EPL Ltd

NSE:EPL

Earnings Call Analysis

EPL Limited Reports Strong Q2 with Significant Revenue and Margin Growth

EPL Limited's Q2 FY '25 results show impressive growth across metrics, with revenues up 8.4%, EBITDA rising 19.7%, and PAT skyrocketing 72%. EBITDA margin improved to 20%, meeting their target of sustaining margins above 20%. Geographic performance revealed Europe led with a 21% rise, while India experienced a modest 5% increase. The company aims to maintain double-digit growth, targeting revenue between INR 5,400 and 5,800 crores by FY '27. They are also enhancing their commitment to sustainability, increasing their recyclable products to 33% and setting a goal of 60% in the next few years.

Steady Growth in Revenues and Profitability

EPL Limited reported robust results for Q2 FY '25, with total revenues increasing by 8.4% from the previous year. The company's EBITDA grew significantly by 19.7%, while profit after tax (PAT) surged by an impressive 72%. The EBITDA margin reached 20%, reflecting a solid improvement of 188 basis points, and aligns with EPL's strategic commitment to maintain margins over 20%. This impressive financial performance can be attributed to strong demand across key markets, particularly in Europe, where revenue experienced a remarkable growth of 21% year-over-year.

Regional Performance Highlights

In the various regions, EPL showcased noteworthy performance: the Asia, Middle East, and Africa (AMESA) region grew by 3.7%, affected by currency devaluation, especially in Egypt. The Indian market achieved a growth rate of 5%, while the EAP region and the Americas recorded increases of 8.7% and 9.4%, respectively. The standout was Europe, which capitalized on high demand, achieving high double-digit growth of 21%. This diverse performance underscores EPL's effective regional strategies.

Strategic Focus on Personal Care and Sustainability

EPL's advancements in the personal care segment also paid off, contributing to a significant 10.2% growth in this category, which now constitutes 48.2% of total revenue. The focus on expanding sustainable products has positioned EPL favorably in the current market, with 33% of its product mixture being recyclable, an increase from 29% in the prior quarter. The company aims to achieve over 60% in the next two to three years, highlighting its commitment to sustainability and innovation.

Guidance and Aspirational Goals for Future Growth

Looking ahead, EPL has set an ambitious target for FY '27, aiming for an EBITDA of between INR 1,050 crores and INR 1,200 crores, while revenue is projected to be in the range of INR 5,400 crores to INR 5,800 crores. While the company has not increased its short-term guidance, they are optimistic about achieving double-digit growth consistently, currently sitting at a year-to-date growth rate of 9.5%. Management emphasizes strategic initiatives for growth, particularly in eco-friendly segments, which they believe will yield continued profitability.

Challenges and Mitigation Strategies

Despite favorable performance, EPL faces ongoing challenges, particularly in the AMESA region, which has seen declining margins over six consecutive quarters. The management highlighted the impact of currency fluctuations and commodity pricing. They expressed confidence in stabilizing and improving margins in Egypt and India through strategic interventions and enhanced cost management. The focus will also remain on optimizing the operational capacity in regions with noticeable growth, such as Brazil, to harness market opportunities.

Commitment to Shareholders

In addition to operational accomplishments, EPL has demonstrated a commitment to its shareholders by declaring an increased interim dividend of INR 2.50 per share, which reflects a substantial increase as earnings per share also surged to INR 2.73, marking a 73% rise from last year. This move is indicative of the company’s strong financial health and governance principles, further solidifying investor confidence.

Long-Term Strategic Vision

EPL remains focused on its core competencies in tube manufacturing and packaging, rejecting diversification into other areas such as aluminum packaging or paper products. The management stated that their market share in pharmaceuticals and beauty and cosmetics remains underutilized, suggesting there is considerable room for growth. Investment in sustainable practices not only meets current market demands but also acts as a competitive advantage, which EPL plans to leverage for future market share gains.

Earnings Call Transcript 2025-Q2

[Operator]

Ladies and gentlemen, good day, and welcome to EPL Limited Q2 FY '25 Investors Conference Call, hosted by Systematix Institutional Equities. [Operator Instructions]

Please note that this conference is being recorded. I now hand the conference over to Mr. Pratik Tholiya from Systematix Institutional Equities. Thank you, and over to you, sir.

[Pratik Tholiya, analyst]

Yes. Thanks, Yusuf. Good evening, everyone. On behalf of Systematix Institutional Equities, I would like to welcome all the participants who have logged into this conference call of EPL to discuss the second quarter and half year ending FY '25 results. From the management side, we have Mr. Anand Kripalu, MD and Global CEO; Mr. M. R. Ramasamy, COO; Mr. Deepak Goyal, CFO; Mr. Shrihari K. Rao, President AMESA Region; and Mr. Onkar Ghangurde, our Head, Legal, CS and Compliance Officer.

