Summary
Sellowrap Industries Limited - H1 FY26 Earnings Call Summary Tuesday, January 20, 2026, 4:00 PM
Event Participants
Executives 2 Saurabh Poddar (Managing Director), Shrushti Gandhi (Company Secretary)
Analysts 2 Madhur Rathi, Tushar Gupta
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Order Book | ₹275 crores | Current status to be executed over the next 2 years. |
| Capacity Utilization | 75% - 80% | Current levels; peak revenue potential from current assets estimated at ₹250-300 crores. |
| Revenue Growth (H1) | Reported Growth | Revenue is growing YoY; QoQ fluctuations attributed to seasonal automotive demand cycles. |
| EBITDA Margin | 14% | Increased from 12% due to automation, waste control, and lean organizational management. |
| R&D Spend | 1% - 1.5% | Allocated primarily to the Ranipet R&D center for EV and new technology development. |
| Short-term Loans | ₹15.16 crores | Increased from ₹8.22 crores due to Pune plant investments and LC conversions for imported machinery. |
| Export Revenue | 20% - 25% | Primarily deemed exports through OEM customers to global markets. |
| Customer Concentration | 60% | Share of top 5 customers; management views this as a standard and healthy proportion for Tier 1 suppliers. |
Geographic & Segment Commentary
- Foam & Water Shield: This segment is the most profitable with margins in the mid-to-high 20% range. Sellowrap is a market leader in “Water Shield” products, benefiting from high market share and efficient nesting processes.
- Segment Mix (Vehicle Type): The portfolio is heavily weighted toward 4-wheelers, which account for approximately 90% of revenue. The remainder is split between tractors, buses, and white goods, with negligible exposure to 2-wheelers.
- Regional Dominance: Manufacturing is strategically distributed across India’s auto hubs. Ranipet (near Chennai) accounts for 49% of sales value, followed by Pune at 23% and Gurgaon at 20%.
Company-Specific & Strategic Commentary
- EV Readiness: While products are largely platform-agnostic (ICE and EV), the company is developing specific components for EV OEMs at its Ranipet R&D center to capitalize on India’s 36.4% EV CAGR.
- Operational Excellence: The company uses only “all-electric” injection molding machines rather than conventional servo machines to align with ESG goals and improve precision.
- Strategic Export Moves: Sellowrap is leveraging global purchasing offices (GPOs) of Indian OEMs to de-risk supply chains away from China and secure international RFQs.
- Vertical Integration: Maintains a Joint Venture (Sellowrap EPP) with Japanese firms Kaneka (51%) and Mitsui (23%) for specialized EPP moldings used in automotive packaging.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | 14% - 15%+ CAGR | Management aims to consistently beat the industry benchmark of 11% CAGR. |
| FY26/27 Top Line | 8% - 10% Growth | Growth expected to be driven by new plant utilization and the ₹275 crore order book. |
| Margin Sustainability | Stable/Improving | PAT margins expected to rise slightly as fixed costs are amortized over higher sales volumes. |
Risks & Constraints
| Risk | Context |
|---|---|
| Raw Material Volatility | Fluctuations are managed through a mix of customer absorption and negotiation; some contracts are formula-based (quarterly/yearly). |
| Customer Concentration | High dependency on top 5 clients (60% of revenue), though management notes these are diversified across 15-20 global car markers. |
| Capital Expenditure | Cash flow from operations turned negative recently due to heavy investments in plant and machinery for the Pune expansion. |
Q&A Highlights
Financials and Loans
- Question: Why did short-term loans increase to ₹15.16 crore? (Madhur Rathi)
- Answer: Driven by investments in the Pune plant and the conversion of imported machine LCs into bank loans (Saurabh Poddar).
- Question: Why was cash flow from operations negative in H1FY26? (Finportal)
- Answer: Primarily due to heavy investment cycles in plant infrastructure (Saurabh Poddar).
Market Position and Competition
- Question: Who are the major competitors? (Finportal)
- Answer: In plastics, competition includes Lumax, Sharda Motor, Radiant, and PPAP. In foam, competitors are Indica Chemicals and Pulcra (Saurabh Poddar).
- Question: Are you a single-source supplier? (Finportal)
- Answer: For certain categories, Sellowrap is a single source with 60-70% market share in specific products, though OEMs typically prefer multiple sources for general parts (Saurabh Poddar).
Growth Strategy
- Question: What is the timeline for the ₹275 crore order book? (Finportal)
- Answer: Execution is expected within the next 2 years (Saurabh Poddar).
- Question: Is the kit value per vehicle increasing? (Finportal)
- Answer: Yes, it is increasing across the 100+ models served, though specific amounts vary widely by model (Saurabh Poddar).
Key Takeaway
Sellowrap Industries demonstrated a steady trajectory in H1 FY26, characterized by an improving EBITDA margin of 14% resulting from aggressive cost-cutting and automation. The company maintains a robust ₹275 crore order book and is strategically positioned in major automotive hubs, with the Ranipet facility contributing nearly half of total sales. Strategic focus remains on high-margin segments like Foam and “Water Shield” products, while transitioning toward EV-specific component development to outpace the industry’s 11% CAGR. Despite a recent spike in short-term debt and negative operating cash flow due to the Pune plant expansion, management remains confident in achieving 14-15% long-term growth. Future performance hinges on the successful execution of the order book and the continued scaling of the all-electric manufacturing base to meet global OEM “China-plus-one” sourcing strategies.
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