Flair Writing Industries Limited — Q1 FY26 earnings call

Call held 29 Jul 2025

Management summary

Flair Writing delivered strong Q1 FY26 results with 16.8% YoY revenue growth and margin expansion, primarily driven by its Own Brand portfolio and robust performance in the Creative and Steel Bottle segments. However, the core Pens business and OEM sales showed slower growth or decline. The company is progressing with its capex plans for capacity expansion and remains confident in its medium-term growth and margin targets.

Highlights

  • Revenue from operations grew 16.8% YoY to ₹288.5 crores, driven by strong demand in domestic and export markets.

  • EBITDA increased 17.9% YoY to ₹49.5 crores, with EBITDA margin expanding 16 bps YoY and 146 bps sequentially to 17.2%.

  • Gross profit margin improved to 50%, up 24 bps YoY and 138 bps sequentially, due to a favorable product mix.

  • Own Brand sales demonstrated robust performance, growing 23% YoY to ₹264 crores, with a heartening rebound in export markets.

  • The Creative segment was a standout, achieving 77% YoY growth to ₹65 crores, supported by new product innovations and increased in-house manufacturing.

Concerns

  • OEM sales declined by 24% YoY, primarily due to a material decline in the domestic OEM pens segment.

  • The core Pens business grew a modest 3% YoY to ₹202 crores, lagging the overall revenue growth.

  • The Steel Bottle segment, despite 55% YoY growth, has hovered around ₹12-13 crores for the last three quarters, raising questions about its 50% CAGR target.

Key financials

  1. Revenue from Operations ₹288.5 Cr +16.8%YoY
  2. Gross Profit ₹144.2 Cr +17.3%YoY
  3. Gross Profit Margin 50%
  4. EBITDA ₹49.5 Cr +17.9%YoY
  5. EBITDA Margin 17.2%
  6. Profit After Tax ₹29 Cr +10.5%YoY
  7. PAT Margin 10%

What they filed

Q1 FY27: revenue up 6.6%, net profit down 7.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue242 229 257 242 263 +9%256 +12%251 −2%258 +7%
EBITDA43 35 39 38 43 +0%36 +3%38 −3%36 −5%
Net profit32 27 28 27 36 +13%25 −7%29 +4%25 −7%
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

  • Own Brand Sales
    ₹264 Cr Revenue
  • OEM Sales
    -24% Revenue Growth
  • Pens Business
    ₹202 Cr Revenue
  • Creative Segment
    ₹65 Cr Revenue
  • Steel Bottle Segment
    ₹13 Cr Revenue
  • Export OEM
    ₹17 Cr Revenue

Capital allocation

high confidence
  • Capex ₹26 Cr this quarter · ₹85 Cr (FY26) planned
    • New manufacturing facility at Valsad (2 lakh sq ft)
    • 60 injection molding machines, molds and assembly machines
    • Rooftop solar system (1.85 MW) ₹4.5 Cr
    Our capex time line remains on track with construction already underway at our new manufacturing facility at Valsad spanning around 2 lakh square feet. As part of this expansion, we have placed orders of 60 injection molding machines, molds and assembly machines. This investment will greatly boost our production capacity and drive further growth in the coming quarters. (Page 3) For FY '26, the planned capex of INR80 crores, INR90 crores has been embarked to support the key strategic initiatives, including the establishment of new manufacturing facility in Valsad dedicated to writing instrument as well as the Creative as a segment. And of this, INR26 crores are deployed in Q1 FY '26 as a part of budgeted capital plan. (Page 13) As part of our sustainability and growth initiatives, we have installed a rooftop solar system with a capacity of 1.85 megawatts at an approximate cost of INR4.5 crores. (Page 5)

Guidance & targets

Revenue

  • Overall Revenue Growth Revenue · medium term · High confidence 15-16% CAGR
    On the qualitative front for the results, the overall revenue growth is in line with our stated growth guidance for 15% to 16% CAGR over the medium term, driven by a mix of stable compounders and high-growth achievers. (Page 4)

