Eveready Industries India Q1 FY27 earnings call

Eveready Industries India Limited reported a strong Q1 FY27, achieving INR 407.7 crores in revenue, a 9% year-on-year growth, marking its seventh consecutive quarter of revenue expansion. EBITDA stood at INR 61.5 crores, translating to a healthy 15.1% margin, and Profit After Tax (PAT) increased by 22.3% year-on-year to INR 37 crores. This performance was delivered despite a dynamic operating environment characterized by geopolitical uncertainty^🌐, supply chain disruption^🌐s, and inflationary pressures on key commodities like zinc, which remained elevated at around $3,500 per ton.

The battery business was a key growth driver, with an 11.9% revenue increase. The alkaline battery portfolio demonstrated exceptional performance, achieving 48% volume growth and expanding its market share within the alkaline sector to 18%. A significant milestone was the commencement of commercial production at the Jammu facility on May 29, which is expected to yield a 10% gross margin increment after stabilization. This plant strengthens manufacturing capacity, improves operating leverage, and opens new opportunities in white labelling and export markets, supporting the company's ambition to achieve an alkaline market share of 25-30% within two years.

The overall flashlight business experienced a 6.7% revenue decline, primarily due to soft demand for conventional battery-operated flashlights and a delayed monsoon. However, the rechargeable flashlight portfolio showed resilience, delivering over 20% revenue growth, supported by product innovations like the hybrid flashlight and the SHOR animal alarm torch. In contrast, the lighting business recorded an encouraging 13.7% growth, benefiting from stabilizing pricing and healthy volume growth in higher-margin categories such as emergency LED bulbs and electrical accessories, with the segment achieving break-even in Q1 FY27.

Innovation remains central to Eveready's strategy, evidenced by the launch of India's first portable liquid mosquito vaporizer and the Xtrabright emergency LED bulb. The company is actively expanding its distribution network across traditional and emerging channels, including quick-commerce and e-commerce, which showed strong growth. The electrical accessories portfolio, including insulation tapes, wires, and MCBs, is also gaining momentum, with management targeting to double revenue and achieve 1-2% market share in wires and MCBs from last financial year.

The company is navigating a complex regulatory environment, particularly concerning BIS norms for flashlights and Extended Producer Responsibility (EPR) compliance. While BIS implementation is complete, market absorption by non-branded players is being monitored. EPR compliance presents operational and pricing challenges, with the company actively engaging with the Ministry of Environment and Climate Change for clarity. To counter elevated input costs, Eveready implemented calibrated pricing actions and focused on operational efficiencies, which were crucial in protecting margins, and may undertake further price corrections if commodity inflation persists.

Eveready's current debt stands at approximately INR 165 crores. Despite significant investments, including over INR 200 crores in the new Jammu plant, the company aims to become debt-free within the next 4-5 quarters. This target is supported by healthy operating cash flows and proceeds from asset rationalization, including the ongoing sale of the second plot of the Noida plant. Management indicated no immediate need for external fund infusion, emphasizing a focus on internal accruals and an asset-light model for future growth.