 "Packaging stocks rally up to 11% post Q1; Uflex, Polyflex hit 52-week highs")
Uflex, Polyflex share price today: Shares of packaging companies rallied up to 11 per cent on the BSE on Friday, lifted by heavy volumes, after the companies reported strong earnings for the quarter ended June 2024 (Q1FY25).
Uflex (Rs 624.50) and Polyflex Corporation (Rs 1,310), for instance, hit their respective 52-week highs, having surged 11 per cent and 10 per cent, respectively. Jindal Poly Films, on the other hand, soared 11 per cent to Rs 825.90 on the BSE in the intraday trade today. In comparison, the BSE Sensex was up 1.3 per cent at 80,217 at 12:50 PM.
Uflex said the packaging films business gained substantial momentum in this quarter, fueled by improved contribution margin in India. This marked a crucial turning point as the increased headline margin in packaging film in India brought earnings before interest, tax, depreciation and amortisation (Ebitda) back into the positive territory after six challenging quarters.
With the packaging film industry showing signs of bottoming out during the quarter, there is now a promising opportunity to capitalise on an emerging growth cycle. As the demand-supply balance stabilises, this could potentially evolve into a significant wealth creation opportunity for film manufacturers, who have been impacted by price declines over the past year and a half.
"Packaging remains the largest end-use for BOPET films, demonstrating robust growth across developing markets and thriving in profitable niches within developed markets," Uflex's management said.
That apart, the ongoing rural demand growth for FY25 is to be driven by a better monsoon, good harvest, higher MNREGA budget allocation, stable inflation, increased government spending and signs of recovery of the domestic demand before the festive season, it added.
In Q1FY25, Uflex's Ebitda margin improved 280 bps year-on-year (Y-o-Y) but slipped 40 bps quarter-on-quarter (Q-o-Q) to 12.6 per cent. On a Y-o-Y and Q-o-Q basis, the company's loss came down to Rs 98.4 crore from Rs 416 crore in Q1FY24 and Rs 271 crore in Q4FY24. Revenue from operations grew 12.1 per cent Y-o-Y and 6.6 per cent Q-o-Q at Rs 3,654 crore.
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Separately, Jindal Poly Films reported a 75 per cent Y-o-Y growth in net profit at Rs 168.09 crore as against Rs 97.63 crore in Q1FY25. Revenue grew 48 per cent Y-o-Y to Rs 1,233 crore.
The revenue and Ebitda growth of Jindal Poly Films significantly outpaced the industry average, the management said, adding that the improvement in Ebitda was driven by the robust 41 per cent revenue growth in its India packaging films business during Q1FY25 compared to the same quarter the previous year.
During the quarter, India packaging films business achieved revenue of Rs 923 crore. This impressive top-line growth was accompanied by a 142 per cent rise in Ebitda.
That said, Jindal Poly Films said the company remains cautiously optimistic about the future prospects of the industry.
"While recognising the ongoing market challenges, the company is confident in its ability to leverage its strengths and capitalise on emerging opportunities. The management's focus on innovation, cost optimisation, and strategic market expansion should drive continued growth and profitability, even as market conditions remain uncertain," the management of Jindal Poly Films said.