    — Alpesh Porwal

Profitability

  • EBITDA Margin Profitability · FY26 · High confidence 17.1-17.2%
    We are confident that the EBITDA margin trajectory will be maintained and will glide upwards as the year progresses. (Page 5) No. So Resha, here what happens when we say maintain is that we had the entire FY '25 margin, which was at 17.1%. And when -- there would be different margins for Q4 and other quarters. When we say maintain it, we are going to maintain this margin and only go northwards once we kind of start benefiting from the operating leverage, which will go to increase the EBITDA margin. (Page 16) So at least 17.1-17.2% is something that we'll try and maintain for this financial year, right? We will maintain that. (Page 16)

    — Alpesh Porwal

  • Return on Equity (ROE) Profitability · next 2-3 years · Medium confidence improve

    From 11% today

    So primarily with the operating leverage kicking in once the new plant also gets operational and as the EBITDA margins further improve, the bottom line contribution will definitely is targeted that we improve on the ROE definitely. (Page 18) Yes, our target would be to achieve even slightly higher than that as we go because we have the right product mix. The installed capacity would be in place at that time. On all trends we are growing. So definitely, we will look forward to that. (Page 18)

    — Pravin Rathod

Volume

  • Pens Segment Growth Volume · entire year · High confidence 9-10%
    So thank you, Aradhana. So to answer your question regarding the pen growth, we would still stick to the guidance what we have stated in high single-digit growth. Of course, OEM was a drag considering the other 2 categories doing well in terms of Creative and houseware at 77% and 55% growth. But yes, the OEM overall was a drag in the pen category. (Page 9) So 9%, 10% of growth in pens; 30%, 35% of growth in Creative; and a 50% growth in steel bottles. Is it fair to assume that we'll be able to deliver on these sort of growth? Yes, Aradhana, we are maintaining our guidance. (Page 11)

    — Mohit Rathod

  • Creative Segment Growth Volume · entire year · Medium confidence 30-35%

    Previously 77% (Q1 FY26) → 30-35%

    Of course, when we compare Q1 last year, it was the base was low. But going forward, we're going to streamline at 45%, 50% growth going forward. (Page 8) So 9%, 10% of growth in pens; 30%, 35% of growth in Creative; and a 50% growth in steel bottles. Is it fair to assume that we'll be able to deliver on these sort of growth? Yes, Aradhana, we are maintaining our guidance. (Page 11)

    — Mohit Rathod

  • Steel Bottle Segment Growth Volume · entire year · High confidence 50%
    So currently, I would say, from the overall perspective, we are still targeting and going to maintain the same growth trajectory that we have mentioned earlier. (Page 9) So 9%, 10% of growth in pens; 30%, 35% of growth in Creative; and a 50% growth in steel bottles. Is it fair to assume that we'll be able to deliver on these sort of growth? Yes, Aradhana, we are maintaining our guidance. (Page 11)

    — Sumit Rathod

Capacity

  • Creative In-house Manufacturing Share Capacity · next couple of quarters · High confidence 80-85%

    From 70% today

    But yes, to answer your other question, almost 70% of the products now are in-house, which will further increase to almost 80%, 85% in next couple of quarters. (Page 16)

    — Mohit Rathod

Cost

  • Employee Expenses Cost · going forward · High confidence steady level
    Going forward, we remain focused on maintaining this cost at a steady level. (Page 4) No. The employee expense what we have put is optimal amount here. Like I said, we would not shy away if we have to kind of add employees. But as of today, this number has moderated. And going forward, it will be within these moderated limits. (Page 8)

    — Alpesh Porwal

What to watch in Q2 FY26

Pens Segment Growth

next quarter
Current 3% YoY in Q1 FY26
Target Acceleration towards 9-10% annual guidance

Why it matters

The pens segment is the core business, and its ability to recover from a low Q1 growth is crucial for meeting overall revenue targets.

