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Flair Writing Industries Limited — Q4 FY25 earnings call

Call held 23 May 2025

Management summary

Flair Writing reported strong top-line growth in Q4 and FY25, with full-year revenue exceeding ₹1,000 crores for the first time. Key segments like Creative and Steel Bottles showed robust growth, and strategic initiatives like Flomaxe and Maped partnership were announced. However, profitability metrics like gross margin and EBITDA saw some compression in Q4 and FY25, primarily due to increased employee and manufacturing costs associated with investments for future growth and product mix shifts.

Highlights

FY25 Revenue reached ₹1,080 crores, up 10.3% YoY, marking the first time crossing ₹1,000 crores.
Q4 FY25 Revenue from operations grew 19.2% YoY to ₹298 crores, driven by Pen division and diversified segments.
Creative segment grew 48% YoY in Q4 and 18% for FY25, with 34 new products launched in FY25.
Steel Bottles segment grew 74% YoY in Q4 to ₹12 crores and became EBITDA positive, adding 30 new SKUs.
Working capital cycle reduced by 33 days QoQ to 113 days, with a target to reduce by another 5-10 days in FY26.
Dividend of ₹1 per share (20% of face value) recommended for FY25.

Concerns

Q4 FY25 Gross profit margin declined by 130 bps YoY to 48.6%.
FY25 EBITDA declined 3% YoY to ₹185 crores, with margin at 17.1%, down from previous year's 19.5%.
Employee expenses and other expenses increased at a higher pace than revenue in FY25, impacting profitability.
Domestic OEM sales declined by 9% in FY25, though overall OEM remained stable.

Key financials

2 periods

Q4 FY25

Revenue
₹298 Cr
YoY +19.2%
Gross Profit
₹145 Cr
YoY +16%
Gross Profit Margin
48.6%
YoY -1.3%

FY25

Revenue
₹1,080 Cr
YoY +10.3%
Gross Profit
₹548 Cr
YoY +11.1%
EBITDA
₹185 Cr
YoY -3%
EBITDA Margin
17.1%
PAT
₹119 Cr
YoY 0%
PAT Margin
11%

What they filed

Q1 FY27: revenue up 6.6%, net profit down 7.4% 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	242	229	257	242	263 +9%	256 +12%	251 −2%	258 +7%
Expenses	199	194	218	204	220	220	213	222
EBITDA	43	35	39	38	43 +0%	36 +3%	38 −3%	36 −5%
Margin	18%	15%	15%	16%	16%	14%	15%	14%
Other income	9	10	8	8	14	9	11	7
Interest	1	1	1	1	1	1	1	1
Depreciation	8	9	9	9	9	9	9	9
Profit before tax	43	36	37	36	47 +9%	36 +0%	39 +5%	34 −6%
Tax rate	25%	25%	27%	26%	22%	29%	26%	26%
Net profit	32	27	28	27	36 +13%	25 −7%	29 +4%	25 −7%
EPS	3.03	2.56	2.61	2.57	3.46	2.40	2.75	2.35

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

Share of Revenue (FY25)

₹2,122 Cr Total

Own Brand Sales ₹940 Cr 44.3%
Pens ₹828 Cr 39.0%
Creative ₹171 Cr 8.1%
OEM Sales ₹139 Cr 6.6%
Steel Bottles ₹44 Cr 2.1%

Capital allocation

high confidence

Capex ₹80 Cr
- Setting up new unit in Valsad for writing instruments
- Funding CAPEX for subsidiaries
- Potential growth opportunities
We envisage a CAPEX program of Rs. 80 crores to Rs. 90 crores in the next financial year for setting up a new unit in Valsad for writing instruments, fund CAPEX for our subsidiaries and for potential growth opportunities.
Dividend ₹1/share (final)

I am happy to announce that the Board of Directors have recommended a dividend of Rs. 1, that is 20% of face value per share for the Financial Year '24-'25.
M&A Flomaxe Stationery Private Limited Joint venture · Announced · Consideration ₹[object Object] (undisclosed)

Building a renewed focus on pencil category, manufacturing polymer pencils, wooden pencils, sharpeners, erasers.
Potential to generate revenue of 2x asset turnover within the first year itself.

