Kuantum Papers Limited — Q3 FY26 earnings call

Call held 9 Feb 2026

Management summary

Kuantum Papers reported strong sequential growth in Q3 FY26, driven by improved operational income and significant margin expansion. Key capacity upgrades for PM1 and PCC were completed, contributing to record production. However, the industry continues to face challenges from low-priced imports and elevated raw material costs, though management anticipates some relief and positive policy outcomes.

Highlights

  • Operational income for Q3 FY26 stood at INR290 crores, reflecting a sequential growth of 4%.

  • EBITDA for Q3 FY26 was INR39 crores, marking a 14% quarter-on-quarter increase, with EBITDA margin improving by 125 basis points to 13.55%.

  • Profit after tax for Q3 FY26 was INR10 crores, with PAT margins at 3.38% and expansion of 131 basis points sequentially.

  • Paper Machine 1 rebuild successfully completed, increasing its capacity to 80 metric tons daily.

  • Precipitated Calcium Carbonate (PCC) capacity doubled from 25,000 TPA to 50,000 TPA, enhancing self-reliance in high-quality fillers.

Concerns

  • The Indian pulp and paper industry is navigating a difficult operating environment due to low-priced imports, which has weighed on industry margins.

  • Scarcity of agro fibres in Punjab continues to impact fibre pricing for the current and next quarter.

  • PM2 upgrade will involve a 30-day shutdown in February, and PM3 upgrade will take 45 days in May, potentially causing marginal impact on revenue and margin.

Key financials

  1. Revenue ₹290 Cr +4%QoQ
  2. EBITDA ₹39 Cr +14%QoQ
  3. EBITDA Margin 13.6% +1.3%QoQ
  4. PAT ₹10 Cr +73.3%QoQ
  5. PAT Margin 3.4% +1.3%QoQ

What they filed

Q1 FY27: revenue up 36.3%, net profit down 48.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue279 270 277 223 280 +0%290 +7%301 +9%304 +36%
EBITDA61 50 60 40 34 −43%39 −22%48 −20%40 −1%
Net profit30 21 26 12 6 −81%10 −53%14 −45%6 −48%
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.

Capital allocation

high confidence
  • Capex ₹735 Cr financed by banks and internal accruals
    • PM2 upgrade ₹45 Cr
    • PM3 upgrade ₹140 Cr
    • Tissue paper machine ₹70 Cr
    PM 2 upgrade is about INR45 crores and PM 3 upgrade will be about INR140 crores. And this is part of the overall plan of INR735 crores, which we've already shared on several occasions in the past. And the entire upgradation sort of stands financed by banks and internal accruals.
  • Debt Debt disclosed
    • Repayment Quarterly repayment of long-term loan ₹30 Cr
    As of now, the peak debt, as you asked, it will be not more than INR750 crores for long-term loan. And as the repayment of, say, around INR30 crores per quarter will be repaid. So as of now, it is somewhere around INR600 crores to INR650 crores, but peak debt will be INR750 crores.
  • Liquidity Undrawn ₹100 Cr Working capital facility utilized at 70-80%.
    No. Short term, we have a working capital facility of fund-based INR100 crores. And out of that utilization, it's 70%, 80% level.

Guidance & targets

Revenue

  • Q4 FY26 Top Line Revenue · Q4 FY26 · Medium confidence slightly better than Q3
    Well, as I said, Q4 is going to be slightly better than Q3.

    — Pavan Khaitan

  • FY27 Annualized Top Line Revenue · FY27 · High confidence INR1,800 crores
    we are targeting a top line of close to INR1,800 crores

    — Pavan Khaitan

EBITDA Margin

  • Q4 FY26 EBITDA Margin EBITDA Margin · Q4 FY26 · Medium confidence around that range (similar to Q3)
    And EBITDA margins, as you're already seeing, will be around that range.

    — Pavan Khaitan

EBITDA

  • Q4 FY26 EBITDA per ton enhancement EBITDA · Q4 FY26 · High confidence INR2,000 per ton
    This EBITDA margin in Q4 should be enhanced by about INR2,000 per ton at least.

    — Pavan Khaitan

  • Future EBITDA per ton EBITDA · going forward (post Q4) · High confidence INR15,000 to INR17,000 per ton
    And going forward, it should climb to between about -- up to about INR15,000 to INR17,000 per ton.

    — Pavan Khaitan

  • FY27 Annualized EBITDA EBITDA · FY27 · High confidence INR300 crores
    or an EBITDA margin EBITDA level of close to INR300 crores going into the future.

