Kanpur Plastipack Ltd (KANPRPLA) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to Kanpur Plastipack Limited Q2 and H1 FY '26 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vinay Pandit from Captify Consulting IR. Thank you, and over to you, Mr. Pandit.
Vinay Pandit (Captify Consulting): Thank you, Nirav. Ladies and gentlemen, on behalf of Captify Consulting Investor Relations team, I welcome you all to the Q2 and H1 FY '27 earnings call of Kanpur Plastipack. Today on the call, from the management, we have with us Mr. Manoj Agarwal, Chairman and Managing Director; and Mr. Shashank Agarwal, Deputy Managing Director. I would now request the management to brief us about the business and performance highlights for the period ended September 2026, their growth plan, and vision for the coming year, post which we will open the floor for Q&A. Over to the management team.
Manoj Agarwal (Kanpur Plastipack Ltd): I welcome you to Kanpur Plastipack's earnings call for the second quarter financial year 26-27. Thank you all for joining us today, and for your continued trust and confidence in the company. On behalf of Kanpur Plastipack, I extend a warm welcome to all our investors, analysts, and stakeholders to our earnings call for the quarter and half-year ended 30th September '26. Building on the strong start we made in the first quarter, Q2 financial year '27 has been another quarter of healthy growth for the company. Revenue for the quarter stood at ₹235 crores, the highest quarterly revenue in the company's history, and profit after tax more than doubled year-on-year to ₹15.1 crores. Compared with the first quarter, EBITDA grew by about 14.5% and the profit after tax by about 24%. This performance reflects the resilience of our business model, the confidence of our customers, and disciplined execution by our team. The global business environment remained challenging during the quarter. Polypropylene prices moved back close to the high levels seen in March '26, owing to the continued geopolitical situation in the Middle East. High energy costs in Europe continued to weigh on the chemical industry, one of the key users of FIBCs, particularly in Germany. Although ocean freights eased during the quarter, they remained elevated, and constrained container availability continued to disrupt supply chains. Despite these headwinds, our diversified export presence, long-standing customer relationships, and agile approach to procurement enabled us to deliver a robust growth in profits. Our focus remains unchanged. We continue to execute a long-term strategy of strengthening the quality of our business while creating new avenues of growth. Rather than pursuing growth purely through higher volumes, we remain committed to
Manoj Agarwal (Kanpur Plastipack Ltd): our product portfolio, expanding into value added applications and building capabilities that support sustainable profitability over the long-term. FIBC remains the cornerstone of our business, contributing approximately 66% of our manufacturing revenue for the quarter. Over the years, we have built lasting relationships with customers in international markets, which has helped us maintain a stable business through changing market conditions. Our customer base across Europe, North America, South America and other markets gives us resilience and a broad base for growth. Our continued participation in international trade fairs has strengthened our in enquiry pipeline and helped us expand our reach into new markets. As informed earlier, the capacity expansion of FIBC to add about 6,000 metric tons per annum in phases over five years and take the total capacity to about 24,000 metric tons per annum remains on track. Production has already started on the ground floor of the new building at Unit 3, the first and second floors are now expected to be completed shortly. Our joint venture with ESSEGOMA Italy, through Essencon Private Limited, continued to build its presence in premium taslan yarn segment. The internationally recognised certifications, Global Recycled Standard, also for GRS and OEKO-TEX, will strengthen our positioning in markets, enhance customer confidence and support value creation. These certifications are making marking a significant milestone in our journey towards sustainable innovation, superior quality and global competitiveness. The response received from the customers has been encouraging, and we're con- confident of scaling up sales in the next half of the cur- financial year. Our entry into the non-woven textile texts technical textiles segment remains one of the company's key strategic initiatives. We see significant long-term opportunities in this business across automotive interiors, geotextiles, artificial leather, carpets, footwear and other industrial applications. Despite slight delays due to heavy rains, we remain on track to commission the non-woven fabric facility thi- in this current quarter, with the first line expected to be commissioned by the 15th of November, '26. Once operational, this business is expected to gradually become an important contributor to our growth, while complimenting our existing packaging portfolio. Together with our investments in premium polypropylene yarns and specialised applications, it reflects our vision of transforming Kanpur Plastipack into a well-diversified industrial packaging and technical textiles company, expanding our addressable market, while also improving product differentiation and value addition. Our entry into these spaces will also open up opportunities in select B2C-linked applications and further dive- diversifying our business model. Sustainability remains central to the way we operate. During the quarter, about 52% of our power requirement was met from renewable sources. We continue to strengthen our ESG practices through responsible manufacturing, energy efficiency, recyclable product designs and internationally recognised certifications. Overall, while near-term market conditions may continue to see volatility, we remain confident in the strength of our business model, our customer relationships and the strategic investments we have already made. Our objective remains clear: to build a stronger, more diversified and future-ready organisation capable of delivering sustainable growth and long-term value for all stakeholders. With that, I would like to invite our Deputy Managing Director, Mr. Shashank Agarwal, to take you through the operational and financial performance in more detail. Thank you, everybody.
