Concall AI

Cosmo First — Q4 FY25 earnings call

Call held 21 May 2025

Management summary

Cosmo First reported strong Q4 and FY25 results, with significant growth in sales, EBITDA, and PAT, driven by specialty film sales and cost rationalization. The company is nearing completion of a substantial capex cycle, with new CPP and Sunshield lines operational, and a new BOPP line expected in Q1 FY26. While profitability in new ventures like Zigly is still evolving, management is optimistic about future growth and asset utilization, targeting ₹3500-4000 crores in revenue for FY26.

Highlights

Consolidated sales for Q4 FY25 increased 16% YoY to ₹746 crores, backed by higher specialty sales and improved BOPP margins.
Full Year FY25 EBITDA surged 44% to ₹362 crores, primarily due to 10% growth in specialty sales and ₹25 crores in cost rationalization.
Consolidated PAT for FY25 more than doubled, increasing 115% to ₹133 crores.
New CPP line (22,000 MT capacity) started operations in March 2025, and Sunshield film began commercial production in May 2025.
The new BOPP line, with 81,000 MT capacity, is expected to be operational by Q1 FY26 and is noted as one of the lowest cost production lines.

Concerns

Q4 FY25 EBITDA was impacted by ₹4.3 crores in one-time costs for shifting a thermal line and a 10% lower volume on the BOPET film line due to planned maintenance.
ROCE/ROE for FY25 is currently below the cost of capital, as significant debt for new capex is on the books but returns are yet to fully materialize.
Zigly's product side margins remain low, and vet care services are not yet profitable, though some older stores are breaking even.
Potential temporary blip in BOPP margins due to 4-5 new lines expected to come up in India in the current financial year.

Key financials

2 periods

Q4 FY25

Consolidated Sales
₹746 Cr
YoY +16%
Consolidated EBITDA
₹85 Cr
YoY +26.9%
BOPP Film Margin
₹21/kg
YoY +50%

FY25

Consolidated EBITDA
₹362 Cr
YoY +44%
Consolidated PAT
₹133 Cr
YoY +115%
Specialty Sales Growth
10%

What they filed

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

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	723	679	687	751	873 +21%	820 +21%	911 +33%	1,059 +41%
Expenses	656	624	628	679	793	770	817	957
EBITDA	67	55	59	72	81 +21%	50 −9%	94 +59%	101 +40%
Margin	9%	8%	9%	10%	9%	6%	10%	10%
Other income	21	20	14	25	24	35	15	10
Interest	25	24	26	30	36	36	35	38
Depreciation	24	24	25	29	33	34	35	36
Profit before tax	39	27	23	38	36 −8%	15 −44%	40 +74%	38 +0%
Tax rate	17%	17%	27%	21%	18%	-12%	24%	22%
Net profit	33	22	17	30	29 −12%	17 −23%	30 +76%	30 +0%
EPS	12.40	8.55	6.44	11.36	11.22	6.55	11.42	11.29

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
₹180 Cr Top Line (FY25)— EBITDA Margin
Cosmo Consumer (Sun Control Films)
₹25 Cr Revenue Target (FY26)₹50 Cr Revenue Target (FY27)₹35 Cr Break-even Sales
Zigly (Pet Care)
₹5 Cr Monthly GMV60% Sales Split (Products)40% Sales Split (Services)32 stores Store Count5% Retail Level Growth

Capital allocation

high confidence

Capex ₹200 Cr largely done through internal accrual
- Multiple growth projects including BOPP line, CPP line, polyester line, metallizer's and coating line, Sunshield and Paint protection film and rigid packaging
- Adding more value addition lines and specialty capacity
The company has already invested close to Rs.1180 crore in last three years as capex in multiple growth projects including BOPP line, CPP line, polyester line, metallizer's and coating line, Sunshield and Paint protection film and rigid packaging. These will yield a significant ramp up in revenue as well as profitability in next two to three years. ... So there is additional around Rs.200 plus crore capex this year which will be largely done through internal accrual.
Debt Net ₹967 Cr · 2.7× EBITDA

The debt position of the company, the company's net debt is at Rs.967 crores, which is 2.7x to EBITDA and 0.7 times to equity. The financials remain strong.
Dividend ₹4/share (final)

Well, the Board of Directors of the company has recommended dividend of Rs.4 per equity share for the Financial Year 24-25 which will be subject to approval of shareholders in upcoming annual general meeting.

