Release Date: January 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Control Print Ltd (BOM:522295, Financial) reported a significant increase in revenue for Q3 FY25, reaching approximately INR95 crores, up from INR84 crores in the same quarter of the previous year.
- The company is focusing on expanding its track and trace and packaging divisions, which are expected to drive future revenue growth.
- Control Print Ltd (BOM:522295) has a strong pipeline of orders, indicating robust demand for its products.
- The company is targeting larger customers, which is expected to enhance revenue quality and market share.
- Innovative Codes, a subsidiary, reported a 36% growth in revenue compared to the previous quarter, indicating successful integration and performance.
Negative Points
- The cost of goods sold (COGS) increased due to a change in product mix, impacting gross margins negatively.
- There was a rise in SG&A expenses, particularly in travel and exhibition costs, affecting profitability.
- The company's EBITDA growth was negative at -1.86% year-on-year, indicating pressure on operating margins.
- Control Print Ltd (BOM:522295) is in an investment phase for its overseas subsidiaries, which may continue to impact short-term profitability.
- The company faces challenges in scaling up its new business initiatives, such as the V-shapes packaging technology, which is still in the development stage.
Q & A Highlights
Q: Can you explain the reasons for the soft performance in the standalone business and the lower gross margins in Q3?
A: Jaideep Barve, CFO: The performance isn't soft; revenue remains robust with a strong order pipeline. The increase in the cost of goods sold (COGS) is due to a change in product mix, with more printers sold, which have higher COGS. Additionally, increased SG&A expenses, including travel and exhibition costs, contributed to the lower gross margins.
Q: What is the opportunity and potential for the V-shapes product, considering its pricing?
A: Shiva Kabra, Joint Managing Director: V-shapes is a single-use packaging format with technical and aesthetic advantages over traditional packaging. While it has cost challenges, it offers benefits to customers. It's an IP-led product similar to Tetra Pak, and we aim to develop it further.
Q: What is the capacity to manufacture V-shapes machinery in India, and what are the plans for scaling?
A: Shiva Kabra, Joint Managing Director: Currently, V-shapes machines are made in Italy, with a capacity of about 40 machines before needing expansion. We plan to manufacture materials in India and may shift some manufacturing to India as sales increase.
Q: Can you share the category-wise sales mix for Q3?
A: Jaideep Barve, CFO: For Q3, the sales mix was 16% printers, 61% consumables, 7% spares, and 15% services. This compares to 13% printers, 64% consumables, 7% spares, and 15% services in Q2.
Q: How is the subsidiary performance, especially overseas, aligning with your strategic goals?
A: Shiva Kabra, Joint Managing Director: The focus is on CP Italy (V-shapes division), which is larger than Markprint and Codeology. Both are profitable, but the main goal is to ramp up packaging machinery and improve technical consistency and marketing efforts.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
