Pakka Q4 FY26 earnings call

Tue 2 Jun 2026PAKKA

In brief

Management commits to commissioning Project Jagriti paper machine by September as Neo refinances with ₹500 cr NCD; Q4 revenue +8% YoY.

Management's tone: Mixed
What was said: Mixed
Guidance: Guidance cut
Analyst pushback: Medium
Stock, next session: −0.07% (Nifty 50 +0.43%)

Q4 FY26 revenue rose 8% YoY and 4% QoQ but PBT turned negative, with wrap and carry PBT down 16-17%.
PM3 unplanned 40-day shutdown (planned 20) cost ₹11 cr in PBT, against ₹16 cr hit from new-entrant pricing pressure.
Neo Group refinances existing lenders with ₹500 cr NCD (₹540 cr with greenshoe) at 12% interest, 16.95% effective, with 4-month moratorium.
Food services Q4 revenue grew to ~₹17 cr from ~₹11.5 cr YoY; full year volumes +20% to 3,100 tons; B2C channel 2.5x to ~₹6.5 cr.
Project Jagriti PM4 paper machine expected to start production by end-September; power plant and recovery boiler commissioning in July.

An AI read of the company's transcript · the filing

The numbers

The quarter, Q4 FY26

	This quarter	A year ago	Last quarter	Margin
Revenue	₹102 cr	+10.2%	+5.6%
EBITDA (excl. other income)	₹10.2 cr	−31.6%	−35.4%	10% (16.1% a year ago)
Net profit	₹3.8 cr	−69.4%	−58.0%	3.8% (13.6% a year ago)
EPS (₹)	₹0.86	−71.3%	−57.6%

From the company's filed results for the quarter ended 31 Mar 2026 (standalone), not from the call. EBITDA here excludes other income, so it can differ from the figure management quotes.

What moved the numbers, as management explained it

PM3 unplanned 40-day shutdown (planned 20) cost ₹11 cr in PBT; PM3 is ~50% of total volume and a one-off operational disruption. (one-off)
New-entrant pricing war reduced NSR by ~₹16 cr across the year, particularly hitting wrap and carry.
Wrap and carry full-year volume fell 17% as PM3 outage and lagged commercialisation hit output.
Food services plant equipment issues drove ~₹3 cr of unplanned losses, with cost per unit rising as output dipped.
Food services booked ~₹3 cr of one-off non-cash write-offs: slow-moving inventory, old packaging materials, and old project development costs. (one-off)
A warrant investor did not honour subscription in Q3, forcing a scramble for funding, delaying project execution and slowing product commercialisation.

The numbers management led with

Neo Group NCD facility: ₹500 crore (with ₹40 crore green shoe option) at 16.95% effective interest rate
Promoter equity infusion: ₹85 crore via optionally convertible instruments at ₹110/share (vs SEBI-determined price of ₹92)
PM3 unplanned outage impact: 40-day outage (vs 20 days planned) cost ₹11 crore in PBT; PM3 contributes 50% of total volume
Wrap & carry pricing impact: ₹16 crore PBT impact from new-entrant pricing war and waste paper-based producers

