GSM Foils Ltd — Q2 FY26 earnings call

Call held 6 Nov 2025

Management summary

GSM Foils Limited reported strong Q2 FY26 financial results, achieving significant year-on-year growth in revenue, EBITDA, and PAT, driven by increased volumes and operational efficiencies. The company is actively expanding its manufacturing capabilities with a new plant in Ahmedabad, set to become operational soon, which is expected to further boost capacity and market presence. While managing working capital remains a focus, management is confident in sustaining performance and achieving ambitious FY26 revenue targets of ₹230-250 crores.

Highlights

  • Revenue of ₹58 crores, up 86% YoY, demonstrating robust growth.

  • EBITDA of ₹6.64 crores, a 107% increase YoY, with EBITDA margin expanding 115 bps to 11.43%.

  • PAT of ₹4.39 crores, also up 107% YoY, and PAT margin improved 76 bps to 7.56%.

  • New Ahmedabad plant, a 17,000 sq ft leased premises, is expected to be operational by the end of November, enhancing capacity.

  • Vasai plant capacity utilization is targeted to increase from 70-72% to over 90% within 3-4 months.

Concerns

  • Working capital remains intensive, leading to negative cash flow due to credit sales and inventory management.

  • Initial expenses for the new Ahmedabad plant may temporarily temper immediate margin improvements.

  • The business model has short-term order visibility, with no orders typically extending beyond one month.

Key financials

  1. Revenue ₹58 Cr +86%YoY
  2. EBITDA ₹6.642 Cr +107%YoY
  3. EBITDA Margin 11.4%
  4. PAT ₹4.395 Cr +107%YoY
  5. PAT Margin 7.6%

What they filed

Q1 FY27: revenue up 86.3%, net profit up 99.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue31 36 46 52 58 +86%66 +84%82 +79%97 +86%
EBITDA3 4 6 6 7 +107%8 +95%9 +63%12 +98%
Net profit2 3 3 4 4 +107%5 +96%6 +84%8 +99%
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.

Order book

high confidence

Pipeline

other

Developing new customers and tying up with listed companies, exploring export and product diversification.

The business operates on a short-term order cycle, with orders typically not exceeding one month due to frequent changes in rates and products. Customer engagement is daily or weekly rather than long-term order books.

Source: Q&A

Capital allocation

high confidence
  • Capex Capex disclosed
    • New manufacturing unit in Ahmedabad ₹4.5 Cr
    • Machine speed increase in Vasai plant ₹0.12 Cr
    Around 4.5 crores to 5 crores. (for Ahmedabad) / The CAPEX on that part, it comes out in spares. The CAPEX is very less. That is between 12 lakhs to 15 lakhs. (for speed increase)
  • Debt Debt disclosed
    • New borrowing Infused additional Cash Credit (CC) ₹5 Cr
    We are looking at CC expansion, but we have postponed that plan currently. In last mid of August, we infused a CC of around 5 crores more. Towards that we did a rights issue of around 23 crores. Everything is in business. Currently at least for 3-4 months we are not looking at any more debt.
  • Liquidity Liquidity disclosed Rights issue of ₹23 crores provided funds to manage inventory and purchases, aiding liquidity.
    Towards that we did a rights issue of around 23 crores. Everything is in business. / This helps us with the money in hand of this right issue. We are able to manage our inventory well by more purchases.

Guidance & targets

Revenue

  • FY26 Revenue Revenue · FY26 · High confidence ₹230-250 crores
    To be very practical, I am being optimistic, I am looking at around between 230 and 250, which is practically scalable and achievable, looking at what we are standing right now, like 7 months already down the line, looking at next 5 months, even if we show a revenue of the same, that is 20 crores to 21 crores per month basis without showing zero growth, then I guess a turnover of around 230 is practically achievable, and it would be slightly higher than that, and we are quite confident on that. We are ranging between 240 to 250, let's see how it goes.

    — Sagar Bhanushali

  • Ahmedabad Plant Revenue (at 40-50% utilization) Revenue · Medium confidence ₹8-10 crores
    if You are talking about number point of view, then we are aiming top line of around 8 crores to 10 crores, which we consider 40% to 50% capacity utilization.

    — Sagar Bhanushali

  • Ahmedabad Plant Initial Revenue (pessimistic) Revenue · January-March · Medium confidence ₹5-6 crores
    On a very lower and pessimistic if I tell you, on initial level what business that we are looking at a revenue point of view at least 5 crores to 6 crores we can see. We can start on an immediate basis like January, February, March, that's our plan.