So thank you, Aradhana. So to answer your question regarding the pen growth, we would still stick to the guidance what we have stated in high single-digit growth. Of course, OEM was a drag considering the other 2 categories doing well in terms of Creative and houseware at 77% and 55% growth. But yes, the OEM overall was a drag in the pen category. (Page 9)

Risks & concerns

  • Decline in domestic OEM pens segment

    medium

    Domestic OEM pens segment saw a material decline, contributing to the overall 24% drop in OEM sales and impacting pens segment growth.

    Management acknowledged

  • Increased working capital due to new product launches

    low

    Working capital has increased as new products require stocking up on multiple SKUs, but is expected to normalize as products stabilize.

    Management acknowledged

  • Geopolitical turmoil impacting export sales

    low

    The past year was marked by geopolitical turmoil, which impacted export sales, though Own Brand exports rebounded strongly this quarter.

    Management acknowledged

Q&A highlights

5 direct, 1 evasive
OEM business decline and its impact on overall growth Direct
So as we mentioned in the last couple of quarter calls also that, as far as the domestic front is concerned, in our growth projection, we haven't taken any of that factor into consideration that will hamper our growth going forward. But yes, when we talk about exports, it's been stabilized. Of course, OEM is a major chunk in export business and it has stabilized over the years.

Addresses a key concern about the underperforming OEM segment and clarifies its impact on overall growth projections.

Asked by Sneha Talreja

Sustainability of Creative segment's 77% growth and guidance revision Partial
So basically, in Creative segment, as we mentioned in the last couple of quarter calls that we are building our in-house capacity for meeting the demand of Creative products in all the categories that we have entered... So the overall contribution of 77% growth in Q1 is because of those factors. And also at last couple of products, which we have launched in last few quarters have been doing exceedingly well. And going forward also, we are expecting a similar trend. Of course, when we compare Q1 last year, it was the base was low. But going forward, we're going to streamline at 45%, 50% growth going forward.

Analyst questioned the high growth rate and asked for revised guidance, management clarified the drivers and provided a more moderate forward-looking growth rate.

Asked by Sneha Talreja

Pens segment growth of 3% versus 9-10% annual guidance Direct
So thank you, Aradhana. So to answer your question regarding the pen growth, we would still stick to the guidance what we have stated in high single-digit growth. Of course, OEM was a drag considering the other 2 categories doing well in terms of Creative and houseware at 77% and 55% growth. But yes, the OEM overall was a drag in the pen category.

Highlights a significant underperformance in the core pens segment relative to guidance and management's explanation for it.

Asked by Aradhana Jain

Stagnation of Steel Bottle segment revenue at ₹12-13 crores for three quarters despite 50% CAGR target Partial
So currently, I would say, from the overall perspective, we are still targeting and going to maintain the same growth trajectory that we have mentioned earlier. Regarding the current quarter, I would say still there's a lot of material in the market from the import perspective, which was already in the market, which is slowly getting lower in the market. But one of the good positive notes from our side is that we are getting a lot of traction in terms of volume growth as well as a little bit of a value growth.

Challenges management on the lack of progress in a high-growth target segment and seeks clarification on the path to achieving the stated CAGR.

Asked by Aradhana Jain

Lack of gross margin improvement despite increased Own Brand contribution Direct
So Aradhana, just to add here, since our Own Branded business is going up and also we need to understand the fact that we are also entering into a lot of new Creative categories where we are new in terms of the new verticals within the stationery category, where as a new entrant, we have to let go in terms of margin, but we are focusing more on the market share in that category. So overall, if you look at it, yes, there is an improvement in overall EBITDA level margins compared to what we did in Q1 '25.

Probes into the quality of margin expansion and the trade-offs being made for market share in new categories.

Asked by Aradhana Jain

Creative segment distribution strategy, penetration, and market share gains Direct
So when we talk about the overall coverage of Creative as a category, we have already had 68,000 outlets. We are planning to grow from here further, but at the same time consolidating the distribution network of 68,000 outlets. We would like to further increase the per-outlet share for at least the next few quarters. And from there on, we will try to increase the number of outlets, yes.

