Detailed Narrative
Robust Standalone Performance and Core Business Growth
Control Print demonstrated strong standalone performance in Q3 and 9M FY26. The company reported a total revenue of INR 322 crores for 9M FY26, reflecting a 15% year-on-year growth from INR 280 crores in the previous fiscal year. Q3 FY26 operating revenue reached INR 109 crores, an increase from INR 94 crores in the corresponding period of FY25. The core coding and marking business, which constitutes 92% of the total business, continues to be a key growth driver, expanding at 14% against a market growth rate of 10%, and contributing to a 21% YoY EBITDA growth.
Challenges in Consolidated Profitability and Foreign Subsidiaries
Despite strong standalone results, consolidated profits were impacted by losses from foreign subsidiaries. The Italy-based V-Shapes packaging business was identified as the major loss-making entity, and the consolidated Codeology Group reported a loss of 147,000 pounds for 9M FY26. Management attributed these challenges to execution issues with new packaging machines and the expensing of global R&D costs (approximately EUR 800,000) entirely within the Italian entity, which distorts its reported performance.
Increased Employee Costs and Cost Optimization Efforts
Employee costs rose significantly in Q3 FY26, primarily due to adjustments for new labor code provisions, including gratuity and staff incentive provisions, which had an estimated impact of INR 5 crores. Additionally, other expenses, such as business promotion and travel, also increased. Management acknowledged these cost pressures and committed to implementing cost control measures and optimizing overheads in Q4 FY26 to improve profitability.
Packaging Business Turnaround and Execution Focus
The packaging business, currently operating at a loss in both India and Italy, is a strategic focus for turnaround. Management expects the Italy packaging business to achieve breakeven by Q3/Q4 FY26, while the Indian packaging business is targeted to become profitable by Q1 FY27. The company is actively resolving technical issues that led to delays in packaging machine shipments in Q2 and Q3, with remaining machines expected to be dispatched in Q4 FY26 and Q1 FY27 to mitigate losses.
Strategic Development in Track & Trace and Patented Technology
Control Print is making strategic advancements in its track and trace and digital printing businesses. The company is in the final stages of negotiating and closing high-value, patented technology deals with pharmaceutical companies, with an expected closure in Q3 FY26. The strategy for track and trace focuses on offering comprehensive, value-added solutions beyond basic compliance, leveraging printing and software capabilities to address broader customer business issues.
Product Innovation and Local Manufacturing Initiatives
The company is investing in product innovation, particularly in developing a single polymer recyclable material. A pilot line for this material is currently undergoing final trials and is slated for delivery in March and commissioning by April or May. This initiative aims to enable local manufacturing of cheaper, recyclable materials, which is expected to enhance margins in the packaging segment. Control Print has also filed patent extensions for various packaging materials and formats to strengthen its intellectual property.
Outlook and Capital Allocation Priorities
Control Print projects its core coding and marking business to maintain a growth rate of 14-15% over the next one to two years. While no major capital expenditure is planned for the core business due to current capacity utilization of 65-70%, some CapEx is directed towards the development and manufacturing of packaging materials. The company generates INR 50-60 crores in cash flow, with an annual dividend payout of INR 15 crores, and remains open to considering strategic acquisitions.