We also forayed into a strategic venture through incorporation of a step-down subsidiary called Flomaxe Stationery Private Limited. In this subsidiary, the company has partnered with other experienced industry partners to manufacture polymer pencils, wooden pencils, sharpeners, erasers, etc. ... We have invested Rs. 14 crores in fixed assets with potential to generate revenue of 2x asset turnover within the first year itself.
M&A Maped Distribution partnership · Announced

Distribution of Maped's stationery products, augmenting mid-premium product segment and improving product basket within Creative offerings.
Maped products will augment our mid-premium product segment and improve product basket within the Creative offerings. Business is going to be starting only in next two to three months, although we have started distribution in a few states of Maped.

We have also undertaken a distribution partnership with Maped, France, for its stationary products. Maped is one of the biggest French stationary brands and we are hoping to deepen our business relation with them in the near future. ... We established a wholly owned subsidiary under the name of Monterosa Stationery Private Limited, which will cater to the business of distribution of Creative products of Maped.

Guidance & targets

Revenue

Overall Revenue Growth Revenue · FY26 · High confidence 15-16%

So, we are sticking to our overall target of 15% to 16% growth in the coming year with growth coming from all three divisions...

— Mohit Rathod
Pens Segment Growth Revenue · FY26 · High confidence ~10%

...Pens, which we are targeting about 10%, because if you look at the second half of the year '25, we have almost grown by 9% to 10% in Q3 and Q4 as well. So, keeping that momentum going forward, we are very confident that 10% growth is achievable in the coming year.

— Mohit Rathod
Creative Segment Growth Revenue · FY26 · High confidence ~40%

...we are expecting at least 40% growth in this division alone from the coming year.

— Mohit Rathod
Steel Bottles Segment Growth Revenue · FY26 · High confidence ~50%

...we are very confident to cross about 50% growth in Steel Bottles segment as well.

— Mohit Rathod
Overall Sales Growth Revenue · Next two years · High confidence 15%

So, going forward, for the next two years, as we mentioned, we are going to have a stable steady growth rate of 15% year-on-year going forward.

— Mohit Rathod

Profitability

EBITDA Margin Profitability · 2 years down the line · Medium confidence 19-20%

However, two years down the line where we say that keeping everything constant, and which is not going to happen, that we are not going to have additional segments or more investments. If everything remains constant in this way that the growth rate at which we are going, we will go back to the EBITDA levels of earlier levels.

— Alpesh Porwal

Working Capital

Working Capital Cycle Reduction Working Capital · FY26 · High confidence 5-10 days reduction

Overall, our efforts are towards reducing working capital cycle by 5-10 days for the coming year.

— Alpesh Porwal

Capex

Total CAPEX Capex · FY26 · High confidence ₹80-90 crores

We envisage a CAPEX program of Rs. 80 crores to Rs. 90 crores in the next financial year for setting up a new unit in Valsad for writing instruments, fund CAPEX for our subsidiaries and for potential growth opportunities.

— Alpesh Porwal

Capacity

Installed Capacity Addition Capacity · Next financial year · High confidence 0.2 billion pieces

The capacity addition of 0.2 billion pieces will operationalize in the next financial year. This 10% rise in installed capacity and given typical capacity utilization levels in the business, which is a 7% to 7.5% increase in effective capacity will be a key lever for growth within the writing instrument segment.

— Management

Export Sales

Export Sales Growth Export Sales · Coming years · Medium confidence Double-digits

No, no, of course, export is going to grow. We are expecting export to grow in double-digits in the coming years.

— Mohit Rathod

Employee Cost

Employee Cost Trend Employee Cost · Next 1-2 years · Medium confidence Flat

One to two years is something, which we cannot commit today. But yes, looking forward for the next couple of quarters, we see it as flat. Unless we have a change in our plans to kind of introduce new products, new facilities, new things, something which changes will be. But yes, the incremental revenue will be more than the incremental.

— Alpesh Porwal

Product Mix

Pens ₹5 Category Contribution Product Mix · Coming quarters · High confidence 5%

So in the coming quarters, as Mohit earlier also explained, that we are going to keep the Rs. 5 category around 5% of the overall.