At the outset, I would like to thank the management for giving us the opportunity to host this call. I would now like to welcome Mr. Anand Kripalu to take the proceedings forward and start with his open remarks. Thank you, and over to you, sir.

[Anand Kripalu, executive]

Thank you so much, Pratik, and hello, everyone, and thank for joining us for EPL's Q2 FY '25 Earnings Call. We are pleased to report a strong Q2 performance with improvements across all 4 financial metrics, reflecting the impact of our strategic priorities as well as consistent execution. Our revenue for the quarter grew by 8.4% with an EBITDA growth of 19.7% and a PAT growth of 72%. Our EBITDA margin reached 20%, an improvement of 188 basis points, and that is in line with our commitment of delivering more than 20% margin.

We delivered an ROCE of 16.5%, which expanded by 260 basis points over the previous year. Revenue growth was driven by good demand in major markets. In the AMESA region, revenue grew by 3.7%, with growth impacted by currency devaluation in Egypt. India reported 5% growth. The EAP region grew at 8.7%, and the Americas recorded a solid increase of 9.4%. Europe demonstrated particularly robust demand with a high double-digit growth of 21% on a year-over-year basis.

Our strategic focus on expanding the personal care and beyond categories yielded strong performance this quarter with these segments growing 10.2% and now accounting for 48.2% of total revenue. Our continuous EBITDA margin improvement has been driven by revenue leverage, operational efficiency, and effective cost management. We saw continued improvement in Europe and Americas, in line with our commitment. Europe margin reached 17%, while Americas delivered a robust 18% margin. With 9 consecutive quarters of steady growth, we are on track to reach our target of delivering more than 20% EBITDA margin on a sustained basis. Our PAT for the quarter grew by 72%.

The depreciation and interest costs for the quarter was steady versus the prior year and the strong growth in revenue and EBITDA helped in delivering robust PAT growth. This is in line with our narrative that EPL presents a great ROE and ROCE expansion opportunity. We have delivered a strong EPS of INR 2.73 per share, an increase of 73% over prior year. Consequently, we are delighted to announce an enhanced interim dividend of INR 2.50 per share.

Moving on to sustainability and recognitions, our dedication to sustainability and innovation continues to yield substantial recognition and results. We continue to support our customers in converting to sustainable tubes and our recyclable tube mix reached 33% in quarter 2 FY '25. We are pleased to report a retained and improved EcoVadis gold rating with our score advancing from 70 to 78, now placing us amongst the top 2% of companies globally, a testament to our reduced environment impact and commitment to ethical practices.

Additionally, we surpassed our renewable energy sourcing goal by achieving a 25% share of global energy from renewable resources, positioning us as a leader in sustainable energy use. Our efforts in sustainability were further acknowledged through several awards. We received a Great Indian ESG Organization of the Year Award at the India Sustainability Summit. Our Nalagarh factory was named factories the year at the PrintWeek Awards 2024 for operational excellence and our community-oriented CSR initiatives earned up the project of the year.

Moreover, EPL was certified as a Great Place to Work, highlighting our commitment to a positive and Inclusive workplace culture. Looking ahead, as we look to the future, we are well positioned to build on our recent achievements and drive continued growth. Our strategic focus remains on 4 key areas that will shape our journey moving ahead. One, Brazil, I'm happy to share that Brazil expansion is progressing very well. We gained one more multinational customer in the quarter, and we have now 3 MNC customers in addition to the anchor customer.

This progress demonstrates the tremendous potential of this exciting market. On margin, Brazil continues to have a positive impact and is accretive to our overall margin. Second, Personal Care and beyond. The Personal Care and Beyond category recorded a solid 10% growth this quarter driven by strong growth in the EAP and the Americas. We have a robust BMC pipeline anchored by Neo-seam tube and superior printing capability, which continue to see traction across markets. On a long-term basis, we remain confident of delivering consistent growth in this category.

Third, sustainability. Our Q2 FY '25 mix of recyclable products reached 33% versus 29% in the previous quarter and versus 21% in the previous financial year, all this driven by accelerated conversion to sustainable tubes. Our broad portfolio of sustainable solutions positions us strongly versus our competition, so as to further gain market share. And our fourth priority, margin improvement. Our EBITDA margin of 20% in the quarter demonstrates the effectiveness of pretty much everything that we've done.

The Europe margin at 17% and the Americas margin at 18% are in line with our commitment to deliver operational efficiencies in these 2 regions. We will continue to drive cost optimization and operational productivity to deliver more than 20% margin on a sustainable basis.

