Huhtamaki India Limited — Q2 FY26 earnings call

Call held 15 Oct 2025

Management summary

Huhtamaki India reported a strong Q3 CY25 with significant profitability improvements, driven by favorable sales mix and operational efficiencies, despite a slight decline in year-on-year revenue and flattish volumes. PBT and Net Profit saw substantial growth, and EBITDA surpassed 10%. The company also highlighted an incident-free quarter and ongoing efforts in sustainability and debt reduction.

Highlights

  • Profit Before Tax (PBT) before exceptional items surged to INR492 million in Q3 CY25, marking a 3.5x increase over INR143 million in Q3 CY24, and a 50% increase QoQ from INR331 million in Q2 CY25.

  • EBITDA for Q3 CY25 exceeded 10%, a significant improvement from previous quarters.

  • EBIT percentage improved sequentially to 8.6% in Q3 CY25, compared to 3% in Q3 CY24, 6.3% in Q1 CY25, and 6.1% in Q2 CY25.

  • Net profit after exceptional items and income tax stood at INR368 million in Q3 CY25, significantly up from INR117 million in Q3 CY24 and INR249 million in Q2 CY25.

  • The company reported an incident-free quarter (golden quarter) for Q3 CY25, with no lost time incidents in the preceding 90 days across its sites.

Concerns

  • Overall volumes remained broadly stable compared to the preceding quarter but declined relative to the same quarter last year.

  • Revenue for Q3 CY25 stood at INR6 billion, a 4.7% decline compared to INR6.3 billion in Q3 CY24.

  • The blueloop (recyclable products) segment is currently in a 'transition stage,' making it 'more challenging' to generate better money due to start-up costs and wastages.

Key financials

  1. Revenue 6,000 Mn -4.7%YoY
  2. PBT (pre-exceptional) 492 Mn +244%YoY
  3. EBIT Margin 8.6%
  4. Net Profit (post-tax & exceptional) 368 Mn +214.5%YoY
  5. EPS ₹4.87

What they filed

Q1 FY27: revenue up 22.5%, net profit up 76.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue652 619 610 612 625 −4%623 +1%613 +0%750 +23%
EBITDA18 26 39 43 55 +206%54 +108%40 +3%75 +74%
Net profit12 12 26 25 37 +208%30 +150%26 +0%44 +76%
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.

Capital allocation

medium confidence
  • Debt Gross ₹1,000 Mn
    • Repayment Repaid INR 1 billion of ECB in September 2024, reducing total ECB from INR 2 billion to INR 1 billion. ₹1,000 Mn
    So it is a reduction into debt. If you look at the last year start of the last year, we had INR2 billion ECB. And out of that, one instalment of INR1 billion we have repaid into September '24. And in this year started off this year with a INR1 billion ECB only. So it is a reduction into the debt only. ... Total INR2 billion was there last year, INR1 billion was repaid into September '24. Now we have outstanding of INR1 billion, INR100 crores. INR100 crores is outstanding as of date.

Guidance & targets

Volume

  • Volume Growth Volume · Ongoing · Low confidence Grow with the industry or market
    Really, it's not it's difficult to give, but I think the idea is to at least grow with the industry or the market.

    — Dhananjay Salunkhe

  • Volume Growth (QoQ/YoY) Volume · Q4 CY25 · Low confidence Better volume growth
    So from what you are seeing today, volume growth should be better in this quarter as compared to last quarter or corresponding quarter of the previous year, sir? I would say, yes.

    — Dhananjay Salunkhe

What to watch in Q3 FY26

Top-line growth improvement

Next quarter and beyond
Current Volume broadly stable QoQ, declined YoY
Target Improved top-line growth

Why it matters

Management's stated endeavor is to improve and sustain top-line growth, which is crucial for overall business expansion.

The question is that how we are going to focus on improving our growth on the top line as well. So all these things can then improve even further. So our endeavour is that how we are going to sustain and improve further.