    — Sagar Bhanushali

  • FY27 Revenue Growth (post Ahmedabad) Revenue · FY27 · Medium confidence 60-70%
    Definitely, once we reach that and once this Ahmedabad plant becomes completely operational then we may see a significant jump of around 60%-70% on a very lower side in that year also.

    — Sagar Bhanushali

  • Turnover increase from ₹15 lakhs CAPEX Revenue · High confidence ₹25-26 crores

    From ₹20 crores today

    If we reach above 95%, then the top line from this plant itself would be from 20 crores that we are up to 25 to 26 crores.

    — Sagar Bhanushali

Capacity

  • Vasai Plant Capacity Utilization Capacity · within 3-4 months · High confidence 90%+

    From 70-72% today

    Roughly between 70% and 72% in our Vasai plant. This would increase more to 10% to 15% in this month itself, and within next quarter or, say next 3 to 4 months we are aiming at around (+) 90% capacity utilization in our Vasai plant.

    — Sagar Bhanushali

  • Vasai Plant Maximum Capacity Utilization Capacity · High confidence 95-98%
    95%-98%.

    — Sagar Bhanushali

  • Ahmedabad Plant Operational Status Capacity · by end of November · High confidence Operational

    From Under construction today

    Ahmedabad would be operational by December 1st week or 2nd week...

    — Sagar Bhanushali

  • Ahmedabad Plant Capacity Utilization Capacity · by March · High confidence 50%
    till March we are expecting at least around 50% of capacity utilization in Ahmedabad also.

    — Sagar Bhanushali

Profitability

  • Return on Capital (ROC) Profitability · High confidence 50%

    From 46% today

    Definitely. (in response to 'Currently our ROC is at around 46%... We could be landing in the 50% mark. Would my understanding be right?')

    — Sagar Bhanushali

What to watch in Q3 FY26

Ahmedabad Plant Operationalization and Utilization

Next quarter (Q3 FY26)
Current Under construction, expected operational by end of November
Target Commercial operations, 50% utilization by March

Why it matters

This is a key driver for FY26/FY27 revenue growth and market expansion, and its successful ramp-up is crucial for meeting overall targets.

Ahmedabad would be operational by December 1st week or 2nd week, and till March we are expecting at least around 50% of capacity utilization in Ahmedabad also.

Risks & concerns

  • Working Capital Intensity and Negative Cash Flow

    medium

    The business model, with credit sales and inventory, leads to negative cash flow, though management expects improvement over time.

    Management acknowledged

  • Initial Expenses for New Ahmedabad Plant

    low

    Small, initial expenses at the new plant may temper immediate margin improvements.

    Management acknowledged

  • Aluminium Price Volatility

    low

    While prices fluctuate, management believes the impact on margins is minimal (0.5-2%) and manageable.

    Management downplayed

  • Short-term Order Visibility

    low

    The business operates on short-term orders (less than a month), requiring constant client engagement.

    Management acknowledged

  • New Team Integration for Ahmedabad Plant

    low

    Integrating a new team for the Ahmedabad plant might involve initial struggles, but management is prepared.

    Management acknowledged

Q&A highlights

6 direct
Asset base vs. Revenue Generation and Business Model Direct
To start a plant like me, what we are doing at, you need a CAPEX of around 4 crores to 5 crores. The machines are not that expensive. We are into coating, lamination, and printing parts. So, there's a confusion in the market because the balance sheet of ours has been compared to the balance sheet of other listed players which have rolling mills. That is Tier-1 of our industry.

Clarifies the company's asset-light business model (Tier-2/3 processing) compared to Tier-1 rolling mills, explaining why their asset base is lower relative to revenue.

Asked by Abhi Chaudhary

FY26 Revenue Target Direct
To be very practical, I am being optimistic, I am looking at around between 230 and 250, which is practically scalable and achievable, looking at what we are standing right now, like 7 months already down the line...

Confirms the company's ambitious but achievable full-year revenue target, providing confidence in future growth.

Asked by Priyanshu Jain

Incremental Margins from Ahmedabad Plant Partial
It should be very practical. Once the plant starts, there are many few small, small expenses would kick in... But over the line, once the machine sets in and the capacity utilization increases over there, then I can definitely guarantee you that there would be much better margin compared to what we are at currently.

Explains that while initial expenses at the new plant might temper immediate margin gains, long-term operational efficiency and lower overheads will lead to significant margin improvement.

Asked by Urmish Shah

Cash Generation and Working Capital Partial
The cash flow is negative, sir, basically because of the level of inventory that we keep and the hedging that we do and also, upon the style of the business that we are in where we need to sell everything on credit, sir. So, there are no cash sales or such... But yes, definitely over a period of time, margin would come in, more working capital would be less, there would be less CAPEX like you told me.

