Mallcom (India)

Mallcom (India) reported a robust Q3 FY26, with consolidated operating revenue reaching ₹131 crores, marking an 11.5% year-on-year growth. EBITDA for the quarter stood at ₹19 crores, a significant 27% increase year-on-year, with the EBITDA margin expanding to 14.7%. Net profit for the period was ₹10 crores, growing 13% year-on-year, achieving a PAT margin of 7.8%.

The improved profitability was attributed to better realizations across key product categories, a strategic shift towards value-added products, and continued cost optimization initiatives across manufacturing and operating expenses. Management highlighted that the Q3 margins are sustainable and align with the 13-15% EBITDA margin range observed over the past 3-4 years.

The company's substantial capital expenditure to strengthen its manufacturing footprint has resulted in both the Sanand facility in Gujarat and the industrial shoe unit at Chandipur, West Bengal, becoming fully operational. While these investments have led to higher depreciation and finance costs in the short term, they are expected to be key enablers for volume-led growth and revenue expansion in the coming years. New glove lines have also been ordered, with delivery and installation expected by Q1 FY27.

Mallcom witnessed strong domestic sales growth, outpacing exports over the 9-month period, reflecting an increased focus on the domestic market. Export markets, particularly in Europe and North America, remained soft due to global economic conditions and competition. However, the company is actively working to gain market share and anticipates significant benefits from potential trade agreements like the EU-India FTA, which could open new markets and create a level playing field.

Mallcom expanded its product portfolio with new launches in the Safety Shoes and Helmet segments, and has started in-house production of PU gloves, which were previously traded. Initial market reception for these new products has been positive, with over 50% of dealers requesting samples and inquiries, indicating strong interest and potential for future growth.

While regular product lines operate at 80-90% utilization, the newer units, including the safety shoe unit in West Bengal and the Sanand facility, are currently at 40-50% utilization. The company targets to ramp up utilization of these new units to 80-90% by March, which is crucial for improving overall profitability and absorbing the increased fixed costs from these investments.

The company's capex over the last 2-3 years was solely funded internally. Finance costs increased due to these investments and the temporary removal of government subvention for exports and MSMEs, though a capped subvention of ₹50 lakhs per annum has been re-introduced. Working capital funding is secured at approximately 6.5% interest, with overall borrowings remaining stable compared to the previous year.

Mallcom aims for at least double-digit revenue growth for FY26 and aspires to achieve 20%+ top-line growth in the next 2-3 years, driven by branded business, Middle East/Africa expansion, and new products. The company's product mix is currently 40% commoditized and 60% value-added, with a strategic focus on increasing the share of higher-margin value-added products to enhance overall profitability.