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

Highlights of the Concall

• EPL posted a revenue growth of 5.6% impacted by softening Commodities which necessitated some pricing pass through. Excluding Brazil the underlying business growth was 4% broad-based across all all regions

• Ebitda margin grew 267 bps on a YoY basis and 103 bps to 19% in Q2FY24 leading a 21% Ebitda growth led by some softening costs coupled with active price management, mixed Improvement and significant P&L productivity. This is the fifth straight quarter of a Ebitda margin increase.

• AMESA revenue grew 5.5% in Q2FY24 to Rs 379.1 crore impacted by the devaluation of the Egyptian pound while Ebitda was up 21.8% to Rs 80.3 crore with Ebitda margin of Rs 21.2% (18.3% in Q2FY23). EBIT grew 22.8% to Rs 49.6 crore with EBIT margin of 13.1% (11.2% in Q2FY223)

• EAP revenue grew 13.2% in Q2FY24 to Rs 245.4 crore while Ebitda was up 13% to Rs 56.4 crore with Ebitda margin of Rs 23% (23% in Q2FY23). EBIT grew 13.5% to Rs 42.8 crore with EBIT margin of 17.4% (17.4% in Q2FY223)

• America revenue grew 6% in Q2FY24 to Rs 236 crore while Ebitda was up 39% to Rs 37.1 crore with Ebitda margin of Rs 15.7% (12% in Q2FY23). EBIT grew 63.1% to Rs 19.9 crore with EBIT margin of 8.4% (5.5% in Q2FY223)

• Europe revenue grew 5.5% in Q2FY24 to Rs 216.3 crore while Ebitda was up 3.3% to Rs 21.5 crore with Ebitda margin of Rs 9.9% (10.2% in Q2FY23). EBIT fell 35.1% to Rs 4.8 crore with EBIT margin of 2.2% (3.6% in Q2FY223)

• The operating environment continues to move in the right direction with relatively benign commodity costs during the quarter.

• Polymer and foil USD prices have declined from Q1FY24 and Q4FY23 level respectively, however the prices remain higher than pre Covid level. USD rate in Q2FY24 was higher than FY21 by 9%.

• Ocean freight rates declined to below pre Covid level.

• Personal Care & beyond category contribution to total revenue stood at 48% in H1FY24

• Plant is scaling up really well in Brazil. It reached over 80% of the lead customers committed volume in its first full quarter of operations and is poised to fulfill the lead customers demand in the next few months and can open up to take other customers orders. The company has already produced a few sample batches for validation and is confident of expanding the customer base in the near future.

• Recyclable volumes as mix of total tube volumes was 10% in FY23 which the company expects to grow to 20% of total tube volumes in FY24 and around 60% by FY26. Around 85% of EPL capacity is recyclable ready.

• Interest cost increased during the quarter due to high interest rate scenario which continues across the world but more specifically in the western side of the world both US and Europe. It has taken a debt for its Brazil for its Greenfield capex and interest rate in Brazil and in South America is high. The company expects interest rates will continue to stay hard for next 2-3 quarter after which it hopes to see some softening in the interest cost.

• The company expects America revenues excluding Brazil to improve in coming quarters.

• The company is targeting mid to high teen margins for Americas.

• The company targets to grow its revenue to double digit led by more aggressive growth in personal care segment and stay focused on Brazil opportunity.

• The company is targeting Ebitda margin of plus 20% going ahead.