UFLEX - Uflex

📊 NSE: UFLEX 🏢 Packaging 📅 Last Updated: 12/14/2025 14:38

💰 Financial Performance

Revenue Growth by Segment

Packaging Films segment volume grew 0.8% YoY in H1 FY26, while the Packaging segment volume grew 5.8% YoY. Total consolidated revenue for H1 FY26 reached INR 7,782.8 Cr, a 3.2% increase from INR 7,545.1 Cr in H1 FY25. For the full year FY25, revenue is projected to grow 10-12% to reach INR 14,800-15,000 Cr compared to INR 13,414 Cr in FY24.

Geographic Revenue Split

The revenue split is 44% Domestic (India) and 56% International. International operations span Egypt, Dubai, Mexico, USA, Russia, Poland, Hungary, and Nigeria. Packaging Films sales volume is split between International (57.4%) and Domestic (20.3%).

Profitability Margins

Normalized PAT Margin stood at 1.9% for H1 FY26. Standalone PAT Margin was 2.0% in H1 FY26 compared to 2.2% in H1 FY25. Profitability is heavily influenced by raw material costs (65-75% of sales) and industry-wide overcapacity which pressures realizations.

EBITDA Margin

Consolidated Normalized EBITDA Margin was 11.0% in H1 FY26, down 110 bps from 12.1% in H1 FY25. Q2 FY26 Normalized EBITDA Margin was 10.1%, down 140 bps YoY. The decline is attributed to increased freight costs from the Red Sea crisis and global demand sluggishness.

Capital Expenditure

The group is undertaking continuous debt-funded capex, including a PET chips plant in Panipat (1,68,000 MTPA) and an upcoming plant in Egypt for FY2026. Capex for H1 FY26 was INR 489.7 Cr. Net debt is expected to remain in the range of INR 5,500-6,000 Cr over the medium term.

Credit Rating & Borrowing

CRISIL maintains a 'Stable' outlook. Interest coverage ratio is estimated at 3.01 times for FY2025 (up from 2.54x in FY2024). Finance costs for H1 FY26 were INR 386.9 Cr, a 14% increase YoY, reflecting higher borrowing levels for expansion.

⚙️ Operational Drivers

Raw Materials

Key raw materials include PET chips, Polyethylene Terephthalate (PET) resins, and chemicals for inks and adhesives, accounting for 65-75% of net sales.

Import Sources

Sourced globally to support manufacturing units in India, Egypt, Dubai, Mexico, USA, Russia, Poland, Hungary, and Nigeria. Specific state/country sources for raw materials are not disclosed, but the company utilizes a 'Glocal' (Global + Local) procurement strategy.

Capacity Expansion

Current global capacity is 1,351,910 MTPA. Aseptic liquid pack capacity is 12 billion packs per annum. A new 1,68,000 MTPA PET chips plant in Panipat started commercial production in April 2024. An Egypt PET chips plant is expected to commence in FY2026.

Raw Material Costs

Raw materials account for 65-75% of net sales. The group is highly susceptible to volatility in input costs; however, the new PET chips plants aim to provide captive supply to stabilize costs and improve margins from FY2026 onwards.

Manufacturing Efficiency

Capacity utilization is supported by a global manufacturing footprint. The Panipat PET chips plant is designed for captive consumption and bottle-grade chip sales to optimize the bottom line.

Logistics & Distribution

Distribution is impacted by geopolitical uncertainty and freight cost hikes. The company maintains 17 manufacturing units globally to stay close to customers and mitigate long-haul logistics risks.

📈 Strategic Growth

Expected Growth Rate

10-12%

Growth Strategy

Growth is driven by capacity expansion in PET chips (Panipat and Egypt) and aseptic packaging. The company is focusing on 'Glocal' operations to navigate trade barriers and high-value product innovations like 2K solvent-based inks and adhesives.

Products & Services

Flexible packaging films (BOPET, BOPP, CPP, metallized), flexible laminates, holographic films, aseptic liquid packs, inks, adhesives, and recycling services.

Brand Portfolio

UFlex, Asepto (aseptic liquid packaging).

New Products/Services

Developed 2K solvent-based inks and adhesives; expanding into PET bottle-grade chips with the new 1,68,000 MTPA Panipat facility.

Market Expansion

Focusing on the U.S. market via Mexico (USMCA benefits) and expanding European reach despite geopolitical headwinds. Egypt plant expansion targets the African and Middle Eastern markets.

Market Share & Ranking

One of the largest players in the global flexible packaging industry; specific percentage market share not disclosed.

🌍 External Factors

Industry Trends

The industry is shifting toward sustainability (recycling) and aseptic packaging. Current trends show a recovery in export demand and realizations after a sharp decline in the previous fiscal due to oversupply.

Competitive Landscape

Competes with global and domestic flexible packaging players. The industry is characterized by cyclicality and frequent capacity additions by players when prices improve.

Competitive Moat

Moat is built on a global manufacturing footprint (17 units), integrated operations (captive PET chips), and a 40-year legacy. Sustainability is reinforced by a 74,317 MTPA recycling capacity and 5.4 billion+ PCR PET bottles recycled.

Macro Economic Sensitivity

Highly sensitive to global consumption momentum and inflation. Persistently elevated food prices put pressure on household budgets, indirectly reducing demand for consumer goods packaging.

Consumer Behavior

Shift toward smaller SKUs and sustainable/recyclable packaging is driving demand for UFlex's recycling and green packaging solutions.

Geopolitical Risks

The Red Sea crisis impacts freight costs. The U.S. tariff environment and European geopolitical uncertainty have led to cautious business sentiment and delayed orders.

⚖️ Regulatory & Governance

Industry Regulations

Subject to global plastic waste management rules and food safety standards for packaging. USMCA trade agreement regulations are critical for Mexico-to-US exports.

Environmental Compliance

Assigned an ESG rating of 58/100 (Adequate). The company operates recycling facilities with a 74,317 MTPA capacity to meet environmental norms.

Taxation Policy Impact

Effective tax rate not explicitly stated, but H1 FY26 consolidated PBT was INR 134.5 Cr with a Net Profit of INR 84.9 Cr, implying an effective tax rate of approximately 36.8%.

⚠️ Risk Analysis

Key Uncertainties

Fluctuations in crude oil prices (impacting raw materials) and forex volatility are primary risks. Continued losses in H1 FY25 (reported in some segments) could pressure liquidity if cash accruals do not recover as expected.

Geographic Concentration Risk

56% of revenue is international, providing diversification but exposing the group to global geopolitical and trade policy risks (e.g., U.S. tariffs).

Third Party Dependencies

High dependency on global shipping lines; Red Sea disruptions directly impact margins via freight costs.

Technology Obsolescence Risk

Risk is mitigated by continuous R&D in chemicals and aseptic packaging; however, the shift toward plastic-free alternatives remains a long-term monitoring point.