EPL Ltd Q4 FY2026 Concall Summary

Key Takeaways

• Record revenue, crisis-managed margins: Revenue grew 17.6% YoY, the highest in five years, while EBITDA margin held at 20.2% despite Middle East supply shocks, proving the pass-through model works.
• Beauty & Cosmetics is the new engine: The segment surged 30% YoY and now drives overall growth, validating years of ahead-of-the-curve investment in capacity and innovation.
• Transformational merger announced: The Indovida deal creates a nearly \$1 billion consumer packaging platform, adding new capabilities and high-growth market access while being margin and value accretive.
• Cost recovery is proactive, not promised: Management is running weekly pricing reviews and has secured raw material supply through mid-July, but the situation changes weekly and no inflation quantum was disclosed.
• What to watch next quarter: Whether the Thailand plant begins contributing volume, the pace of merger regulatory approvals, and any signal on how long Middle East supply disruption persists.

The 17.6% Quarter: What Drove It

• Beauty & Cosmetics dominance: The segment hit 30% YoY growth, is now larger than Oral Care in most key markets, and has reached the scale where its momentum pulls the whole company: Personal Care and Beyond mix now sits at 53%.
• Oral Care recovery: After a weak prior year, Oral Care returned to healthy 10% YoY growth, and management is confident of a better year ahead.
• Broad-based regional strength: EAP grew 25% (led by China, not the new Thailand plant), Americas grew 24.1% (Brazil a blockbuster, every country double-digit), Europe grew 15.5%, and AMESA grew 10.4%.
• No one-offs in the number: Management explicitly stated the 17.6% growth is not driven by the Middle East crisis, tariff pre-buying, or any other distortion: it is the manifestation of a deliberate strategy to shift mix toward faster-growing B&C.

Hemant Bakshi: "I feel that our strategy, which we've articulated many times, you are seeing the manifestation of that."

Middle East Crisis: The Pass-Through Test

• The model: EPL operates a landed cost plus power pass-through model, more advanced than what existed during COVID, covering over 50% of business through contractual customers with clear pass-through agreements.
• Supply secured, for now: Raw material availability is secured until at least mid-July and is being extended on a weekly basis, with long-standing supplier relationships and scale providing an advantage over smaller competitors.
• Pricing agility intensified: Management moved from monthly to weekly (or more frequent) customer-wise gross margin reviews, catching deviations early and pushing proactive price increases even to non-contractual customers.
• Full cost recovery expected: Management expressed confidence that all additional costs from the crisis will be recovered with no significant lag, though it declined to quantify the blended raw material inflation, citing weekly changes and regional variation.
• The unanswered question: An analyst pressed for a specific inflation number and where EBITDA margin might bottom out; management declined to provide either, stating only that all costs will be recovered and there may be optical changes.

Hemant Bakshi: "We are making sure that our price increase is proactive, and we do not have a lag. So we remain confident that the full cost will be recovered."

The Indovida Merger: Rationale & Constraints

• Strategic logic: The merger creates a nearly \$1 billion consumer packaging platform with a broader product portfolio, stronger manufacturing and innovation capabilities, and expanded presence in high-growth markets, and is expected to be margin and value accretive.
• What Indovida brings: On a steady-state basis, Indovida is expected to grow in high single digits and holds #1 or #2 positions in all its markets, per management.
• Regulatory path: Filings have been made for SEBI, CCI, and antitrust approvals across multiple countries; completion is expected by Q4 FY27, roughly 12 months from the March announcement, though the timeline is not in the company's hands.
• Dividend suspended: Neither company can declare a dividend until the merger is completed, to preserve the valuation construct of the share swap.
• Information blackout: Management declined to share Indovida's operating margin or comment on the beverages category where Indovida is strong, citing regulatory restrictions on information sharing between independent companies until merger approval.

Margins: Gradual Expansion, Growth First

• Full-year expansion delivered: EBITDA margin expanded 50 bps from 19.9% to 20.4%, and EBIT margin also expanded 50 bps from 11.8% to 12.3%, marking the seventh consecutive quarter above 20% EBITDA.
• AMESA margin noise: Q4 AMESA margins were impacted by two one-offs: CEO transition-related costs (two CEO costs in the quarter) and a phasing one-off reversal in the prior-year base; equalizing for both, margins were within the target range.
• Growth investment over margin maximization: When pressed on why the strong B&C mix did not produce a visible margin kicker, management pointed to full-year expansion and argued that resourcing growth fully is the priority because these are "good costs," making expansion deliberately gradual.
• Depreciation stepped up: Large equipment was capitalized in Q4, causing a sequential increase in depreciation, which offset some currency benefit at the EBITDA level and muted EBIT margin expansion in the quarter.

Deepak Goyal: "Our priority is to drive growth, and we will resource the growth fully because we believe that these are the good costs. And hence, the expansion is gradual, and that's how we expect it to continue."

Capital Allocation & The Hunt for Deals

• Capex stays elevated: Capex will continue at a slightly elevated level into FY27 because market share gain opportunities justify investing ahead of the curve, though over time it will converge toward depreciation.
• Balance sheet firepower: Net debt to EBITDA improved to 0.52x, ROCE expanded 96 bps to 19%, and the company is completely debt-free, creating significant capacity for both organic investment and acquisitions.
• Acquisition criteria sharpened: Management is actively looking for targets that bring either a new geography or a new capability, with B&C as the priority, and that are both growth and margin accretive.
• Dividend policy vs. M&A: An analyst asked whether the absence of dividend obligations for the next year makes acquisitions more likely; management deflected, stating dividend policy has no material impact on acquisition strategy, though the hunt is active.

Hemant Bakshi: "When we are looking for a new acquisition, it should get us either into a new geography or get us a new capability."

Guidance & Commitments

Key Metrics