Cosmo First — Q3 FY26 earnings call

Call held 12 Feb 2026

Management summary

Cosmo First reported strong top-line and EBITDA growth in Q3 FY26, driven by new capacities and improved specialty mix. However, profitability was tempered by BOPP margin pressure, one-time costs, and higher depreciation. The company is focused on sweating its recent capex, reducing net debt, and scaling new high-margin businesses, with an expectation of improved profitability from USA operations starting Q1 FY27.

Highlights

  • Consolidated sales of ₹899 crores, up 28% YoY, driven by 29% higher volume due to new capacities.

  • EBITDA increased 19% YoY to ₹103 crores, supported by higher sales volume, better specialty mix, and improved specialty chemical subsidiary performance.

  • Net debt reduced by ₹20 crores during the quarter to ₹1,215 crores, with a clear roadmap for further reduction of ₹200-250 crores annually.

  • Rigid Packaging business (Cosmo Plastech) reached EBITDA breakeven in December 2025 and achieved close to 70% capacity utilization.

  • BOPET film gross margins improved significantly to ₹12 per kg in Q3 FY26 from ₹6 per kg in Q2 FY26, primarily due to reduced imports.

Concerns

  • BOPP core film margins declined to ₹13 per kg in Q3 FY26 from ₹22 per kg in Q2 FY26 due to increased imports and USA tariffs.

  • EBITDA was adversely impacted by ₹19 crores from non-repetitive items, including a ₹8.4 crores inventory loss and a ₹4 crores one-time gratuity liability.

  • Volume loss of approximately 6% (₹4 crores impact) occurred due to a BOPP line shutdown, though it was rectified towards quarter-end.

  • PAT growth was muted due to increased depreciation and interest expenses related to recently commissioned new capacities.

Key financials

  1. Consolidated Sales ₹899 Cr +28%YoY
  2. EBITDA ₹103 Cr +19%YoY
  3. BOPP Film Gross Margin ₹13/kg
  4. BOPET Film Gross Margin ₹12/kg
  5. Net Debt ₹1,215 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
    ₹52 Cr Sales25% EBITDA Margin
  • Rigid Packaging (Cosmo Plastech)
    70% Capacity UtilizationBreakeven status EBITDA Status
  • Consumer (Zigly)
    50% Topline Growth

Capital allocation

high confidence
  • Capex Capex disclosed
    • Sweating strategic capex done in recent years ₹1,100 Cr
    Capex cycle of the Company is largely complete. Now the focus will be on sweating strategic capex done in recent years amounting to more than 1,100 Cr.
  • Debt Net ₹1,215 Cr · 2.8× EBITDA Cost 6.5%
    • Repayment Net debt reduced by Rs 20 crores during the quarter. ₹20 Cr
    The Company's net debt at Dec 2025 is Rs 1,215 crores (Sept 2025 Rs 1,234). Accordingly, net debt has reduced by Rs 20 crores during the quarter. Company's net debt is 2.8 times to EBITDA and 0.8 times to equity. So, weighted average stands between 6.5% to 6.8%, depending on the mix between the foreign currency loans and the India denominated loans.
  • M&A Filmax (Korea) Joint venture · Signed

    To grow in the Korean market and other regions over the next couple of years.

    Coming back to the third question, we have also entered a joint venture with Filmax in Korea. So, that is another region that we intend to grow in over the next couple of years.

Guidance & targets

Debt

  • Net Debt Reduction Debt · next 2-3 years · High confidence ₹200-250 crores each year
    we expect between Rs. 200 crores, Rs. 250 crores each year reduction, which translates to 15% to 18% of the reduction in the net debt position each year.

    — Management

Capacity Utilization

  • New BOPP Line Utilization Capacity Utilization · from March onwards · High confidence 100%

    From 70% in Q3, 80% in Jan today

    In January, already there has been some more output increase from this line. We have reached now close to 80% of the potential and we expect that from March onwards, we should be able to get 100% out of this line.

    — Management

  • CPP Line Full Potential Capacity Utilization · 12 more months · Medium confidence Full potential
    The only area where it is going to take us 12 more months to reach full potential will be CPP.

    — Management

Product Mix

  • Specialty as % of Total Sales Volume Product Mix · in a couple of years · Medium confidence 70%

    From 50% (estimated for FY27) today

    Our target will be to take this number to about 70% in a couple of years.

