Cosmo First — Q2 FY26 earnings call

Call held 12 Nov 2025

Management summary

Cosmo First reported a strong Q2 FY26 with consolidated sales up 21% YoY to Rs. 919 crores and EBITDA up 19% to Rs. 128 crores, driven by higher sales volume and specialty margins. However, commodity film margins faced pressure from imports and US tariffs, and PAT was muted by new capacity-related depreciation and interest. The company is focused on ramping up new lines, expanding specialty products, and improving profitability in its consumer and rigid packaging verticals, while managing debt.

Highlights

  • Consolidated sales for September'25 quarter is Rs. 919 crores, which is higher compared to Sept 24 quarter by 21%.

  • EBITDA for the quarter has increased by 19% to Rs. 128 crores compared to Rs. 107 crores in September 24 quarter.

  • Higher sales volume by 25%, largely because of the new capacity, contributed Rs. 33 crores to EBITDA.

  • Higher specialty margin contributed Rs. 10 crores and improved performance of Specialty Chemical Subsidiary contributed Rs. 4 crores to EBITDA.

  • Specialty Chemical Subsidiary posted record EBITDA of Rs. 13 crores on top line of Rs. 49 crores in September'25 quarter.

  • Zigly acquired two established veterinary hospitals in Mumbai and Bangalore, both of which are profitability centers.

Concerns

  • Margin decline on BOPP and BOPET commodity films due to imports in India in Sept 25 quarter, impacting BOPP by Rs. 16 crores and BOPET by Rs. 7 crores.

  • Higher USA tariff (55% post-August) had an adverse impact of Rs. 6 crores in Q2, with an annualized impact of Rs. 55 crores.

  • Stabilization cost related to commissioning of the new line, involving 'a couple of crores' in trials and shutdowns.

  • PAT impact was muted despite EBITDA increase due to increased depreciation and interest related to new capacity.

  • Zigly business is currently making a loss of around Rs. 11.5 crore rupees per quarter, with profitability expected in 3-4 years.

Key financials

  1. Consolidated Sales ₹919 Cr +21%YoY
  2. EBITDA ₹128 Cr +19%YoY
  3. BOPP Gross Margin ₹22/kg -12%QoQ
  4. BOPET Gross Margin ₹6/kg -50%QoQ
  5. Specialty Chemical Subsidiary EBITDA ₹13 Cr
  6. Net Debt ₹1,230 Cr

What they filed

Q1 FY27: revenue up 41.0%, net profit up 0.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue723 679 687 751 873 +21%820 +21%911 +33%1,059 +41%
EBITDA67 55 59 72 81 +21%50 −9%94 +59%101 +40%
Net profit33 22 17 30 29 −12%17 −23%30 +76%30 +0%
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

  • Specialty Chemical Subsidiary
    ₹49 Cr Revenue₹13 Cr EBITDA
  • Cosmo Consumers (Window/Paint Protection Film)
    ₹4.5 Cr Sales
  • Zigly (Pet Care)
    ₹11.5 Cr Losses

Capital allocation

high confidence
  • Capex ₹250 Cr
    • New BOPP line, CPP line, window film (already commercial production)
    • Two new lines (one in Q4 FY26, one in Q1 FY27)
    So basically these are part of Rs. 250 crores of capex that is planned for this year. And then beyond this, we are kind of in a consolidation phase, and we are not committing any further capex at this stage, any major capex, I would say, for the rest of the year and for the next year.
  • Debt Net ₹1,230 Cr · 3.0× EBITDA
    The company net debt position at September'25 is close to Rs.1230 crore, which is 2.97x to EBITDA and 0.8x to GDP.
  • M&A Two established veterinary hospitals Acquisition · Closed

    Part of Zigly's strategy to move towards services and high-margin house brands; both are profitability centers.

    Both acquired hospitals are profitability centers.

    Zigly has also acquired two established veterinary hospitals during the quarter, one in Mumbai and another in Bangalore. Both of them are profitability centers.

Guidance & targets

Revenue

  • Overall Revenue Revenue · FY26 · Medium confidence ₹3500-3800 crores
    Yes, you see, I mean, it is very difficult to give such projections, but at a very broad level, we could close this year between Rs. 3500 crores to Rs. 3800 crores.

    — Management

  • Specialty Portfolio Revenue Revenue · FY26 · Medium confidence ₹2200-2500 crores
    And, within that, the specialty portfolio should be anywhere between Rs. 2200 crores to Rs. 2500 crores.

    — Management

  • Paint Protection Film / Sun Control Film Revenue Revenue · FY26 · High confidence ₹20 crores
    So, this year we expect to close around Rs. 20 crore and next year we should try to make it two to three times of this sale.

    — Management

  • Paint Protection Film / Sun Control Film Revenue (Next Year) Revenue · FY27 · High confidence ₹40-60 crores
    and next year we should try to make it two to three times of this sale.

