Eveready Inds.

Eveready Industries reported a robust Q3 FY25, with revenue growing 9.4% year-on-year to ₹333.3 crore, up from ₹304.8 crore in the same period last year. This growth was primarily fueled by strong performance in the battery and flashlight segments. The company also achieved a significant 56% increase in PAT for the quarter, reflecting improved operational efficiencies despite a high inflation environment. YTD EBITDA and PAT margins stood at 12.1% and 6.9% respectively, demonstrating consistent profitability improvements.

The alkaline battery segment was a standout performer, achieving an impressive 90.8% revenue growth and a 110% year-on-year volume increase in Q3 FY25. This strong momentum nearly doubled Eveready's market share in alkaline batteries to 11%, driven by robust product propositions, distribution, and consistent marketing efforts. To further capitalize on this growth, the company is investing ₹180 crore in a new greenfield production facility in Jammu, expected to commence commercial production by the end of calendar year 2025. This facility is projected to yield an 8-10% margin improvement for alkaline products and generate ₹100 crore in annualized revenue in its first year, potentially scaling up to ₹400 crore.

The flashlight segment also contributed positively, with overall revenues growing by 9.6% in Q3 FY25. Rechargeable flashlights continue to gain traction, offsetting declines in battery-operated models, and now constitute about 30% of the market. A significant regulatory development is the gazetting of mandatory BIS certification for all flashlight products, which is expected to weed out unethical practices from the unorganized market and benefit organized players like Eveready, potentially leading to an immediate uptick in growth.

The lighting segment experienced marginal growth in volumes, but this was offset by continued market-wide price erosion, though its impact is gradually lessening. Eveready is expanding its product portfolio and presence in alternative channels such as modern trade, e-commerce, and quick commerce. The company is also building its presence in professional luminaires and strengthening its electrical outlet channel to showcase premium products, aiming to double its active distributors in the short run.

Eveready remains committed to debt reduction, having paid ₹80 crore last year and ₹35-40 crore this year. The current debt stands at approximately ₹245 crore, with a year-end target of ₹225-230 crore, excluding the new project cost. The ₹180 crore Jammu plant capex will be funded 25% through internal accruals and 75% through bank financing, potentially raising the peak debt level to ₹325-330 crore during the project implementation phase.

The company maintained its gross margin within the targeted range despite increased raw material costs, with Q3 FY25 gross margin at 43.7%. Management aspires for an overall gross margin of 40% and expects it to revert to 45% levels in the next quarter or so. Advertising and promotion (A&P) expenditure stood at 11% of revenue in Q3 FY25, reflecting a focus on consistent communication and market activation. This spend is expected to remain at 10-11% for the next couple of quarters, with a potential shift to absolute value spending as revenue scales.

The legal case regarding the CCI penalty of ₹170 crore is ongoing, with the next hearing deferred to May 5th. Management reiterated its commitment to robustly defend its position. Additionally, the Managing Director, Mr. Suvamoy Saha, discussed his reappointment for six months until September 2025, emphasizing his focus on consolidating recent gains and ensuring a smooth succession plan during this period.