    — Management

Profitability

  • USA Operations Profitability Profitability · starting Q1, FY27 · High confidence Improved profitability
    Recently announced reduction in the USA tariff will lead to improved profitability from the USA operations starting from Q1, FY27 once the higher duty paid inventory is exhausted.

    — Neeraj Jain

  • USA Margin Improvement (Full Year) Profitability · next year · High confidence ₹50 crores
    So, for the full year next year, we should have two impacts. One is the margin improvement by close to Rs. 50 crores.

    — Management

New Business

  • Window Films Business Break-even Sales New Business · Medium confidence ₹80-85 crores
    we expect that this business based on the current margins should be roughly Rs. 80 crores, Rs. 85 crores at which it should start to break even.

    — Management

Corporate Action

  • Zigly Demerger Corporate Action · FY27 · High confidence Demerged
    We have always stated FY'27 and we maintain that.

    — Management

Sustainability

  • Renewables Gains Sustainability · FY28 · Medium confidence More gains
    We are already getting some gains from renewables, and some more gains are largely expected to come in FY28.

    — Management

Market context

  • Revenue Growth Revenue · coming quarters · High confidence Double-digit
    The Company expects double-digit revenue growth in coming quarters due to enhanced utilization of recently added capacity.

    — Neeraj Jain

What to watch in Q4 FY26

New BOPP Line Utilization

from March onwards
Current 70% in Q3, 80% in January
Target 100% output

Why it matters

Achieving full utilization of the new BOPP line is crucial for revenue growth and sweating recent capex.

We have reached now close to 80% of the potential and we expect that from March onwards, we should be able to get 100% out of this line.

Risks & concerns

  • BOPP core film margin pressure

    high

    Margins declined due to increased imports in India and high USA tariffs, with a full-year impact of ₹50 crores expected.

    Management acknowledged

  • One-time financial impacts

    medium

    Q3 EBITDA was adversely impacted by ₹19 crores from non-repetitive inventory loss (₹8.4 crores) and one-time employee benefit gratuity liability (₹4 crores).

    Management acknowledged

  • Muted PAT growth

    medium

    PAT was impacted by increased depreciation and interest expenses related to new capacities, offsetting operational improvements.

    Management acknowledged

  • Industry overcapacity in BOPP/BOPET

    medium

    Concerns raised by analysts about industry overcapacity, though management expressed confidence in full utilization for BOPP/BOPET.

    Analyst acknowledged

Q&A highlights

6 direct
Impact of USA tariffs on Q3 FY26 margins and full-year P&L Direct
It is near to full impact. So, as we said, depending on the math between Rs.4 crores to Rs.5 crores is the net impact because of the USA tariff. Out of this, Rs. 6 crores impact was already made in the Quarter 2 results. So, there is additional impact of close to Rs.8 crores. It is very difficult to, to exactly quantify, but we expect it to be close to Rs. 8 crores. Yes, see, on a full year basis, it was expected to give an Rs.50 crores impact on our P&L.

Quantified the specific financial impact of USA tariffs on current quarter and full year, which was a key adverse factor for EBITDA.

Asked by Neerav Jimudia

Break-even point for the Window Films business Direct
What we have projected right now is close to Rs. 15 crores of marketing cost next year and we expect that this business based on the current margins should be roughly Rs. 80 crores, Rs. 85 crores at which it should start to break even.

Provided a specific revenue target for the new Window Films business to achieve profitability, including the associated marketing costs.

Asked by Neerav Jimudia

Realistic volume assumptions for BOPP/BOPET capacity utilization over the next 2-3 years given industry overcapacity Direct
See, on a very realistic basis, we see no reason why we should not be able to fully utilize BOPP and BOPET capacity. We should reach our full potential. The only area where it is going to take us 12 more months to reach full potential will be CPP.

Addressed concerns about industry overcapacity by stating confidence in achieving full utilization for BOPP and BOPET, while providing a timeline for CPP.

Asked by Gaurav

Year-on-year net debt reduction target from free cash flow generation Direct
we expect between Rs. 200 crores, Rs. 250 crores each year reduction, which translates to 15% to 18% of the reduction in the net debt position each year.