Guidance

Guidance on this call

What	For	What management said
PM4 paper machine commissioning (Project Jagriti)	Q2 FY27	PM4 paper machine to begin producing by end of September
Power plant & recovery boiler commissioning (Project Jagriti)	Q2 FY27	Power plant and recovery boiler to be commissioned in July
FY27 PM4 capacity utilisation (Project Jagriti)	FY27	Achieve 60%+ production capacity by end of FY27
FY28 PM4 capacity utilisation (Project Jagriti)	FY28	Expect 75%+ production capacity in FY28
Outsourced greaseproof volumes (Wrap and Carry)	—	Scale outsourced greaseproof to about 500 tons per month
Bare minimum EBITDA (next 2 years)	FY27-FY28	Bare minimum EBITDA of ₹125-130 cr over next 2 years
FY28 EBITDA target	FY28	FY28 EBITDA targeted at ₹140-150 cr
EBITDA margin recovery	—	EBITDA margins to recover to 22-25% range
Base paper revenue from PM4 (Project Jagriti)	—	Base paper revenue target upwards of ₹500 cr
Flexible paper revenue potential (Project Jagriti)	—	Incremental turnover potential of ₹1,200-1,500 cr from Ayodhya if flexibles commercialise
Replace high-cost Neo debt	—	Plan to replace high-cost Neo debt in 15-16 months
Food services city expansion	FY27	Add 25 new cities in food services in FY27
PM3 capacity uplift (Wrap and Carry)	Q1 FY27	PM3 capacity to rise by 10 tons/day in 4th week of June, adding ~₹8 cr to PBT
In-person investor meet	Q3 FY27	In-person investor meet at Ayodhya in October 2026

The business

By business

Wrap and Carry (paper)

Q4 FY26 revenue up 4% YoY and 6% QoQ; full-year volume down 17% and PBT ~50% lower due to PM3 outage and pricing pressure; PM3 capacity uplift pending in late June.

Q4 revenue +4% YoY · Q4 PBT -16-17% · FY26 volume -17% · PM3 PBT impact ₹11 cr · NSR impact ₹16 cr · Production gain target 10 tons/day, ₹8 cr PBT

Outlook: PM3 capacity uplift by June-end; outsource to 500 tons/month; new grades in PM1/PM2 for higher contribution.

Food Services (Chuk/moulded products)

Q4 revenue ~₹17 cr vs ~₹11.5 cr YoY; full year volumes 2,600→3,100 tons (+20%); 25 new cities; B2C 2.5x to ~₹6.5 cr. PBT hurt by plant issues and ~₹3 cr non-cash write-offs.

Q4 revenue ~₹17 cr vs ~₹11.5 cr YoY · Full year volumes 2,600→3,100 tons · FY26 volume growth 20% · FY26 top-line gain ₹8 cr · B2C revenue ~₹6.5 cr (vs ~₹2.5 cr) · Plant losses ~₹3 cr · One-off non-cash write-offs ~₹3 cr

Outlook: Asset-light via 10 outsourced supplier sites; expand to 25 new cities; target quick commerce, e-commerce, modern trade, big box stores; phase-1 delivery container launch this quarter.

Innovation / Flexible Packaging

Barrier-coated paper (non-metallised Flexi) at pilot trial stage; metallised continues; delivery containers soft-launched at Akhtar; Bangalore R&D site moving to Ayodhya in next 2 months.

Delivery container phase-1 launch this quarter

Outlook: Partner with European pilot machines and global converters; non-metallised Flexi remains central focus despite chemistry challenges.

Project Jagriti (PM4 paper machine)

Brand-new specialty paper machine at Ayodhya with new recovery boiler, power boiler and 15 MW turbine; pulping capacity to rise 130→180 tons/day; significant construction progress.

PM4 commissioning end-September · Pulping capacity 130→180 tons/day · Base paper price ₹110-150/kg · Flexible paper price ₹250-300/kg

Outlook: Reach 60%+ capacity utilisation in FY27 and 75%+ in FY28; project asset turns of ₹500 cr base paper, ₹1,200-1,500 cr potential with flexibles.

