Sirca Paints

Sirca Paints India Limited reported robust financial growth for Q4 and the full fiscal year 2026. Q4 FY26 revenue from operations increased by 33.07% YoY to INR 134.29 crores, with EBITDA growing 35.69% YoY to INR 25.74 crores, and PAT up 25.07% YoY to INR 17.71 crores. For the full year FY26, revenue grew 31.79% YoY to INR 492.48 crores, while EBITDA surged 46.62% YoY to INR 98.88 crores, expanding the margin to 20.08% from 18.05% in FY25. PAT for FY26 also saw a significant increase of 32.48% YoY to INR 65.05 crores.

FY26 was a transformational year, with Sirca outperforming the broader paints market due to its differentiated portfolio and premium positioning. The company expanded its luxury and super-premium portfolio, including Sirca, Oikos, Unico, and Wembley Valentino brands. Acrylic coatings emerged as the fastest-growing premium wood-coatings category, preferred for superior aesthetics and low-VOC formulations. The company's vision is to build India's most aspirational coatings platform, spanning mass to luxury segments.

The new Wembley manufacturing facility is now fully operational, consolidating multiple production lines to improve efficiency and reduce costs. Formula transfers for acrylic and polyester systems are complete, with commercial trials underway and production expected to commence in Q1 FY27. UV technology transfer is also on track for Q1 FY27. This localization strategy has enabled 95% of previously imported products to be manufactured in India, significantly increasing gross margins.

Sirca deepened engagement through partnerships with Architectural Digest and Elle Decor, and expanded distribution across Tier-2 and Tier-3 cities, leveraging the Sirca Parivaar Pro platform. While 80% of current revenues come from North India, the company is actively expanding in the West and South, opening 5 new depots last year in key cities like Bangalore, Pune, and Mumbai. The company aims to scale Wembley across India using its nationwide distribution network and expects credit terms in South/West to be better than in the North.

The company experienced short-term margin pressure due to high volatility in crude oil-linked raw material prices. To counter this, Sirca implemented two price increases totaling approximately 10% for Sirca products and about 35 rupees per liter for Wembley/Welcome products, which are currently sufficient to offset inflation. Management expects EBITDA margins to remain in the 19-21% range for FY27, with margin benefits anticipated from increased domestic manufacturing of previously imported products. A shortage of NC cotton impacted nitrocellulose products, but is expected to streamline by June.

The Wembley brand's revenue remained flat at approximately INR 74 crores in FY26 compared to INR 72 crores at acquisition. This was attributed to initial transition challenges, teething problems, and a significant raw material shortage (NC cotton) in March 2026, which led to an estimated revenue loss of INR 4-5 crores. However, management expects 'real growth' for Wembley in FY27, targeting a 40% increase in revenues from Wembley and Valentino, as integration issues are resolved and supply chain normalizes. Wembley products have 10-12% less gross margins than Sirca Luxury products but are expected to maintain similar final EBITDA.

Sirca is actively pursuing export opportunities, with Nepal already being a key market where sales targets are set to increase. The company is also seeking full-time distributors in Sri Lanka. Exports under the Wembley Valentino brand, focusing on polyurethane-based coatings, are targeted to commence in Q1 FY27 to markets like the Middle East (including Dubai), despite current challenges with shipment costs and handling volatile materials. The goal is for exports to contribute 3-4% of total revenue in FY27.

Working capital increased over the last two years due to inorganic growth, transition phase challenges, and a strategic buildup of acrylic product inventories (held for 6 months due to logistic issues). Management expects working capital to improve in the coming quarters, with an anticipated inventory reduction of INR 15-20 crores by June end. For FY27, the company projects a modest CAPEX of INR 5-6 crores, primarily for enhancing acrylic product production, following significant investments in the Wembley/Welcome facilities this year.