Pakka Q1 FY27 earnings call

Tue 29 Sept 2026PAKKA

In brief

Q1 FY27 revenue ₹117.19 cr (+43% YoY), PAT ₹5.89 cr vs loss; PM4 commissioning revised to Jan 2027; FY26 dividend skipped.

Management's tone: Cautious
What was said: Leaned negative
Guidance: First guidance issued
Analyst pushback: Low
Stock, next session: −1.27% (Nifty 50 −0.28%)

Q1 FY27 consolidated revenue ₹117.19 cr (+43% YoY from ₹81.97 cr); PAT ₹5.89 cr vs ₹1.53 cr loss YoY.
PM4 commercial production revised to January 2027; first product from the machine targeted by Diwali 2026.
Project Jagriti financed via NBFC bridge loan (1-1.5 years); bank borrowings retired; chairman expects no further cost overrun.
FY25-26 standalone revenue ₹355.80 cr (-12%), net profit ₹18.15 cr vs ₹56.70 cr; Board skipped dividend to preserve liquidity.
Exports at 25% of revenue (down from 30%); CHUK FY26 revenue ₹63.23 cr with volumes crossing 3,100 tonnes.

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

The numbers

The quarter, Q1 FY27

	This quarter	A year ago	Last quarter	Margin
Revenue	₹117 cr	+43.0%	—
EBITDA (excl. other income)	₹15.3 cr	+158.1%	—	13.1% (7.2% a year ago)
Net profit	₹5.9 cr	—	—	5% (-1.9% a year ago)
EPS (₹)	₹1.29	—	—

From the company's filed results for the quarter ended 30 Jun 2026 (consolidated), 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

Q1 FY27 revenue +43% YoY (₹117.19 cr vs ₹81.97 cr) driven by ramp-up of existing capacity even before PM4 commissioning.
FY25-26 standalone revenue fell to ₹355.80 cr from ₹406.04 cr on planned shutdowns for facility integration, equipment breakdowns and expansion project delays. (one-off)
FY25-26 net profit compressed to ₹18.15 cr from ₹56.70 cr on realisations pressure from increased imports and one-off integration costs.
Q1 FY27 swung to ₹5.89 cr PAT vs ₹1.53 cr loss YoY on operating leverage as activity normalised after the FY25-26 transition.

The numbers management led with

CHUK (Moulded Fibre) revenue for FY26: Rs 63.23 crore on volumes crossing 3,100 tonnes
Capital raised via preferential issue / EGM approvals: Rs 114.60 crore
PM3 + PM4 incremental revenue potential at full utilisation: ~Rs 600 crore
Export share of revenue: 25% (down from 30% prior year due to geopolitics)

Guidance

Guidance on this call

What	For	What management said
PM4 commercial production commissioning (Project Jagriti)	—	PM4 commercial production commissioning revised to January 2027.
Additional revenue at PM4 and PM3 full utilisation	—	About Rs. 600-odd crore of additional revenue when PM4 and PM3 are fully operational at the planned capacity utilisation.
NBFC bridge loan tenure (Project Jagriti)	—	Project Jagriti NBFC funding treated as a bridge loan for a year to a year and a half until PM4 stabilises.
First PM4 product (Project Jagriti)	—	First product from PM4 expected by Diwali 2026, ahead of commercial commissioning in January 2027.

What changed since the Tue 18 Aug 2026 call

What	On the Tue 18 Aug 2026 call	On this call
PM4 commissioning timeline (delayed)	PM4 commissioning targeted Oct/Nov 2026; adds 30,000+ tonnes/year at ~₹753 cr project cost	Revised commercial production commissioning to January 2027; first product by Diwali
FY27 revenue and EBITDA margin guidance (not repeated)	First-time FY27 guidance: ~₹500 cr revenue and ~19% EBITDA margin; effective tax rate ~26%	Targets not restated; chairman instead cited ~₹600+ cr additional revenue at full PM3+PM4 capacity
Food Services outsourcing scale (not repeated)	Food Services outsourcing to scale to 800-900 tonnes/month; long-term 80% outsourced / 20% in-house mix	Not addressed on this call
flexC compostable substrate cost reduction (not repeated)	Reduce flexC compostable substrate cost toward ₹18/sqm from ₹24/sqm	Not addressed; flexC back in lab with Slovenia trials
Material Science Centre relocation (restated)	Relocate Material Science Centre from Bengaluru to Ayodhya; deepen innovation	R&D head position flagged as vacant by shareholder; relocation concerns raised
High-cost debt refinancing (restated)	Refinance Neo Asset Management debt within 14-18 months at lower cost; promoter shares pledged	NBFC bridge loan tenure given as 1-1.5 years; bank borrowings already retired
Capital raise (new)	Not previously mentioned	Shareholder congratulated management on ₹114.60 cr capital raise and subsequent listing approvals

