BOROLTD - Borosil Limited Share Price

Management Outlook:
Borosil's management remains confident in medium-term growth, targeting 15-20% CAGR despite short-term challenges. Key strategies include expanding into new product categories, transitioning consumers to sustainable glass/Opalware, enhancing domestic manufacturing, and optimizing supply chains. They aim to achieve 20%+ EBITDA margins through operational efficiency and scale.

Major Points:

1. Financial Performance:

   • 9M FY25 Revenue: Rs.837.6 Cr (17.1% YoY growth).
   • EBITDA: Rs.140.2 Cr (17.4% YoY growth), with margins at 17%.
   • PAT: Rs.63.1 Cr (up 3.8% YoY), impacted by higher taxes and depreciation from new glass furnace.

2. Segment Growth:

   • Larah Opalware: Rs.292.6 Cr (+9% YoY).
   • Glassware: Rs.190.9 Cr (+22.9% YoY) driven by microwavables and storage.
   • Non-Glassware: Rs.340.9 Cr (+17.8% YoY) led by appliances and cookware.

3. Challenges:

   • Pharma Gifting Ban: Reduced B2B institutional sales.
   • Channel Shift: Higher e-commerce costs (A&SP expenses up Rs.18.56 Cr in 9M FY25).

4. Strategic Initiatives:

   • Capacity Expansion: New borosilicate glass furnace operational, reducing import reliance.
   • Product Launches: Premia dinnerware collection and focus on premium, sustainable categories.
   • Domestic Sourcing: Targeting 70-80% Made in India for non-glassware (vs. 35% now).

5. Debt & Funding:

   • Net debt reduced to Rs.20.4 Cr post-QIP (Rs.150 Cr raised).
   • Focus on margin improvement via operational leverage and reduced ad spend (long-term target: 6-8% of revenue).

6. Regulatory Impacts:

   • BIS norms disrupting steel bottle imports; plans for domestic manufacturing (Rs.50-70 Cr capex likely).

Outlook: Management remains bullish on India's consumer market, prioritizing innovation, brand equity, and sustainability to drive long-term growth.

Question 1 (Resha Mehta): "Compliments for the revenue growth considering the muted macro demand. The first is on the sourcing. I'm fairly new to the company. So first on the sourcing, if you could just clarify that now glassware with the furnace that we have is everything 100% in-house? Or how is it for each of the segments, if you could elaborate on glassware and non-glassware, is there anything that we in-source or everything is outsourced? And what would be the China sourcing component over here? For each of these segments, if you could also comment on what would be our utilization for glassware and opalware?"

Answer: Opalware is 100% in-house. Glassware comprises three categories: pressware (made in-house), blownware (5"“7% imported, non-China), and tube-made products sourced from Borosil Scientific. Non-glassware is 65% imported (30"“35% domestic). Opalware capacity utilization is ~85%, and glassware (press) is 55"“60%. China sourcing is minimal, with plans to shift non-glassware to 70"“80% domestic production in 3 years.

Question 2 (Aniruddha Joshi): "Regarding the ban on imported steel bottles: What is the current situation? How might Borosil gain market share? Can glassware replace steel bottles?"

Answer: Steel bottles cannot be replaced by glass due to durability needs. Borosil will invest in domestic manufacturing to comply with BIS norms, targeting medium-term market-share gains. Short-term revenue may dip due to supply-chain adjustments, but quality-focused domestic production will drive long-term growth.

Question 3 (Aniruddha Joshi): "What is the revenue run rate and strategy for small kitchen appliances? How do you view market stress and growth outlook?"

Answer: Non-glassware grew 17.8% in 9M FY25, driven by appliances and bottles. Focus is on expanding retail presence and transitioning to domestic sourcing. Margins remain stable due to premium branding and minimal advertising reliance. Growth is expected via product quality and broader distribution.

Question 4 (Dhaval Shah): "How will Borosil sustain opalware growth amid capacity constraints? What new categories are planned?"

Answer: Opalware growth involves material diversification (e.g., alternatives to plastic/melamine) and new premium launches. New non-glassware categories (e.g., high-grade steel) are under development. Medium-term revenue CAGR target is 15"“20%, with margins improving post-BIS normalization and operational scaling.

Question 5 (Aman): "Why did opalware growth slow? When will glassware capacity utilization peak? Will ad spends normalize?"

Answer: Opalware growth slowed due to lost B2B pharma gifting sales (~10% revenue impact). Glassware capacity will be fully utilized by FY27 via debottlenecking. Ad spends (8% of revenue) may reduce to 6% in 2"“3 years as e-commerce channel mix stabilizes.

Question 6 (Akhil Parekh): "Is B2B sales loss permanent? How will opalware capacity expand amid competition?"

Answer: B2B sales recovery is uncertain. Opalware capacity will increase 10"“20% via debottlenecking, avoiding new furnaces. Competition is rising, but Borosil's brand strength and glassware/non-glassware growth (targeting 20%+ EBITDA margins) will offset opalware's slower expansion.