Shashank Agarwal (Kanpur Plastipack Ltd): Thank you, and good afternoon to everyone joining us today. As the Chairman highlighted, we have continued the momentum of the first quarter into Q2. Let me briefly take you through the financial performance for the quarter. For the second quarter of FY '27, on a standalone basis, despite a very challenging global environment, the company reported a total income of 238 crores, reflecting a growth of about 43% year-on-year. EBITDA for the quarter stood at 25.4 crores, registering a 55% growth year-on-year. The margin improved from 10.67% to 9.83%
Shashank Agarwal (Kanpur Plastipack Ltd): PAT stood at 15.10, almost doubled on a year-to-year basis, while basic earning per share increased 6.16 compared to 3.25. For the half year ended 30th September, the total income stood at 445.64, up by 28%, EBITDA at 47.59 crores and PAT at 27.25 crores, more than double of 13.07 crores of H1 FY26. Basic EPS of the year stood at 11.11 compared to 6.26 in the corresponding period. On a consol basis, total income for the quarter was 240.22 crores and PAT at 16.06, up by 100% year-on-year. Export realizations remain strong. Export sales were 119.81 crores, marginally higher than 119.16, even though the export volumes were lower at 4,757 tons against 6,591 tons. During the quarter realizations continue to remain strong with an average selling price increasing by 14% compared with the previous quarter. PP prices rose again during the quarter towards the, which was seen towards the end of March 26, but our pricing discipline enabled us to largely pass on the increase in the input costs. As a result, manufacturing segment margin improved to 11.65% from 8.95% in Q1 FY27 and 6.34% in Q2 FY26. This coupled with our disciplined procurement strategy and improved product mix contributed to stronger margins during the quarter. On trading, segment revenue was 78.96 crores compared to 16.87 in Q2 FY26. The company reported a trading profit of 1.16 crores compared to 0.59 in the corresponding quarter of the previous year. As I have mentioned earlier as well, primary focus continues to remain on our con- core manufacturing business. Given our understanding of the polymer market and established procurement capabilities, selectively capitalize on opportunities arising from market dislocations globally, price volatility, wherever they align with our risk management framework. On the other operating incomes and other incomes. Other operating incomes for the first quarter was 13, for the for this quarter was 13.11 crores of which 12.4 crores was export incentive under the DFIA scheme, against 2.64 crores in Q2 FY26. Since DFIA income is recognized on realization of the licenses, it varies significantly from quarter to quarter. Also, this was suspended in quarter one FY27 by the Government of India. Other income for quarter was 3.52 crores, which includes foreign exchange gain of 2.24 crores. Other income for half year was 7.85 crores, of which 5.57 crores was a net gain on foreign exchange. As an export-oriented company, a large part of our receivables are in foreign currency and the gain reflects the exchange rate movements during this period. We treat this as linked to our export business, but it depends on currency movements and should not seen as a recurring trend. Higher employee cost: employee benefit expenses for the quarter stood at 21.41 crores, an increase of about 4 crores, or 23%. As I explained in the last quarter, this primarily reflects the annual salary revision and increase in minimum wages in line with the state government's revised wage policy. This also includes the director's commission increase due to higher profits as compared to the corresponding period. Compared with Q1 FY27, employee costs were broadly stable. While this has increased our operating cost, the company continues to implement focused initiatives around cost optimization, operational efficiencies, productivity improvements, and value-added products to mitigate the impact and sustain healthy margins going forward. Borrowings: On the debt side, total borrowings as on 30th September stood at 162.61 crores, out of which 39.76 crores was long-term borrowing and the balance 132 short-term.