Balance sheet, capex and funding

Refinanced via Neo Group with ₹500 cr NCD (₹540 cr including ₹40 cr greenshoe); first charge on fixed assets, second on current assets; promoter and associate guarantees plus share pledge.; The facility drawn is in form of debentures of 500 crores
Terms: 4-month moratorium, no principal repayment for 16 months; 12% stated interest, 16.95% effective rate; cash outflow for next 24 months carved out.; we get a four month moratorium and there is no principal repayment for 16 months
Equity: Neo Group to invest up to ₹30 cr (shareholders approved); promoter infusing ₹85 cr via optionally convertible instrument at ₹110/share (vs SEBI formula ₹92).; the promoter infuses 85 crores in terms of equity
Capex on Project Jagriti under completion; ~₹210 cr already deployed from equity and internal accruals; balance covered by NCD and remaining equity.; 210 odd crores has already been invested out of equity and internal accruals
Working capital requirement at full ramp: ₹45-50 cr, supported by current bankers via first charge on current assets.; working capital requirement will not be in the tune of 50 crores which you're talking about, it will be between 45 and 50 crores
Plan to replace high-cost Neo debt in 15-16 months; bare minimum EBITDA ₹125-130 cr in next 2 years and ₹140-150 cr in FY28.; minimum, it should take about 15 to 16 months to bounce back

The industry, as management sees it

Management sees a demand-supply mismatch in the paper market, with low-cost waste paper-based producers creating pricing pressure in wrap & carry. Pakka's strategy is to focus on highly specialized applications where pricing power can be retained (e.g., 50 tons → 400-500 tons/month trajectory in niche grades). The delivery and quick-commerce segment in India is seen as a significant growth opportunity, as is the US food services market. The market is described as competitive but with pockets of strong specialty demand.

Risks management named

Project execution delays driven by funding gaps and supplier challenges; PM3 outage doubled from 20 to 40 days
Pricing pressure from new entrants and low-cost waste paper-based producers in wrap & carry market
High-cost Neo Group debt (16.95% effective) burdening near-term cash flow; replacement timeline 15-16 months
Plant-level losses in food services from equipment issues; potential disruption from Ayodhya refurbishment
Spread-too-thin risk historically led to delays in product development and commercialization

Q&A

Q&A was substantive with high engagement on funding structure, project execution, and food services trajectory. The most pointed pushback came from Kaustav Bubna on promoter warrant structure and from Ravi on missed food services targets and shareholder wealth destruction. Analysts received direct, unusually candid answers from Ved Krishna, with strong support from Himanshu Kapoor on funding mechanics. The weakest moment was the deferred response on combined revenue numbers for the next two years.

Not answered directly

Combined FY27-28 revenue guidance (Ved declined to give an explicit number, leaving investors to calculate)

Asked for a number, answered without one

Top-line and margin trajectory for next two years: Ved: "I won't give you an actual number. In terms of EBITDA margins, we will definitely look to come towards where we were earlier, which was around the mark of 22 to 25 odd percent."
Chuk 15% market share / ₹680 cr by 2028: Shubham: "We continue to work towards that goal. We are quite optimistic. We keep adapting as well... there are things we plan which work out, some others don't." No date or number reaffirmed.
2030 US$1 billion revenue goal: Ved: "Absolutely no changes in terms of where we want to get to. The team is as driven towards that goal of scale." No timeline or number restated.