    — Management

Capacity Utilization

  • New BOPP Line Utilization Capacity Utilization · Q4 FY26 · High confidence Fully utilized
    We expect this line to be fully utilized by Q4 of FY'26.

    — Management

  • Rigid Packaging (Cosmo Plastech) Capacity Utilization Capacity Utilization · Coming quarters · High confidence Further increase
    The business has reached close to 70% capacity utilization in Q2 which should further increase in the coming quarters.

    — Management

Cost

  • Cost Rationalization Impact (Film Business) Cost · 12 to 15 months · High confidence ₹25 crore annualized impact
    grow the specialty film and further try to push down the cost which we expect close to Rs. 25 crore of the annualized impact of the cost rationalization in 12 to 15 months from now.

    — Management

Growth

  • Specialty Chemical Subsidiary Growth Growth · Ongoing · High confidence Continue growth trend
    We expect this growth trend for the Specialty Chemical Subsidiary to continue with new innovative products.

    — Management

Power Consumption

  • Renewable Power Consumption Share Power Consumption · 12 to 15 months · High confidence Close to 2/3rd
    we are targeting to increase further to close to 2/3rd in 12 to 15 months from now.

    — Management

Profitability

  • Zigly Profitability Profitability · 3 to 4 years from now · Low confidence Profitable
    But profitability may easily take three to four years from now.

    — Management

Debt

  • Net Debt Level Debt · Next year (FY27) · High confidence Reduction
    But next year, you should see a reduction in the capex. And any kind of projection in our industry takes time. And given that we are controlling capex, so debt levels will continue to come up.

    — Management

Margin

  • BOPP Gross Margin Margin · From Q3 FY26 onwards · Medium confidence Pick up
    Ideally, it should pick up from here because it is the season time for our industry. And, also, the demand is good --So, if at all, the margins should ideally go up. I do not know if we can predict the future. But what we feel is that it should go up.

    — Management

Corporate Action

  • Demerger of Pet Care Vertical Corporate Action · By March 2027 · High confidence Demerge
    we had said that that we have a certain plan to do that. You know, we had set a deadline couple of years back that by March 27 ideally we would like to do. So, we are monitoring the situation very closely and at this stage we continue to remain that by March 27 I believe we would like to demerge it.

    — Management

Product Mix

  • Specialty/Semi-specialty volume percentage on new BOPP line Product Mix · Over next 12 months · High confidence Close to 70%

    Previously 18-20% → Close to 70%

    This could be about 18% to 20% in Q2.

    — Management

What to watch in Q3 FY26

BOPP New Line Utilization

By Q4 of FY'26
Current Close to 2/3rd of potential in Q2
Target Fully utilized

Why it matters

Full utilization will drive higher sales volume and improve cost efficiency, contributing significantly to overall performance.

The new BOPP line is ramping up each stage by stage and could achieve close to 2/3rd of potential in Q2. We expect this line to be fully utilized by Q4 of FY'26.

Risks & concerns

  • Margin decline on BOPP and BOPET commodity films

    high

    BOPP gross margin dropped to Rs. 22/kg from Rs. 25/kg; BOPET to Rs. 6/kg from Rs. 12/kg due to imports.

    Management acknowledged

  • Higher USA tariff (55%) on film imports

    high

    Annualized impact of Rs. 55 crores, with a net impact of 25% tariff after partial price increases.

    Management acknowledged

  • Stabilization costs for new production lines

    medium

    Couple of crores spent on trials and shutdowns during the ramp-up of new lines, muting PAT.

    Management acknowledged

  • Long gestation period for Zigly business profitability

    medium

    Profitability for the pet care vertical may take three to four years from now, currently incurring Rs. 11.5 crore losses per quarter.

    Management acknowledged

Q&A highlights

7 direct
Impact of US tariffs on business and ability to pass on costs Direct
Sure. Earlier it used to be 5%. Post-August, it moved to 55%. So as of now, it is 55% tariff on import of film in USA from India... close to Rs. 6 crore was the impact for the Q2. So, if we annualize, we expect close to Rs. 55 crore annualized impact... we could also take price increases from the customers... remaining net impact for us is close to 25% tariff.

Clarifies the significant financial impact of US tariffs and the company's strategy to mitigate it, including the portion passed on to customers.

Asked by Nirav Jimudia

Cost savings from newer lines once fully ramped up Direct
It will be 15% lower cost.

Provides a quantifiable benefit of the new capacity, indicating future margin improvement potential.

Asked by Nirav Jimudia

Future investment in specialty/semi-specialty lines after current ramp-up Direct
So see, some of it has already been commissioned. We have added two new lines very recently. And two lines are under commissioning. One line will come up in the Q4 and the other line will come up in the Q1 of next year. So basically these are part of Rs. 250 crores of capex that is planned for this year. And then beyond this, we are kind of in a consolidation phase, and we are not committing any further capex at this stage, any major capex, I would say, for the rest of the year and for the next year.

