UFLEX Limited

Uflex reported a Q3 FY26 revenue of ₹36,329 million, a 3.8% decline year-on-year, primarily due to volume softness and import-related pricing pressures. Despite this, the company achieved a normalized EBITDA of ₹4,395 million, marking a 12.8% sequential growth. The normalized EBITDA margin expanded by 200 basis points quarter-on-quarter to 12.1%, reflecting improved operational discipline. Profit After Tax (PAT) for the quarter stood at ₹361 million, up 34% sequentially, with EPS at ₹5.01 per share.

For the first nine months of FY26, Uflex's revenue reached ₹114,157 million, a modest 0.8% increase year-on-year. Normalized EBITDA for this period was ₹13,000 million, down 9.6% YoY, with a margin of 11.4%. A significant turnaround was observed in PAT, which moved to a positive ₹1,210 million compared to a loss of ₹263 million in the corresponding period last year, supported by lower exceptional impacts. This indicates a recovery trajectory despite earlier challenges.

The aseptic liquid packaging business demonstrated steady growth, with volumes increasing by 2.3% year-on-year in Q3 FY26 to 1.8 billion packs. For the nine-month period, volumes grew 4.4% to 5.9 billion packs. The company expects this momentum to continue, projecting a total sales volume of approximately 8.5 billion packs for the current fiscal year (FY26). This growth is reinforced by the nearing commissioning of a 12 billion packs expansion in Egypt and an extra 5 billion packs capacity in India, expected to drive significant improvement in FY27.

Uflex is on the verge of commissioning three major projects: a 12 billion packs aseptic liquid packaging facility in Egypt, a 40,000 tons recycling plant in India, and an 80 billion bag production capacity woven polypropylene bag plant in Mexico. These projects are expected to be operational within the next 90 days. Management anticipates these new capacities, coupled with improving market conditions, will significantly boost EBITDA and lead to a moderation in the company's leverage ratio, which is currently perceived to be at its peak.

The packaging films business faced headwinds in Q3 FY26 due to US tariff-related uncertainties and a reorientation of exports, leading to supply gluts and pricing pressure in European and MENA markets. However, management noted signs of reversal, with BOPET film prices recovering from ₹90/kg to around ₹110/kg and BOPP film prices improving to ₹120-121/kg. The company expects capacity utilization in overseas plants like Poland, Hungary, and Mexico to normalize to over 80% in the coming fiscal year.

The company's net debt stands at ₹8,000 crore, with current maturities for the next year estimated at ₹1,450-1,500 crore. Management believes the leverage ratio has peaked and expects it to improve with enhanced EBITDA from new projects. The blended cost of funds is currently around 6.9-7% and is anticipated to decrease further. Remaining capex of approximately ₹1,200 crore, combined with debt repayments, is expected to largely offset each other, preventing significant additions to the overall debt.

Uflex is strategically focusing on value-added products within its packaging film portfolio, including metallized ALOx and ultra-high barrier films, which offer better realizations. The company is also a key player in Extended Producer Responsibility (EPR) initiatives, with significant investments in recycling capacity. While EPR guidelines have been extended, Uflex expects to be an early beneficiary of their eventual implementation, driving increased utilization and potentially improving margins through its renewable mix.