Detailed Narrative
Q1 FY26 Financial Performance Overview
Control Print reported a standalone total revenue of ₹109 crores in Q1 FY26, marking a 22.47% growth from ₹89 crores in Q1 FY25. Standalone operating revenue also increased by 13.64% to ₹100 crores from ₹88 crores. On a consolidated basis, operating revenue grew 13.27% to ₹111 crores from ₹98 crores in the previous year's corresponding quarter. However, consolidated EBITDA experienced a 7.5% decline, settling at ₹18.5 crores compared to ₹20 crores in Q1 FY25, primarily due to higher expenses in the packaging business.
Packaging Business Challenges and Outlook
The packaging business, particularly through CP Italy (V-Shapes), is currently a drag on profitability, incurring an actual loss of ₹4-5 crores abroad in Q1 FY26. Management aims to reduce the annual loss for this segment to less than ₹10 crores for FY26 and targets overall profitability by FY27. The segment faces challenges related to logistics, machine installation, and 'niggling issues' that have prevented some machines from becoming fully active, impacting material sales.
Coding & Marking Business Strategy and Capacity
The core Coding & Marking business is projected to maintain a growth rate of 14-15% over the next two to three years. The company estimates that its current capacity can support revenue generation of up to ₹600 crores, an increase from the current ₹400 crores, without requiring significant additional CapEx or manpower. To address a slight drop in gross margins, a price increase was announced, effective August 1st, with its positive impact expected to be visible from Q3 FY26.
Track & Trace Segment Progress
The Track & Trace business is showing improved performance and is anticipated to achieve breakeven or become profitable during FY26. The company is actively working with two major customers for solution rollout, leveraging its three key patents and digital printing technologies to provide comprehensive solutions. This segment is considered a key growth initiative for Control Print.
Recyclable Packaging Material Development
Control Print is investing in the development of fully recyclable packaging materials, with a strategic goal to reduce the cost per piece for mono dose packaging from the current ₹2 to ₹1. This cost reduction is dependent on establishing in-house manufacturing capabilities for the material. The company plans an initial CapEx of ₹10-15 crores for pilot equipment and lab lines to facilitate this R&D and manufacturing setup.
International Subsidiaries Performance
The international subsidiaries contribute to the consolidated performance. Markprint, focused on digital printing, is profitable with revenues around €2 million and is growing its ink business. Codeology, an end-of-line automation provider, is also profitable, contributing approximately £1.3 million. CP Italy, which houses the V-Shapes business, is currently loss-making due to ongoing investments and integration challenges.
Cost Structure and Employee Expenses
In Q1 FY26, employee costs accounted for 18% of the operating revenue, depreciation was 4%, and other expenses stood at 13%. The increase in employee costs is attributed to hiring specialized and expensive personnel for new growth areas like Track & Trace and Packaging. Management indicated that a significant increase in overall headcount is not expected going forward⏳, with a focus on optimizing existing staff.