Flair Writing

Flair Writing reported a strong Q3 FY25, with revenue from operations growing 17.6% year-on-year to ₹265 crores. EBITDA increased by 31.1% to ₹45 crores, leading to a 17.1% EBITDA margin, an expansion of 176 basis points. Profit after tax (PAT) saw a significant jump of 54% to ₹29 crores, with PAT margin expanding by 262 basis points to 11.1%. For the nine months ended December 31, 2024, revenue grew 7.3% to ₹782 crores, and PAT increased 4.7% to ₹88 crores.

The company announced a strategic partnership with Maped, France, for product distribution, aiming to strengthen its presence in the premium stationery segment and expand its creative offerings. This builds on the existing collaboration with Disney for branded products, now manufacturing and distributing 20 Disney-branded items. Flair also launched a new 2mm mechanical pencil range, designed as a wood-free alternative, which has received a very positive market response and is expected to be rolled out Pan-India by the end of Q4 FY25. These initiatives are part of a broader strategy to address the overall stationery and writing instruments market.

All divisions delivered healthy growth in Q3 FY25. The Pens business grew 10% year-on-year to ₹197 crores, despite Q3 being a seasonally slow period. The Creative segment achieved 10% year-on-year growth, contributing ₹45 crores to revenue. The Steel Bottle segment saw its revenue contribution more than triple to ₹12 crores in Q3 FY25, reaching ₹32 crores for the nine months. Management expects continued momentum across all segments, with Q4 historically being the strongest quarter due to exam season and export push.

Gross profit margins remained largely stable at 51.9% in Q3 FY25, expanding by 100 basis points to 51.5% for 9M FY25. The company achieved EBITDA margin expansion through rationalization of resources and controlled expense growth. Employee benefit expenses increased by 14.3% and other expenses by 8.4% year-on-year, both growing slower than gross profit. Management anticipates EBITDA margins to return to 19%-19.5% within the next 2-3 quarters as investments in sales, distribution, and manufacturing efficiencies start yielding results.

Flair Writing incurred approximately ₹110 crores in capex in FY24 and targets around ₹100 crores for FY25. These investments are directed towards backward integration, including setting up manufacturing facilities for polymer and wooden pencils under new subsidiaries like Flomaxe, and expanding capacity for Steel Bottles. The company maintains a net debt negative status, which has contributed to lower interest costs and enabled higher other income on its cash balance.

Working capital remains elevated due to strategic stocking for new product launches and the Chinese New Year closure, which necessitated extra stock in December. However, management is implementing new policies and measures to reduce working capital, with a positive impact expected in Q4 FY25. Export sales of own brands increased by 33% year-on-year to ₹26 crores in Q3 FY25, and management targets double-digit export growth from FY26 onwards, noting that freight costs are easing. The domestic OEM business, which has been flat at ₹12-13 crores, is being de-emphasized in future projections.