PAKKA LIMITED — Q3 FY26 earnings call

Call held 2 Feb 2026

Management summary

Pakka reported a turnaround in profitability for Q3 FY26, with PM3 stabilization and significant progress on Project Jagriti. The company is focusing its efforts on India operations, leading to a pause in the Guatemala project. While the food services business saw revenue improvement, losses widened slightly. The company is addressing an equity funding gap for Jagriti and launching new delivery range products, aiming for a total production trajectory of 8,000-9,000 tons by calendar year-end 2026.

Highlights

  • Profitability is turning around after challenging first two quarters (VK 2:31).

  • PM3 stabilization achieved, with productivity expected to rise significantly in the coming quarter (VK 2:31).

  • Jagriti project sections (power plant, recovery) expected to start production by end of March/early April 2026 (VK 2:31).

  • Food services business revenue improved compared to the previous quarter (ST 10:34).

  • B2C segment revenue increased 80% year-over-year, with 5 new channels added in Q3 and 5 more planned for Q4 (ST 10:34).

  • New leak-proof delivery range products are ready for launch this quarter with strategic partnerships (ST 10:34, VK 15:36).

Concerns

  • First two quarters of FY26 were challenging due to extended shutdown for PM3 expansion and Jagriti project (VK 2:31).

  • Losses in the food services business slightly widened compared to the previous quarter due to inventory liquidation and equipment upgrades (ST 11:25).

  • Guatemala project (Ka Wok) has been paused for 6-12 months to focus on stabilizing India operations (VK 5:31, VK 28:13).

  • An equity funding gap of approximately ₹60 crores remains for Project Jagriti (NS 41:12).

  • Market is resistant to cost increases for flexible packaging, making it challenging to introduce new barrier-coated products (VK 51:16).

Key financials

  1. Quarterly Revenue ₹100 Cr
  2. Quarterly EBITDA ₹20 Cr

What they filed

Q1 FY27: revenue up 43.0%, net profit up 485.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue111 106 92 82 76 −31%97 −9%101 +10%117 +43%
EBITDA20 15 6 6 2 −92%14 −8%9 +58%15 +158%
Net profit17 9 3 -2 -2 −112%7 −20%3 −4%6 +485%
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 Capex disclosed Project Jagriti funded by ₹198 crores equity, ₹308 crores banks/loans, and ₹8 crores creditors.
    • Project Jagriti (total committed) ₹515 Cr
    • Ka Wok/Guatemala project (total spent before pause) $5 Mn
    The total spend is 515, the total equity invested 198, banks and loans 308, creditor, there's two account balance, 8CR. So it's a 515 that has already been committed to Project Jagriti. (NS 40:30) / So about five, four to 5 million USD is what has been spent. (VK 25:50)
  • Debt Debt disclosed
    banks and loans 308 (NS 40:30) / So, it will be split across 15 to 18 quarters and that's how the repayment is planned and it starts from the quarter after the date of commissioning. So, for example, when we say August, it'll start only from December. (NS 49:42) / I think it will be about 20 CR per quarter (NS 50:13)
  • Liquidity Liquidity disclosed Internal accruals and promoter equity are planned to bridge the ₹60 crore equity gap for Project Jagriti.
    So, we are looking at a gap of about 60 CR in the equity side and. Yes, we will. We plan to fund this through internal approvals and the equity from the promoter side. (NS 41:12)

Guidance & targets

Productivity

  • PM3 Productivity Productivity · coming quarter · High confidence rise significantly
    The big one that has happened in the last quarter is the stabilization of PM3. We are still expecting the productivity to rise significantly in the coming quarter

    — Mr. Ved Krishna

Project Milestones

  • Jagriti Project Sections Production Start Project Milestones · this quarter (end of March, early April) · High confidence start producing
    in line with the Jagriti project, a lot of the sections are going to start producing in this quarter, especially the new power plant, the recovery, it should be around end of March, early April.

    — Mr. Ved Krishna

  • New Paper Machine (PM4) Commissioning Project Milestones · first quarter of next year · High confidence significant movement / very close to commissioning
    the new paper machine has also made significant progress, and we are definitely expecting in the first quarter of next year that there will be significant movement in that and if not commissioning, then at least very close to commissioning is where we will be.

    — Mr. Ved Krishna

  • Jagriti Project Commissioning Project Milestones · July 2026 · High confidence July 26
    So that'll be July 26. That's what we declared in the last the board meeting as well.

    — Ms. Neetika Suryawanshi

  • Guatemala Project Pause Duration Project Milestones · next 6-12 months · Medium confidence 6-12 months
    the actual actions we might delay for the next six months or so. (VK 5:31) / if we don't manage to do it in the next 9 to 12 months, then we will have to take a call of course. (VK 47:14)

    — Mr. Ved Krishna

  • Jagriti Project Spend Initiation Project Milestones · by 1st August · High confidence initiate the project
    That's the target because the major spend would be now for us to be able to initiate the project by 1st August.

