TCPLPACK - TCPL Packaging Limited Share Price

The management of TCPL Packaging Limited expressed a positive outlook, emphasizing sustained growth driven by strategic initiatives and operational efficiency. Key highlights include:

1. Strong Financial Performance: Record-breaking Q2 revenue of Rs.463 crore (14% YoY growth), EBITDA of Rs.77 crore (18% YoY), and PAT of Rs.36 crore. Margins remained healthy at 17%, attributed to raw material cost benefits and operational improvements.

2. Expansion & Capacity Addition: The Greenfield facility near Chennai is nearing commissioning (expected within 1"“2 months), adding 750 tonnes/month capacity (~Rs.70"“80 crore/year revenue initially). Investments in Goa and flexible packaging capacity aim to boost production efficiency and market reach.

3. Market Share Gains: Despite weak domestic FMCG demand, the company grew revenues by capturing market share. Export growth (Europe, Middle East, Africa, Southeast Asia) remains robust, supported by competitive pricing and quality.

4. Focus on Innovation & Sustainability: Recyclable films and specialty packaging solutions are gaining traction, with new customer acquisitions and incremental capacity utilization.

5. Subsidiary Growth: Subsidiaries (e.g., COPPL in electronics packaging) are scaling revenue but require further operational optimization to improve margins.

6. Capex & Debt Management: Annual capex of ~Rs.100 crore planned for brownfield expansions, technology upgrades, and potential M&A. Debt reduction remains a priority, but growth investments take precedence.

7. Long-Term Confidence: Management expects steady domestic recovery, export momentum, and margin stability (benign raw material costs) to drive sustainable growth. The Chennai facility and flexible packaging expansion are pivotal for future scalability.

Question 1 (Pavan Kumar, RatnaTraya Capital):
"Firstly, congratulations for the great set of numbers. I wanted to understand, on the subsidiary side, we seem to have done a pretty decent job in terms of revenues, but the EBITDA seems to have actually compressed. So, first of all, how sustainable is the revenue run rate? And what kind of EBITDA growth can we see at the subsidiary level going forward? My second question would be regarding the Chennai facility. When is it expected to commence? And what kind of revenue potential does it have as of now?"
Answer: Subsidiary revenue growth is sustainable with high double-digit growth, though EBITDA margins remain pressured due to scale. Efforts are ongoing to improve profitability. The Chennai facility is expected to commission in 1.5"“2 months, with initial annual revenue potential of ~Rs. 70"“80 crore, scalable over time.

Question 2 (Rohan Kalle, InCred Capital):
"Thanks for the opportunity and congrats on a good set of numbers. I have largely two questions. One is on our domestic business. As for my estimate, we have grown about 6%-7% in the first half. Just wanted to get your sense of how you expect the second half to be. And on the second part, how are the utilization levels right now in the folding carton and the flexible packaging segments?"
Answer: Domestic growth faces challenges due to weak FMCG sector performance. Folding carton utilization is ~80%, while flexible packaging operates at 60"“70% capacity. New capacity additions (Chennai, Goa) will alter utilization rates.

Question 3 (Siddhant Dand, Goodwill Warehousing):
"I just wanted to ask about this quarter and H1, how much of the margin improvement would be attributed to the fall in packaging board pricing or is it largely passed through?"
Answer: Margin benefits were partly due to lower raw material prices over the past 6"“9 months. However, price reductions are largely passed through to customers, with minimal recent fluctuations.

Question 4 (Jeewan Garg, Individual Investor):
"Firstly, congratulations on great set of numbers. As you mentioned, you've achieved very strong revenue, even historically. What do you believe has contributed to this? Is it domestic sales, or has export been a key factor, especially since you noted that the domestic performance of many of your customers has been weak?"
Answer: Both domestic and export segments contributed to growth. Despite domestic market softness, TCPL gained market share, while exports sustained strong momentum across regions like Europe, the Middle East, and Africa.

Question 5 (Vedant Bhasin, Minerva India):
"Congratulations on the good set of numbers. I just had one question. I know you don't share the split of export versus domestic. But if you could just shed some light on what countries the export is really going to?"
Answer: Exports target Western/Northern Europe, the Middle East, Africa, Southeast Asia, neighboring countries, and parts of the Americas, driven by competitive pricing, quality, and supply-chain reliability.

Question 6 (Pavan Kumar, RatnaTraya Capital "“ Follow-up):
"Akshay, just on the flexible packaging side, I understand our current utilization is somewhere around 60%-70%. So, by what time can we expect to hit full utilization and any plans for the capex going forward on that?"
Answer: Flexible packaging utilization is ramping steadily, with full utilization expected within 6"“12 months post-capacity addition. Capex plans include brownfield expansions and new lines post-stabilization.

Question 7 (Abhisar Jain, Monarch AIF):
"The question is on COPPL, your subsidiary, which is into the packaging for the electronics on mobile phone particularly. Can you talk about how the business traction is moving there and what kind of scale up, if at all, we can have in the next few years there?"
Answer: COPPL's revenue growth is robust, but profitability remains sub-scale. Growth is driven by client additions (post-Diwali season validation) and focus on high-margin rigid boxes. Scaling is expected over 3 years.

Question 8 (Vedant Bhasin, Minerva India "“ Follow-up):
"Has [growth] come from the addition of new customers or is it existing partnerships that are already we have gone deeper in?"
Answer: Growth stems from deepening existing partnerships (trust built over years) and gradual onboarding of new clients, which typically take 2"“3 years to scale volumes.