    — Pavan Khaitan

Realization/Pricing

  • Industry-wide price hike Realization/Pricing · current/next quarter · Medium confidence INR2,000 to INR4,000 per ton
    We could see a hike of between INR2,000 to INR4,000 per ton.

    — Pavan Khaitan

  • Additional price hike Realization/Pricing · before month end (Feb 2026) · High confidence at least INR2,000 per ton
    we are expecting another hike of about at least INR2,000 to happen before the -- this month end.

    — Pavan Khaitan

Capacity/Volume

  • Total Production Volume Capacity/Volume · FY28 · High confidence 2.35 lakh tons
    So, once all these machines come on stream, we are likely to touch a figure of 2.35 lakh tons.

    — Pavan Khaitan

Capacity

  • Tissue Paper Machine Capacity Capacity · future · High confidence 50 tons per day
    we are looking at installing a 50 tons per day machine.

    — Pavan Khaitan

Industry Demand

  • Paper Industry Demand Growth Industry Demand · High confidence 6% CAGR
    So, demand is growing at a good and gradual increment of about 6% CAGR.

    — Pavan Khaitan

Capex

  • Tissue Paper Machine Capex Capex · High confidence INR70 crores to INR80 crores
    And the investment for this machine will be in the range of about INR70 crores to INR80 crores.

    — Pavan Khaitan

Project Timeline

  • Tissue Paper Machine Implementation Time Project Timeline · High confidence 16 to 18 months
    Implementation time once we source the machine will be about 16 to 18 months.

    — Pavan Khaitan

What to watch in Q4 FY26

Q4 FY26 Revenue and EBITDA Margin

Next quarter (Q4 FY26 results)
Current Q3 FY26 Revenue INR290 crores, EBITDA Margin 13.55%
Target Slightly better than Q3 for revenue, around Q3 range for EBITDA margin

Why it matters

Verifies management's near-term outlook on improving financials and margin stability.

Well, as I said, Q4 is going to be slightly better than Q3. And so overall, we should touch a top line of about INR1,100 crores. And EBITDA margins, as you're already seeing, will be around that range.

Risks & concerns

  • Influx of low-priced imports

    high

    Low-priced imports, particularly from ASEAN countries and China, are weighing on industry margins, prompting engagement with policymakers for safeguard measures like MIP.

    Management acknowledged

  • Elevated raw material costs (agro fibres)

    medium

    Scarcity of agro fibres in Punjab, exacerbated by past flooding, is keeping raw material prices high and is expected to impact fibre pricing for the current and next quarter.

    Management acknowledged

  • Competition from European players due to India-EU FTA

    low

    Phased elimination of tariffs under the India-EU free trade agreement could introduce higher competition in certain specialty segments, though it also incentivizes efficiency improvements.

    Management acknowledged

  • Digital substitution for paper products (online education)

    low

    The impact of online education on paper demand is primarily limited to urban centers and a small percentage of the population, with physical education remaining dominant.

    Analyst downplayed

Q&A highlights

6 direct, 1 evasive
Raw material cost outlook and impact of floods Direct
So that situation is continuing for the time being. There is a scarcity of agro fibres in the state of Punjab that we are present in. And unfortunately, that is going to impact fibre pricing, agro fiber pricing for us in this quarter as well as the next quarter.

Highlights ongoing raw material cost pressure due to agro fibre scarcity in Punjab, impacting current and next quarter margins.

Asked by Madhav Jhawar

EC clearances for future capacity expansion Direct
So, we are already in the process and the application is going through, and we are very confident that they will come well ahead of time of our proposed expansions.

Confirms progress on regulatory approvals for planned capacity increases beyond current upgrades, crucial for future growth.

Asked by Madhav Jhawar

Impact of machine upgrades on revenue and margin Partial
Very, very marginal because by now, the additional capacities from PM 4 and PM 1 have already kicked in. And PM 2 shutdown will not be very heavy because currently, we are producing only about 40 tons per day, which is clearly and easily made up by the additional quantities we are getting on the balance machine upgrades, which have happened.

Management expects minimal impact on overall financials from upcoming shutdowns due to already added capacity from PM4 and PM1.

Asked by Niteen Dharmawat

Peak debt and repayment plan Direct
As of now, the peak debt, as you asked, it will be not more than INR750 crores for long-term loan. And as the repayment of, say, around INR30 crores per quarter will be repaid. So as of now, it is somewhere around INR600 crores to INR650 crores, but peak debt will be INR750 crores.

Provides clear figures for peak debt and quarterly repayment, indicating financial discipline and debt management strategy.