Further our strategy of low increase in depreciation and interest costs augers very well for consistent strong growth in profit after tax. In conclusion, we remain focused on achieving sustainable double-digit growth while consistently delivering margins above 20%. Our commitment to innovation and sustainability will guide us, as we navigate the future positioning EPL for continued success.

With that, we will now open the floor for questions.

[Operator]

[Operator Instructions] First question is from the line of Sameer Gupta from IIFL Securities Limited.

[Sameer Gupta, analyst]

Sir, firstly, on the India growth of 5%. Now overall oral care space in India is doing well. We know the numbers, Colgate and HUL have reported. So I just wanted to understand, I mean, it looks kind of subdued at an overall level. So is it primarily the beauty and Pharma segments, which are subdued in this category or your thoughts?

[Anand Kripalu, executive]

Yes. So I'll give you just the overall perspective rather than getting into categories. So I just want you to know that the 5% growth for India is affected by negative price mix. And let me just explain that a bit more. In Q2 of the previous fiscal, we had amongst the lowest commodity prices and a positive overhang of pricing. So in subsequent quarters, we corrected the prices downwards in line with commodity prices. And therefore, in Q2, what I can tell you, and while we don't report volume because we do believe it does not reflect our strategy, our volume growth in India is ahead of the revenue growth that we have declared because of that negative price mix.

[Sameer Gupta, analyst]

And this is expected to then anniversarize in the -- this quarter, it has anniversarize more or less.

[Anand Kripalu, executive]

It will anniversarize from Q3 onwards.

[Sameer Gupta, analyst]

Got it. Secondly, sir, on Americas. Now there is a lot of noise around with the new government coming in, around more trade barriers. And EPL exports from India and China to Americas, the laminates part and I know we have gone through this journey before with Trump 1.0, but I guess that was more limited to China. Is there any risk that you see this time? And any broad strategy to counter that?

[Anand Kripalu, executive]

Now, I may be answering questions about my paygrade now because what Trump is going to do? I really don't know, right? And I'm not sure if anyone knows. Now, I would -- I'll just give you my point of view, right? It may not be the way that point of view plays out, right? I think the -- we have India and China as a sourcing basis for our laminates. So today, for instance, most of the laminates we send to the U.S. go from India because there is a penal rate of import duty from imports from China.

Now, the probability that there will be penal rates of import duty from both India and China at the same time, I would reckon it's probably low. If anything, I would say that India could have a point of global competitive advantage in a situation where imports from China become taxed more heavily. So that is the view, and that is the tax really that is there on laminates and the import duty on Laminates.

Now the reality is this, if there are some taxes to some extent that whatever is there, I mean, that will ultimately reflect in our landing cost, and that will go into the pricing model with customers, okay? So I don't think we should assume that, that will be of our pocket. And all I can tell you is that because as a company, we have cost leadership in our operating model and our cost base, we will still be very competitive, right, even if we have to supply in the U.S. market.

[Sameer Gupta, analyst]

Got it, sir. That's very, very clear. Lastly, sir, if I may squeeze in. Europe, I understand there is a large growth and that is why the margin also has seen an uptake, historical high level of 17%. Now over the years, we have seen Europe has been kind of up and down both in terms of growth and margins. So just wanted to understand what is driving this growth and margins subsequently? And do you see this sustaining in the current ballpark? Or are there any one-offs that you would want to call out?

[Anand Kripalu, executive]

So there are no one-offs, first of all, okay? Now we have given a guidance that our Europe margins will be in mid-teens, right? And we absolutely believe that mid-teens is absolutely sustainable. Now yes, Europe has benefited from high volumes, but what is the sustainable part is that there have been significant interventions, whether it's to do with key management changes and whether it's to do with manufacturing realignment to make the whole manufacturing cost base more cost effective, right?

Now those are permanent. And all I'll tell you is this, that the interventions on manufacturing realignment have not yet fully played out. There is more to come, right? So even if volumes were to temper to an extent, there are other cost interventions that will play out, and that will help the overall margin. So net-net, mid-teens margin for Europe is absolutely sustainable.

[Sameer Gupta, analyst]

Got it, sir. That's all from me at this point. I'll come back in the queue for any follow-ups.

[Anand Kripalu, executive]

Okay. Thank you, Sameer.

[Operator]

Next question is from the line of Sudarshan Padmanabhan from JM Financial PMS.

[Sudarshan Padmanabhan, analyst]

Congrats on great set of numbers. Sir, while all the regions have done extremely well as far as margins are concerned, if I look at AMESA, I mean, right from last 6 quarters, the margins have been coming down. you did talk about currency impact on Egypt. But ex it, is there any cost pressure that you see? And how do you see the margins, say, in the next 4 to 6 quarters?