Guidance & targets

Revenue

Specialty Sales Growth Revenue · FY26 · Medium confidence better off than 10%

So we are quite optimist that the growth rate should be better off in FY'26.

— Management
Cosmo Consumer (Sun Control Films) Revenue Revenue · FY26 · High confidence ₹25-30 crores

So, there we see that majority of the growth will actually happen in FY'27. So, we expect next year should be closing anywhere between Rs.25 to Rs.30 crores

— Management
Cosmo Consumer (Sun Control Films) Revenue Revenue · FY27 · High confidence exceed ₹50 crores

and a year thereafter, we should exceed Rs.50 crores.

— Management
Total Revenue with Full Utilization Revenue · Longer Term · Medium confidence ₹5000 crores

With all the assets including Zigly,, with BOPP, CPP line, BOPET line to full potential, we should be, we can potentially touch close to Rs.5000 crores with full utilization of all assets across all business verticals.

— Management
Total Sales Revenue · FY26 · High confidence ₹3500-4000 crores

But this year, we are expecting anywhere between Rs.3500 to Rs.4000 crore sales, and a year thereafter, and the 10% to 15% jump.

— Management

Profitability

Cosmo Consumer (Sun Control Films) Break-even Sales Profitability · Ongoing · High confidence ₹35 crores

Right now, we feel Rs.35 crores should be the break even.

— Management
BOPET Film Margins Profitability · Ongoing · Medium confidence improve

So, we expect margins should improve on the BOPET side logically

— Management
New BOPP Line Monthly Gross Margin Profitability · Monthly (post-commissioning) · High confidence ₹7.5 crores

it should generate Rs.7.5 crore of the gross margin on a monthly basis and fixed overhead on this line we do not expect more than Rs.8, Rs.9 crore on annual basis.

— Management

Capacity

New BOPP Line Operation Capacity · Q1 FY26 · High confidence Q1 FY26

The BOPP line having an annual capacity of close to 81,000 metric ton, is also expected to start operation from Q1 of FY'26.

— Management

Capital Allocation

Pet Care Business Demerger Capital Allocation · 3-4 years · Medium confidence within 3-4 years

We will separate it out at the right time as we said, we had indicated that in next three years to four years we will do it

— Management

What to watch in Q1 FY26

New BOPP Line Commissioning

next quarter

Current Expected Q1 FY26

Target Commercial operations started

Why it matters

This new line is a major capex investment and is expected to significantly contribute to revenue and profitability.

The BOPP line having an annual capacity of close to 81,000 metric ton, is also expected to start operation from Q1 of FY'26.

Risks & concerns

BOPP oversupply and margin pressure
medium

4-5 new BOPP lines coming up in India may cause a temporary blip in BOPP margins, though the company's focus on specialty films and lowest cost production should mitigate.

Management acknowledged
ROCE/ROE below cost of capital
medium

Current ROCE is subdued because significant debt for new capex is already on the balance sheet, but the returns from these investments are yet to fully kick in.

Management acknowledged
Zigly profitability challenges
medium

Product side margins are low due to supplier terms, and vet care services are not yet profitable, requiring a focus on private labels and services to improve.

Management acknowledged

Q&A highlights

5 direct, 1 evasive

Impact of commodity BOPP margin changes on specialty/semi-specialty margins Direct

Well frankly, in our past experience the Specialty Film margins broadly remain the same, except there may be some minor changes due to change in the mix. Semi specialty runs with a additional delta over the commodity. But the relationship is not linear, so let us say if commodity margins moves by Rs.10 or so, it's not necessary semi specialty margin will also change by 10. It may change by Rs.4, Rs.5 or Rs.6, depending on the criticality of the film. To answer your question, in the specialty film, largely the margins are protected. Semi specialty changes with the change in the commodity but delta is lower compared to the change in the commodity.

