Huhtamaki India Q2 FY26 Results (NSE: HUHTAMAKI)
Signal: Margin expansion
The read
Q2FY26 marks a sharp inflection in profitability: EBITDA margin expanded 220bps to 10.2%, reversing a trend of contraction in prior quarters (Q4FY16 seen 15% OPM, but subsequently eroded). The operating leverage story is credible – revenue grew 22.5% while employee costs fell, and other expenses grew only 12%. PAT ₹437 Mn (+75%) is best in recent history. However, the accounting correction (₹88 Mn extra depreciation) and the sharp drop in normal D&A raise questions about asset base quality; also, negative operating cash flow due to working capital build needs monitoring.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹750.02 Cr | 22.5% | 22.3% |
| EBIT | ₹62.16 Cr | 71.8% | |
| Net profit | ₹43.73 Cr | 75.3% | |
| EPS | ₹5.79 | 75.5% | |
| EBIT margin | 8.5% |
P&L walk
Q2FY26 operating profit surged 71.8% YoY to ₹621.6 Mn EBIT, driven by 22.5% revenue growth, a decline in employee costs (-2.1%), and slower growth in other expenses (+12%) — strong operating leverage. EBITDA margin expanded 220bps to 10.2%. Gross margin slipped ~60bps to 33.8% as raw material cost inflation outpaced pass-through, but pricing and mix partially offset. PAT grew 75.3% on lower interest and tax, though other income halved to ₹13 Mn. One-off depreciation correction of ₹88 Mn (prior period error) inflated current D&A but did not affect EBITDA.
Segments
Single segment – Consumer Packaging drove all revenue and results. Segment profit jumped 91.1% YoY to ₹544.2 Mn, well ahead of revenue growth, indicating strong margin improvement within the segment.
Key positives
- Revenue growth of 22.5% YoY from volume and pricing pass-through.
- EBITDA margin expanded 220bps to 10.2% – 4th consecutive quarter of margin expansion (from 9% in Q4FY15 to 12% in Q4FY16, and now 10.2% after interim dips).
- Employee costs declined 2.1% YoY despite revenue growth.
- PAT growth of 75.3% YoY, fastest in recent quarters.
- Company remains net cash (₹808 Mn), low leverage.
Key concerns
- Gross margin compressed ~60bps YoY to 33.8% on raw material cost inflation despite price hikes.
- Other income plunged to ₹13 Mn (from ₹66.8 Mn), but operating strength offset.
- Working capital buildup led to negative operating cash flow of ₹713.6 Mn in H1.
Research and educational content only. Not investment advice.