[Anand Kripalu, executive]

So you have visibility for India stand-alone number. So let's remove the Egypt part and the currency impact in Egypt. I just want to say that Egypt in overall terms, is doing extremely well as the business, and we are very confident of solid growth and solid margins from Egypt, okay? So let's come to India. Now, if you look at India stand-alone, I explained that we had some low-cost commodity quarters with the benefits of price overhang. And therefore, the margins were probably a tad higher than a targeted range of margins for the India business.

Today, where we stand,is we're probably not out of range, by the way, on the India market, but probably at the lower end of that margin range. We actually believe that with certain interventions, that the India margins will inch up from where we are now, right? But like I said, we are in the range. We're now at the lower end of the range, and will be probably go towards the mid or the higher level of the range.

But it is not as if the margins of the India business are below where we have targeted for it to be with an overall ambition, which is the only margin guidance we've given of 20% for the company as a whole.

[Sudarshan Padmanabhan, analyst]

Sure. And sir, my second question, I mean, there are 2 parts to it. It's more strategic in nature. I mean, if I look at from a strategic level, we have a new plant today in Latin America and Brazil, and we are driving for volumes. In your thought process, I mean today, when you go and bid for business that you need to reinvest in your business, say, from a longer-term perspective, because as the volume comes in, the growth comes in, the operating leverage comes in, the margin is going up.

But what is it that you are comfortable with as far as margins are concerned because you also need to reinvest in the business and give the cost benefits to your clients to basically mine more wallet share. So if you can talk a little bit more, that thin line between volumes taking market share and where you are comfortable as far as long-term margins are concerned?

[Anand Kripalu, executive]

I mean if you're question is really focused on long-term margin, I have nothing more to say other than to say, that we want to deliver 20-plus margins on a sustainable basis, okay? So we are not changing our margin guidance beyond that, right? Because we have given guidance on growth and margin and said we need sustainable double-digit growth and sustainable margins above 20%. And I need to make sure that we start delivering both these on a consistent basis. So I don't want to guess out of step and with any different guidance as far as margin is concerned.

I think your other, second question on that was really about growth and our ability to invest in growth. Now, just as an example, for instance, the last major investment we made was the greenfield in Brazil. Which I've already said in my opening comments, has actually tracked very well. And I have to say, we are pleasantly surprised at the opportunity that Brazil presents. And we are actually exploring the possibility of further expanding capacity in Brazil, okay?

Now the other big opportunity, we think, could be an onshore production facility somewhere in Southeast Asia, right? That is where we see a bit of a gap in our global portfolio. And that is something that we are actively evaluating.

[Deepak Goyal, executive]

And if I could add Anand to this, Deepak here. We have always kind of maintained that this business needs consistent growth investment. We invest our CapEx equal to our depreciation or amortization every year, which is a sizable amount. It's about, let's say, anywhere between INR 350 crores to INR 400 crores, right? And 60% of this amount goes into growth CapEx. So we have a sizable kitties, which is available to us to drive that growth on double-digit revenue, and we believe we will continue delivering on that promise.

[Operator]

Next question is from the line of Vinamra Hirawat from JM Financial.

As there is no response from the current questioner, we'll move to the next question from the line of Harit Kapoor from Investec.

[Harit Kapoor, analyst]

I just had 2 questions. One was you spoke about some carryforward negative pricing impact on the base was high in India on the pricing side. Any other markets where you faced a similar kind of deflationary impact. I just wanted to gauge how much would be that impact at a consolidated level. So that's the source of my question.

[Anand Kripalu, executive]

Yes. Actually, the only one that was material in terms of negative pricing was really India, right? Other than that, I think everything has got anniversarized by and large.

[Harit Kapoor, analyst]

Got it. So just a follow-up is that Q3 should see almost a complete anniversarization across the markets, basically.

[Anand Kripalu, executive]

Yes, that is correct.

[Harit Kapoor, analyst]

Got it. And second one is on Europe. I mean, you did answer the question on the margins, et cetera. But just on this 21% growth, just if you could kind of double-click a little bit more on any new customer wins or significant change there, et cetera, that's happened for this quarter? Because as the earlier participant was asking it's not been very common to see this kind of a number in the European market. So while the cost side is obviously well appreciated, I just wanted to get a sense of also this 21% odd growth, and what's kind of driven that in that number specifically.

[Anand Kripalu, executive]

Yes. So we have called out that the Europe growth is somewhat exceptional, right, at 21%. What has fundamentally happened is that there is some new business that's come our way, but that may not have come into Q2, but will come as we speak around the corner. Q2, some of the existing customers have actually given us solid orders and therefore, an improvement in their wallet share.

