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    Huhtamaki India

    HUHTAMAKI
    Capital Goods·25 Jul 2025
    Management Summary

    Huhtamaki India reported a mixed Q2 CY25, with net sales declining 4.7% YoY to ₹5.9 billion amidst subdued demand and flat volumes. However, strong cost control and an improved product mix led to a 28.7% YoY increase in EBITDA to ₹493 million and a 55% YoY rise in PBT (ex-exceptional items) to ₹331 million. The company maintained a comfortable debt-to-equity ratio and strong liquidity, despite a less favorable working capital position due to higher inventory and receivables.

    Highlights

    6

    • EBITDA grew 28.7% YoY to ₹493 million, reflecting healthy business performance and operating leverage.

    • PBT (excluding exceptional items) increased 55% YoY to ₹331 million.

    • EPS for the quarter stood at ₹3.30, with H1 EPS at ₹6.76.

    • Cost control measures are effectively helping to deliver results.

    • Debt-to-Equity ratio remains comfortable with External Commercial Borrowing (ECB) of ₹1 billion as the sole debt.

    • Liquidity continues to be strong, supported by sizeable, unutilized credit lines and surplus cash deployed in bank deposits and mutual funds yielding over 6.8%.

    Concerns

    5

    • Net sales declined 4.7% YoY to ₹5.9 billion and were slightly lower QoQ.

    • Volume remained flat QoQ and showed a decline YoY.

    • Demand situation remained mixed with urban demand not fully recovered and rural demand driving consumption.

    • Working capital position was less favorable compared to March 2025 and June 2024 due to increased inventory and receivables.

    • BOPP prices increased in double digits in the first half of the year, posing a raw material cost headwind.

    Key financials

    Single quarter

    06 metrics
    1. 01Revenue5,900 Mn-4.7%YoY
    2. 02EBITDA493 Mn+28.7%YoY
    3. 03EBIT362 Mn+37.4%YoY
    4. 04PBT (ex-exceptional)331 Mn+55.0%YoY
    5. 05Net Profit (after exceptional)249 Mn-35.3%YoY

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Debt

    Gross ₹1 billion

    Maturity: Gross debt repayment due in 2027.

    Liquidity

    Liquidity disclosed

    Liquidity continues to be strong, supported by sizeable, unutilized credit lines that remain fully available. Surplus cash is prudently deployed in bank deposits and mutual funds, delivering an average yield exceeding 6.8% during 2025.

    Guidance & targets

    1
    CategoryTargetPriority
    Sustainability
    SBTi targets for Scope 1 and Scope 2 reduction
    aligned with 2023 goals
    		Medium

    Inventory levels

    by end of this year (CY25)
    CurrentHigh, ₹310 crores as of June 2025
    TargetDecent inventory level

    Why it matters

    Optimizing inventory is crucial for improving working capital and reducing the need for provisions.

    So by end of this year, we can have a decent inventory level.

    How to verify

    key_financials.metrics[label='Inventory'] or capital_allocation.liquidity.notes

    Risks & concerns

    7
    RiskSeverity

    Subdued demand and mixed consumer sentiment

    Urban demand not fully recovered, rural demand driving consumption, leading to mixed demand situation. — Management acknowledged

    medium

    External headwinds (unseasonal rains, early monsoon, inflationary pressure)

    These factors impacted overall demand and performance in Q2. — Management acknowledged

    medium

    Volume decline YoY

    Volume remained flat QoQ but declined on a year-on-year basis. — Management acknowledged

    medium

    Working capital deterioration

    Position less favorable due to increased inventory and receivables as of June 2025. — Management acknowledged

    medium

    BOPP price increase

    Double-digit increase in BOPP prices in H1 2025, posing a raw material cost headwind. — Management acknowledged

    medium

    Commodity price volatility

    High-inflation situations can have a lag impact on profitability, and hedging all volatility is difficult. — Management acknowledged

    high

    Market fragmentation and competition

    Low entry barriers have led to a fragmented flexible packaging market, increasing complexity. — Management acknowledged

    medium

    Q&A highlights

    8

    “So I mean it continues into the similar range what we had in the first quarter. So we are trending somewhere between 27% to 30%.”

    Provides insight into the contribution of a key product segment to the company's revenue.

    asked by Dhruv Himani

    2 min read5 chapters

    Detailed Narrative

    01

    Q2 CY25 Performance Overview

    Huhtamaki India experienced a mixed Q2 CY25, with demand remaining subdued due to a slow recovery in urban areas and typical rural consumption patterns. The quarter also faced headwinds from unseasonal rains, an early monsoon, and inflationary pressures. Despite these challenges, the company's strategic cost control measures and efforts to improve product mix helped deliver strong profitability, even as net sales declined.

    02

    Financial Highlights: Profitability Amidst Revenue Decline

    For Q2 CY25, net sales stood at ₹5.9 billion, a 4.7% YoY decrease, and were nearly flat QoQ. However, EBITDA saw a robust 28.7% YoY growth, reaching ₹493 million, though marginally lower by 1% QoQ. EBIT also grew significantly by 37.4% YoY to ₹362 million. Profit Before Tax (excluding exceptional item📎s) increased by 55% YoY to ₹331 million, despite a slight QoQ dip of 2.7%. Net profit after exceptional item📎s and taxes was ₹249 million, with EPS at ₹3.30 for the quarter.

    03

    Strategic Focus on Operational Excellence and Sustainability

    The company continues to emphasize operational efficiencies through its World Class Operations (WCO) Program. Significant improvements in safety records were noted, with reduced incident rates and fire ignition points. Huhtamaki India is also committed to sustainability, expecting to sign SBTi targets in 2025 aligned with 2023 goals for Scope 1 and Scope 2 reductions, and is pursuing projects for electrical power reduction, water conservation, and waste reduction.

    04

    Market Dynamics and Product Strategy

    The market signals were mixed, with smaller players gaining traction in Q1 2025, impacting larger FMCG companies and, consequently, Huhtamaki. The company is focusing on high-value business and product mix improvement. Its 'blueloop' segment contributes 27-30% of revenue. The company is also leveraging its global presence and capabilities to offer future-ready and sustainable packaging solutions, including mono-polymer, polyolefin, and paper-based options, and sees pet food as a growing opportunity.

    05

    Working Capital and Debt Management

    The company's debt-to-equity ratio remains comfortable, with the External Commercial Borrowing (ECB) of ₹1 billion being the sole debt, due for repayment in 2027. Finance costs declined 39% YoY due to partial ECB retirement. However, the working capital position as of June 2025 was less favorable compared to previous periods, primarily driven by an increase in inventory and receivables. Management acknowledged high inventory levels (₹310 crores) and aims to achieve a 'decent inventory level' by year-end.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.