Rajshree Polypack Q1 FY27 earnings call

Rajshree Polypack Limited delivered robust financial results for Q1 FY27, with revenue from operations growing 24.72% year-on-year to INR 102.91 crores. EBITDA increased by 36.75% to INR 16.52 crores, leading to an improved EBITDA margin of 16.05% compared to 14.64% in Q1 FY26. Profit after tax saw a significant jump of 76.83% to INR 7.25 crores, with PAT margins expanding to 7.04% from 4.97%.

The domestic business showed strong recovery, with revenue increasing from INR 69.12 crores in Q1 FY26 to INR 91.19 crores in Q1 FY27, while export revenue remained stable at INR 11.72 crores despite geopolitical uncertainties. Packaging Products continued as the largest revenue contributor, with an EBITDA margin of 16-17%. The Injection Moulding segment, with an EBITDA margin of 13-14%, saw its revenue contribution temporarily decline from 15.6% to 12.3% due to geopolitical issues affecting exports, which typically account for 60% of its sales.

The company expanded its flaring capacity from 1,275 lakh units per annum to 1,675 lakh units per annum. Injection Moulding capacity reached 5,800 metric tons, following an addition of 1,000 metric tons, marking a 5.8x increase since FY23. Current utilization levels are 80-85% for Packaging and Extrusion, and 55-60% for Injection Moulding. Management believes the existing setup can support revenue of INR 420-430 crores, achievable within 1-1.5 years.

Rajshree Polypack is focused on strengthening customer relationships, expanding its product portfolio, and investing in manufacturing capabilities. The company has procured land in Eastern India for a new facility, with initial Phase 1 investment estimated at INR 25-30 crores, expected to generate INR 80-100 crores in revenue. This new facility, planned for FY28, will combine both Packaging and Injection Moulding capabilities.

The company is implementing a group captive wind-solar arrangement of approximately 1.9 megawatt, expected to be commissioned in October 2026. This initiative is projected to meet nearly 30% of the company's energy requirements and generate annual savings of around INR 1.75 crores, contributing to operational efficiency and environmental goals.

The Olive Ecopak joint venture, focusing on paper-based food packaging, reported a Q1 FY27 revenue of INR 17.22 crores and an EBITDA of INR 4.61 crores. Management guided for FY27 revenue of INR 90 +/- 5 crores, aiming for at least PBT breakeven. For FY28, the JV targets revenue of INR 140-150 crores, indicating strong growth prospects in this new segment.

Raw material prices, particularly polypropylene, experienced volatility during the quarter, initially dropping by 10% but then increasing due to geopolitical tensions. This volatility significantly impacted gross margins, which declined to 38.3%. Management expects raw material prices to stabilize within one to two months, which should ideally lead to a recovery in gross margins towards the 42.5-43.5% range seen in previous quarters.

Despite future expansion plans, management intends to reduce debt by 15-20% in FY27, with an estimated repayment of INR 10-15 crores. Future expansion will be funded through a combination of internal accruals and long-term debt, rather than solely relying on working capital.