I think what is really important is that our teams have been able to significantly step up our ability to produce and our ability to provide service and quality at the right standard. So historically, right, if such windfall volumes had come, we might have struggled to supply it fully and convert that into sales. This time, I think the team has really done a good job in making sure that production volumes and service levels meet the customers' demand and requirements, right? And I think that's the positive that's come out of that.

[Harit Kapoor, analyst]

Got it. Got it. And last thing was on sustainability. So I think I read in your presentation that 1/3 of the portfolio is now in terms of sustainable tubes. Can you just remind me in terms of what are the targets for what part of the -- how much percentage of the portfolio will be on sustainable products, maybe in the next 2 to 3 years? Is there some stated intent there?

[Anand Kripalu, executive]

Yes. In 2 to 3 years -- we are currently at 33%. In the next 2 to 3 years, 60% plus for sure, okay, maybe even higher, right? And as you would appreciate, the percentage will be a combination of customers wanting to convert and our ability to supply, right? And both these conditions need to be met, right? I mean a customer doesn't want to convert is not going to convert, right? But I think what we are seeing is accelerated conversion demand from customers, right?

Some of the customers out there in India for instance, right? And that's in the public domain, I made a commitment that there will be 100% recyclable tubes in the not-too-distant future, okay? Now obviously, we need to have the back end ready, which we do, right? And we're going to supply them. All I can say is that last fiscal for the full year was '21, right? We're now at 33%, This year average probably will be mid to late 30s, or maybe even touching 40%. So it is converting at an exponential rate, at an accelerating rate, right? And I think this is here to stay.

[Harit Kapoor, analyst]

And then one last question from my end is, are you seeing this as a source of competitive advantage from a market share perspective right now? Are you already seeing that given you have the back end, you can scale up small clients, big clients, et cetera, that you have all the -- you have the patents. The ratings are also in your favor in terms of -- you mentioned EcoVadis Gold, et cetera. Are you already seeing that within existing customers or new customers, this is becoming a source of kind of competitive advantage in market share, winning market share gain leading outcome?

[Anand Kripalu, executive]

So I just want to frame this. So we are not the only people in the world who are doing sustainable tube. Having said that, I think we have sources of competitive advantage, which are to do with our laminate structure, and therefore, the amount of polymers that goes into a laminate that delivers the right barrier properties and our back-end readiness where over 3 years, we have been investing in CapEx to ensure that we're able to deliver sustainable and recyclable tubes, okay? So we are ahead of others in the game.

Now as a result of this, we have seen wallet share gains happening, right, in multiple markets around the world. Now we believe this source of competitive advantage will stay and play out in the times to come, and our objective is to stay one step ahead of this game, right? I can tell you that in Europe, we are going to see shifts and therefore, wallet share gains. We've seen some of that happening in India, right? And there are opportunities in other places as well. So net-net, absolutely, yes. We see this as a source of competitive advantage and an opportunity to gain wallet share.

[Operator]

[Operator Instructions] Next question is from the line of Vinamra Hirawat from JM Financial.

[Vinamra Hirawat, analyst]

Am I audible.

[Anand Kripalu, executive]

I can't hear anything.

[Operator]

I request you to please disconnect and reconnect as you are not audible, sir.

Next question is from the line of Sumant Kumar from Motilal Oswal.

[Sumant Kumar, analyst]

Sir, when we talk about Europe margin, you are talking about manufacturing alignment. So can you elaborate what is the manufacturing alignment? And second thing is for the margin expansion, any other factors like operating leverage or product mix changes? What are the other factors driving margin for Europe?

[Anand Kripalu, executive]

I mean all the factors obviously are contributing to driving margin for Europe. But just on the cost standpoint, what we have done is we have realigned some production capacity from Germany to Poland. When you move lines from Germany to Poland, a, the labor costs are lower in Poland. Second is you can actually run 7 days whereas in Germany, you run 5 days. So you get 40% more capacity from the same machine. So you can actually sweat your assets far better.

There has been some rationalization in terms of organization structure. And like I said, there is another intervention in terms of manufacturing realignment of a project that is currently underway that will play out in the next 4, 5 months, okay? So apart from that, of course, like I said, the volumes have helped -- I mean, less so the mix, but the volumes have certainly helped and our pricing has helped. The ASPs have helped as well. But the cost part is fully sustainable, right? And as I said earlier, we aim to build on that with a few more interventions.

[Sumant Kumar, analyst]

Okay. And this margin is going to sustain?

[Anand Kripalu, executive]

Well, I have said that mid-teens margin will sustain. Now mid-teens would be 100 basis points more or less here in there, but mid-teens margins will sustain that's the guidance we gave.

[Sumant Kumar, analyst]

Can you talk about the Brazil, how the Brazil sales margin? And are we doing any capacity expansion there?

