TCPL Packaging

TCPL Packaging delivered a robust Q3 FY25, with consolidated revenues growing by 32% year-on-year to ₹480 crore. This strong performance was supported by both the paperboard and flexible packaging segments, benefiting from a favorable product mix and enhanced operational efficiencies. EBITDA increased by 29% to ₹71 crore, maintaining a steady margin of 15%, while PBT surged by 71% to ₹48 crore. The company also reported significant year-on-year growth in PAT (101%) and cash profits (46%), partly aided by a weaker base in the corresponding quarter last year.

The company is advancing its strategic expansion with the commissioning of a new greenfield facility near Chennai, dedicated to paperboard cartons, within the current quarter (Q3 FY25). This facility, while initially adding less than 10% to overall capacity, offers significant room for future growth with lower incremental capital expenditure. Additionally, TCPL has entered an exclusive manufacturing agreement with Ventit for innovative ventilated pizza box technology, aiming to penetrate the fast-growing food delivery segment and leverage its pan-India manufacturing presence to serve national QSR chains.

For FY25, TCPL Packaging anticipates a capital expenditure of approximately ₹150 crore, primarily focused on brownfield expansions, increasing factory area, and upgrading to sustainable boilers. The company's overall capacity utilization currently stands at over 80%, indicating efficient asset deployment and some headroom for further growth. Management stated a preference for funding future opportunities through internal accruals and maintaining a minimum return on capital above 20% for new projects.

The Creative Offset subsidiary, focused on electronics packaging, is currently at an EBITDA breakeven with a small cash loss, but is expected to improve as utilization increases. Management projects Creative's revenue to be around ₹50 crore for FY25, with aspirations for very high double-digit growth in FY26, contingent on market conditions. The electronics industry faced headwinds in 2024 with moderated growth, and the liquor segment continues to experience decartonization, though TCPL has offset these impacts through new customer development and market share gains.

TCPL's export performance continues to be strong, driven by established reputation, quality, and service rather than just price competitiveness. The company exports to diverse geographies including Europe, Middle East, Africa, USA, North America, and Southeast Asia. Domestically, while consumer demand has been weak, management is optimistic about a potential rebound, citing recent tax cuts and moderating inflation as positive drivers for future consumer demand growth, which would benefit the industry.

The company emphasizes continuous innovation and product diversification, actively exploring 5-10 new projects at any given time. TCPL received five IFCA Awards 2024 for excellence in packaging design, reinforcing its commitment to cutting-edge and sustainable solutions. Management highlighted the long-term importance of sustainable packaging, noting that while the 'sustainability story has sort of taken a backseat' recently, it is expected to be a major theme in the coming years.