Clarifies that specialty film margins are largely protected from commodity price volatility, which is key for the company's strategy.

Asked by Neerav from Anvil Wealth

ROCE/ROE below cost of capital despite capex and specialty focus Direct

Two things, first is COVID were exceptional years, because globally supply chains were impacted. But having said so, we have clearly stated in our media release, that in last three years we have done almost Rs.1200 crore of capex, and last year itself we have done Rs.500 plus crore of capex. It doesn't happen that the moment you spend capex next day returns start coming. It does take some time and as polyester got installed in the FY'23 and this year, it has started contributing reasonably to the EBITDA numbers. Even in polyester, we are moving the direction of selling more and more specialty. We have got close to 35% to 40% semi specialty sales on polyester. We have worked on some high-end Specialty Films also when it comes to polyester films. So these are the capex which is done recently, which are yet to start maturing. Once they start maturing, our revenue and profitability numbers will grow quite a bit. ... ROCE is appearing subdued today, because the most part of the debt related to the new growth is already in the balance sheet. But we do not have commensurate last 12 months earning out of it. So once we have all the new growth assets contributing, so that would help and post that only probably you may like to look at the ROCE.

Addresses a critical concern about capital efficiency, explaining that new capex takes time to yield returns and ROCE will improve as assets mature.

Asked by Arun Malhotra from CAPGROW Capital Advisors

Promoters selling 4% stake and any financial transactions with the company Direct

Yes, see that was his personal need and if you had seen earlier, when he had fund, actually bought shares. But last year, he had purchased some personal asset, and he needed to fund that, and therefore he had to sell some shares. So, promoters can also have personal needs to manage their cash flows. What is your second question? ... Not really. There was in between, for a very few days, there was a transaction. There was a very small loan, not small, but there was a loan which was given, and that was immediately repaid, something of that sort. It was nothing material.

Provides clarity on promoter share sale, attributing it to personal needs, and confirms no material financial transactions with the company, addressing potential investor concerns.

Asked by Amit Agarwal from Leeway Investments

Profitability of Zigly and impact of quick commerce Partial

The bigger issue right now in product side is that the margins are not good enough. The suppliers are not offering good margins to any of the players, and therefore some of our competitors, and including Zigly, we are trying to move in the direction of private label so as to move the margins and also provide better quality products to the customer. ... Some of the old stores have started to turn break even and be profitable. What we are realizing is, as I said earlier services like grooming at the pan India level is profitable for us. Vet care, given that we have invested quite a bit in vet care in the last eight, nine months, vet care is still not profitable, but many of the centers in vet care are profitable already. What is really hurting us is the product side where margins are not coming either in online, or offline, and that is purely because the supplier partners are not offering enough margins.

Highlights the ongoing challenge of low product margins in Zigly and the strategic shift towards private labels and services to improve profitability.

Asked by Amit Agarwal from Leeway Investments

Break-even sales for the new sun control films business Direct

Right now, we feel Rs.35 crores should be the break even. But I don't know if you get a chance to see some of the videos that we launched this year. We have already released two videos of Cosmo Sunshield, because there is a lot of awareness that we need to create in the market.

Provides a clear financial target for the new Cosmo Consumer vertical to achieve profitability.

Asked by Neerav from Anvil Wealth

Capitalization timeline for ₹584 crore CWIP Direct

We expect within this current quarter only. ... So out of that, a larger part is BOPP film which we are going to commission in the current Quarter 1 only. And the second part is the sun control film, which in any case we have already started the commercial production, starting from the May.

Gives a clear timeline for the conversion of a significant portion of capital work-in-progress into operational assets, indicating imminent revenue generation.

Asked by Saket Kapoor from Kapoor and Co.