Every question, with its answer

1. R&D focus and promoter warrants structure
Kaustav Bubna, Unknown
Question. Two questions: (1) Given the back-and-forth and change in guidance, what is the company focusing on from a product basket standpoint? Are R&D initiatives for metallized and non-metallized flexible packaging products continuing? What has been stopped vs continued? (2) Why is the promoter infusing money through optionally convertible instruments given the share price volatility and risk of warrants not being converted?
Answer, Ved Krishna, Group Lead. Ved explained Flexi strategy in detail: barrier coating chemistry remains complex due to viscosity challenges with new-age chemicals; the team will produce base paper designed for flexible packs and tie up with converters for them to apply coating rather than Pakka doing it. On metallized, they continue to grow that market but acknowledge environmental concerns. Promoter warrants: promoters can only creep 5% per year, hence the OCI structure; the warrants will not fail. Himanshu added that the SEBI-determined price was ₹92/share but the promoter put in money at ₹110 (a 20% premium to the then book value of ₹109), demonstrating promoter commitment. Money is already in the war chest.
2. NCD end-use, working capital, Chuck volume phasing
Jeet Gala, Unknown
Question. Two questions on funding: (1) NCD is ₹540 cr, not ₹500 cr — what is the end use? How much goes to refinancing (~₹307 cr existing) vs incremental project debt? How will incremental working capital of ₹100-150 cr be tied up when current assets are pledged to Neo? (2) Phasing out old Ayodhya machines — does this imply Chuck volumes will drop for the next 2-3 quarters?
Answer, Neetika Suryavanshi, Finance Head. Neetika explained: ₹500 cr is NCD, ₹40 cr is green shoe option; usage is bank repayment first, balance to Project Jagriti. Working capital lenders retain first charge on current assets; the difference is that the pledge is no longer with them. Additional working capital need is only ~₹45-50 cr (50 ton bagasse increase + new products) which will be funded via internal accruals. Shubham added: Ayodhya machine shutdown will be synced with outdoor outsourcing site build-up, so no adverse volume impact.
3. Cost of capital exit and FY27-28 outcomes
GS, Unknown
Question. Two questions: (1) Pakka is taking funding at a very high cost — is there a protocol to come out of it once stabilized? (2) What outcomes in FY27 and FY28 would make the company happy in terms of revenue and product mix for both molded products and the overall company?
Answer, Ved Krishna, Group Lead. Ved explained this is a short-term measure; the debt can be refinanced without any premium in 15 months. Himanshu provided a detailed numbers walk: pre-2025 the company did consistent ₹80-85 cr EBITDA; SG&A + team cost of ₹115-120 cr today should reach ₹160-180 cr post plant ramp (drop from 29-32% to 26-27% of turnover); with additional ₹200 cr top line from new plant, EBITDA differential of ₹18 cr; plus ₹12 cr/year UP subsidy already approved. Bare minimum EBITDA target is ₹125-130 cr; bull case ₹140-150 cr by FY28. Shubham added food services targets: crack delivery containers, achieve lowest-cost-producer status via integrated mill, win US market. Mayank added: 60%+ capacity utilization in FY27, 75%+ in FY28.
Follow-up. GS followed up: (1) Is there tailwind from Chinese paper prices rising? (2) What is the asset turn on the ₹700 cr Jagriti project at full capacity?
Answer. Ved acknowledged ripple effect on specialty segments, but the bigger threat is from low-cost waste paper-based producers in India who bypass food-contact regulations by labeling as secondary packaging. The team has pivoted to highly specialized applications (50 tons → 400-500 tons/month). Asset turnover: upwards of ₹500 cr on base paper from the project. Himanshu added: a paper machine of 100 tons on base paper is the only addition, rest is retrofitting. Base paper ₹110-120/kg vs Flexi plastic at ₹250-300/kg; if Flexi commercializes, turnover can go to ₹1,200-1,500 cr additional. Peak capacity base case: ₹700-750 cr turnover with 25% EBITDA; if Flexi works, ₹1,400-1,500 cr at 22-23% EBITDA.
4. Revenue and margin trajectory
Vansh Sachde, Unknown
Question. Revenues have dipped YoY this year. What can be expected on the top line for the next two years? Margins have also dipped — when do they stabilize and at what level?
Answer, Ved Krishna, Group Lead. Ved described three revenue buckets: ~₹420 cr from current operations, additional revenue from new facility (4-5 months at 60% average utilization as Mayank indicated), and growth in food services from current ₹60+ cr. He declined to give an explicit combined number. On EBITDA margins, target is to come back to the 22-25% historical level.
Not answered directly.
5. PM4 product grade clarity
Jeet Gala, Unknown
Question. Follow-up: Realisations of ₹140-150 for release paper/glassine vs ₹110 for base paper were mentioned, and trials on European machines are happening. Is it clear what will be made on PM4 — release paper or base paper?
Answer, Ved Krishna, Group Lead. Ved explained the product hierarchy: release paper is essentially base paper designed for low absorption. Within release, there are multiple grades including glassine (the see-through, smooth grade used in airline baggage stickers). The PM4 product is designed to look like glassine and not absorb much coating. Pilot machine trials are being done now to validate recipes before running on the big machine. Realisation: European premium at ₹150, Indian at ~�110, expect to enter in the middle. Stretch target: creep toward ₹130-140 within FY27 or early FY28 once stabilized.
6. Food services market share goal and Pakka's 2030 vision
Ravi, Unknown
Question. Two questions: (1) For Shubham: Last August you had shared a goal of capturing 15% of food services market share by 2028 (~₹680 cr). Nine months have passed with no meaningful growth — are you still on track? (2) For Ved: Investors have really struggled for the past 1.5 years. Are we still chasing the 2030 goal of $1B in revenue? When will investors be rewarded — back to the ~₹300 levels where Cardinalian and SBI invested?
Answer, Ved Krishna, Group Lead. Shubham described a hockey-stick growth pattern: small changes that compound over time, not an overnight switch. Confident the team will reach the 2028 food services target. Ved was unusually candid: absolute zero change in the $1B / scale vision, but took full responsibility for delays in products, funding, project execution and goal-shifting. Guatemala is on pause; US will continue supply from India rather than near-shore. Board remains committed to the vision. Promised continued engagement, transparency, and a 'different feel in the market' once one or two products click. On a lighter follow-up about when Pakka will be a billion-dollar company (revenue or market cap), Ved said 'the effort will be in that direction, for sure'.
7. High-cost debt repayment timeline
Prabhakar, Unknown
Question. Already taken ~₹500 cr debt. With interest ~₹60 cr/year potentially, how soon can this be closed given it will eat into profits?
Answer, Himanshu Kapoor, Non-Executive Director. Neetika pushed back on the premise that interest will entirely consume profits — said the company has room for internal accruals even at current EBITDA. Himanshu added that even bank debt at ₹500 cr would have cost ₹50-60 cr, so the delta is not that large. Key is the speed of Jagriti commissioning and food services recovery. Visible improvement from Q2 FY27 onward. Minimum 15-16 months to wipe out the high-cost debt; faster if the plant bounces back quicker.

