 12%
  8. Standalone PAT ₹41 Cr

What they filed

Q1 FY27: revenue up 21.5%, net profit up 50.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue298 275 258 279 260 −13%250 −9%256 −1%339 +22%
EBITDA32 42 33 26 11 −66%10 −76%24 −27%32 +23%
Net profit12 19 12 10 -5 −142%-5 −126%4 −67%15 +50%
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.

Segment breakdown

  • Specialty Polymers
    72% Revenue Growth (FY25)164% EBIT Growth (FY25)3,165 metric tons Volume (excl. rPET) (FY25)754 metric tons Volume (excl. rPET) (Q4 FY25)
  • Polyester Films
    15% Revenue Increase (FY25)
  • Ester Filmtech (Subsidiary)
    ₹352 Cr Revenue (FY25)₹31 Cr EBITDA (FY25)9% EBITDA Margin (FY25)₹-26 Cr Net Loss (FY25)
  • rPET
    ₹16 Cr Revenue (FY25)1,486 metric tons Volume (FY25)

Order book

low confidence
The company notes sustained growth in demand for its products, leading to improved profitability and capacity utilization. While not a traditional 'order book' in the capital goods sense, the demand-supply scenario is favorable.

Source: Inferred

Capital allocation

high confidence
  • Capex ₹110 Cr
    • rPET capacity enhancement (20,000 TPA production line in Hyderabad) ₹50 Cr
    • Sustenance, maintenance, and quality improvement of assets ₹60 Cr
    We are only doing CAPEX, which is required for sustenance and maintenance and improvement in quality of the assets. And of course, which includes about a Rs. 50 crore investment in rPET, which is going to be commissioned in August in Hyderabad. So including that, our total capital outlay for this year is about Rs. 110 to Rs. 120 crores.
  • Debt Net ₹591 Cr · 3.6× EBITDA
    On a consolidated basis, net debt was Rs. 591 crore which as a multiple of EBITDA stood at 3.61, a substantial improvement as compared to 31st March 2024. ... Exchange fluctuation is an account of reinstatement of foreign currency liability as on 31st March 2025. For the full year, the subsidiary's income stood at Rs. 352 crore as compared to Rs. 281 crore during FY'24, which is a 25% increase on a YOY basis. Company could earn EBITDA of Rs. 31 crore as compared to a loss of Rs. 19 crore during FY'24, translating into an EBITDA margin of 9%. Ester Filmtech recorded a lower loss of Rs. 26 crore compared to a loss of Rs. 78 crore incurred in FY'24.
  • M&A Ester Loop Infinite Technologies Private Limited (JV with Loop Industries Inc.) Joint venture · Announced · Consideration ₹[object Object] (equity)

    To serve the growing demand emerging from PWMR and leverage Loop Industries' technology for rPET.

    Total CAPEX outlay expected at $175-180 million, with Ester's equity contribution around Rs. 250-255 crores.

    With regards to our 50-50 joint venture with Loop Industries Inc., we are pleased to report that the execution of our joint venture plans is advancing according to established timelines. ... So the total CAPEX outlay is expected at about $175 to $180 million. ... So approximately both Ester and Loop will be investing about Rs. 250- Rs. 255 crores as equity, both of us. Each Rs. 255 crores will be the investment from Ester and Rs. 255 crores will be the investment from Loop in terms of equity. The balance will be debt which will be raised by the joint venture Company which is called Ester Loop Infinite Technologies Private Limited.
  • Liquidity Liquidity disclosed EIL current ratio 1.71, EFTL current ratio 1.68. Both companies have adequate limits to sustain budgeted enhanced operations.
    Liquidity of EIL and EFTL as defined by current ratio stands at 1.71 and 1.68 respectively.

Guidance & targets

Revenue

  • Consolidated Total Income Revenue · FY26 · Medium confidence ₹1,450-1,500 crores
    Yes, we close the Financial Year '25 with a consolidated turnover of about Rs. 1100 crores. We are expecting anything between Rs. 1450 to Rs. 1500 crores in FY '25-'26.

    — Pradeep Rustagi

  • Specialty Polymer Revenue Revenue · FY26 · Medium confidence ₹220-230 crores

    From ₹170 crores (FY25) today

    We gave a guidance for FY'26. The consolidated turnover will be in the region of about Rs. 1,500 crores for FY'26. Out of which, the specialty polymer is expected to grow by about 25%, so we close this year at Rs. 175 crores so add another Rs. 40 to Rs. 50 crores in specialty polymer business so we should be at about Rs. 220 to Rs. 230 crores in that ballpark for FY'26.

    — Arvind Singhania

Profitability

  • Consolidated EBITDA Margin Profitability · FY26 · Medium confidence 13-16%
    So EBITDA margins should be in the range of about 13% to 16% for the Company.