Blended EBITDA margin trajectory for the current FY Evasive

Difficult to project at this moment but you may write to us at the given email ID in our investors presentation.

Management declined to provide specific guidance on blended EBITDA margins for the current fiscal year, suggesting uncertainty or a preference not to commit publicly.

Asked by Saket Kapoor from Kapoor and Co.

3 min read 6 chapters

Detailed narrative

Q4 & FY25 Performance Overview

Cosmo First reported consolidated sales of ₹746 crores for Q4 FY25, marking a 16% increase from the March 2024 quarter, driven by higher specialty sales and improved BOPP margins. The company's EBITDA for the quarter stood at ₹85 crores, up from ₹67 crores in the prior year, despite a ₹4.3 crore one-time cost and a 10% volume reduction in BOPET due to planned maintenance. For the full fiscal year FY25, consolidated EBITDA grew 44% to ₹362 crores, with PAT increasing by 115% to ₹133 crores, primarily attributed to a 10% growth in specialty sales and ₹25 crores in cost rationalization.

Strategic Investments & Capacity Expansion

The company has invested approximately ₹1180 crores in capex over the last three years across various growth projects, including BOPP, CPP, polyester, metallizer, coating lines, Sunshield, Paint Protection Film, and rigid packaging. The new 22,000 metric ton CPP line commenced operations in March 2025, and the Sunshield film began commercial production in May 2025. A new BOPP line with an 81,000 metric ton capacity is expected to be operational by Q1 FY26, which management states is one of the lowest cost production lines available. An additional ₹200+ crores in capex is planned for FY26, largely funded by internal accruals, focusing on specialty and value-added lines.

Specialty Films & Margin Dynamics

Cosmo First's strategy emphasizes specialty film sales, which have grown at a 10% CAGR over the past six years, with a similar growth rate in FY25. The company's specialty film portfolio currently represents 71% of its total film sales, split broadly 50:50 between semi-specialty and specialty. Management noted that specialty film margins are largely protected from commodity price fluctuations, with semi-specialty margins showing a lower delta to commodity changes. While BOPET margins are expected to improve due to limited new capacity, BOPP margins might experience a temporary blip in the short term due to several new lines coming up in India.

New Business Verticals: Cosmo Consumer & Zigly

The company is expanding its new business verticals. The Specialty Chemical subsidiary achieved a top line of ₹180 crores in FY25 with high-teens EBITDA. The new Cosmo Consumer vertical, encompassing Sunshield and Paint Protection Film, is projected to generate ₹25-30 crores in FY26 and exceed ₹50 crores by FY27, with a break-even sales target of ₹35 crores. The pet care vertical, Zigly, currently operates 32 stores and has a monthly GMV of ₹5 crores, with sales split 60% products and 40% services. Zigly is focusing on private labels and services to improve profitability, as product margins remain a challenge.

Capital Structure & Shareholder Returns

As of March 31, 2025, Cosmo First's net debt stood at ₹967 crores, resulting in a net debt to EBITDA ratio of 2.7x and a debt to equity ratio of 0.7 times. The Board of Directors has recommended a dividend of ₹4 per equity share for FY24-25, subject to shareholder approval. Management acknowledged that the current ROCE is subdued and below the cost of capital, primarily because the debt associated with recent large-scale capex is already on the books, while the full returns from these maturing assets are yet to be realized.

Outlook & Growth Drivers

Cosmo First anticipates FY26 sales to be in the range of ₹3500-4000 crores, with potential to reach ₹5000 crores with full utilization of all assets. The company expects specialty sales growth to be even better in FY26 than the 10% achieved in FY25. The new BOPP line is projected to generate a monthly gross margin of ₹7.5 crores at 90% utilization. The company plans to demerge its pet care business within the next three to four years, once it achieves decent scale and significantly reduces losses. The focus remains on leveraging new investments, expanding international geographies, and further cost rationalization.

This is an AI-generated summary of a publicly available earnings call transcript.

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