Linc Limited (531241) Earnings Call Transcript

Good afternoon, ladies and gentlemen. Welcome to the Linc Limited Q1 FY '27 Earnings Conference Call. [Operator Instructions]Please note that this conference is being recorded. I now hand the conference over to Mr. [indiscernible] SKP Securities Limited. Thank you, and over to you, sir.

Good afternoon, ladies and gentlemen. It's my pleasure to welcome you all on behalf of Linc Limited and SKP Securities to this financial results conference call. We have with us Mr. N.K. Dujari, Director Finance and CFO; and Mr. Sanjeev Sancheti from Unitas Advisors LLP, the company's IR advisers. We will have the opening remarks by the management, followed by a Q&A session. Thank you, and over to you, Mr. Sanjeev.

Thank you, Anand. Good afternoon to all the participants. Before I hand over the call to Mr. Dujari for the opening remarks, I would like to draw your attention to the safe hard statement in the earnings presentation. I perceive one of you to kindly go through the presentation. In terms now before the Q&A starts, so that you are well aware of the earnings presentation details as well as the safe harbor statement. Request you to go through the same very carefully. Over to you, Mr. Dujari.

Good afternoon, and thank you for joining us for Linc Limited Quarter 1 FY '27 Investor Call. During the quarter, we delivered a stable performance despite a challenging operating environment marked by geopolitical uncertainty and elevated input costs. Operating income stood at INR 13,895 lakhs representing a Y-o-Y growth of 1.4%. Our business segment recorded varying trend during the quarter. Corporate sales declined by 14% against a high base in the previous year. While export revenue declined by 3% due to the continued impact of geopolitical uncertainty on global trade flows. At the same time, general trade grew by 8%, while e-commerce registered a robust growth of 32%, supported by sustained demand for our product portfolio and an increasing contribution from Linc on our e-commerce-focused subsidiary. Corporate sales are inherently requirement based and influenced by the timing of order execution. Consequently, quarterly fluctuations are characteristic of this segment and do not indicate any structural change in the business. The steady growth in general trade and the strong performance of e-commerce underscore the continued progress of our brand building and distribution initiatives. Operating EBITDA for the quarter stood at INR 1,209 lakhs with an EBITDA margin of 8.7%, representing a Y-o-Y contraction of 89 bps. The margin pressure was primarily attributable to an increased polymer prices, our principal raw material, driven by supply constraints and higher crude oil prices. This impact was partially offset by disciplined cost management. Looking ahead, we are seeing polymer prices ease, and we expect them to normalize over the coming quarters. Alongside this, we will continue to maintain a disciplined approach to cost management. For quarter 1 FY '27, PAT stood at INR 581 lakh translating into a PAT margin of 4.2%. The Pezenik Y-o-Y decline of 93 bps. Our balance sheet remains strong with net cash position of INR 1,194 lakhs as on 30th June 2026, reflecting continued financial discipline. Asset productivity remained healthy with fixed asset turnover of 3.72x, indicating efficient utilization of the asset base. The cash conversion package stands at 65 days. Our international growth initiative continues to progress broad line with our previously outlined plan. Unilink, our JV with Mitsubishi Pencil company, Japan remains operationally stable with exports accounting for more than 50% of its revenue during the quarter. Operations at our JV in Turkey continues to progress steadily. The development of our subsidiary with Morris of Korea remains linked to the commissioning of the upcoming manufacturing facility in West Bengal which is expected to become operational by quarter 3 of FY '27. Sales momentum at our Kenya subsidiary has begun to improve, and we expect this positive trend to strengthen over the coming quarters. [indiscernible] has remained stable in the current quarter and is expected to gain momentum in periods ahead. While the ramp-up of these initiatives has taken a little longer than initially envisaged, we believe the foundations being established are robust and well considered. The benefit of and improving product mix, disciplined execution and gaining strategic partnerships are expected to become increasingly visible as near-term input cost pressure more rates. We remain committed to strengthening the business and creating a platform for sustainable long-term growth. Given the current uncertainties, we believe it will be prudent to await another quarter to gain better visibility before providing some more guidance on our outlook. We've been focused on maintaining financial discipline while executing our long-term growth initiatives. With that, now I open the floor for the questions.

[Operator Instructions] We take the first question from the line of Sapna Devi from Renaissance Investment Managers.

I have 3 questions. One is related to the market share. How has our market shares trended this quarter? Have we seen any market share gains or dip? And what's the long-term revenue growth guidance? And have we taken any price hikes considering the commodity inflation? How much of the price hike has been passed on to the customers vis-a-vis how much is yet to be passed on? And how much of the price hike has passed through has reflected in the margins this quarter? And what is like -- question 2 would be what is the steady-state margin guidance we are expecting?