Release Date: January 21, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- AGI Greenpac Ltd (BOM:500187, Financial) reported a strong financial performance with a total income of INR 674 crore for Q3 FY25.
- EBITDA increased by 20.3% year-on-year to INR 185 crore, achieving a 27.4% margin.
- Profit after tax grew by 35% year-on-year to INR 91 crore.
- The company maintained a high container capacity utilization rate of over 95%.
- AGI Greenpac Ltd received several awards for its commitment to sustainability, including a bronze at the 2024 International Green Apple Environmental Awards in the UK.
Negative Points
- The company faces uncertainty regarding the acquisition of HNG, which is currently under court proceedings.
- There are challenges related to raw material price fluctuations, particularly soda ash.
- Litigation-related expenses have impacted financials, as seen in the current and previous quarters.
- The company is operating at full capacity, limiting immediate volume growth potential.
- There is a dependency on external factors such as commodity prices, which affect the normalized revenue levels.
Q & A Highlights
Q: Is the current topline of INR 650 crore the new normal, and how will industry tailwinds affect margins?
A: Rajesh Khosla, President and CEO, explained that the INR 650 crore topline is a "normalized normal," influenced by raw material prices like soda ash and sand. The company operates at over 95% capacity, so industry changes may not significantly impact them. They focus on long-term customer relationships rather than exploiting temporary market conditions.
Q: Are there any fundraising plans for the company?
A: Sandeep Sikka, Group CFO, stated that while they closed the quarter with a net debt of around INR 350 crore, they have an enabling resolution to potentially raise equity post-acquisition of HNG, which is under court proceedings. However, nothing concrete is planned yet.
Q: What is the company's plan if the National Safety Glass acquisition doesn't go through?
A: Sandeep Sikka mentioned that if the acquisition doesn't proceed, the company has a natural plan for organic growth. However, specific plans are not yet board-approved and cannot be disclosed. Rajesh Khosla added that they have multiple plans for volume and value growth, which will be shared once approved.
Q: How sustainable is the current product mix and profitability?
A: Rajesh Khosla emphasized that the Indian economy's growth towards $5-6 trillion will drive demand for premium products, benefiting their product mix. The company aims to capitalize on this trend, with imports being low-hanging fruits for market capture.
Q: What is the status of the HNG litigation, and when can a resolution be expected?
A: Sandeep Sikka reported that the Supreme Court has reserved its judgment since November 2024. The company is hopeful for a favorable outcome, which would allow NCLT to proceed with the resolution plan approval, potentially taking a few more months.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
