Huhtamaki India Ltd

Rating action

• Instrument: Working Capital Facility (Rs 88 crore); Rating: Crisil AA-/Stable (Reaffirmed).

Outlook

• Outlook: Stable.

Rationale – Strengths

• Established market position in premium flexible packaging with diversified product range.

Rationale – Weaknesses

• Exposure to intense competition and regulatory risks; raw material price volatility.

Financials & Liquidity

• CY2025 revenue Rs 2,469 crore; PAT Rs 118 crore; PAT margin 4.8%.
• Net debt/adjusted net worth 0.17x; Interest coverage 13.22x.
• H1CY26 revenue up 12% to Rs 1,322 crore; margin 8.4%.

Liquidity & ESG

• Cash and investments over Rs 400 crore as of 30 Jun 2026.
• ESG profile supportive; carbon-neutral target by 2030.

Governance & Parent Support

• Operational and financial support from parent Huhtamaki; parent holds 67.73% stake.

Rating Sensitivities

• Upward: sustained 7-9% margin and stronger parent credit profile.
• Downward: margin at 3-4% or large debt-funded capex; weaker parent profile.

Financial Performance

• Q2 CY '26 net sales up 23.1% to INR 723 crores.
• H1 revenue growth close to 12% YoY.
• EBITDA margin 10.5% in Q2, up from 8.3%.
• Profit before tax rose 77% YoY to INR 559 crores; EPS up 77.3%.
• Q2 sales at INR 723 crores, among highest in 3–4 years.
• Net debt nil; cash INR 270 crores; investments INR 125 crores; unutilized limits INR 427 crores.
• Working capital higher due to inventory buildup to manage raw-material volatility.
• Intercompany debt to be repaid early.

Operating Update

• Exports and domestic sales grew at a similar rate.
• Volume growth in Q2: high single-digit; exact number not disclosed.
• Blueloop adoption below 30%; over 70% of other products produced in-house.
• Capacity is sufficient to support future growth due to productivity improvements.
• INR 750 crores quarterly run-rate possible with price pass-through.
• Blueloop margins not sacrificed; higher-cost but strategic.
• Pricing uses index-based adjustments; quarterly or monthly; inventory-sharing with customers.
• Market remains robust; festival season expected to buoy demand.
• No formal guidance; focus on profitable growth and capital discipline.

Balance Sheet and Cash Flow

• Net debt remains nil; intercompany borrowing to be repaid early.
• Bank balances INR 270 crores; liquid mutual funds INR 125 crores.
• Unutilized fund-based limits INR 427 crores.
• DSO/DSI largely unchanged; inventories higher due to price increases.

Projects and Capex

• Capex focus on modernization to boost productivity and capacity.
• Cash deployed for organic growth; no inorganic plans disclosed.
• Land monetization discussions: Thane asset completed; others not disclosed.

Outlook and Guidance

• Markets remain robust; festival season expected to support demand.
• No formal numeric guidance; focus on profitable growth and capital discipline.
• Exports account for about 30% of sales; growth balanced across segments.

Q&A

• Volume growth: high single-digit; not expected to sustain 23% quarterly pace.
• Capacity: adequate for future growth due to productivity improvements.
• Pricing pass-through: index-based; contract terms vary; inventory-sharing with customers.
• Blueloop: adoption under 30%; margins not sacrificed; some customers value sustainability.
• No current plan for inorganic acquisitions; focus remains on organic capex.
• Exports already ~30% of sales; markets include SE Asia, Africa, Europe, Americas.
• Inventory and receivables rose; no realization challenges; DSOs/DSIs largely stable.

Meeting Details

• Date and time: July 27, 2026 at 03:30 p.m. IST
• Type and mode: virtual group earnings conference call

Participants

• Key company participant: Whole Time Director

Purpose

• Discuss earnings for the 2nd quarter ended June 30, 2026

Additional Notes

• Audio recording will be available on YouTube and company website

Business Overview

• Core business is packaging and flexible packaging under Huhtamaki.
• India operations pursue profitable growth, disciplined capital allocation, and accountability.
• Q2 2026 revenue trend reflects price and volume mix.

