Creative Graphic — Q2 FY26 earnings call

Call held 19 Nov 2025

Management summary

Creative Graphics reported strong Q2 FY26 results with sales growing over 50% and PAT by 33% year-on-year, driven by high utilization of existing capacity and new capacity additions. The company is expanding into new product lines like PVDC and tandem, with initial utilization targets of 10-15% for H2 FY26, ramping up to 70-80% by next fiscal year. However, margins faced pressure from raw material costs and forex, leading to a deterioration in working capital and negative cash flow from operations, which management aims to address through bill discounting and internal accruals.

Highlights

  • Sales grew by more than 50% year-on-year in Q2 FY26.

  • PAT grew by 33% year-on-year in Q2 FY26.

  • Existing cold form blister plant achieved close to 75% utilization for its 8,000 metric tons annual capacity.

  • New capacity is expected to add 1.5 times more capacity, with PVDC full capacity at 1,000 tons per month.

  • Wahren India is expected to continue growing faster than the Flexographic business, with export margins anticipated to be 4-5% better.

  • Targeting a minimum of 20% export share of total revenue by FY27, with 150-200 tons/month of exports by 2027.

Concerns

  • Margins were impacted by high raw material prices (aluminum) and adverse forex movements (USD rise).

  • Working capital deteriorated in H1 FY26 compared to FY25, with a required input of ₹200-250 crores against current ₹100 crores.

  • Cash flow from operations remained negative due to increased sales momentum and higher receivables.

  • Ramp-up of the Alu-Alu segment was delayed due to machine delivery and technical changes.

Key financials

4 periods

Headline

  • Cold Form Blister Utilization
    75%
  • Flexography Utilization
    65%

Q2 YoY

  • Sales Growth
    50%
    YoY +50%
  • PAT Growth
    33%
    YoY +33%

H1

  • FY26 Group Sales
    ₹175 Cr

H2 FY26

  • Wahren Margins
    12%

What they filed

Q4 FY26: revenue up 102.4%, net profit up 75.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ4 FY23Q2 FY24Q4 FY24Q2 FY25Q4 FY25Q2 FY26Q4 FY26
Revenue48 48 84 113 138 +188%176 +267%170 +102%
EBITDA8 12 7 13 19 +138%21 +75%12 +71%
Net profit5 7 4 9 12 +140%12 +71%7 +75%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Wahren India (Pharmaceutical Packaging)
    faster than Flexographic qualitative Growth Rate4 % better than domestic Export Margins
  • Flexography Business
    65% Capacity Utilization₹20 Cr Oman Revenue Potential₹14 Cr Bangalore Revenue Potential

Order book

medium confidence

Composition

  • Top 20 Customers (client type) 75%
  • Exports (geography) 20%

Pipeline

qualified rfp

Good order in pipeline for PVDC and tandem lines, with continuous demand for samples.

Management noted a shift in the order book towards larger customers and a healthy pipeline for new product lines, particularly for exports.

Source: Q&A

Capital allocation

high confidence
  • Capex Capex disclosed
    • Setting up two new factories
    • Maintenance and runnable capacity for existing operations
    Deepanshu Goel: "We are not doing any Capex expansion as of now. We are just consolidating what we have done in recent months and last year." Pulkit Agrawal: "Yes, there will be some, some, there is some capex on the cards. As I said, we are setting up two factories."
  • Debt Debt disclosed
    • New borrowing Management would like to take some debt to fund working capital.
    Deepanshu Goel: "So, we would like to take some debt, I suppose, to fund our working capital whenever it is required."
  • Liquidity Liquidity disclosed Company has internal accruals and available credit lines from existing lenders, and is yet to use bill discounting facilities.
    Pulkit Agrawal: "We have limits available in our current lines, that we already have new lines are also available from our existing lenders and we are yet to use bill discounting facilities." and "Also, the business is generating profits. So, we have internal accruals as well which we will hopefully be able to cover the scale."

Guidance & targets

Capacity Utilization

  • PVDC/Tandem Utilization (H2 FY26) Capacity Utilization · H2 FY26 · High confidence 10-15%
    Deepanshu Goel: "We just look at the number of 10-15% at max to start with."