— Sumit Rathod

ROE

Return on Equity ROE · Over next 2-3 years · Medium confidence Gradual increase to ~17%

At that time, you will see coming back to the ROE to the similar levels what we were doing pre-IPO.

— Sumit Rathod

Marketing Expense

Marketing Expense Trend Marketing Expense · Coming years · Low confidence Uptick to a little extent

This time, we were a little slow on marketing, but going forward, we see an uptick to a little extent in the coming years on marketing.

— Alpesh Porwal

What to watch in Q1 FY26

Overall Revenue Growth

FY26

Current 10.3% YoY (FY25)

Target 15-16% YoY

Why it matters

To confirm the company's ability to achieve its ambitious growth targets across all segments.

So, we are sticking to our overall target of 15% to 16% growth in the coming year with growth coming from all three divisions...

Risks & concerns

Gross margin compression due to product mix
medium

Q4 gross margin declined by 130 bps YoY to 48.6% due to higher sales contribution from mass/lower-priced segments (₹5 and ₹10 pens).

Analyst acknowledged
EBITDA decline due to increased operating expenses
medium

FY25 EBITDA declined 3% YoY to ₹185 crores, with margin at 17.1%, primarily due to higher employee and manufacturing costs as investments for future growth.

Management acknowledged
Working capital cycle still high
low

Working capital cycle is 113 days, historically a bit heightened due to export sales credit periods (90-100 days) and inventory for new products.

Management acknowledged

Q&A highlights

8 direct

EBITDA margin improvement and target Direct

So, Shraddha, as we grow now we are investing, as I explained to you. And we are investing in CAPEX, we are investing in human capital, plant and machinery. There is lot of backward integration going, new products being launched. And hence, the number of new products you will see where we have grown, for example, from Creatives, in-house manufacturing has gone up, which we were doing at 40%- 45% is now up to 70%.

Clarifies the drivers for future EBITDA margin improvement (in-house manufacturing, premiumization, new products) and provides a timeline for returning to previous margin levels (19-20% in two years).

Asked by Shraddha Saurabh Kapadia

Revenue growth targets for FY26 across segments Direct

So, we are sticking to our overall target of 15% to 16% growth in the coming year with growth coming from all three divisions, which is Pens, which we are targeting about 10%, because if you look at the second half of the year '25, we have almost grown by 9% to 10% in Q3 and Q4 as well. So, keeping that momentum going forward, we are very confident that 10% growth is achievable in the coming year.

Provides specific growth targets for the overall business and key segments (Pens, Creatives, Steel Bottles) for the upcoming financial year, indicating management's confidence in continued momentum.

Asked by Atul Mehra

Impact of product mix on gross margins and strategy for ₹5 and ₹10 pen segments Direct

So to answer that, I would say, it's more to do with the product mix what we have sold in Q4. As we mentioned earlier, we have launched about 22 products in the entire year in mass segment, and particularly Rs. 10 segment which is doing exceptionally well for us. And also, you can say, as we have re-entered in the Rs. 5 segment, we have launched five to six models in that category as well, and it's just picking up.

Explains the reason for gross margin contraction in Q4 (product mix towards mass/lower-priced segments) and clarifies the strategy to limit exposure to the ₹5 pen category to 5% of overall sales.

Asked by Jaiveer Shekhawat

Rationale for increased employee costs and future outlook Direct

Basically, it is about the operating leverage. As we have invested in the manpower, for example, in the sales team alone we have increased about 160 people. On the workforce level there has been lot of rationalization, including bringing contract labor into the mainstream, lot of other costs, all that has happened in the last quarter. So this will give a positive effect in the coming quarters.

Addresses the concern about higher employee costs impacting EBITDA, explaining it as an investment for future growth and operating leverage, with an expectation for costs to stabilize and contribute positively in coming quarters.

Asked by Megh Shah

Capacity utilization for Creative and Steel Bottles segments and CAPEX breakdown Direct

So for the Creative range, as you know, we have increased the in-house capacity, earlier the trading that we used to do from third-party, now we have increased the in-house capacity to almost 70% of the goods being manufactured in-house. And for the steel bottle, like we had said that still the capacity and overall turnover is still a long way to go, but currently, we are achieving almost 40% of the capacity.

