Borosil Ltd - From capacity build-out to earnings growth | Q1FY27 Company Update

Borosil Q1FY27 numbers were largely in line with our estimates, with healthy growth across glassware and Opalware partly offset by near-term margin pressure from elevated fuel and packaging costs and initial operating expenses related to the newly commissioned steel flask facility. The company continues to sharpen its focus on building in-house manufacturing capabilities, with commercial production commencing from two double-wall lines at its Rajasthan steel bottle plant and the third line expected to come on stream in Q2FY27E. This should improve product availability in the Hydra portfolio, reduce dependence on imports and provide better control over costs and supply-chain execution. Borosil is also progressing with its Rs 1,420mn dedicated glassware facility at Bharuch, expected to commission by end-Q3FY27E, alongside the Rs 500mn Jaipur borosilicate furnace expansion. With FY27E capex guided at Rs 1,250–1,500mn, the company remains in an investment phase focused on strengthening backward integration and manufacturing depth; as these capacities ramp up, we expect higher in-house production, better utilization, solar savings and operating leverage to support margin expansion and improvement in return ratios over the medium term. We maintain our BUY rating on the stock.

Borosil Ltd. Stock Price Chart

Healthy volume-led growth across glassware and Opalware:

Borosil reported revenue growth of 9.0% YoY to Rs 2,536mn (MNCL Est- Rs 2,539mn), with growth led by glassware and Opalware. Larah (Opalware) (~33% of revenue) grew by 9.8% YoY to Rs 836mn, while glassware (~26%, of revenue) posted a growth of16.8% YoY to Rs 656mn. Non-glassware (~39%), with revenue increasing 4.2% YoY to Rs 981mn. The Management highlighted that growth in both glassware and Opalware was largely volume led, with limited pricing contribution during Q1 as the benefit of price hikes is expected to flow through from Q2FY27E onwards. Within non-glassware, Hydra continued to face BIS-related supply constraints, though this was partly offset by healthy growth in domestic appliances and stainless-steel cookware.

Near-term cost pressure weighed on profitability

Gross margins expanded by 234bps YoY to 69.1%; however, higher other expenses and elevated fuel and packaging costs led to OPM contraction of 246bps to 13.6%. EBITDA declined 7.7% YoY to Rs 345mn, while PAT declined 26% YoY to Rs 128mn. impacted by lower operating profit and lower other income. West Asia conflict had an adverse impact of ~Rs 100–120mn during Q1, with fuel costs remaining the key pressure point. Encouragingly, fuel costs have started moderating, while price hikes of 5–7% across categories should begin to reflect more meaningfully from Q2FY27E.

Outlook:

We expect earnings momentum to improve over the coming quarters, supported by better price realization, easing fuel costs and improved Hydra availability ahead of the festive season. The management expects the newly commissioned double-wall lines to materially improve product availability, while incremental solar savings of ~Rs 270–280mn at the EBITDA level in FY27E should provide additional support to margins. With underlying demand in glassware and Opalware remaining healthy and largely volume led, we expect revenue momentum to sustain, while a normalization in input costs, higher in-house manufacturing and better operating leverage should support a gradual recovery in profitability through FY27E.

Valuation, view and Risk:

We expect Borosil to post a revenue/EBITDA/PAT CAGR of 14%/29%/40% over FY26-29E, supported by healthy volume growth, ramp-up of new manufacturing capacities and operating leverage. We largely maintain our revenue estimates, while trimming our FY28E PAT estimates to factor in higher depreciation associated with the ongoing capex programme. We introduce FY29E estimates and roll forward our valuation to Q1FY29E. We value the stock at 30x Q1FY29E EPS, arriving at a revised TP of Rs 395 (earlier Rs 365) and maintain our BUY rating. Key risks include slower-than-expected demand, delay in ramp-up of new capacities, sustained input-cost inflation and higher competitive intensity.

Company website: https://www.borosil.com/

Click to download the full Borosil Ltd. Company Update

Analyst:

• Rahul Dani - Research Analyst, Institutional Equities (NISM-201500034725)
• Vaidik Bafna - Research Associate, Institutional Equities (NISM-202100035711)

Frequently Asked Questions (FAQ)

What is the target price for Borosil Ltd?

The supplied research sets a target price of ₹395 per share, compared with the reported CMP of ₹255. This is a research-based valuation estimate and is not a guaranteed return.

What is the rating on Borosil Ltd?

The supplied research maintains a BUY rating on Borosil Ltd, citing healthy volume growth, capacity expansion, manufacturing integration and potential operating leverage.

How did Borosil perform in Q1FY27?

Borosil reported 9% year-on-year revenue growth to ₹2,536 million. EBITDA declined 7.7% to ₹345 million, while PAT decreased 26% to ₹128 million.

What drove Borosil's Q1FY27 revenue growth?

Revenue growth was led by glassware and Opalware. Larah Opalware revenue increased 9.8% year-on-year, while glassware revenue grew 16.8% year-on-year, according to the supplied research.

Why did Borosil's profitability decline in Q1FY27?

Profitability was affected by elevated fuel and packaging costs, higher other expenses and initial operating expenses related to the newly commissioned steel flask facility. A reported West Asia conflict impact also weighed on the quarter.

What are Borosil's key capacity expansion initiatives?

Borosil has commenced commercial production from two double-wall lines at its Rajasthan steel bottle plant. It is also developing a dedicated glassware facility at Bharuch and expanding its Jaipur borosilicate furnace capacity.

What could support Borosil's future margins?

Potential margin drivers include moderating fuel costs, price hikes, higher in-house production, improved capacity utilisation, solar savings, better Hydra product availability and operating leverage.

What are the key risks for Borosil Ltd?

The supplied research identifies slower-than-expected demand, delays in capacity ramp-up, sustained input-cost inflation and higher competitive intensity as key risks.

Should investors buy Borosil Ltd shares?

The supplied research maintains a BUY rating. This represents the research firm's view and should not be treated as personalised investment advice or a guarantee of future performance. Investors should conduct independent due diligence and consult a SEBI-registered investment adviser where appropriate.

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