    — Pradeep Rustagi

Growth

  • Specialty Polymer Business CAGR Growth · year-on-year · High confidence 25-30%
    Well, peak can be anything, but we are targeting a growth, CAGR growth of 25% to 30% in specialty polymer business year-on-year.

    — Arvind Singhania

Product Mix

  • Value-added Film Sales as % of Production Product Mix · FY26 · High confidence 27-30%

    From 23% (FY25) today

    For the film business, we closed FY'25 with 23% of production and in FY'26, we are targeting anything between 27% to 30% value added product sales.

    — Arvind Singhania

Capacity Utilization

  • Film Segment Capacity Utilization Capacity Utilization · FY26 · High confidence 85% plus

    From 70% (FY25) today

    I think FY'26 will see a substantial improvement in capacity utilization, I think it will be in the 85% plus.

    — Arvind Singhania

Operations

  • rPET Production Line Operational Operations · August 2025 · High confidence Operational

    From Under construction today

    To serve the growing demand emerging from PWMR, we are enhancing our rPET capacity by putting up a production line of 20,000 tons per annum in Hyderabad, which is expected to be operational by August 2025.

    — Arvind Singhania

Joint Venture

  • Ester Loop Infinite Technologies JV Operational Joint Venture · H2 calendar year '27 · High confidence Operational

    From Under planning/construction today

    We are diligently pursuing various activities related to implementation of the project. ... and so we are progressing very well and we hope to start in the second half of calendar year '27.

    — Arvind Singhania

Sustainability

  • Renewable Power Usage Sustainability · Q1/Q2 calendar year '26 · High confidence 60-70%
    By the first or second quarter of calendar year '26, both our plants should be using about 60% to 70% renewable power sources for the use of power.

    — Arvind Singhania

  • Third-Party ESG Assessment Sustainability · Coming years · Medium confidence Will be doing

    From Not yet today

    Not yet. ... Yes, we will be doing that.

    — Arvind Singhania

What to watch in Q1 FY26

Film segment value addition/margin recovery

Next quarter
Current ₹26/Kg (March quarter)
Target ₹30-35/Kg (12 micron plain basis)

Why it matters

Recovery of film margins is crucial for overall profitability, especially given the impact of predatory imports in Q4 FY25.

Going forward, this will be maintained at about Rs. 30 to Rs. 35 gross value addition going forward on a 12 micron plain basis.

Risks & concerns

  • Predatory pricing from imports (China and Thailand)

    high

    Surge in imports at unremunerative pricing led to correction in domestic market pricing and a ₹10/Kg drop in value addition for films. Management is taking steps to protect interests and engaging government.

    Management acknowledged

  • Foreign exchange fluctuation

    medium

    Adversely impacted Ester Filmtech's Q4 FY25 EBITDA by ₹7.1 crores and full FY25 by ₹4 crores due to foreign currency loan reinstatement.

    Management acknowledged

  • Potential for new capacity additions by competitors

    low

    While competitors like Polyplex and Jindal Poly have announced expansions, management believes no new capacity will come online for 2-2.5 years, and domestic demand growth (10-12% p.a.) will absorb future capacity, preventing a glut like 2023-24.

    Analyst downplayed

  • Tariff war between US and India

    low

    At the current 10% tariff level, the effect is marginal for Ester. US exposure is 5-7% of overall sales, all in specialty films, allowing for pricing power to recover impact up to 10%.

    Analyst downplayed

Q&A highlights

6 direct
Impact of predatory imports from China and Thailand on film margins and management's response. Direct
Okay, so one of the main reasons was that there was a surge in imports from China and Thailand at predatory pricing, at very, very unremunerative pricing. And that is the reason we had to, there was a correction in the pricing in the domestic market for us as well. But we are taking adequate steps to protect our interest because these prices are unremunerative, they are dumping prices, they are dumping and therefore we are now moving to protect our interest in the domestic market and we are moving the government to address this situation.

This question directly addresses the primary reason for margin pressure in the film segment and outlines management's strategy to counter it, including government intervention.

Asked by Saket Kapoor

Current and future capacity utilization levels for the film business. Direct
I think now we are seeing a far more balanced demand supply scenario and we expect the utilization levels to be at much, higher levels that we have seen in FY'25. I think FY'26 will see a substantial improvement in capacity utilization, I think it will be in the 85% plus.

Capacity utilization is a key driver for profitability in manufacturing. Management provides a clear target for FY26, indicating confidence in demand recovery.

Asked by Saket Kapoor

Details of the CAPEX plan for the current year, including rPET investment. Direct
So we are going to be, we're not adding any capacity, no major, no capacity expansion is taking place. We are only doing CAPEX, which is required for sustenance and maintenance and improvement in quality of the assets. And of course, which includes about a Rs. 50 crore investment in rPET, which is going to be commissioned in August in Hyderabad. So including that, our total capital outlay for this year is about Rs. 110 to Rs. 120 crores.

Provides clarity on the nature and scale of current year's capital expenditure, distinguishing between maintenance and strategic rPET expansion.