Provides specific capacity utilization figures for Creative (70%) and Steel Bottles (40%) and details the allocation of FY25 CAPEX (₹131 crores) primarily towards buildings, plant, machinery, and moulds, with 60% for Creative.

Asked by Resha Mehta

Working capital days outlook for FY26 Direct

And our endeavor out here is in the next financial year we improve this further by around 10 days. Given the nature of our business and our credit policies in the industry, 10 days would be a good improvement in the coming year.

Management commits to further reducing working capital days by approximately 10 days in the next financial year, indicating focus on efficiency and cash flow management.

Asked by Atul Mehra

ROE projection and timeline to return to pre-IPO levels Direct

See, we are doing substantial CAPEX over the last two years, including what we explained during the call in the current year. So all that advantages will start accruing over the next two to three years. At that time, you will see coming back to the ROE to the similar levels what we were doing pre-IPO.

Explains that current lower ROE is due to significant CAPEX investments, and benefits from these investments are expected to accrue over the next 2-3 years, bringing ROE back to pre-IPO levels (~17%).

Asked by Deepesh Sancheti

Flomaxe revenue contribution and integration Direct

So it's marginal revenue. So we started Flomaxe in the last quarter. And since it's a Brownfield project, there is marginal revenue which is coming. This year, we should see good numbers coming from this initiative, which we are doing.

Clarifies that Flomaxe started contributing marginally in Q4 and is expected to generate 'good numbers' in the current year, with an investment of ₹14 crores targeting 2x asset turnover.

Asked by Naitik Mutha

2 min read 6 chapters

Detailed narrative

Strong Revenue Growth in Q4 and FY25

Flair Writing achieved a significant milestone by crossing ₹1,000 crores in revenue for the first time in FY25, reporting ₹1,080 crores, a 10.3% YoY increase. The fourth quarter of FY25 also demonstrated robust performance with revenue from operations growing 19.2% YoY to ₹298 crores. This growth was primarily driven by the Pen division and strong momentum in diversified segments like Creatives and Steel Bottles.

Profitability Impacted by Investments for Future Growth

Despite strong top-line growth, profitability metrics saw some compression. Q4 FY25 gross profit margin declined by 130 bps YoY to 48.6%, and full-year FY25 EBITDA decreased 3% YoY to ₹185 crores, with the margin at 17.1% compared to 19.5% in the previous year. Management attributed this to increased employee expenses (up 18% YoY to ₹172 crores in FY25) and elevated manufacturing costs, which are considered investments to build capability and support accelerated growth in the upcoming financial year.

Strategic Expansion in Product Categories and Partnerships

The company continued to expand its product portfolio, launching 65 new pens in FY25, with 43 targeting mid-premium and premium segments. The Creative segment saw impressive growth of 48% YoY in Q4 and 18% for FY25, supported by 34 new product introductions. Flair also announced a strategic investment in Flomaxe Stationery Private Limited for the pencil category, investing ₹14 crores, and a distribution partnership with Maped, France, to augment its Creative offerings.

Steel Bottles Segment Turns EBITDA Positive with Significant Growth

The Steel Bottles segment demonstrated strong performance, with Q4 revenue increasing 74% YoY to ₹12 crores and full-year revenue reaching ₹44 crores. Management highlighted that this segment has now turned EBITDA positive, marking a significant milestone. The company expanded its SKU count by 30, bringing the total to 52, and is targeting approximately 50% growth for the segment in FY26.

Future Outlook and Capital Expenditure Plans

Flair Writing provided an optimistic outlook, targeting an overall revenue growth of 15-16% for FY26, with Pens expected to grow ~10%, Creatives ~40%, and Steel Bottles ~50%. The company plans a CAPEX of ₹80-90 crores in FY26, primarily for a new writing instruments unit in Valsad and for subsidiaries. They also anticipate a gradual increase in EBITDA margins, aiming to return to 19-20% levels within two years, driven by operating leverage and in-house manufacturing.

Focus on Working Capital Efficiency

The working capital cycle improved, reducing by 33 days QoQ to 113 days. Management aims to further optimize this by reducing it by another 5-10 days in FY26. This will be achieved through increasing payable days, rationalizing inventory levels, and leveraging improved distribution networks. The company acknowledged that export sales and mid-to-premium product mix contribute to a higher credit period.

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