Don’t Trade in the Dark—Get Your Pre-Market Report Every Day.Join Now
Search stocks
Eveready Industries India Ltd

| Q4 FY26 Earnings Conference Call

BULLISH SENTIMENT

Report Source

⬤5th May 26

Summary : Eveready delivered strong FY26 growth, driven by batteries and new Jammu plant, with optimistic outlook for FY27 despite commodity and geopolitical risks.

Management Perspective positive : We remain optimistic that this facility will contribute meaningfully to growth, margins and market share over FY '27 and beyond. We are confident that Eveready is entering FY '27 in a stronger position with better operational readiness, greater strategic clarity and improved long-term competitiveness.

Concall Report Analysis & Insights

Business Overview

  1. FY26 revenue grew 8.2% and EBITDA grew 8.9%, with an 11.5% EBITDA margin.
  2. Battery segment, primarily alkaline, was the main growth driver, increasing 9.3%.
  3. Flashlight segment grew 3%, with rechargeable formats gaining traction.
  4. Lighting business grew 8.1% through volume growth and focus on higher-value SKUs.
  5. Commissioned Jammu manufacturing facility for alkaline batteries, a strategic milestone.

Future Growth Prospects

  1. Jammu plant ramp-up will enhance supply resilience and support margin expansion.
  2. Stronger alkaline penetration and premiumization across batteries and lighting are key focus areas.
  3. Expansion in adjacencies like mosquito racquets and power banks is expected.
  4. New product launches, including lithium batteries and mobile accessories, will drive growth.
  5. BIS standard for flashlights is expected to benefit quality-compliant branded offerings.

Management Insights

  1. FY26 closed with gradually improving demand, supported by rural consumption and urban recovery.
  2. Calibrated pricing actions and disciplined cost control helped navigate cost headwinds.
  3. Jammu facility is a strategic decision, aligning with 20%+ CAGR in alkaline battery volumes.
  4. The company aims for sustainable growth, double-digit operating margins, and stronger manufacturing integration.
  5. Foundations built in FY26 position the company strongly for FY27 and long-term value creation.

Signs of Skepticism

  1. Management expects to maintain similar EBITDA margins despite strong headwinds and commodity volatility.
  2. Operational breakeven for the Jammu plant is year one, but payback is projected at 5-6 years.
  3. The impact of alkaline battery growth on carbon zinc sales (cannibalization) is acknowledged but downplayed.
  4. The full benefit of tax transition to 22% in FY27 is subject to utilization of carryforward business loss.

Risk Factors

  1. Ongoing West Asia crisis poses risks of higher crude-linked inflation and supply chain disruption.
  2. Commodity costs, especially zinc prices, intensified in H2 FY26, creating cost pressures.
  3. Rupee depreciation against the Yuan impacts Chinese imports and overall costs.
  4. Geopolitical sentiments could impact urban demand revival.
  5. Commodity volatility may continue in the near term, affecting pricing and margins.

Good To Know

  1. The company reduced debt by over INR100 crores in FY26.
  2. Sale of leasehold rights for Noida plant Plot B1 completed, Plot B2 pending.
  3. Total sale proceeds from Noida land expected to be around INR251 crores.
  4. The company will transition to a 22% tax regime in FY27.
  5. A&P expenses are expected to remain around 10% of sales in the new financial year.

Key Drivers

  1. Jammu plant boosts alkaline production.
  2. New products drive premiumization.
  3. Strong distribution network aids growth.
  4. Debt reduction improves flexibility.

Key Analyst Discussions

Competitive Environment

  1. Alkaline battery market share is targeted to reach 20% from current 16%.
  2. BIS standard for flashlights will benefit quality-compliant brands over unorganized players.
  3. Alkaline batteries are more premium than carbon zinc, driving future growth.
  4. The unbranded flashlight market is heavily dependent on China and will be impacted by BIS compliance.

Market Trends & Consumer Behavior

  1. Urban demand showed revival in recent months, but geopolitical events could impact it.
  2. Consumer preference is shifting towards high-performance and premium products.
  3. Power-intensive devices are driving increased demand for alkaline batteries.
  4. India's growth will increase penetration of power-consuming devices.

Financial Highlights

  1. Management expects to maintain EBITDA margins around 11.5% despite headwinds.
  2. Debt reduction is a priority, with further reductions planned for FY27.
  3. The company will transition to a 22% tax rate in FY27, subject to business loss utilization.
  4. Noida land sale proceeds are INR116 crores for Plot B1, with Plot B2 pending.
  5. Jammu plant's depreciation cost will be capitalized from Q1 FY27.

Product Composition

  1. Alkaline segment is growing over 20% CAGR in volume terms.
  2. Alkaline batteries are expected to become 1/3 of the overall battery segment.
  3. New product launches include lithium batteries and mobile accessories.
  4. Premiumization is a focus across battery and flashlight segments.
  5. Jammu facility will produce alkaline, zinc batteries, flashlights, and lighting products.

Strategic Considerations

  1. Jammu plant is a strategic move to localize alkaline battery production.
  2. The plant aims for margin decompression and improved cost efficiencies.
  3. Manufacturing realignment includes optimizing existing units and Noida plant closure.
  4. The Jammu plant offers potential for white labelling alkaline batteries for global markets.
  5. A&P spend will remain around 10% of sales in the coming year.
Eveready Industries India Ltd (EVEREADY) Concall Report Analysis & Insights | Dhanarthi