Asked by Saket Kapoor

Progress and funding details of the joint venture with Loop Industries Inc. Direct
That is a joint venture. It's a 50-50 joint venture between Ester Industries and Loop Industries of Canada. So the total CAPEX outlay is expected at about $175 to $180 million. ... So approximately both Ester and Loop will be investing about Rs. 250- Rs. 255 crores as equity, both of us.

Crucial details about a significant strategic investment, including total outlay, equity contribution, and debt-equity structure, which impacts future growth and financial leverage.

Asked by Saransh Gupta

Management's view on competitor capacity expansion and its impact on the market. Direct
So first of all, please note that no more new capacity is coming up for the next 2 to 2.5 years. By the time the Polyplex expansion will come, there will be a need for new capacity because the demand growth in the domestic market is very, very healthy and in our opinion, it is at around 10% to 12% per annum. So there will be a need for capacity. I don't think going forward that there will be a surge in capacity like what we saw in '23, '24.

Addresses a key industry concern about oversupply and its potential impact on margins, with management providing a reassuring long-term perspective based on demand growth and prudent capacity additions.

Asked by Deepak Malhotra

Sustainability roadmap, carbon footprint reduction, and ESG assessment plans. Direct
So sustainability is at the forefront of our business plan and our objectives. So we are addressing it in many ways. As far as even our products go, we are working towards sustainable solutions for our customers. And on top of that, we are now venturing into renewable power for both our facilities. So hopefully by the first or second quarter of calendar year '26, both our plants should be using about 60% to 70% renewable power sources for the use of power.

Highlights the company's commitment to ESG, including specific targets for renewable energy adoption and plans for third-party assessment, which is increasingly important for investors.

Asked by Sana

3 min read 6 chapters

Detailed narrative

Strong Financial Turnaround in FY25

Ester Industries reported a robust financial performance for Q4 and full FY25, marking a significant turnaround. Consolidated total income for FY25 reached ₹1,298 crores. Consolidated EBITDA surged by an impressive 485% YoY to ₹164 crores from ₹3 crores in FY24, with the EBITDA margin expanding to 13%. The company also returned to profitability with a consolidated PAT of ₹14 crores in FY25, compared to a loss of ₹121 crores in the previous year.

Segmental Performance Highlights

Both key business segments contributed to the strong performance. The Specialty Polymers business segment demonstrated exceptional growth, with revenue increasing by 72% and EBIT rising by 164% in FY25. This growth was primarily driven by strong demand for marquee products like MB03 and Innovative PBT. The film segment also recorded a healthy 15% increase in revenue for FY25, benefiting from sustained demand growth and an improved product mix towards higher-margin value-added films, which constituted 23% of production in FY25.

Ester Filmtech's Performance and Challenges

The wholly-owned subsidiary, Ester Filmtech Limited (EFTL), generated revenues of ₹352 crores in FY25, a 25% increase over FY24. EFTL's EBITDA for FY25 was ₹31 crores, with a 9% margin. However, its Q4 FY25 EBITDA was adversely impacted by a ₹7.1 crore foreign exchange fluctuation on a Euro-denominated loan, with the full FY impact being ₹4 crores. The subsidiary managed to reduce its net loss to ₹26 crores in FY25 from ₹78 crores in FY24, indicating an improving operational trajectory despite the FX headwind.

Strategic Capital Expenditure and Joint Venture

Ester Industries plans a total capital outlay of ₹110-120 crores for FY26, primarily for sustenance, maintenance, and quality improvement. A significant portion, ₹50 crores, is allocated for enhancing rPET capacity by adding a 20,000 TPA production line in Hyderabad, expected to be operational by August 2025. The 50-50 joint venture with Loop Industries Inc. for a total CAPEX of $175-180 million is progressing as per timelines, with Ester's equity contribution of approximately ₹250-255 crores, and is targeted to commence operations in H2 calendar year '27.

Market Dynamics and Competitive Landscape

The domestic polyester film market is estimated at 850,000-900,000 tons per annum, growing at 10-12% annually. While the company faced challenges from predatory imports from China and Thailand in Q4 FY25, leading to a ₹10/Kg drop in value addition, management is engaging the government to address this. Despite competitor capacity expansion announcements, management believes domestic demand growth will absorb new capacity, preventing a significant glut in the next 2-2.5 years. Current film spreads in May 2025 for 12 micron plain are around ₹103.

Sustainability and Future Outlook

Sustainability is a key focus, with plans to adopt renewable power sources for 60-70% of both plants' energy needs by Q1/Q2 calendar year '26. The company also intends to undertake a third-party ESG assessment. For FY26, Ester Industries targets a consolidated total income of ₹1,450-1,500 crores and an EBITDA margin of 13-16%. Specialty Polymers are expected to grow at a CAGR of 25-30%, reaching ₹220-230 crores in revenue, while film segment capacity utilization is projected to exceed 85%.

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