Ester Industries Ltd Q4 FY25 Earnings Analysis

- Specialty Polymers segment aims for double-digit volume growth in the next financial year, driven by a strong pipeline and new product approvals. - Full-year specialty polymers tonnage expected to close near 5,000 tons, including rising rPET volumes (Q4 rPET sales projected at 800-1,000 tons). - Filmtech business revenues targeted to reach Rs. 450-500 crore by FY26 with capacity utilization increasing from current 55-60% to over 65-70%. - Value-added specialty films proportion increased to 27% with plans to maintain or grow this share to around 30%. - Export sales expected to sustain or grow based on established recurring business pipelines. - Overall, strong confidence in growth potential due to narrowing demand-supply gap, government rules boosting demand, and product innovations. - Long-term BOPET industry growth forecasted at 11-12% annually for 3-4 years, with supply additions slower than demand growth.

- Specialty Polymers segment expects double-digit volume growth in the next financial year driven by a rich product pipeline and new product approvals. - Specialty Polymers profitability likely to remain stable with EBITDA margins around 30-33%. - Film business anticipated to grow with revenues reaching Rs. 450-500 crore by FY26 at optimal utilization. - Film EBITDA margins expected to sustain at 18-20% levels given fixed costs remain constant. - Improved demand-supply dynamics and better product mix (27% value-added products) to support margin expansion. - Export and value-added product segments to contribute higher margin and volume growth. - PWMR implementation expected to increase demand for polyester films, driving further growth. - JV with Loop Industries projected to significantly enhance growth trajectory and profitability post commencement in CY 2027. - Overall consolidated EBITDA for 9M FY25 improved to Rs. 125 crore from negative Rs. 6 crore year ago; PAT positive at Rs. 25 crore vs loss of Rs. 45 crore. - Management confident of sustained improved operational and financial performance going forward.

- Loop Industry Venture: Ongoing project with a total CAPEX of around $165 million (~Rs. 1,400-1,500 crore), funded 40% by equity and 60% by debt. Equity contribution split equally between Ester Industries and Loop (~Rs. 280 crore each). DPR in preparation; debt tie-up expected within 4-6 months. - Ester Filmtech plant: Installation of a metallic extruder in Hyderabad by June/July 2025 to convert PET bottle flakes to granules for recycled content in films. No major CAPEX planned at Khatima plant. - Share warrants raised for Rs.175 crore equity; 25% already received; additional equity funding to be called as required. - CAPEX may increase temporarily if new projects arise, but existing debts expected to be liquidated by 2030. - Earlier Rs. 70-80 crore capital work-in-progress relates to extrusion capacity enhancement linked to value-added films.

- Loop industry venture funding: The total project cost is approximately Rs. 1,400-1,500 crore (~$165 million), funded through 40% equity and 60% debt. - Equity for Loop: Ester Industries and Loop will each contribute Rs. 280 crore as equity. - Recent equity investment: Both Ester Industries and Loop invested Rs. 8.5 crore each recently (total Rs. 17-18 crore in hand). - Share Warrants: Ester Industries has raised share warrants for Rs.175 crore; 25% amount received so far, balance to be called as required. - Debt tie-up for Loop: Bankable DPR is being prepared; debt expected to be tied up in next 4-6 months. - Debt repayment for Ester Filmtech: Long-term debt repayment obligation of Rs. 50 crore annually; existing debt expected to be extinguished by 2030. - No major repayments due in current March quarter; Rs. 80-85 crore due next year.

- Export business operates on a recurring order basis rather than tender-driven. - Orders are received and executed frequently ("every day, every week"), creating a running account situation. - Q3 had a proven export pipeline which is expected to continue contributing in the current quarter. - New business opportunities are being explored to expand export volumes beyond Q3 levels. - Management targets to maintain at least the same export sales as Q3 with potential growth. - No specific quantified order book or pending order value was disclosed. - Focus is on sustaining and growing recurring exports alongside developing new business.