Clarifies the immediate capex pipeline and signals a pause in major capex beyond FY26, impacting future debt levels.

Asked by Nirav Jimudia

BOPP import situation and market pricing outlook Direct
Yes, you see, in anticipation some traders did import. And that negatively impacted in August-September... Imports are not happening because most of these importers realized that they lost a lot of money in this import exercise... There is a fair balance between demand and supply and the prices should improve from here.

Explains the reason for recent margin pressure (imports) and provides an outlook for price improvement due to reduced imports and balanced demand-supply.

Asked by Nirav Jimudia

Strategy to counter oversupply in BOPP segment Direct
We will continue to remain focused on specialty and exports.

Highlights the company's strategic shift towards higher-margin products and diversified markets to mitigate commodity cycle risks.

Asked by Aman Kumar

Timeline for Zigly business to stop losses and turn profitable Partial
Losses stopping, business itself has a lot of interest globally because pet care is a very upcoming segment... But profitability may easily take three to four years from now.

Indicates a longer gestation period for the consumer business to achieve profitability, impacting overall company earnings in the near to medium term.

Asked by Aman Kumar

Debt reduction timeline and year-end debt level Direct
You see, right now, this year, the debt is not going to be reduced because this year we had planned for Rs. 250 crores capex. But next year, you should see a reduction in the capex... so debt levels will continue to come up. But we have no major expenditure capital expenditure for the next 18 months.

Provides clarity on the debt trajectory, indicating no reduction this fiscal year but potential reduction next year due to reduced capex.

Asked by Nikhil

Progress on demerger of pet care vertical Direct
we had said that that we have a certain plan to do that. You know, we had set a deadline couple of years back that by March 27 ideally we would like to do. So, we are monitoring the situation very closely and at this stage we continue to remain that by March 27 I believe we would like to demerge it.

Confirms the company's commitment to demerging the pet care business by March 2027, which could unlock value for shareholders.

Asked by Vipul Kumar Shah

3 min read 6 chapters

Detailed narrative

Q2 FY26 Performance Overview

Cosmo First reported consolidated sales of Rs. 919 crores for Q2 FY26, marking a 21% increase compared to the September 2024 quarter. EBITDA grew by 19% to Rs. 128 crores, up from Rs. 107 crores in the prior year. This growth was primarily driven by a 25% higher sales volume, largely attributable to new capacity. However, the company noted that PAT growth was muted due to increased depreciation and interest expenses associated with these new investments.

Margin Pressures and Mitigation Strategies

Gross margins for BOPP and BOPET films experienced significant pressure in Q2 FY26. BOPP gross margin declined to Rs. 22 per kg from Rs. 25 per kg in the previous quarter, while BOPET dropped to Rs. 6 per kg from Rs. 12 per kg. This was mainly due to increased imports in India and a 55% US tariff, which had an adverse impact of Rs. 6 crores in Q2, with an annualized impact of Rs. 55 crores. The company has partially passed on these tariffs through price increases and expects margins to improve as imports curtail and demand-supply dynamics stabilize.

Focus on Specialty Products and Cost Efficiency

The company is strategically focusing on expanding its specialty film portfolio and aims to achieve an annualized cost rationalization impact of Rs. 25 crores within the next 12-15 months. The Specialty Chemical Subsidiary demonstrated strong performance, posting a record EBITDA of Rs. 13 crores on Rs. 49 crores in revenue for the quarter. Management plans to increase the specialty/semi-specialty product mix on its new BOPP line from the current 18-20% in Q2 to approximately 70% over the next 12 months.

New Business Verticals Update

Cosmo Plastech, the Rigid Packaging business, reached close to 70% capacity utilization in Q2, with expectations for further increases in coming quarters. Consumer businesses, including Zigly (pet care) and Cosmo Consumers (window film, paint protection film, ceramic coating), are scaling up. Zigly acquired two profitable veterinary hospitals in Mumbai and Bangalore. While the Cosmo Consumers segment is projected to achieve Rs. 20 crores in revenue this fiscal year, Zigly's profitability is anticipated to take three to four years from now, despite scaling revenue without increasing losses.

Capital Structure and Future Capex Plans

As of September 2025, the company's net debt stood at Rs. 1230 crores, resulting in a net debt to EBITDA ratio of 2.97x. Cosmo First has planned Rs. 250 crores in capex for FY26, which includes two new lines expected to be commissioned by Q1 FY27. Beyond this, management indicated a consolidation phase with no major capex planned for the next 18 months, expressing confidence that net debt reduction will occur in the coming years due to controlled capital expenditure.

Renewable Energy and Market Diversification

The company is committed to increasing its renewable power consumption, targeting close to two-thirds of its power from renewable sources within 12-15 months, which will also facilitate cost rationalization. In response to US tariffs, Cosmo First will evaluate further price increases after December if duties persist, while actively expanding its export footprint to other regions such as the Americas, Europe, Middle East, and Africa, covering approximately 70% of the world market.

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