EPL Ltd Q2 FY2026 Concall Summary

Key Takeaways

• Double-digit growth, fifth straight 20%+ margin: Revenue grew 11% YoY and EBITDA margin hit 20.9%, up 91 bps, while PAT rose 19.9%. The quarter extends a run of consistent operational delivery.
• Beauty & Cosmetics is the growth engine: B&C surged 26.3% YoY and drove broad-based momentum, especially in the Americas (27.4% growth) and EAP. Management says the B&C runway has barely begun.
• Europe margin hit is a one-customer, one-time destocking: A single major Oral Care customer’s inventory correction compressed Europe’s scale and margin; the customer’s forward outlook is stronger and a bounce-back is expected.
• Thailand plant live in record time: The greenfield B&C plant started operations in October, just 9 months from breaking ground, and begins customer supplies this quarter.
• What to watch next quarter: Whether Europe’s destocked customer resumes ordering, the pace of B&C’s continued acceleration, and the Thailand plant’s revenue contribution and margin trajectory as it ramps.

Beauty & Cosmetics: The Growth Engine

• Category momentum: B&C delivered 26.3% YoY growth, reflecting sustained focus and a robust innovation pipeline that management describes as just getting started.
• Americas breakout: The Americas grew 27.4%, led by broad-based double-digit growth across all countries, with Brazil (the world’s third-largest B&C market) standing out as even stronger. EPL remains small in Brazil with what management calls “explosive opportunities” ahead.
• EAP strength: EAP grew 10.6%, supported by healthy Oral and B&C performance. B&C has now delivered solid growth for five years running, driven by local teams and stepped-up innovation that commands higher ASPs.
• Sales capability build: Employee cost stepped up partly because EPL is ramping frontline B&C selling capabilities globally, a different muscle from key account management for large Oral customers. Management calls this “good cost” that generates returns.
• Capacity headroom: In B&C-dominated markets, capacity utilization runs 50–55%, leaving ample room to absorb growth before new capex is needed.

Kripalu: “I’m honest with you, our momentum on Beauty & Cosmetics has only just started. We have enormous headroom for future growth.”

Europe: A One-Customer Margin Blip

• The problem is narrow: Europe revenue grew only 2.8% and margin contracted, but the bulk of the challenge traces to significant destocking by one major Oral Care customer across several European countries. There is no fundamental loss of business.
• Scale-driven margin compression: The margin drop is purely a loss of scale on the top line from that customer. B&C performance in Europe has actually been stronger and better than Oral Care.
• Investment continued through the softness: EPL kept planned B&C investments in Europe because it remains a critical market. Natural inflation came in while revenue did not, making the quarter an aberration.
• Recovery expected: The customer’s forward outlook is much stronger, per what they are sharing with EPL, and management believes the margin issue will bounce back in the foreseeable future.

Kripalu: “The bulk of the challenge has been with one customer, there’s been some significant downstocking that happened across some of the countries in Europe… Now our belief is that this is going to bounce back — their outlook in the future is much stronger, what they are sharing with us.”

Thailand Plant & Capacity Expansion

• Record-speed execution: The greenfield Thailand plant started operations in October, completing a world-class facility in just 9 months, with support from the Indorama team for site and licenses.
• Customer supplies begin Q3: The plant will start supplying B&C customers this quarter itself, and the business development pipeline is strong enough that management is already looking at further expansion.
• Lean cost structure: The breakeven point is low because indirect manning cost is very limited; the EAP leadership team also oversees plant operations since it is only two hours from the China plant. Setup costs are being incurred now but it will not be a material EBITDA drain.
• Brazil capacity: The last expansion capex in Brazil started production 3–4 months ago from the new line. As volumes come in, EPL will proactively make further investment decisions.
• Modular capacity philosophy: Overall capacity utilization runs 60–65%. When utilization reaches 65% and above, capacity is added in a modular way; at peak 70%, additions bring it back to 65%.

Bakshi: “Not even some of the new age companies can claim to have this level of speed. We also had an opportunity to review our innovation pipeline in Beauty & Cosmetics, and I was just blown away with what I saw.”

Regional Performance

Margins & Cost Structure

• Margin walk: EBITDA margin expanded 91 bps YoY to 20.9%, the fifth consecutive quarter above 20%. Expansion came from operational efficiencies and margin improvement initiatives, not commodity tailwinds; commodity prices have been stable for two years.
• Commodity-cyclical-proof P&L: The revenue mix of contractual (commodity inflation/deflation passed to customer) and non-contractual pricing makes the P&L predictable and insulated from commodity cycles.
• Other expenses rose on investments in S&D and power/fuel inflation in Western markets.
• Employee cost stepped up primarily from ramping B&C sales capability globally, not from the Thailand plant (immaterial to global numbers). Management distinguishes “good cost” that generates returns from “bad cost” that adds no value.
• Europe margin guidance has always been mid-teens; the current dip is a scale-driven aberration, not a structural reset.

Kripalu: “As long as we are increasing cost, which is good cost, right, which is delivering returns, we must absolutely do it. We need to be ruthless about bad cost, which is cost that doesn’t add value to the business.”

Leadership, Innovation & Sustainability

• CEO transition: Anand Kripalu retires at end of 2025; Hemant Bakshi takes over as MD and Global CEO effective Jan 1, 2026. Bakshi promises to return with a plan to take the company to even greater heights.
• Tube-in-tube innovation: A rare Oral Care innovation with two concentric cylinders dispensing two different products, commanding a significant selling price and propping up Oral revenue in EAP.
• EcoVadis Platinum: EPL received the EcoVadis Platinum Rating, placing it in the top 1% of 150,000 companies assessed worldwide and making it the only packaging company from India globally certified.
• Great Place to Work: Certified again across 7 countries.
• Tariff agility: When China laminate duties to the US rose, EPL shifted laminate production to India. When China commodity prices are lower, manufacturing shifts to China. The bulk of US value-add happens inside EPL’s US plant. Creative solutions including sourcing from other countries’ laminates or tubes are being explored with customers.

Guidance & Commitments

Key Metrics