EPL conducted conference call on 08 August 2023 to discuss the financial results and performance of the company for the quarter ended June 2023. Mr. Anand Kripalu – MD & Global CEO, Mr. M.R. Ramasamy – COO and Mr. Amit Jain – CFO along with other senior management of the company addressed the call

Highlights of the Concall

• The company mentioned that operating environment continues to steadily move in the right direction in the last quarter with input costs stabilizing.

• Polymer and foil USD prices have declined from Q1FY23 and Q4FY22 level respectively. However, the prices remain higher than pre-Covid level. USD rate in Q1FY24 was higher than FY21 by 10.5% which further increased the landed cost.

• Ocean freight rates have declined to below pre-Covid level.

• EPL's Brazil operations have been steadily ramping up, but for better comparison, all financial numbers are excluding Brazil, unless otherwise mentioned.

• In Q1, EPL posted a solid revenue growth of 9.2%, broad-based across all regions. Amesha grew at 5%, partly impacted by the devaluation of the Egyptian pound. EAP continues to bounce back with double-digit growth of 11.5%. Europe grew by 7.8% and Americas grew by 9.5%.

• EPL continued focus on personal care and beyond has seen success with the category now contributing 49% to total sales in Q1FY24 compared to 47% in FY23.

• EPL delivered a solid EBITDA margin of 17.9%, an improvement of 282 basis points with an absolute EBITDA growth of 29.6% year-on-year. This is a result of softening costs coupled with active price management, mix improvement and productivity. Significantly, this is the fourth straight quarter of EBITDA margin increase signaling the recovery in the business.

• Including Brazil, the EBITDA margin stood at 17.5%, and absolute EBITDA and PAT growth rates were 26.6% and 57.4%, respectively.

• Brazil plant is now fully operational. It is a state-of-the-art manufacturing facility integrated with SAP. Commercial production and delivery is underway. Several potential customers have evinced keen interest and it is confident of winning new business and expanding its market share in the near future.

• The company mentioned its priorities as it look ahead include continued growth momentum in India and China, though recognize that there is some demand softening in Western geographies, accelerate Beauty & Cosmetics by winning small consumers, ramp up volumes and expand its customer base in Brazil, continued focus on margin improvement through mix and cost efficiency, efficient capital allocation and manufacturing location optimization. And finally, drive customer conversion to sustainable solutions. So in continuation of past quarters, it remain focused on driving growth with continuing margin recovery.

• The company is cautiously optimistic about the future to deliver double-digit growth with margin improvement.

• Demand outlook in India remains soild. In China is that there has been some shift away from China for exports by large multinationals. Exports out of China that EPL do, right, beyond that, to places like Thailand and so on, remain robust. The company is seeing some demand softness in U.S. but probably a little more pessimistic given the overall environment in Europe.

• The company expects effective tax rate to be around 26-27% for FY24