    — Deepanshu Goel

  • PVDC/Tandem Utilization (FY27) Capacity Utilization · FY27 · High confidence 70-80%
    Deepanshu Goel: "No, we are actually looking at 70 to 80% of the utilization by the next year ending by the March ending before because yeah."

    — Deepanshu Goel

Export Share

  • Share of Exports to Total Revenue Export Share · FY27 · High confidence minimum 20%
    Deepanshu Goel: "Also as far as the export numbers are concerned, we have look at a minimum of 20% of the share of exports to a total revenue in FY 2027."

    — Deepanshu Goel

Export Volume

  • Monthly Export Volume Export Volume · by 2027 · High confidence 150-200 tons
    Deepanshu Goel: "But I'm talking about that we are looking to at least if you say by the numbers 150 to 200 tons a month of the exports by 2027."

    — Deepanshu Goel

Profitability

  • Gross Margin (PVDC/Tandem) Profitability · near-term · Medium confidence higher teens
    Pulkit Agrawal: "Gross margin should be in higher teens."

    — Pulkit Agrawal

  • EBITDA Margin (PVDC/Tandem) Profitability · near-term · Medium confidence slightly higher than ALU-ALU
    Pulkit Agrawal: "Slightly higher. I said slightly higher, a few percentage points higher."

    — Pulkit Agrawal

Growth

  • Overall Growth Aspiration Growth · next 2-3 years · Medium confidence 100%
    Pulkit Agrawal: "Aspiration is the same madam, but that does not mean that it will be a straight line from 1/4one quarter to another. Over the next 2-3 years, we continue to hold ourselves to the same aspiration that we have already."

    — Pulkit Agrawal

What to watch in Q3 FY26

PVDC/Tandem Commercial Operations

H2 FY26
Current First trial conducted, awaiting commercial run
Target Commercial run commenced in H2 FY26

Why it matters

Successful commercialization of new product lines is crucial for future revenue growth and diversification.

Deepanshu Goel: "I'm really happy to share that we conducted the first trial yesterday and last week, and we plan to commence the commercial run in H2."

Risks & concerns

  • Raw material price volatility (Aluminum) and Forex impact

    medium

    Margins were impacted by steep rise in aluminum prices and adverse forex movements (USD rise), which the company had to absorb due to existing orders.

    Management acknowledged

  • Working capital deterioration and negative cash flow from operations

    medium

    Working capital has deteriorated, and cash flow from operations remains negative due to a shift towards larger customers with longer payment cycles (90 days) and aggressive sales growth.

    Management acknowledged

  • Delay in new capacity ramp-up

    low

    The ramp-up of the Alu-Alu segment was delayed due to late machine delivery and technical changes, but installation is now underway.

    Management acknowledged

Q&A highlights

3 direct, 1 evasive
Working capital deterioration and funding strategy Partial
Pulkit Agrawal: "As we continue to grow, we will continue to nurture these relationships. These are some of the larger names in the pharma space, and here, because the size of the order is larger, you will continue to see a larger increase in working capital. The debtor days in most of the pharma space is 90 days.

Analyst highlighted a significant increase in working capital requirement (₹100cr input vs ₹200-250cr required), and management explained it's due to larger pharma clients with 90-day debtor days, but plans to use bill discounting.

Asked by Manhar Rao

Cash flow from operations remaining negative Direct
Pulkit Agrawal: "we are continuing in Pressing the pedal on growth and each month our sales are higher compared to the previous month, which means that the database continues to grow as I answered as part of your previous question. So, we expect the cash flows from operations to be negative for a while as we continue to increase the sales momentum, this will start plateauing once all our facilities are on.

Management directly addressed the negative CFO, attributing it to aggressive growth and increasing sales momentum, indicating it will persist until new facilities are fully operational.

Asked by Gaurav Kothari

Alu-Alu segment ramp-up delay reasons Direct
Deepanshu Goel: "Krimesh, we had ordered the machine last year from Bob. They have taken some time. There was some technical change. We have received the machine last month. That is the only reason for getting it delayed. Now we have started the installation process. we are looking forward to integrate into the production line very soon.

Analyst inquired about the delay in a key segment ramp-up, and management provided a clear reason (machine delivery/technical changes) and timeline for integration.