Risks & concerns

  • Short-term volume growth challenges

    medium

    The company faces a 'short-term challenge in terms of apple-to-apple volume growth' due to its strategic focus on higher-value products over low-priced, commoditized segments.

    Management acknowledged

  • Profitability challenges in Blueloop segment

    medium

    The Blueloop (recyclable products) segment is in a 'transition stage' with high start-up costs and wastages, making it 'more challenging' to generate better money currently.

    Management acknowledged

  • Regulatory clarity for recyclability/sustainability

    medium

    The regulatory landscape for recyclability and sustainability in India still requires more clarity compared to developed markets, which impacts the speed of change.

    Management acknowledged

  • Short-term uncertainty from GST reforms

    low

    September 2025 saw some uncertainty due to GST announcements, causing customers to put printing orders on hold, though a positive traction was observed post-clarification.

    Management acknowledged

Q&A highlights

4 direct, 2 evasive
Volume growth vs. industry trends and company's strategy Partial
So volume growth is at, I would say, very low-priced products, and that is where the lot of commoditization is there. So when it comes to what we offer and what is our focus area is basically where we want to play, and that is where we are focusing on. So yes, there is a short-term challenge in terms of apple-to-apple volume growth.

Analyst questioned why Huhtamaki's volume growth was flattish despite the flexible packaging industry growing 9-10% in volume, highlighting the company's strategic choice to focus on higher-value products over low-priced, commoditized volumes.

Asked by Aditya Khetan

Sustainability of current margin improvements and cost reductions Direct
So definitely, what is the project which we are driving from the last one, one and a half years, those are coming into a line right now. So we believe that most of the programs on the cost reductions, optimizations and all are going to remain.

Analyst sought clarity on whether the significant margin improvements were structural or temporary, with management confirming they are largely structural due to ongoing cost reduction and optimization programs.

Asked by Aditya Khetan

Reduction in finance costs and outstanding debt Direct
So it is a reduction into debt. If you look at the last year start of the last year, we had INR2 billion ECB. And out of that, one instalment of INR1 billion we have repaid into September '24. And in this year started off this year with a INR1 billion ECB only. So it is a reduction into the debt only. ... Now we have outstanding of INR1 billion, INR100 crores. INR100 crores is outstanding as of date.

Analyst inquired about the reason for reduced finance costs, leading to management clarifying a INR1 billion debt repayment in September 2024, bringing the outstanding ECB to INR1 billion.

Asked by Raman KV

Impact of GST reduction on FMCG companies and Huhtamaki Direct
So I would say now there is an upgradation of products by consumers, which was actually a trend of a down trading in last couple of years. I think we could see that now there is a trend possibly might reverse to the upgrading. And which both these two, consumptions as well as premiumization, shall help the FMCG companies to really go into a growth mode, which ultimately will be helpful for the packaging companies.

Analyst asked about early signs of increased FMCG volumes due to GST reduction, and management noted a positive trend of consumer upgrading to premium products, which benefits packaging companies.

Asked by Vipulkumar Shah

Margins for Blueloop (sustainable packaging) versus conventional portfolio Partial
So at this moment, the start-up costs, the start-up wastages and all other costs are at least on a very high side. And that's why -- and that's been absorbed by us to really make sure that we really participate in the larger cost, which is introducing the recyclable laminates in the ecosystem. So at this moment, I would say, in fact, it's more challenging for us than actually making better money because we are into a transition stage.

Analyst sought to understand the margin difference between Blueloop and conventional products, with management explaining that Blueloop is currently in a challenging transition stage due to high start-up costs, impacting profitability.

Asked by Vipulkumar Shah

Future volume growth expectations Evasive
I think your questions are really too speculative. And as I said at the start that we do not do this. And even if by chance, we are giving all of you some hints of performance of future, possibly, I would resort to my safe harbor statement that please do not use this for a future indication of a performance.

Analyst pressed for specific volume growth targets for the next few quarters, but management explicitly declined to provide forward-looking numbers, citing company policy and safe harbor statements.

