Cosmo First

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.

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.

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.

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.

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.

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.