Cosmo First

Cosmo First reported a strong Q1 FY26, with consolidated sales reaching ₹800 crores, marking a 16% year-on-year increase. This growth was primarily fueled by a 19% rise in volume and improved BOPP film margins. The company's EBITDA for the quarter also saw a significant jump to ₹116 crores, up from ₹84 crores in the corresponding period last year. This improvement was attributed to higher volumes, better BOPP margins, ₹4 crores in cost rationalization, and an additional ₹4 crores from enhanced performance in the specialty chemical subsidiary.

The company successfully commissioned two key assets in Q1 FY26. A new BOPP line with an annual capacity of 81,000 metric tons began operations in June, increasing the company's BOPP capacity by 45%. This line is expected to ramp up to 100% utilization within the next two to three months and contribute approximately ₹750 crores in revenue at full capacity, with a strategic focus on specialty films. Additionally, a new window film line under the 'Sunshield' brand commenced operations in May 2025, quickly gaining traction with over 50 distributors.

The specialty chemical business continued its strong performance, posting a record EBITDA of ₹12 crores on quarterly sales of ₹49 crores in Q1 FY26, and is expected to maintain its growth trajectory. The pet care venture, Zigly, is poised for higher momentum in FY26, shifting its business model towards high-margin services and house brands. While some centers have started making money, the company anticipates older stores to achieve profitability by December, and two-year-old centers by Q4 latest, following initial investments in vet care and staffing.

The Indian BOPP market saw a net reduction of 3,000-4,000 tons in capacity due to a competitor's exit, leading to full capacity utilization across the industry. India's domestic consumption stands at 65,000-70,000 tons, with exports around 15,000 tons, where Cosmo First is a major player. Management noted a temporary surge in BOPP imports in July/August by traders anticipating higher prices, but expects this situation to normalize within 30-45 days as these traders face losses, reaffirming that such imports are generally unprofitable due to customs duties and logistics costs.

As of June 30, 2025, Cosmo First's net debt stood at ₹1140 crores, an increase of ₹200 crores from March. This rise is attributed to the significant BOPP capacity addition and related working capital requirements. However, management expects this to be near the peak level, projecting a significant reduction in net debt over the next two years, as there are no major CAPEX plans for the upcoming fiscal year. The company aims to reduce its debt burden through operational cash flows.

The company faces a significant challenge in its export markets, particularly the USA, where current tariffs of 55% could impact up to 50% of its business, which generated ₹250-280 crores in sales last year. Management hopes for a reduction in these duties to a more realistic 15-20% range. On the sustainability front, Cosmo First is committed to increasing its renewable energy usage, aiming for two-thirds of its power consumption from renewable sources within one to two years, up from over 50% in FY25, alongside other cost rationalization efforts targeting ₹40 crores in savings this year.