The business

By business

Wrap & Carry (Moulded Fibre Products)

Achieved its highest annual revenue in FY25-26 with expanded volumes and market reach; profitability remained under pressure during the transition.

Outlook: Volume and pricing-led margin recovery expected as PM3 modification and PM4 commissioning raise utilisation.

CHUK (Food Services)

FY25-26 revenue ₹63.23 cr; volumes crossed 3,100 tonnes; expanded products and reach across FY25-26.

FY26 revenue ₹63.23 cr · FY26 volumes >3,100 tonnes

Outlook: Chairman expects CHUK to reach more customers and benefit from new PM4 products.

Project Jagriti

Pulp, paper, energy and recovery expansion; delayed and capital-intensive; NBFC bridge funding has replaced bank borrowings.

Capital work-in-progress at Pakka Inc ₹3,197.81 lakh

Outlook: PM4 commercial production targeted Jan 2027; first product by Diwali; ~₹600+ cr additional revenue at full PM3+PM4 utilisation.

Flexible Coated Products (flexC)

Back in lab/pilot stage; trials ongoing in Slovenia; PM4 has online coating only, offline coating handled by external partners.

Outlook: Pilot and laboratory trials continue; commercial launch beyond 12 months; coating partner collaboration and training underway.

Balance sheet, capex and funding

Capital raise of ₹114.60 cr completed via preferential issue (post-EGM May 2026) for capacity expansion and international business.
Project Jagriti NBFC bridge loan (tenure 1-1.5 years) replaced bank borrowings; refinance to low-cost debt planned post PM4 stabilisation.
No FY25-26 dividend recommended; earnings retained to support capex and protect liquidity.
Pakka Inc. (Guatemala) capital work-in-progress of ₹3,197.81 lakh; project activities suspended; qualified opinion from statutory auditors on recoverability.
Overseas subsidiary has working capital deficit and depends on continuing financial support from related parties and shareholders.
CSR spend ₹2.35 cr in FY25-26 across education, employment and ecology.

The industry, as management sees it

Management sees paper-based and compostable packaging as a developing market opportunity as customers, brands and regulators seek practical alternatives to conventional plastics, but emphasises that success will depend on reliable operations, product performance, competitive costs and consistent delivery rather than demand alone.

Risks management named

Project Jagriti cost overrun and FX volatility; rupee touched 90-96/USD over the past two years
Qualified audit opinion on consolidated financials due to Pakka Inc. CWIP of Rs 3,197.81 lakh — impairment possible if project does not resume
Overseas subsidiary has working capital deficit and depends on continuing support from related parties and shareholders
Compliance delays across subsidiary reporting, Form FC, Annual Performance Reports, FLA returns and one related-party disclosure
No dividend for FY26 — capital retained to fund capex and protect liquidity

Q&A

Q&A was polite and orderly, dominated by three substantive shareholder speakers (Jeet Gala, Muskan Drolia on behalf of Mahant Vanijya, and Reddeppa Gundluru); one shareholder (Badri Vishal Bajaj) used his slot for appreciation only and was skipped per the no-substantive-question rule. The Chairman answered all material questions himself — neither the MD nor the CFO contributed substantively (the CFO's audio failed). Pushback was minimal; the most pointed line of questioning came from Reddeppa on capital deployment, exports, raw materials and the Observer/Nominee Director governance proposal. The Observer/Nominee Director question (special business item 5) was not heard on audio and was deferred to a written response.