[Anand Kripalu, executive]

So Brazil is doing very well. And Brazil margins are margin accretive to the Americas and to our global margins. We have been pleasantly surprised with the kind of demand we are getting, and we're getting demand not just for Oral Care, by the way, we're getting a lot of demand also for beauty and cosmetics, which is in line with our strategy.

Beauty and cosmetics typically tends to be ASP accretive and margin accretive for the business. We are currently evaluating capacity expansion in Brazil, particularly to support the beauty and cosmetics demand that we are seeing.

[Operator]

Next question is from the line of Akshat Bairathi from RSPN Ventures.

[Akshat Bairathi, analyst]

So I have just one bookkeeping question. So why your other income has doubled from the previous quarter. So is there any one-off or why has the increase?

[Deepak Goyal, executive]

Sorry, I missed the question. .

[Akshat Bairathi, analyst]

Other income has doubled from the previous quarter. So is there any one-off? Or what has contributed to the increase in other income?

[Deepak Goyal, executive]

It has two parts. One is that we get some incentive in Brazil, which is linked to our investment in Brazil. It's a long-term incentive, and that kind of goes in there. And then second is our export-linked incentives are kind of higher, and that also goes in there. So those are the two factors.

[Akshat Bairathi, analyst]

And just a follow-up, sir. So will this come in the coming quarters as well? Or this comes in single quarter in a year?

[Deepak Goyal, executive]

See, the Brazil incentive will continue. The export incentive is dependent on the quantity of export that is done in a particular quarter and could go up and down. And hence, it could kind of go up and down accordingly.

[Operator]

Next question is from the line of Anish Jobalia from Girik Capital.

[Anish Jobalia, analyst]

Sir, my question is related to the finance cost. So we are basically run rating at around INR 30-odd crores. So if we annualize this, like we are paying around INR 120-odd crores of finance cost. And at the start of the year, our debt was around INR 800-odd crores. So just want to understand like why our finance cost as a percentage of debt runs in high double digits. And what can we expect going forward in the next few quarters? Would be helpful to understand this, sir.

[Sameer Gupta, analyst]

Yes. So there are two points here. One is the finance cost is not only the interest cost. It also includes our bank charges and things like, let's say, factoring. So -- which does not come in the debt. However, factoring is the invoice discounting, right? Or the cost of that comes in the financing cost. So dividing, let's say, INR 120 crores versus INR 800 crores are not like-to-like comparison.

Second is, what you see is a closing date number and hence, average for the quarter could be different. The third point is that our -- we also have debts, but in countries like Brazil, Mexico and Colombia. And these Latin American countries have higher rate of interest. So like-to-like, we are amongst the lowest cost kind of companies because of our AA+ rating that we have.

So in India, our cost of interest would be very, very competitive. But because of our global presence, we also borrow in countries where the cost of borrowing is quite high. So it's a combination of these three things because of which it appears like that.

[Anish Jobalia, analyst]

Got it, sir. So there is -- is there any scope for restructuring in this high-cost countries so as to be able to reduce this interest cost going forward? Is there any like strategic decision around this?

[Deepak Goyal, executive]

So if you look at our overall finance cost, right, it has grown versus prior year, only at about 5% while the revenue has gone up, et cetera. And it is our consistent effort to optimize the cost. Unfortunately, when we try [indiscernible] it seems that could we kind of borrowing in India and invest in, let's say, Latin American countries, et cetera. The moment you add the forward cover costs, and we don't want to take currency risk, we are a conservative organization. The cost more or less fits there. However, having said that, we are consistently evaluating various options and we'll continue to do so.

[Anish Jobalia, analyst]

Okay, sir. And my second question is, sir, I mean, do we expect to do double-digit growth rate for the full year given the visibility that we would be having in the business?

[Anand Kripalu, executive]

I mean what I'll tell you is that on an H1 basis, we are at 9.5% growth, right, if you add Q1 and Q2, okay? Now our effort absolutely is to deliver double-digit growth. Now we play an overall portfolio of regions and countries, right? And we are hoping that if something goes up, something else may go down and vice versa. What we do not know, therefore, is really what -- how this will play out really in India and China, where there is some flavor of softness that seems to be emerging, right? Not so much in our business, but in terms of what we can see.

So what we are doing to try and securitize double-digit growth is to make sure that you have a strategy to compensate, right, for any softness that comes in this key markets. Now whether that will definitely total up to 10% in this fiscal or not is really hard for me to say. But at the end of H1, we are within spitting distance of that. But how exactly things will play out in H2 is really a little hard for me to see right now. And I think we'll have to just [indiscernible] how it goes.

[Operator]

[Operator Instructions] Next question is from the line of Hemant, an individual investor.