Highlights the working capital intensive nature of the business and its impact on cash flow, while also indicating expected improvement over a longer timeframe.

Asked by Ayush Chaturvedi

Impact of Small CAPEX on Turnover Direct
If we reach above 95%, then the top line from this plant itself would be from 20 crores that we are up to 25 to 26 crores.

Quantifies the significant revenue upside (₹5-6 crores) from a relatively small CAPEX (₹12-15 lakhs) for machine speed enhancement.

Asked by Manoj Kulchandani

Customer Visibility and Order Book Nature Direct
In our line of business, there are no orders more than a month because every month the rate changes, every month the product changes... the order frequency is basically on a daily or on a weekly basis.

Provides crucial insight into the short-term, transactional nature of the company's order book, which differs from typical capital goods companies with long-term projects.

Asked by Sandeep Dixit

Debt Plan for Ahmedabad CAPEX Direct
We are looking at CC expansion, but we have postponed that plan currently. In last mid of August, we infused a CC of around 5 crores more. Towards that we did a rights issue of around 23 crores. Everything is in business. Currently at least for 3-4 months we are not looking at any more debt.

Details the current funding strategy for the Ahmedabad plant, indicating a postponement of new term debt due to recent capital infusions from CC expansion and a rights issue.

Asked by Shivam Kumar

Lamitubes Manufacturing Strategy Direct
Lamitubes and Alu Alu manufacturing, we have taken slightly backed the route on that because with this Ahmedabad plant we were working on it but something clicked, we saw very good business on that, so we decided what we are doing and what we know, let's progress in that... But CAPEX, slightly we have held that.

Explains the strategic decision to prioritize the core business and Ahmedabad plant, temporarily deferring aggressive expansion into Lamitubes manufacturing, while still engaging in trading.

Asked by Shivam Kumar

2 min read 6 chapters

Detailed narrative

Robust Q2 FY26 Financial Performance

GSM Foils Limited delivered a strong Q2 FY26 performance, with revenue reaching ₹58 crores, marking an 86% year-on-year growth. EBITDA increased by 107% to ₹6.64 crores, and the EBITDA margin expanded by 115 basis points to 11.43%. Profit after tax also saw a significant 107% rise to ₹4.39 crores, with the PAT margin improving by 76 basis points to 7.56%, reflecting enhanced operating leverage and cost-effectiveness.

Strategic Expansion with New Ahmedabad Plant

The company is advancing its strategic growth with a new manufacturing unit in Ahmedabad, Gujarat, a leased premises of approximately 17,000 square feet. This facility, involving a CAPEX of ₹4.5-5 crores, is expected to become operational by the end of November 2025. This expansion aims to diversify the product portfolio, deepen market presence, and cater to the growing demand from the pharmaceutical and packaging sectors.

Industry Tailwinds and Market Opportunity

The Indian pharma and packaging ecosystem is experiencing a multi-layer expansion phase, directly benefiting pharma-grade aluminium foil manufacturers. The Indian pharmaceutical market is projected to double in the next five years, creating significant demand for compliance-grade packaging. Globally, the aluminium foil market is also on a steady growth path, driven by pharmaceutical, industrial, and food applications, increasing the attractiveness for well-polished domestic suppliers.

Capacity Utilization and Future Revenue Targets

The existing Vasai plant is currently operating at 70-72% capacity utilization, with a target to reach over 90% within the next 3-4 months. The new Ahmedabad plant is projected to achieve 50% capacity utilization by March, contributing an estimated ₹8-10 crores in revenue at that level. Management is optimistic about achieving a full-year FY26 revenue of ₹230-250 crores, with a further 60-70% revenue jump anticipated in FY27 post-Ahmedabad stabilization.

Working Capital and Cash Flow Dynamics

The company's business model is working capital intensive, with debtor days typically ranging from 50-70 days, leading to negative cash flow. Management noted that the recent rights issue of ₹23 crores has helped manage inventory and purchases effectively. While immediate positive cash flow is not expected, management anticipates improvement over a longer period as the business scales and becomes more efficient.

Aluminium Price Impact and Margin Management

Aluminium prices have shown a continuous increasing trend, with recent month-on-month increases of 2-3.5%. This trend, combined with strategic inventory management and funds from the rights issue, has contributed to slightly better margins. Management believes that even with potential price declines, the impact on margins would be minimal (0.5-2%) and manageable due to their operational efficiency and ability to adjust purchasing and sales strategies.

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