JK Paper Q1 FY27 Results (NSE: JKPAPER)
Signal: Margin pressure
The read
Q1FY27 sees a clear inflection in revenue (+13.6% YoY) after three consecutive quarters of YoY decline, driven by 'higher volume and enriched product mix', but the EBITDA margin compressed 120bps YoY to 12.6% as raw material tailwind (-220bps) was overwhelmed by a surge in power/fuel/water (+45.9% YoY) and other expenses (+36.9% YoY). The BCTMP plant commissioned on 30 June 2026 will add pulp capacity but raises depreciation ahead of benefits. PAT fell 39.4% YoY, a second consecutive YoY decline, though a sharp sequential recovery from Q4FY26 (₹62.37 Cr to ₹83.73 Cr). The standalone-PAT divergence (₹113 Cr standalone vs ₹84 Cr consolidated) reflects losses at packaging subsidiaries, notably the newly-acquired Borkar Packaging (87.36% stake).
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹1,886.78 Cr | 13.6% | -4.0% |
| EBIT | ₹182.28 Cr | 3.4% | |
| Net profit | ₹83.73 Cr | -39.4% | |
| EPS | ₹4.62 | -41.1% | |
| EBIT margin | 12.6% |
P&L walk
Revenue grew 13.6% YoY on higher volumes and enriched product mix, after three quarters of decline, but EBITDA margin compressed 120bps YoY to 12.6% — raw material cost as % of revenue improved 220bps YoY to 60.1% (tailwind from input deflation/mix), fully offset by a surge in other expenses (power, fuel & water +45.9% YoY; other expenses +36.9% YoY) and higher depreciation (+11.0% YoY on BCTMP capex). Finance costs fell 41.2% YoY, but other income of ₹31.14 Cr (vs ₹22.88 Cr YoY, +36.1%) and a lower tax rate (22.7% vs 33.1% YoY) were insufficient to lift PAT, which fell 39.4% YoY on the operating decline. EPS fell to ₹4.62 from ₹7.84 YoY.
Segments
The single reportable segment 'Paper and Packaging' accounts for virtually all revenue (₹1,886.78 Cr of ₹1,886.78 Cr total segment revenue); 'Others' segment has negligible revenue (₹1.61 Cr) but contributed ₹11.01 Cr segment result (PBIT) — likely from subsidiaries. Consolidated PAT (₹83.73 Cr) is materially lower than standalone PAT (₹113.00 Cr), indicating losses/drag from packaging subsidiaries (Borkar Packaging etc.).
Key positives
- Revenue growth resumed (+13.6% YoY) after 3 quarters of decline, supported by higher volume and enriched product mix.
- Raw material cost % of revenue improved 220bps YoY to 60.1% (4th consecutive quarter of tailwind), indicating input deflation or mix shift.
- Standalone PAT jumped 48.3% YoY to ₹113 Cr, helped by a 50.5% drop in finance costs and a surge in other income (₹21.39 Cr vs ₹5.96 Cr YoY).
- BCTMP plant commissioned end-June 2026, expected to reduce pulp import dependency and improve cost structure over time.
- Finance costs declined 41.2% YoY on consolidated basis (₹39.81 Cr vs ₹67.74 Cr), reflecting lower debt or better rates.
Key concerns
- Consolidated PAT fell 39.4% YoY despite revenue growth — the second consecutive YoY decline — as EBITDA margin compressed 120bps on higher power/fuel/water and other expenses.
- Power, fuel and water costs surged 45.9% YoY to ₹177.98 Cr (9.4% of revenue vs 7.3% a year ago), eroding operating leverage.
- Other expenses rose 36.9% YoY to ₹159.17 Cr (8.4% of revenue vs 7.1% a year ago), compounding margin pressure.
- EPS decline (-41.1% YoY) exceeded PAT decline (-39.4%) due to equity dilution from 1,19,16,427 shares allotted under the Scheme.
- Consolidated PAT (₹83.73 Cr) is 25.9% lower than standalone PAT (₹113.00 Cr), indicating losses at packaging subsidiaries (Borkar Packaging etc.).
- Depreciation rose 11.0% YoY as the BCTMP plant comes online, but the revenue benefit may take quarters to materialize.
Research and educational content only. Not investment advice.