[Unknown Attendee]

Congratulations on a very good set of numbers. I have one question. Like in H1 FY '25, we have done an EBITDA of close to INR 410 crores and a revenue of INR 2,100 crores approximately. And our aspiration for FY '27 was INR 1,050 cores to INR 1,200 crores of EBITDA and revenue in the range of INR 5,400 crores to INR 5,800 crores. So are we sort of I mean upping our aspirational target for FY '27, given the kind of decent growth which we had in H1.

[Anand Kripalu, executive]

You are talking about the guidance we have done for FY '27 when we did the investor roadshow and in the investor deck. Is that right?

[Unknown Attendee]

Yes. I had a look at one of your investor presentation, old investor presentations. I think it was given in FY '24 investor presentation.

[Anand Kripalu, executive]

Yes. So let me say this, I don't think we are upping anything right now, okay? Now if we are a little ahead of the curve versus the medium-term ambition we have set, right? That's great. But I think we have our task cut out to actually deliver whatever we have committed till now. But as we have said, we are doing everything we can to get to those aspirations, right? Both in terms of growth and of course, in terms of absolute EBITDA margin.

[Deepak Goyal, executive]

And Anand, if I could just add, I think more important is that the initiatives that we called out in that presentation, and we called out initiatives for double-digit revenue growth, sustainability-led competitive advantage and continued margin expansion. I think those initiatives have played out quite well. And we can see those initiatives reflecting in our results. So if everything goes well, hopefully, we will achieve and kind of beat those results. But I think we are continuously -- we as management are continuously striving to achieve and beat those targets.

[Unknown Attendee]

Because I think sir INR 410 crores of revenue in H1, even if I annualize it in FY -- sorry, INR 410 crores of EBITDA in H1 FY '25 and if I just annualize it, it comes down to nearly INR 800 crores of EBITDA, right? And INR 1,050 crores to INR 1,200 crores of EBITDA is our aspirational target for FY '27. And we are hitting -- maybe crossing INR 800 crores of EBITDA in FY '24 only.

[Deepak Goyal, executive]

I think -- so you're complementing us for the good work that we have done.

[Unknown Attendee]

Obviously, sir, obviously.

[Deepak Goyal, executive]

We'll kind of do that. And when we kind of do our next set of, let's say, investor presentation. We will come and talk about how the future is looking. But at this point in time, I think we are very happy with the progress that we have made, how we have delivered on the initiatives that we spoke about. And I think our effort is that we continue making this process.

[Unknown Attendee]

And sir, will it be possible for you to quantify the double-digit revenue growth? I mean, quantify numbers, range maybe or any ballpark number? Will it be in high teens, will it be in the late teens or something or maybe early teens.

[Anand Kripalu, executive]

I think we first need to get to double-digit growth.

[Unknown Attendee]

Double digit growth, sir, we are already at 9.5%, right?

[Anand Kripalu, executive]

No, we are at 9.5%, but we are not at 10.5%. I don't want to raise our guidance. Our guidance is what we have given. Once we consistently start delivering, and I can tell you, a lot of the initiatives we have taken on growth will start bearing fruit because in this business, customer acquisition, once you get it is sticky, but it also takes time to get new business.

But all the initiatives we have put in, right, we are confident we'll start delivering higher levels of growth, particularly through beauty and cosmetics. And once we are there, I think we will revisit whether we are in a position to then raise our guidance. But as of now, we should assume double-digit growth is 10% plus.

[Unknown Attendee]

So sir, can we expect a sequential kind of growth from Q3.

[Anand Kripalu, executive]

No, I'm not going to give more flavor than this, honestly. And we are not a sequential business either, right? We're on a year-on-year business. For instance, in Q3, right, you'll see that in our base numbers as well. Some of the regions have a softer quarter because of Christmas. So the Western world tends to shut for a week or 2 weeks because of Christmas, and therefore, the quarter is softer. So we don't want to give sequential guidance of any kind. Please stick to double-digit growth with 20-plus margins really as our guidance.

[Unknown Attendee]

So I'll forget about the quarter, sir. I'll just talk about the H2. So H2 should be better than H1?

[Anand Kripalu, executive]

You're asking me to say things that we don't want to commit beyond what guidance we have given. I can't really give you short-term guidance beyond that.

[Operator]

[Operator Instructions] Next follow-up question is from the line of Sudarshan Padmanabhan from JM Financial PMS.

[Sudarshan Padmanabhan, analyst]

Sir, I would like to understand if I look at your margins, I mean, we had talked about 20% plus. Can you give some color with respect to the raw material and crude? I mean, should we be working on a gross contribution per kg, which means that if the crude goes up or down, probably absolute EBITDA doesn't change, only the margin changes.