Asked by Harsh Shah

Composition of 'Blueloop' sales (27-30% of revenue) Direct
So 27% to 30% is all products which are recyclable, whether they are produced through blueloop assets or not. So that's the first one. ... we are also having certain intermediate products, and we call it like a blueLite and all, so, which we are trying to offer to our customers the solutions which are also intermediate.

Analyst sought clarification on whether the 27-30% blueloop sales figure represented only premium blueloop products, to which management clarified it includes all recyclable products, including intermediate solutions, not just those from dedicated blueloop assets.

Asked by Rohan Panday

Overall capacity utilization Evasive
Yes. So, again, as we keep on saying that we normally do not discuss the capacity utilizations because we are a complex multi-locational company. So we don't really drill into that much.

Analyst asked for the company's overall capacity utilization, but management declined to provide the figure, citing the complexity of their multi-locational operations.

Asked by Vipulkumar Shah

3 min read 7 chapters

Detailed narrative

Q3 CY25 Performance Overview

Huhtamaki India reported Q3 CY25 revenue of INR6 billion, a 4.7% decline year-on-year from INR6.3 billion, but a 2.2% sequential growth from INR5.9 billion in Q2 CY25. For the nine-month period, revenue totaled INR17.9 billion, down 3.2% from INR18.5 billion in the same period last year. Despite lower volumes, the company achieved significant margin expansion and profit growth, with PBT before exceptional items surging 3.5x year-on-year to INR492 million and net profit after tax reaching INR368 million.

Profitability and Margin Expansion

The company demonstrated strong profitability improvements, with EBIT margin reaching 8.6% in Q3 CY25, a notable increase from 3% in Q3 CY24 and 6.1% in Q2 CY25. EBITDA surpassed 10% for the first time in many quarters, attributed to a favorable sales mix and excellent operational efficiency. Management emphasized that these improvements are largely structural, stemming from cost reduction and optimization programs implemented over the past 1.5 years.

Volume and Sales Mix Strategy

While overall volumes remained flattish sequentially and declined year-on-year, management stated this was a conscious choice to prioritize a 'right mix' of products and customers, focusing on higher-value offerings rather than low-priced, commoditized volumes. This strategy aims to avoid compromising the bottom line, even if it results in short-term challenges for 'apple-to-apple volume growth' compared to the broader industry.

Blueloop and Sustainability Initiatives

The Blueloop (recyclable products) segment contributes 27-30% of the company's total sales, a figure that has remained stable year-on-year. Management acknowledged that this segment is currently in a 'transition stage,' incurring high start-up costs and wastages, making it 'more challenging' to generate better profits. The company is also focusing on new product development in high-barrier structures for personal care and paper-based products, aligning with recyclability and sustainability goals. Additionally, the company achieved an incident-free 'golden quarter' in Q3 CY25, with no lost-time incidents across its sites for 90 days.

GST Impact and Consumer Trends

Following GST reduction announcements in September 2025, the company observed initial uncertainty among customers, leading to some printing orders being put on hold. However, post-clarification, a positive traction was noted. Management highlighted a potential reversal of the 'down-trading' trend, with consumers now upgrading to premium products. This shift towards premiumization and increased consumption is expected to benefit FMCG companies and, consequently, packaging providers like Huhtamaki, as premium products often require more sophisticated packaging.

Capital Structure and Debt Repayment

The company's finance costs remained stable, supported by a reduction in debt. Huhtamaki repaid INR1 billion of its ECB in September 2024, reducing the outstanding ECB from INR2 billion to INR1 billion. This repayment contributed to the stability of the capital structure. Surplus cash was strategically deployed into bank deposits and mutual funds, indicating a healthy liquidity position.

CFO Transition

Mr. Jagdish Agarwal, Executive Director and CFO, announced his departure from Huhtamaki India Limited towards the end of November 2025. Management acknowledged his significant contributions over the past 3.5 years, particularly during a period of significant change and growth for the company. The company expressed confidence in its future trajectory under a dynamic leadership team and strong talent pool.

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