    — Ms. Neetika Suryawanshi

Sales Channels

  • B2C Channels Added Sales Channels · Q4 · High confidence 5
    So we added five of them in Q3 and we will be adding another five in Q4.

    — Mr. Shubham Tibrewal

Product Launch

  • Delivery Range Product Launch Product Launch · this quarter · High confidence launch
    On our delivery range, we are ready to launch this product in the market in this quarter

    — Mr. Shubham Tibrewal

Production Volume

  • PM4 Production Volume Production Volume · by calendar year end · Medium confidence 3,500-4,000 tons
    Going to be about 3 1/2 to 4000 tons from PM4.

    — Mr. Ved Krishna

  • Total Production Volume Production Volume · by calendar year end · Medium confidence 8,000-9,000 tons
    So you know we're looking at about 8 to 9000 ton trajectory in the next you know like I would say by the calendar year end.

    — Mr. Ved Krishna

Funding

  • Equity Gap Funding for Jagriti Funding · February and March 2026 · High confidence ₹60 crores
    So, we are looking at a gap of about 60 CR in the equity side and. Yes, we will. We plan to fund this through internal approvals and the equity from the promoter side. Timeline wise, we would be doing it within the month of February and March, March.

    — Ms. Neetika Suryawanshi

Debt Repayment

  • Jagriti Loan Repayment Debt Repayment · per quarter, starting quarter after commissioning · High confidence ₹20 crores
    So, it will be split across 15 to 18 quarters and that's how the repayment is planned and it starts from the quarter after the date of commissioning. (NS 49:42) / I think it will be about 20 CR per quarter (NS 50:13)

    — Ms. Neetika Suryawanshi

What to watch in Q4 FY26

PM3 Productivity Improvement

coming quarter
Current Stabilized
Target Significant rise in productivity

Why it matters

Improved productivity from PM3 is crucial for operational efficiency and overall performance turnaround.

The big one that has happened in the last quarter is the stabilization of PM3. We are still expecting the productivity to rise significantly in the coming quarter

Risks & concerns

  • Guatemala Project Pause Impact on P&L

    medium

    Analyst inquired about potential P&L impact and need for bad provisions due to the Guatemala project pause. Management clarified it's a pause, not shelving, and relationships remain intact, but team salaries are stopped.

    Analyst acknowledged

  • Equity Funding Gap for Project Jagriti

    medium

    A gap of approximately ₹60 crores in equity funding for Project Jagriti needs to be covered by internal accruals and promoter equity by March 2026.

    Analyst acknowledged

  • Market Resistance to Cost Increases for Flexible Packaging

    medium

    Management noted significant market resistance to cost increases for flexible packaging, making it challenging to introduce new barrier-coated products at a premium.

    Management acknowledged

  • Past Commitments Not Met / Investor Confidence

    medium

    Analyst highlighted past unmet commitments and nosediving stock prices. Management acknowledged past optimism and committed to making 'lesser commitments' and delivering better results, aiming to infuse more confidence in investors.

    Analyst acknowledged

Q&A highlights

8 direct
Guatemala Project Pause and Financial Implications Direct
The project that is being paused is not Jagriti. It is the Ka Wok project or the Guatemala project, basically because we felt that stabilizing Jagriti is important and we need to devote all our energy and resources there. Both the projects are focused primarily on flexible packaging, which is fundamentally barrier coating.

Clarifies which project is paused and the strategic rationale behind it, emphasizing focus on India and flexible packaging.

Asked by Kaustav

Capex for Jagriti and Ka Wok Projects Direct
The total spend is 515, the total equity invested 198, banks and loans 308, creditor, there's two account balance, 8CR. So it's a 515 that has already been committed to Project Jagriti. (NS 40:30) / So about five, four to 5 million USD is what has been spent. (VK 25:50)

Provides a clear breakdown of the capital expenditure incurred and committed for both major projects, including funding sources.

Asked by Kaustav

Guatemala Project Funding and Pause Reason Direct
No, that's not the case. No, that's not the case. The IT is a factor of focus and energy. I don't think we would have definitely gone ahead and raised. We had almost we had contracted with Rothschild and they were very, very clear about raising the money. But we felt that our bandwidth is limited right now.

Addresses concerns about inability to raise funds for the Guatemala project, clarifying that the pause is due to bandwidth and focus, not funding issues.

Asked by Kaustav

Hiring of Professional CEO Direct
Yeah, so we have interviewed a lot of people. We felt then internally that it's better right now to function as a team that is already in place. So, I have situated myself from Ayodhya, Neetika, me and the team here have been working together. To stabilize the operations and we are developing people from within the organization.

Indicates a shift in strategy towards internal leadership development and team-based management for stabilization, rather than external hiring for a CEO role.

Asked by Kaustav

Delivery Range Product Strategy and Pricing Direct
if you compare Apple to Apple, we're looking at around 25 to 30% premium. But again, you know you will have noticed recently the delivery segment is primarily Zomato, Swiggy and a few other such marketplaces, right? Most of them have allowed. Restaurants to charge for extra packaging costs, correct.