Clarifies the strategy for growing the Creative segment, focusing on depth of distribution rather than just breadth.

Asked by Aliasgar Shakir

Capacity utilization across segments and impact of capex Direct
So historically also when we reach an optimum of around 70%, 75% of our capacity, we tend to develop new manufacturing facility for the same. So like mentioned earlier, we have capex in plan and we have already -- and the momentum towards installing a new manufacturing facility in Valsad for which we have already given moulding machine and we already placed the moulds order and also assembly machines are in place. So I think for the future growth, for the growth coming forward, we will be we are in place with the capex in the facility, which will help us assist in the targets that we have for each respective brands, especially for the Creative and pen as a category.

Provides insight into the current capacity constraints and the rationale behind the ongoing capex for future growth.

Asked by Aradhana Jain

ROE dip from 24% to 11% and future targets Evasive
It will be not the right place to give you the guidance on that at this stage. Let at least 1 more quarter go and we will be able to tell you that.

Analyst challenged the significant drop in ROE, and management deferred providing a specific target, indicating uncertainty or a need for more data.

Asked by Deepesh Sancheti

2 min read 5 chapters

Detailed narrative

Q1 FY26 Performance Overview

Flair Writing reported a strong Q1 FY26 with revenue from operations growing 16.8% year-on-year to ₹288.5 crores. This growth was primarily driven by the company's own brand portfolio and robust demand in both domestic and export markets. Gross profit increased by 17.3% YoY to ₹144.2 crores, with the gross profit margin improving to 50%. EBITDA also saw a healthy increase of 17.9% YoY to ₹49.5 crores, resulting in an EBITDA margin of 17.2%, which was 16 bps higher YoY and 146 bps sequentially. Profit after tax grew 10.5% YoY to ₹29 crores, with a PAT margin of 10%.

Segmental Performance and Drivers

The Own Brand sales were a significant contributor, growing 23% YoY to ₹264 crores, with a notable rebound in export markets. The Creative segment was a standout performer, achieving an impressive 77% YoY growth to ₹65 crores, attributed to new product innovations and increased in-house manufacturing. The Steel Bottle segment also showed strong momentum, with revenue increasing 55% YoY to ₹13 crores. However, OEM sales experienced a 24% YoY decline, mainly due to a material drop in the domestic OEM pens segment. The core Pens business grew a modest 3% YoY to ₹202 crores, with management attributing the slower growth to the drag from domestic OEM.

Capex and Manufacturing Expansion

The company's FY26 capex plan of ₹80-90 crores is on track, with ₹26 crores already deployed in Q1. This investment includes the construction of a new 2 lakh square feet manufacturing facility in Valsad, along with orders for 60 injection molding machines, molds, and assembly machines. This expansion aims to boost production capacity for both writing instruments and the Creative segment. Additionally, Flair Writing invested ₹4.5 crores in a 1.85-megawatt rooftop solar system, enhancing sustainability and reducing dependence on grid electricity.

Margin Management and Cost Control

Flair Writing successfully expanded its gross profit margin to 50% and EBITDA margin to 17.2% in Q1 FY26. This improvement was largely due to a favorable product mix towards higher-value products. Management indicated a focus on maintaining FY26 EBITDA margins within the 17.1-17.2% range, with expectations for it to glide upwards as operating leverage benefits materialize. Employee expenses, which saw a 5.4% QoQ increase, are expected to moderate and be maintained at a steady level going forward, despite investments in sales, marketing, and manufacturing workforce.

Strategic Initiatives and Outlook

The company is undergoing a qualitative business transformation, integrating sustainability practices like rainwater harvesting and effluent treatment plants, and leveraging technology through automation in production and assembly lines. A dedicated field force application enhances sales and marketing efficiency, and a major ERP system replacement is underway for cohesive decision-making. Flair Writing reiterated its medium-term revenue growth guidance of 15-16% CAGR. The focus for Creative distribution is on increasing throughput in existing 68,000 outlets, rather than just expanding the number of outlets, to maximize penetration.

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