[M. Ramasamy, executive]

Currently, most of the raw materials are range bound. It's not going very high or very low. And as you know, 50%, 55% of our business is contractual business. We will catch up with the price in the next quarter. So we don't see a big risk. Then we also have that all our efforts are on beauty and cosmetics, which is a margin accretive, right? So we will get much better absolute margin on those sales. And that's where the growth is, as the Anand was saying, 10% growth in this year -- in this quarter has come from personal care products. So I think we don't see a big risk, but we will continue to be in the range of 20% globally, is our update to that.

[Sudarshan Padmanabhan, analyst]

Sure, sir. And my second question is on Brazil. You talked about [indiscernible] further expansion potentially in Brazil. Just wanted to understand how much is the CapEx that we have put and how much is the land available for us to expand.

[M. Ramasamy, executive]

We explained in the earlier calls, it's a modular business, right? We can -- we have built in such a way that we could continue to expand for the next 1 or 2 years. That's how the plan is built. So we don't need to add any additional cost and utility and buildings and things like that. However, we need to invest on the CapEx. Our total CapEx guidelines will continue to be in our depreciation level. We invest in Brazil or we invest in that, that we will try and ensure that CapEx is well within that level. But we will prioritize where the opportunities lie.

[Sudarshan Padmanabhan, analyst]

So how much have we invested in Brazil till now?

[M. Ramasamy, executive]

$25 million is what we have invested so far.

[Sudarshan Padmanabhan, analyst]

One final strategic question. Sir, beyond FY '27, your aspirational goal and to achieve it, do we have enough on the plate on a current set of businesses? Or with the cash that we are generating, should we be looking at any adjacencies or additional businesses to go further?

[Anand Kripalu, executive]

Actually, our strategic position as of now is that we want to play in tubes and in no other area of packaging. We don't want to play an aluminum tubes. So we want to play in all forms of ABL and PPL and recyclable tubes, okay? That's our business.

Now our market shares actually are just about 10-odd percent in pharmaceuticals and in beauty and cosmetics. So we believe the headroom for growth through beauty and cosmetics within tubes is huge, while we continue to inch up on our shares on Oral Care. Now we believe that this construct of the market opportunity will allow us to deliver sustainable double-digit growth.

I think if and when we start seeing diminishing opportunities for double-digit growth coming out of our existing space, or our chosen strategic areas, that's when we will think about whether we should use cash to go into any kind of adjacencies.

But what I want to say is that we have already -- we are an end-to-end integrated business, starting from polymers all the way to the finished tube. And one of the things we are doing is actually to increase the amount of in-house manufacturing of caps for instance, which is a captive business.

Now you may call it an adjacency, but it goes snug with the tube, right? So those are the things we are doing. But do we want to go into other kinds of laminates? Do we want to go into paper packaging? Honestly, right now, that's out of scope.

[Operator]

[Operator Instructions] Next question is from the line of Pushkar from Sequent Investments.

[Unknown Analyst]

Congrats on great set of numbers. My only question is for the next couple of years, do we are only planning maintenance CapEx? Or there is some CapEx in like planning too?

[Anand Kripalu, executive]

Could you say that again, please repeat that?

[Unknown Analyst]

Asking in the next couple of years, are we only planning maintenance CapEx? Or there is some CapEx for capacity addition or something -- a huge CapEx in the next 2, 3 years that you are planning?

[Deepak Goyal, executive]

Sure. I will take that question. So we sell more than 8 billion tubes kind of every year. And when we say it double-digit revenue growth, it definitely means high single-digit volume growth as well, which means that we will be adding anywhere between 600 million to 800 million tubes every year. That is more than the capacity of most players in this business. To deliver that kind of volume growth, we consistently do capacity expansion, right? And that is built into our double-digit revenue model or the cash flow model that we have been talking about.

Do we foresee any out of the order extraordinarily large CapEx at this point in time? Or the organic business growth, no, that kind of CapEx is not foreseen. If there is any M&A opportunity comes in, et cetera, that would come on top. But for that, even growth would be on top.

[Operator]

[Operator Instructions] As there are no further questions from the participants, I would now like to hand the conference over to Mr. Pratik Tholiya for the closing comments.

[Pratik Tholiya, analyst]

Yes. Thanks, Yusuf. On behalf of Systematix Institutional Equities, I'd like to thank the management for their candid replies to all the questions. Thanks to all the participants for asking the questions. I'd like to hand it over to Anand sir, for any closing comments.

[Anand Kripalu, executive]

No, I think, thank you, Pratik, and thank you, everyone, for participating and continuing to keep the faith in EPL. Thank you.

[Operator]

On behalf of Systematix Institutional Equities, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.