What was said

Topic by topic, in the order it was spoken

Ved Krishna — Year-end Reflections and Learnings · Ved Krishna (Group Lead)

Acknowledged a difficult year with multiple setbacks including funding shortfall, project execution delays and spread-thin resource allocation
Key issue: warrant subscriber failed to honor commitment after share price fall, leaving a ₹300 cr funding gap that had to be scrambled to fill
Realized the team had spread too thin across four simultaneous plant setups; will narrow focus to stabilize India first
New manufacturing business head Mayank Jindal (35 years experience, ex-JK Paper, ex-Apple Fine Group) joined two months ago

Wrap & Carry — Q4 and Full-Year Performance · Mayank Jindal (Manufacturing Business Head)

Q4 FY26 revenue +8% YoY and +4% QoQ for wrap & carry; Q4 PBT negative but recovering sequentially
Full-year volume dropped 17% and PBT dropped ~50% primarily due to PM3 unplanned 40-day outage (vs 20 days planned)
PM3 is the highest-capacity machine, contributing ~50% of total volume; outage impact on PBT was ₹11 cr
Wrap & carry realisation impact of ₹16 cr from new-entrant pricing war and waste paper-based competitors

PM3 Recovery and Operational Plan · Mayank Jindal (Manufacturing Business Head)

PM3 capacity addition work planned for 4th week of June 2026 — will add 10 tons/day and ~₹8 cr PBT boost
TPM outsourcing ramping up gradually to 500 tons/month; new grades planned for better market positioning
PM1 and PM2 trials with new product mix already giving better results

Food Services — Q4 Performance and Growth · Shubham Tibrewal (Food Services Business Head)