Not answered directly

Innovation/R&D team relocation and vacant R&D head — partly sidestepped with broad statements about Ved Krishna's lab network
Governance balance under Observer/Nominee Director proposal — fourth question inaudible, deferred to Company Secretary by email

Asked for a number, answered without one

Flexible coated product launch in next 12 months: Chairman said trials ongoing in Slovenia and PM4 will start with conventional products that serve food packaging needs; value-added products will follow over time.
Profitability and margin improvement initiatives: Chairman said only three levers exist: increase volume, increase pricing, or reduce cost; PM3 and PM4 expected to add ~₹600+ cr revenue without proportionate overhead rise.
Project Jagriti revised completion timeline and cost control: Chairman said commercial production revised to January 2027 with first product by Diwali; cost expected stable as most machinery delivered.
R&D head and innovation team relocation: Chairman did not provide a timeline for hiring an R&D head; highlighted ongoing work, collaboration with external laboratories and Slovenian pilot trials.

Every question, with its answer

1. Flexible products & innovation
Mr. Jeet Gala, Individual Investor (long-term shareholder)
Question. Two questions. First, with little mention in the Annual Report of how Pakka plans to crack flexible coated products and base-paper NSR from PM4 likely in Rs 130-150/kg range vs the Rs 180-200/kg target, can a launch happen in the next 12 months given PM4 has only online (not offline) coating? Second, the innovation team is being moved from Bengaluru to Ayodhya and the R&D head position has been vacant for some time — how will Pakka attract and rebuild innovation talent given ambitions to go global?
Answer, Mr. Pradeep Vasant Dhobale, Chairman & Independent Director. Work on flexible products has not stopped; MD Ved Krishna was personally in Slovenia last week for pilot-plant trials because the paper machine is not yet ready. Products to start the machine have already been identified; PM4 will produce dense, low-porosity papers that can be coated externally by partner coaters (some have already visited and trained Pakka's team). The Rs 130-150/kg to Rs 200/kg move will come progressively through value-added products, not in a single 12-month jump — the first 3 months will be conventional food-packaging grades, with more value-added variants layered on. Ved Krishna has built contacts with global labs and academic institutions to supplement in-house R&D, with basic equipment in-house and collaboration elsewhere.
Partly answered.
2. Profitability & Project Jagriti
Ms. Muskan Drolia (representing Mahant Vanijya Private Limited), Mahant Vanijya Private Limited
Question. Two questions. First, what are the key initiatives planned to strengthen the Company's profitability and margins in the coming years? Second, please give a brief update on Project Jagriti — particularly the revised completion timeline and the measures being taken to ensure effective cost control.
Answer, Mr. Pradeep Vasant Dhobale, Chairman & Independent Director. Profitability is driven by volume, pricing or cost — all three are priorities. PM3 modification and PM4 coming on stream should add roughly Rs 600 crore of revenue when fully operational at planned capacity utilisation, while overheads will not rise proportionately. On Project Jagriti, cost is reviewed by the Banking & Finance Committee chaired by Himanshu Kapoor; most machinery is already delivered to site and no further material cost overrun is expected, though FX volatility (rupee to 90-96/USD) was a headwind that is now largely behind. Commercial production commissioning is targeted for January 2027, with operational production earlier — first product is being targeted by Diwali. The shift to an NBFC bridge loan (1-1.5 years) was driven by project cost overrun; once the machine stabilises, internal cash flows should support refinancing at lower cost and a rating upgrade.
3. Capital deployment, exports, raw materials & governance
Mr. Reddeppa Gundluru, Individual Investor (shareholder)
Question. Four questions. (1) How will the additional capital of Rs 114.60 crore be deployed into capacity expansion and a stronger international business? (2) Capacity expansion and exports — please comment. (3) Margins and raw materials — what is the procurement strategy, long-term contracts or a pricing mechanism, for protecting operating margins? (4) Under the amended governance framework with the proposed Observer and Nominee Director, how will the Company maintain balance between lender oversight and the Board's operational and strategic independence? (Question 4 could not be heard on the audio; Chairman said Company Secretary would respond by email.)
Answer, Mr. Pradeep Vasant Dhobale, Chairman & Independent Director. On exports, 25% of revenue currently comes from exports (down from 30% last year due to geopolitics); management believes no other Indian paper company earns 25% of revenue in foreign exchange, and PM4 should drive further export earnings. On raw materials, the main input is bagasse under long-term contracts (up to 5 years) with sugar mills in Uttar Pradesh, with flexible payment terms reflecting counterparty trust in Pakka's receivables — no concern on availability or pricing. Question 4 on governance was not heard clearly; Chairman said the Company Secretary would respond by email. (Capital deployment into capacity expansion was implicitly addressed via the PM3/PM4 and Project Jagriti commentary earlier in the response.)
Not answered directly.