Operational Highlights

• Q2 net sales +23.1% YoY to MINR 7,286.
• EBITDA up 55.1% YoY to MINR 764.4.
• EBIT up 71.8% YoY to MINR 621.6.
• PBT before exceptional item up 77.5% YoY; PAT up 75.3%.
• H1 2026 includes MINR 88 depreciation adjustment and MINR 22 tax benefit.
• Operating working capital higher due to inventory and receivables.
• Net debt Nil; cash MINR 2,706; mutual funds MINR 1,253.
• Unutilized fund-based limits MINR 4,272.
• Total assets MINR 22,155; total equity MINR 13,488; debt-equity 0.1; current ratio 2.2.

Financial Performance

• Q2 2026 net sales 7,286 MINR; YoY +23.1%.
• EBITDA margin 10.5%; EBIT margin 8.5%.
• PBT before exceptional item 587.9 MINR; YoY +77.5%.
• PAT 437.3 MINR; YoY +75.3%.
• Earnings per share (adjusted) Rs 5.79; YoY +77.3%.
• H1 2026 revenue 13,222.3 MINR; EBITDA 1,385; EBIT 1,007.3.

Capital Structure & Liquidity

• Net debt at end of Q2 2026: Nil.
• Cash and equivalents MINR 2,706; mutual funds MINR 1,253.
• Unutilized fund-based limits MINR 4,272.
• Total assets MINR 22,155; Total equity MINR 13,488; debt-equity 0.1; current ratio 2.2.

Strategic Priorities & Outlook

• Align with Huhtamaki global strategy: profitable growth, disciplined capital allocation, stronger accountability.
• Sustainability initiatives: recycled content, lightweight packaging, and FSC-certified plants.
• Solar captive generation for Khopoli expected in Q3 2026.
• Decarbonization roadmap for 2030 Scope 1&2 prepared.
• ZLD and water recycling programs; MVR at Taloja; rainwater harvesting.
• Three label plants and Khopoli FSC-certified.

Risks & Mitigation

• Risks: commodity inflation, currency volatility, energy price movements, and Middle East impact.
• Mitigation: operational efficiencies and pricing discipline.

Governance & Leadership

• MD Kamal Taneja and CFO Amit Gupta highlighted in presentation.
• Ramya Mohan, Whole Time Director, signed the filing.

Dematerialisation/rematerialisation filing status

• RTA MUFG Intime India confirms dematerialisation/rematerialisation details for quarter ended 30 June 2026 were furnished to stock exchanges.
• Details furnished to the stock exchanges where the shares are listed.

Meeting Details

• Board meeting scheduled for July 21, 2026; time and venue not disclosed.

Key Agenda Items

• Unaudited financial results for Q2 and six months ended June 30, 2026 to be considered and approved.

Other Notes

• No additional notes disclosed in this filing chunk.

Business

• Huhtamaki India makes flexible packaging products for food and non-food applications.
• Management emphasized profitable growth, disciplined capital allocation, and stronger accountability.

Operations

• Q1 sales were stable as pricing and mix gains offset slightly lower volumes.
• Supply chain challenges from geopolitical conditions became a focus late in the quarter.
• A solar captive electricity project at Khopoli was approved, with commissioning expected in H2 2026.

Financials

• Q1 FY26 net sales were INR 5,936.3 million, up 0.1% year on year.
• EBITDA rose 24.8% to INR 620.8 million, with margin expanding to 10.5%.
• EBIT increased 27.8% to INR 473.7 million; reported PAT rose 23.1% to INR 322.0 million.
• Excluding prior-period depreciation, EBIT rose 4.0% and PBT rose 2.9% year on year.
• Finance cost fell 16.9% year on year to INR 35.3 million.

Sustainability

• TRI reduced by 67% year on year through safety awareness and standardization initiatives.
• The company continued increasing PCR use in non-food product lines and reducing solvent consumption.
• Several plants, including Khopoli, Rudrapur, and Silvassa, maintained zero liquid discharge status.