Q4 FY26 food services revenue ~₹17 cr vs ~₹11.5 cr in Q4 FY25; quarter-on-quarter slower due to festive season base and re-rationalization
Full-year FY26 volumes grew 20% from 2,600 tons to 3,100 tons; Pan-India presence unlocked in 25 new cities
B2C channel — the highest-margin segment — grew 2.5x from ~₹2.5 cr to ~₹6.5 cr, adding ₹8 cr to top line

Food Services — Loss Drivers and Plan of Action · Shubham Tibrewal (Food Services Business Head)

Losses split: ~₹3 cr from plant/manufacturing (equipment issues, mid-year machine shutdown, fixed cost absorption) and ~₹3 cr one-off non-cash items
One-offs include write-off of slow-moving inventory, old packaging materials, and old project development costs — described as a 'clean start' for FY27
FY27 plan: 25 new cities, more B2B touch points, aggressive B2C push, asset-light outsourcing model with 10 supplier network across India
US opportunity: team there has opened a significant pipeline; trial run this year

Innovation and R&D Highlights · Ved Krishna (Group Lead)

Working with European pilot machines to validate base paper chemistry for barrier coating in flexibles
Non-metallized Flexi at pilot trial stage after multiple lab pilots; cost down and efficacy up significantly
Delivery containers soft-launched at Akhtar in Q4; response excellent; phase 1 launch planned this quarter
Bangalore facility to be moved to Ayodhya over next 2 months to be closer to operations team; most staff expected to be retained

Funding Refinancing — Neo Group Deal · Himanshu Kapoor (Non-Executive Director)

Cardinalian and SBI warrants (~₹73 cr warrant + ₹146 cr bank) did not subscribe after share price fall; ~₹300 cr total shortfall
Bankers would not give Pari Pasu charge to new lender, forcing full refinancing via Neo Group
Refinancing terms: ₹500 cr NCD facility (+₹40 cr green shoe), 4-month moratorium, 12% headline (16.95% effective), 16 months no principal repayment
Equity infusion: ₹30 cr from Neo Group (shareholders approved), ₹85 cr from promoters via OCIs at ₹110/share (20% premium to ₹109 book value)
Security: first charge on fixed assets, second charge on current assets, promoter personal/corporate guarantees and share pledge

Project Jagriti Commissioning Status · Mayank Jindal (Manufacturing Business Head)

New PM4 paper machine will produce specialty full-gate paper; supported by new recovery boiler, power boiler and 15 MW turbine
Recovery boiler removes existing bottleneck; pulp mill modification already complete
Power plant and recovery boiler commissioning: July 2026; PM4 paper machine production: end-September 2026

FY27 Strategic Plan and Cost Optimization · Ved Krishna (Group Lead)

Priority 1: Commission Project Jagriti; pilot runs on other machines for new product introduction
Food services: build network of ~10 outsourced suppliers; Ayodhya plant to be refurbished and old equipment removed/sold/leased
Continue scaling outsourced greaseproof from 300 tons/month toward 500 tons/month; explore lower grammage tie-up and flexible packaging outsourcing
Cost optimization: SG&A and team cost (currently ₹115-120 cr / 29-32% of turnover) targeted to fall to ₹160-180 cr / 26-27% as turnover grows

Investor Engagement Plan · Neetika Suryavanshi (Finance Head)

In-person investor meet planned for next quarter (October 2026) at Ayodhya plant, post PM4 commissioning
Ved added: the meet could be hybrid (in-person + virtual); investors invited to see the plant commissioning action on the ground

In their words

We are totally responsible for eroding your wealth. And we want to make sure that we do right by you.

Ved Krishna (Group Lead, Pakka Limited)

The SEBI decided price was about 92 rupees, which was coming as per SEBI formula. And the money has been put in at 110 rupees. The primary reason for that was that the book value of the company was 109 rupees at that point of time.

Himanshu Kapoor (Non-Executive Director, Pakka Limited)

But ultimately, we have to take the responsibility of the delays in products, the delays in funding, the delays in projects, the delays in or shifting of goals as well. But we feel that that's the journey. That's the journey we are on.