Seshasayee Paper Q1 FY26 Results (NSE: SESHAPAPER)
Signal: Margin pressure
The read
Revenue inflected to +27.7% YoY after five quarters of decline, but OPM compressed 150bps as other expenses surged; PAT doubled on other income and lower tax — an earnings quality concern as the operational core remains weak.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹492.08 Cr | +27.7% | -16.9% |
| EBIT | ₹21.62 Cr | +98.7% | |
| Net profit | ₹31.91 Cr | +106.9% | |
| EPS | ₹5.3 | +107.0% | |
| EBIT margin | 4.4% |
P&L walk
Revenue jumped 27.7% YoY to ₹492 Cr, the first YoY growth after five quarters of decline, likely on volume recovery; gross margin (raw material + power & fuel + stock-in-trade) compressed 150bps to 4.4% OPM as other expenses surged 46% YoY, wiping out input-cost relief; PAT doubled to ₹31.9 Cr entirely because other income remained robust (₹11.9 Cr) and tax rate fell 160bps.
Segments
Paper is the sole reportable segment; group result driven entirely by paper operations, with no material contribution or drag from the negligible subsidiary (₹0.05 Cr net profit) or the associate (loss of ₹0.34 Cr).
Key positives
- Revenue growth of +27.7% YoY to ₹492 Cr — first YoY growth after five quarters of decline.
- PAT doubled to ₹31.9 Cr (+106.9% YoY) driven by operating profit growth (EBIT +98.7%) and lower finance costs.
- Raw material cost as % of revenue improved 100bps to 64.2%, a partial input-cost tailwind.
- Near-zero debt — finance cost negligible at 0.1% of revenue; balance sheet remains debt-free.
Key concerns
- OPM compressed 150bps YoY to 4.4% as other expenses (₹50.5 Cr) surged 46% YoY, far outpacing revenue growth — suggesting weak cost control.
- Other income (₹11.9 Cr) contributed 27% of PBT; core operating profitability (EBIT margin 4.4%) remains thin and below historical levels.
- QoQ revenue declined 16.9% vs Q4FY26, indicating lumpy demand in paper industry and lack of sustained momentum.
- The company continues to hold the Servalakshmi Paper assets with ongoing legal uncertainty (NCLAT appeal reserved) and no timeline for revival — a contingent drag on capital allocation.
Research and educational content only. Not investment advice.