Shashank Agarwal (Kanpur Plastipack Ltd): Sorry, 132 crores was the total borrowing on 30th June '26 and the long term stood at 22.83 at that time. This increase is due to new term loan for our nonwoven project. Our net worth stood at 290.56 crores and debt equity remained at 0.56 times. The increase in borrowings during the half year was driven by capital expenditure. The capital work in progress rose by about 37 crores during the half year to 45.67 crores as an ongoing projects moved towards completion. YES BANK has sanctioned a term loan of 40 crores for these projects, out of which 27.38 crores has been availed as on 30th September. Higher receivables: trade receivables increased by 26.32 crores to 120.6 crores in line with the higher selling price. GST refunds and other current assets increased by 11.19 crores. IGST refunds of 12.64 crores were receivable as on 30th September '26. Exports and product mix: Exports Exports continue to be the backbone of our business. During the quarter, Europe contributed 65% of our geographical mix followed by North America at 17% and South America at 14%. The balance coming from Australia, Asia and Africa. The diversified geographical presence helps us mitigate regional demand fluctuations. Based on product-based se revenue mix, FIBC grew from 60 from grew to 66% from 54%. Fabrics shrunk from to 18% from 20%. Multifilament remained stable at 9% from 8%. UV masterbatches, small bags and geofabrics all remained under 3% in this quarter. From an end-user perspective, our revenues remain well diversified across food and agriculture, industrial packaging, construction, automotive and mining, reducing the concentration risk across demand vehicles. Coming to the projects update: against a total project cost of 106.9 crores, we had incurred 78.86 crores, or about 74% up to 20th October 2026. Some activities have taken longer than planned mainly because of exceptional heavy rainfall in Kanpur during the monsoons and also machine commissioning issues related to overseas visa regulations. FIBC capacity expansion was updated was the update was given by the Chairman. Nonwoven technical textiles: needle punching machine and was received in August '26 and commissioning of the first line is now complete is expected to complete by 15th of November, within our Q3 FY '27 target. Civil work was held up initially due to the heavy rainfall and then the late arrival of the suppliers engineers. The project is slightly delayed but within our targeted schedule. Roll management system and warehousing: the building for this shall be completed between 15th and 30th November. The warehousing for trading division for IOCL has already been completed. On the manufacturing front, we continue to invest in automation, process optimization, infrastructure debottlenecking across our facili- facilities to improve productivity, quality consistency, operational efficiency, and agility in the lead time. Valx Ventures, as we had indicated last quarter, our UK subsidiary, regained its profitability regime in Q2 FY '27 after a small loss in Q1, supported by customer supplies scheduled after the implementation of the Free Trade Agreement and structural changes that have been undertaken there. Order book and outlook: During Q2 F Q2 '27, the order book and demand was affected by a couple of factors. First, the polymer prices historically remained at the highest levels. At these prices, customers are reducing their inventory levels. Second, the energy crisis in Europe caused by shortage of oil and gas has driven up power costs and hit industrial activity, particularly the chemical sector in Germany. Europe is our largest market, accounting for almost 65% of our geographical mix and the weak the weakness in the European demand remains our area of concern going forward. The third factor was the El Niño weather conditions that affected agriculture output and also fertilizer demand in agriculture-based economies, such as Brazil.
Shashank Agarwal (Kanpur Plastipack Ltd): the demand for bulk packaging in these segments. Fourth, the ocean freight cost remains high, and container availability at Kanpur ICD was also affected during this period. This raised the landed cost of our products for overseas buyers and had led some customers to defer purchases. We continue to issue regular market advisories to our customers to enable timely commercial discussions and fair pass through of cost increases. We do see some easing out on this front. Our diversified customer base across Europe, North America, South America, and markets with long relationships give us resilience during these tough times. Despite lower volumes, our focus on realizations and improved product mix helped us to continue with the profitability. Customers are buying closer to their immediate requirements. Most of our order book continues to be for dispatch within a month, consistent with the demand visibility of 3 to 4 weeks as mentioned earlier. We have seen a slight dip in the average order quantity during this period. Looking ahead, we expect these conditions to persist in the near term and volumes in the quarter may also remain affected. We are monitoring demand extremely closely, particularly in Europe, and remain focused on protecting realizations, managing working capital carefully and widening our customer base. At the same time, FIBC capacity expansion nears completion. The completion of nonwoven facility and our continued focus on value added products and new markets, we remain confident about our medium to long-term prospects of the business. We are also exploring inorganic growth opportunities both in India and overseas to strengthen our market presence, customer base and product portfolio. While we are actively scouting suitable opportunities, nothing material is visibly present today. We will remain selective and financially disciplined, focusing on acquisitions that create long-term value for our shareholders and fit well into the culture of the organization. With that, we conclude our opening remarks. Thank you once again for joining us today. We would now be happy to take questions.
Moderator: Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and 1 to ask a question. First question is from line of Agastya Dave from CAO Capital. Please go ahead.
Agastya Dave (CAO Capital): Hello, am I audible?
Shashank Agarwal (Kanpur Plastipack Ltd): Yes.
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