What was said

Topic by topic, in the order it was spoken

Chairman's Reflections on FY 2025-26 · Mr. Pradeep Vasant Dhobale (Chairman)

FY26 characterised as demanding due to planned shutdowns for facility integration, equipment breakdowns, expansion delays and import-driven price pressure.
Standalone revenue from operations fell to Rs 355.80 crore from Rs 406.04 crore; net profit dropped to Rs 18.15 crore from Rs 56.70 crore.
Moulded Fibre Products (CHUK) achieved highest-ever annual revenue, expanded volumes and reach, although profitability remained under pressure during the transition.
Board did not recommend a dividend for FY26 to protect liquidity and fund Project Jagriti; capital allocation to be reviewed with care and accountability.
CSR investment of Rs 2.35 crore during FY26 across education, employment and ecology.

Q1 FY 2026-27 Snapshot · Mr. Pradeep Vasant Dhobale (Chairman)

Q1 FY27 unaudited consolidated revenue from operations was Rs 117.19 crore vs Rs 81.97 crore in the year-ago quarter.
Group PAT swung to Rs 5.89 crore from a loss of Rs 1.53 crore a year earlier.
Management cautioned that one quarter does not establish a trend; focus remains on operating discipline, margin improvement and dependable cash generation.

Project Jagriti Status · Mr. Pradeep Vasant Dhobale (Chairman)

Project Jagriti is intended to strengthen pulp, paper, energy and recovery capabilities and support a larger portfolio of value-added, sustainable packaging products.
Project has required substantial capital and has faced delays; Board and management focused on completion, commissioning, stabilisation, funding and risk control.
Cost overrun triggered a shift from bank borrowings to an NBFC bridge loan; bridge is expected to be substituted with lower-cost debt once machine stabilises.
International expansion plans (including the Guatemala facility of Pakka Inc.) being paced to funding availability and execution readiness.

Sustainability & Workforce Snapshot · Pakka FY25-26 Video Presentation (Narrator)

100% renewable raw material utilisation, 52.91% renewable energy share, and 57.37% of water recycled and reused.
Over 500 people powering operations, innovation and execution.
Pakka Foundation invested Rs 2.35 crore across education, employment and ecology even during the challenging year.

Auditors' Reports — Statutory & Secretarial · Mr. Sachin Kumar Srivastava (Company Secretary)

Statutory Auditors gave an unmodified opinion on standalone FY26 financials with an Emphasis of Matter on the overseas subsidiary (Pakka Inc.) and the temporary pause of the Guatemala plant.
Qualified opinion on consolidated financials over capital work-in-progress of Rs 3,197.81 lakh at Pakka Inc.; financing for resumption not yet arranged, recoverability uncertain.
Management does not presently envisage impairment as much of the CWIP relates to detailed engineering expected to be reused on project resumption.
Emphasis of Matter on an overseas subsidiary's working capital deficit and dependence on continuing related-party and shareholder financial support.
Secretarial Auditor reported 73-day delay in Pakka Inc. audit review, 73-day delay in FY25 consolidated results approval, 150-day delay in one related-party disclosure to NSE (BSE on time), and delays in Form FC, APR and FLA returns; NSE waived the related fine.

Business of the Meeting — Six Resolutions · Mr. Sachin Kumar Srivastava (Company Secretary)

Ordinary Business: adoption of audited Standalone FY26 financials (Item 1), audited Consolidated FY26 financials (Item 2), re-appointment of Mr. Gautam Ghosh (Item 3) and Mr. Himanshu Kapoor (Item 4), both retiring by rotation.
Special Business: alteration of Articles of Association to insert provisions relating to an Observer and a Nominee Director (Item 5).
Special Business: clarification of objects of the preferential issue of equity shares and fully convertible warrants approved at the EGM on 5 May 2026 (Item 6).

In their words

These results were below our expectations, and the Board recognises the concerns that this performance may have caused our shareholders.

Mr. Pradeep Vasant Dhobale (Chairman & Independent Director, Pakka Limited)

Purpose must be supported by execution.