Huhtamaki India

Huhtamaki India reported a Q3 CY25 revenue of INR 6 billion, marking a 4.7% year-on-year decline from INR 6.3 billion in Q3 CY24, though it showed a modest 1.7% growth quarter-on-quarter from INR 5.9 billion in Q2 CY25. Despite the revenue dip and lower volumes, the company achieved significant profitability improvements. Profit Before Tax (PBT) surged 3.5x to INR 492 million in Q3 CY25 from INR 143 million in Q3 CY24, and Net Profit (post-tax) increased by 214.5% to INR 368 million from INR 117 million year-on-year.

The substantial margin expansion was primarily driven by a favorable sales mix and excellent operational execution, including productivity and efficiency improvements across its manufacturing sites. The EBIT percentage improved significantly to 8.6% in Q3 CY25, up from 3% in Q3 CY24 and 6.1% in Q2 CY25, with EBITDA exceeding 10%. Management confirmed these gains are structural, stemming from long-term projects and cost reduction programs implemented over the past 1.5 years, indicating their sustainability.

The company is strategically refining its product and customer portfolio, focusing on high-quality business and 'sweet spots' that align with its strengths, leading to an improved revenue mix. The Blueloop portfolio, comprising 27-30% of total sales (all recyclable products), is a strategic investment for the future, aiming for 100% recyclable products by 2030. However, this segment is currently in a 'transition stage' with high start-up costs and regulatory uncertainties, making it more challenging for immediate profitability.

Management observed positive signs from recent GST reforms, anticipating increased consumption and premiumization within the FMCG sector. Consumers are reportedly upgrading to premium products, which require more sophisticated packaging with value-added features, creating a 'ripple effect' that benefits packaging companies. This trend is expected to help FMCG companies achieve growth, which will ultimately support the packaging industry.

Huhtamaki India reduced its debt by INR 1 billion in September 2024, bringing the outstanding ECB to INR 1 billion. The company maintains a stable debt-to-equity ratio and strong liquidity, supported by substantial unutilized credit lines and a steady working capital position. Surplus cash is strategically deployed into bank deposits and mutual funds, generating an average yield exceeding 6%.

The company achieved a significant milestone in Q3 CY25 by reporting an incident-free quarter, with no lost time incidents across its nine locations, ten sites, and three offices for the preceding 90 days. Huhtamaki India also highlighted continuous progress in renewable energy adoption, reduction of water consumption, and community support initiatives, underscoring its commitment to sustainability and operational excellence.

Mr. Jagdish Agarwal, Executive Director and Chief Financial Officer, announced his departure from the company, effective next month. Mr. Agarwal has been instrumental in leading the company's financial performance during a period of significant change and growth, and management acknowledged his substantial contributions over the past three-plus years.