Asked by Manan Poladia

Impact of new capacity in the wider paper industry on oversupply Direct
a lot of the new machines that are coming up are in the tissue paper segment... Some of the mills that you mentioned, which is like JK Paper, their focus is on packaging board... Companies like us, which are focused on writing and printing paper, there is not a lot of new capacity coming in.

Management differentiates its writing and printing paper segment from other segments (tissue, packaging) experiencing high new capacity, suggesting less direct impact from potential oversupply.

Asked by Prashant Kale

Normalized EBITDA per kg target Direct
EBITDA margin in Q4 should be enhanced by about INR2,000 per ton at least. And going forward, it should climb to between about -- up to about INR15,000 to INR17,000 per ton.

Provides a clear long-term target for a key profitability metric (EBITDA per ton), indicating management's confidence in margin expansion.

Asked by Jayesh Lad

Impact of GST rate reduction on notebooks and inverted tax structure Direct
for us, as an industry, the impact is close to about INR7,500 per ton. So, if anybody wants this kind of supply from us, the basic price we have enhanced by this same value to ensure that there is no direct loss coming to us on account of sales of notebook.

Reveals the specific financial impact of the GST change on notebooks and how the company is mitigating it by passing on costs to maintain profitability.

Asked by Jayesh Lad

Potential for a share buyback given improved cash flows Evasive
No, I think I would want more our investors to be happy. If they grow, I'm happy. So, I would not want to take away that opportunity from them. I'm happy where I am. And in fact, my focus is to increase shareholder value, investor value. And going forward, that ethos will remain.

Management avoids committing to a buyback, indicating a preference for reinvestment for growth and shareholder value creation rather than immediate capital return through buybacks.

Asked by Keshav Garg

2 min read 6 chapters

Detailed narrative

Operational Performance & Efficiency

Kuantum Papers achieved significant operational milestones in Q3 FY26. The rebuild of Paper Machine 1 (PM1) was successfully completed in December 2025, increasing its daily capacity to 80 metric tons. The company also doubled its Precipitated Calcium Carbonate (PCC) capacity from 25,000 TPA to 50,000 TPA. These enhancements contributed to record-breaking production, with PM4 achieving 8,758 metric tons in December 2025 and PM1 reaching 91.4 metric tons in a single day.

Financial Performance Q3 FY26

The company reported an operational income of INR290 crores for Q3 FY26, reflecting a sequential growth of 4%. EBITDA for the quarter stood at INR39 crores, marking a 14% quarter-on-quarter increase, with the EBITDA margin improving by 125 basis points to 13.55%. Profit after tax (PAT) was INR10 crores, and PAT margins expanded by 131 basis points sequentially to 3.38%.

Capacity Expansion & Upgrades

Kuantum Papers is progressing with its mill upgradation and expansion program, part of an overall INR735 crores plan financed by banks and internal accruals. PM2 is scheduled for an upgrade in February 2026, requiring a 30-day shutdown, while PM3 will undergo a larger upgrade in May 2026, taking about 45 days. The company also plans to install a 50 tons per day tissue paper machine with an investment of INR70-80 crores, expected to be implemented in 16-18 months.

Raw Material & Pricing Dynamics

The industry faces pressure from low-priced imports, impacting margins. Raw material costs, particularly for agro fibres in Punjab, remain elevated due to scarcity, expected to impact pricing in the current and next quarter. However, management anticipates wheat straw prices to decrease during the harvesting season starting April. Sales realizations improved by INR800 per ton in Q3, with an additional industry-wide hike of INR2,000 per ton already implemented and another similar hike expected by month-end.

Industry Outlook & Policy Support

Management expressed confidence in an industry revival in the next financial year, expecting better pricing levels. Policy support, including temporary duty waivers on pulp and wastepaper and streamlined customs procedures from the Union Budget 2026, is expected to lower input costs. The India-EU free trade agreement is seen as supportive for exports of packaging board and kraft paper, while the government is seriously considering Minimum Import Price (MIP) for writing and printing grades to counter low-priced imports.

Future Growth & Product Innovation

Kuantum launched 'Kuantum Kopio' copier brand (65, 70, 75 GSM) and 'Kuantum Pura' (65% Argo Pulp furnish) as part of product innovation. The company targets an annualized top line of INR1,800 crores and EBITDA of INR300 crores post PM3 operation, and a total production volume of 2.35 lakh tons by FY28 after all machines are upgraded. Demand for paper is projected to grow at a 6% CAGR, supported by government focus on education.

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