UFlex cuts net debt to normalized EBITDA ratio to 3.42x

UFlex Limited cut net debt to normalized EBITDA to 3.42x at September 30, 2026, from 3.77x three months earlier, while spending Rs 1,047.1 crore on capital expenditure in H1 FY27. The ratio declined despite net debt rising to Rs 9,039 crore, alongside Q2 FY27 normalized EBITDA of Rs 758.8 crore, up 95% year on year.

What lifted UFlex's normalized EBITDA in Q2 FY27?

UFlex reported normalized earnings before interest, tax, depreciation and amortization, or EBITDA, of Rs 758.8 crore in Q2 FY27, up 95% from Rs 389.5 crore in Q2 FY26. Its normalized EBITDA margin increased by 550 basis points, or 5.5 percentage points, to 15.6%, after an adjustment of Rs 46.2 crore for foreign-exchange losses on derivative instruments.

Revenue rose 26% year on year in Q2 FY27, driven principally by higher sales realisations, while total sales volume increased 2%. UFlex attributed the rise in realisations to a larger value-added portfolio, recovery in Indian biaxially oriented polyethylene terephthalate, or BOPET, film prices, regional procurement in overseas markets and pass-through of higher raw-material costs.

Overseas operations contributed 61% of Q2 FY27 revenue, with Egypt, Mexico, Hungary and Nigeria named as the principal contributors to incremental revenue. India, Egypt, Mexico and Hungary also made a major contribution to incremental EBITDA, while blended spread rose 190 basis points year on year to 42%.

How did UFlex's debt and leverage change by September 2026?

UFlex reduced net debt to normalized EBITDA, measured over the trailing 12 months, to 3.42x at September 30, 2026, from 3.77x at June 30 and 4.51x at March 31. Its average blended cost of debt was 7.9% in Q2 FY27.

The leverage ratio fell even as net debt increased by Rs 451.5 crore from June 30 to September 30, 2026. Over that quarter, gross debt rose by Rs 283.1 crore and cash and cash equivalents declined by Rs 168.4 crore, while UFlex reported substantially higher normalized EBITDA than in Q2 FY26.

Long-term borrowings stood at Rs 6,612.1 crore at H1 FY27, compared with Rs 5,821.1 crore at FY26, and short-term borrowings rose to Rs 4,110 crore from Rs 4,031.5 crore. Property, plant and equipment increased to Rs 9,520 crore from Rs 8,937.9 crore over the same comparison.

Which UFlex expansion projects are being funded?

UFlex disclosed three projects with combined planned capital expenditure of Rs 2,241.8 crore, of which Rs 1,669.2 crore had been incurred by Q2 FY27. The Ain Sokhna, Egypt, greenfield aseptic project is the largest by planned outlay at Rs 1,209.3 crore and is scheduled for commissioning in H2 FY27.

The Egypt project accounted for about 54% of the disclosed three-project outlay and had incurred about 87% of its planned cost by Q2 FY27. Its annual capacity is 12 billion carton packs, whereas the Dharwad and Noida projects are measured in metric tonnes per annum, or MT PA, so their output capacities are not directly comparable.

The brownfield biaxially oriented polypropylene, or BOPP, line in Dharwad had the highest residual spend at Rs 420 crore at Q2 FY27. It is planned to add 54,000 MT PA and is scheduled for FY27-28, later than the H2 FY27 commissioning target for the Egypt aseptic facility.

UFlex said its Noida Sector 155 recycling project was commissioned on May 1, 2026. The 39,600 MT PA facility had Rs 1.1 crore of residual capital expenditure at Q2 FY27 against total planned spending of Rs 317.1 crore.

How is UFlex funding its capital expenditure programme?

UFlex spent Rs 568.9 crore on capital expenditure in Q2 FY27, compared with Rs 478.2 crore in Q1 FY27, taking H1 FY27 spending to Rs 1,047.1 crore. The Q2 outlay was Rs 90.7 crore higher sequentially, while residual expenditure across the three disclosed projects totalled Rs 572.7 crore.

Cash flow from operations after tax increased to Rs 1,085 crore in H1 FY27 from Rs 379.4 crore in H1 FY26. Cash flow from investing activities was an outflow of Rs 1,098.6 crore, compared with an outflow of Rs 932.4 crore a year earlier, alongside the higher H1 FY27 capital expenditure.

Cash flow from financing activities was Rs 423.4 crore in H1 FY27, versus Rs 556.9 crore in H1 FY26, while net cash increased by Rs 409.7 crore compared with Rs 3.9 crore. UFlex said working-capital management improved its cash-conversion ratio and net operating cash flow in H1 FY27.

Conclusion

UFlex combined a lower reported leverage ratio with continued capital deployment: net debt to normalized EBITDA declined from 4.51x at March 31, 2026, to 3.42x at September 30, while normalized EBITDA reached Rs 758.8 crore in Q2 FY27. Its H1 FY27 capex of Rs 1,047.1 crore coincided with projects in aseptic packaging, BOPP films and recycling.

The next disclosed milestones are H2 FY27 commissioning for the Egypt aseptic project and FY27-28 commissioning for the Dharwad BOPP line, which retained Rs 420 crore of residual capex at Q2 FY27. Management also expects improved shipping conditions to aid aseptic export volumes and lower European gas prices to reduce power costs in H2 FY27.