Explains the premium pricing strategy for new delivery products and how restaurants can pass on costs, highlighting the target market and value proposition.

Asked by Manali Gala

Jagriti Project Equity Funding Gap Direct
So, we are looking at a gap of about 60 CR in the equity side and. Yes, we will. We plan to fund this through internal approvals and the equity from the promoter side. Timeline wise, we would be doing it within the month of February and March, March.

Quantifies the remaining equity funding requirement for Project Jagriti and outlines the plan and timeline for securing these funds.

Asked by Jeet Gala

Guatemala Project Contracts and Team Status Direct
So, the Bagas contract and the land contract have both been put in appearance. So, we did have a penalty on both sides if we did not start picking up or they did not start giving by 2027. So, we both met mutually. We met all the sugar companies. We told them about our focus on Jagriti and we kind of did a kind of abeyance of the deal, like, OK, we will write off this contract, and we'll say that we will renegotiate once Packer is ready.

Details the handling of existing contracts and personnel in Guatemala following the project pause, including mutual agreement on abeyance and no penalties.

Asked by Jeet Gala

Feasibility of Grease Proof and Barrier Coated Papers Direct
So, project remains feasible even with base paper. Jeet, we have a decent EBITA value and we will be able to sustain. But yes, that's not what we are in for. We of course want to create barrier coated functionalized papers. I would actually go the other way, and I would say that actually thank goodness we haven't ordered a quota because what I'm finding in the market is there is a significant resistance to any cost increase right now.

Clarifies the company's strategic focus on higher-value barrier-coated papers despite market resistance to cost increases, and confirms the base paper project's feasibility.

Asked by Jeet Gala

3 min read 6 chapters

Detailed narrative

Q3 FY26 Performance Overview and Turnaround

Pakka experienced a turnaround in profitability during Q3 FY26, following a challenging first two quarters primarily due to an extended shutdown for PM3 capacity expansion and initial phases of the Jagriti project. The company reported a quarterly revenue of approximately ₹100 crores and an EBITDA of about ₹20 crores available for investment. Despite a 4% drop in prices, operational efficiencies helped reduce the year-on-year PBT gap. The food services business saw improved revenue compared to the previous quarter, though losses slightly widened due to inventory liquidation schemes and equipment upgrades.

Project Jagriti Progress and Funding

Project Jagriti has made significant progress, with a total committed Capex of ₹515 crores. This is funded by ₹198 crores from equity, ₹308 crores from banks and loans, and ₹8 crores from creditors. Key sections of Jagriti, including the new power plant and recovery unit, are expected to start production by the end of March or early April 2026. The new paper machine (PM4) is also progressing well, with significant movement towards commissioning expected in the first quarter of next year. A remaining equity funding gap of approximately ₹60 crores is targeted to be covered by internal accruals and promoter equity by March 2026, with the project's major spend initiation targeted by August 1st.

Guatemala Project (Ka Wok) Pause and Strategic Re-focus

The company has made a strategic decision to pause the Ka Wok project in Guatemala for the next 6 to 12 months. This pause is to allow the company to fully focus its bandwidth and resources on stabilizing Project Jagriti and current India operations. Approximately $5 million USD has been spent on the Guatemala project to date. Existing Bagas and land contracts have been put in abeyance by mutual agreement, with no penalties, and the team in Guatemala has been let go, with the intention to renegotiate and restart once the India operations are stable.

Food Services Business and Product Innovation

The food services business has implemented several initiatives and strategies, leading to improved revenue in Q3 FY26. The B2C segment showed an 80% year-over-year revenue growth, driven by increasing the number of B2C channels and marketplaces; five were added in Q3, with five more planned for Q4. A new leak-proof delivery range, designed for gravy products and addressing leakage issues, is ready for launch this quarter. This product will be offered at a 25-30% premium, justified by its innovation and benefits to restaurants, with an initial scale of 8 machines producing 400 KG/day.

Production Targets and Product Mix

Upon stabilization, PM4 is expected to produce approximately 3,500 to 4,000 tons. Combined with existing paper machines producing around 4,000 tons, the company aims for a total production trajectory of 8,000 to 9,000 tons by the calendar year-end 2026. The initial focus for PM4 will be on base papers like grease-proof and release paper, which have umpteen applications and are largely imported. The company aims to eventually move towards barrier-coated functionalized papers, acknowledging market resistance to cost increases but emphasizing the need for better performance and value.

Leadership Strengthening and Investor Engagement

Pakka has focused on strengthening its internal leadership team, with management working from Ayodhya to stabilize operations and develop talent from within the organization, rather than hiring an external CEO. The company is committed to transparent communication and has released an annual calendar for investor meets, including virtual Q4 and Q3 meets, and physical Q1 and Q2 meets in Ayodhya and Mumbai, respectively. Management acknowledged past unmet commitments and expressed a commitment to delivering better results and rebuilding investor confidence.

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