Asked by Krimesh

Future Capex plans and additional capacity Evasive
Deepanshu Goel: "So Agastya, we are not adding any more capacity as of now. So, to maintain the current kind of a capacity to you to have a good utilization and to make it runnable, there could be small Capex which needs to be incurred. But as of now, we are not even saying that we are totally no to this if we get some good opportunity we will definitely grab it, but right now there's nothing on cards to add new capacity. As if now, there's nothing. It's not required as of now.

Analyst pressed for clarity on future capex and capacity additions beyond current plans, but management was non-committal, stating no new capacity additions are planned 'as of now' beyond maintenance.

Asked by Agastya Dave

Impact of large clients on margins Direct
Deepanshu Goel: "So, Maitri, this was an intended strategy to start with. When you go to a larger house, the ultimate expectation is high, and then we have to offer a price that is a little lower than the competition to enter. When they start growing the volumes, the product margin and profile definitely improve.

Analyst questioned if large clients would compress margins. Management confirmed initial lower pricing to gain entry but expects margin improvement with volume growth and cross-selling value-added products.

Asked by Maitri

100% growth aspiration for the full financial year Partial
Pulkit Agrawal: "Aspiration is the same madam, but that does not mean that it will be a straight line from 1/4one quarter to another. Over the next 2-3 years, we continue to hold ourselves to the same aspiration that we have already.

Analyst asked if the company could achieve 100% growth for the full FY given 55% in H1. Management clarified that the 100% aspiration is over 2-3 years, not necessarily for the current fiscal year.

Asked by Reena Gattani

2 min read 5 chapters

Detailed narrative

Q2 FY26 Performance Overview

Creative Graphics Solutions India Limited reported robust financial performance for Q2 FY26, with sales growing by over 50% year-on-year and Profit After Tax (PAT) increasing by 33% year-on-year. For the first half of FY26, the group's annual sales reached ₹175 crores. The existing cold form blister plant demonstrated strong operational efficiency, achieving close to 75% utilization of its 8,000 metric tons annual capacity. The company highlighted its steady growth since 2001, culminating in its listing on the NSE Emerge platform in 2024.

Capacity Expansion and New Product Lines

The company is actively expanding its capacity and product offerings. A new Bobst machine has been installed to enhance the capacity of the existing plant for old format business. Creative Graphics has also taken over Radha Madhav Corporation Limited's PVDC and tandem lines, with the first trial conducted recently and commercial operations planned for H2 FY26. The new capacity is expected to add 1.5 times more capacity, with PVDC's full capacity estimated at 1,000 tons per month. Initial utilization for PVDC and tandem lines is conservatively targeted at 10-15% for H2 FY26, with a ramp-up to 70-80% utilization by FY27.

Margin Dynamics and Working Capital Management

Margins faced pressure primarily due to the steep rise in aluminum raw material prices and adverse forex movements (USD appreciation), which the company had to absorb for existing orders. While gross margins for new PVDC/tandem lines are expected to be in the 'higher teens' and EBITDA margins slightly higher than Alu-Alu, the company noted a deterioration in working capital. This is attributed to a strategic shift towards larger pharma clients, who typically have 90-day debtor cycles, leading to negative cash flow from operations. Management plans to mitigate this through bill discounting facilities and internal accruals, expecting cash flow to normalize once new facilities are fully operational.

Flexography Business and Export Strategy

The flexography business currently operates at 65-70% capacity utilization. The company has started operations in Bangalore and intends to start operations in its Oman unit in H2 FY26, with an estimated revenue potential of ₹14-15 crores from Bangalore and ₹20-24 crores per annum from Oman (at 60-70% utilization). Creative Graphics is bullish on the flexographic sector due to its eco-friendly nature and low penetration in India. The company is aggressively pursuing exports, targeting a minimum of 20% of total revenue from exports by FY27, with a volume target of 150-200 tons per month by 2027. Export margins are expected to be 4-5% better than domestic margins.

Audit Observations and Compliance

The company addressed observations from the limited review report concerning gratuity provisions, MSME compliance, and a machine that was purchased but not yet capitalized. Management stated that they are working to resolve these issues, including getting an actuarial audit for gratuity and reconciling views with statutory auditors on the machine capitalization. They anticipate these matters will be clarified and resolved in the March numbers (Q3 FY26).

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Capital Goods earnings calls