Provided a clear quantitative target for annual debt reduction, indicating financial resilience and capital allocation strategy.

Asked by Gaurav

Timeline to reach 75% specialty business level Direct
See, going by historical growth rate it should be in about four years.

Gave a timeline for achieving a key strategic goal of increasing the proportion of higher-margin specialty products.

Asked by Madhur Rathi

Demand-supply balance for BOPP segment over the next 2-3 years Direct
See, as far as world is concerned, we feel BOPP will be fairly balanced. When it comes to India, FY'27 should be largely balanced. But FY'28, supply could be more than demand. So, in the next two to three years, I think our specialty business will be much higher. And since we export most of the specialty business, we will not be hit because of this overcapacity.

Provided an outlook on market dynamics and how the company plans to mitigate potential overcapacity through its specialty and export focus.

Asked by Amar Kumar

News regarding China's BOPET production curtailment and its impact on India Partial
You see, across certain sectors where companies are carrying older assets, and across sectors where China is not making money, government has been pursuing the private entities to curtail the sales. Now, obviously, government has given certain directions, and we have seen that China sticks to the broad guideline that it set for itself. So, we have to see the progress, but you are largely right in terms of what you have heard. We do not have complete tracking of that, but you are right that in general, Chinese government is pursuing to shut down the older capacities. And we could certainly see that in the last few months there is much lesser import from China.

Confirmed the general trend of China curtailing older capacities, which has a positive implication for Indian manufacturers by reducing imports.

Asked by Amar Kumar

2 min read 5 chapters

Detailed narrative

Q3 FY26 Financial Performance Overview

Cosmo First reported consolidated sales of ₹899 crores for Q3 FY26, marking a 28% year-on-year increase, primarily driven by a 29% higher sales volume from new capacities. EBITDA grew 19% to ₹103 crores, benefiting from increased sales volume, a richer specialty product mix, and improved performance of the specialty chemical subsidiary. However, the quarter's profitability was impacted by approximately ₹19 crores from non-repetitive items, including a ₹8.4 crores inventory loss and a ₹4 crores one-time gratuity liability, alongside a 6% volume loss due to a BOPP line shutdown.

Margin Dynamics in Film Business

Gross margins in the BOPP film segment declined to ₹13 per kg in Q3 FY26, a significant drop from ₹22 per kg in Q2 FY26 and ₹21 per kg in Q3 FY25. This pressure was attributed to increased imports in India and high USA tariffs, which management expects to have a full-year impact of ₹50 crores on the P&L. Conversely, BOPET film gross margins saw a substantial improvement, rising to ₹12 per kg in Q3 FY26 from ₹6 per kg in Q2 FY26, largely due to a reduction in imports, particularly from China.

Strategic Focus on Capacity Utilization and Debt Reduction

With the capex cycle largely complete, Cosmo First's immediate focus is on maximizing the utilization of its recently added strategic capex, amounting to over ₹1,100 crores. The new BOPP line, which operated at 70% capacity in Q3, is expected to reach 100% utilization from March onwards. The company also outlined a clear roadmap to reduce its net debt of ₹1,215 crores by ₹200-250 crores annually over the next 2-3 years, aiming to strengthen its financial resilience.

Performance of New and Specialty Businesses

The Specialty Chemical subsidiary continued its strong traction, posting sales of ₹52 crores with a 25% EBITDA margin in Q3 FY26, and has three new products awaiting commercialization. The Rigid Packaging vertical (Cosmo Plastech) achieved EBITDA breakeven in December 2025, operating at nearly 70% capacity. In the consumer segment, Zigly (Petcare) reported over 50% topline growth year-on-year in Q3 FY26, focusing on high-margin services and house brands. The Window Films business is projected to break even at ₹80-85 crores in sales, with an estimated ₹15 crores in marketing costs next year.

Outlook and Geographic Expansion

The company anticipates double-digit revenue growth in coming quarters, driven by enhanced capacity utilization. Profitability from USA operations is expected to improve starting Q1 FY27 following tariff reductions. Cosmo First is also actively pursuing growth in new geographies, including a joint venture with Filmax in Korea, and sees positive prospects from India's FTAs with America and Europe. The demerger of Zigly is still planned for FY27, aiming to unlock further value.

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