Kuantum Papers Ltd

Business overview

• Integrated agro and wood-based paper producer with 259-acre facility in Punjab.
• Order-based manufacturing with 120+ dealers; exports to 26 countries.
• Backward integration enabling wide product portfolio across maplitho, copier, and specialty papers.

Operational highlights

• Paper capacity expanded to 540 TPD; PM1/2/4 upgraded.
• PCC capacity increased to 50,000 TPA; on-site plant with PMI collaboration.
• Co-Gen power plant 38 MW; CRP capacity 700 solids TPD.
• Effluent plant upgraded with water reuse across 2,050 acres.
• Project Nirman AI journey initiated; modernization capex INR 7,350 Mn.

Financial performance

• FY24: 12,113 INR Mn revenue; EBITDA 3,330; PAT 1,838.
• FY25: 11,070 revenue; EBITDA 2,426; PAT 1,152.
• FY26: 10,932 revenue; EBITDA 1,618; PAT 420.
• Q1-FY27: 3,038 revenue; EBITDA 401; PAT 62.
• EBITDA margins: 27.49% (FY24), 21.92% (FY25), 14.80% (FY26), 13.20% (Q1-FY27).

Capital structure & liquidity

• Equity FY26: 12,283 INR Mn; Cash & equivalents 409 INR Mn.
• Non-current borrowings FY26: 5,897; Current borrowings 2,701.
• Total borrowings FY26: 8,598 INR Mn; Total assets FY26: 23,989 INR Mn.

Strategic priorities & outlook

• Capex focus on modernization; Nirman AI initiatives.
• Continued capacity expansion: 540 TPD paper; PCC 50,000 TPA; PM upgrades.
• Water stewardship: target freshwater below 30 m3/tonne; effluent reuse.
• Shift to in-house wood pulping; diversify with agro residues.
• Clonal Propagation Center targets: 1 crore clones/year; 75,000 acres by 2030.

Risks & governance

• Raw material volatility tied to agro-residue supply; mitigated via backward integration.
• No governance changes disclosed in this update.

Financial Performance

• Operating income ₹304 crores, up 36% YoY; paper sales volume 42,922 MT (+35% YoY).
• NSR per ton (blended) up ~₹3,400 QoQ; cost per ton up ~₹4,200 QoQ.
• PM3 upgrade on stream within the month; entire upgradation program nearing completion.
• Pulping capacity: agro 200 tpd and wood 200 tpd; overall capacity aligned to run 4 machines.

Operational Update

• DDS Double Displacement Digester System commissioned to optimize pulp cost and quality.
• Advanced native starch system installed on PM2 and PM3 to improve paper properties.
• Folio Ream Wrapping Machine installed to automate packaging; enhances handling efficiency.
• Paper Machine 3 shut temporarily for a major rebuild to boost production capability.

Balance Sheet & Liquidity

• Peak debt guidance: INR 760–770 crores; annual repayments ~INR 170–175 crores for 2–3 years.
• Debt to be under INR 300 crores within 3 years; gradual reduction expected.
• Current top line around INR 1,300 crores for FY27; growth to INR 1,400–1,500 crores in FY28.
• Turnover potential with current realizations: INR 1,400–1,500 crores; with higher realizations could approach INR 1,800 crores.

Projects & Capex

• PM3 upgrading completion anticipated this month; EC clearance filed and awaiting approval.
• Pulp capacity to increase to 410–415 tpd; imported pulp content estimated at 40–50 tpd.
• Overall capex aimed at achieving 30% specialty paper share; current specialty mix ~18–19%.

Outlook & Guidance

• Management positive on FY27; expects full integration of upgradation to lift profitability.
• EBITDA margin target expected to be around 16–18% from Q3 FY27 onwards.
• Exports/imports: imports diminishing due to shipping/logistics; pricing remains stable.
• AI integration in production ongoing; cost savings target 4–5% by FY28.

Q&A Highlights

• Guidance: FY27 positive; PM3 coming online; EBITDA margins expected 16–18% from Q3 onwards.
• Debt trajectory: peak ~₹760–₹770 crore; annual repayments ~₹170–₹175 crore; debt under ₹300 crore in 3 years.
• Raw materials: agro/wood pulps ~50/50; imports decreasing due to logistics; price stability noted.
• Specialty mix: current ~18–19%; target to reach 30% of production.
• Pulp capacity: agro 200 tpd and wood 200 tpd; total capacity to 410–415 tpd; imported pulp 40–50 tpd.
• Sapling program: venturing into seeds with potential future wood-cost benefits; growth non-core.

Meeting Details

• Date: 14 August 2026; time not disclosed.
• Type/Mode: group earnings conference call (audio).
• Event/organiser: Earnings Conference Call; Kuantum Papers Limited.
• Key participants: Company Secretary & Compliance Officer.
• Purpose: discuss unaudited Q1 FY27 results for quarter ended June 30, 2026.
• Recording: audio recording available on company website.

Business overview

• Kuantum Papers is an agro and wood-based paper manufacturer with integrated pulp and power.
• Fully integrated plant across 259 acres supports diversified product portfolio.
• Export footprint expanded to 26 countries; marquee clients include Macmillan, Oxford, Pearson.
• Targets 75,000 acres social forestry by 2030; 1 crore clones annually.

Operations & capacity

• Total paper capacity 540 TPD; pulping capacity 365 TPD.
• Co-Gen capacity 38 MW; boilers 190 TPH.
• DDS commissioned; starch system on PM2/PM3; folio wrapping machine installed.
• PM3 rebuilt for higher production and quality.

Financial highlights

• Operational income ₹3,038 Mn; EBITDA ₹401 Mn; margin 13.20%.
• PAT ₹62 Mn; PAT margin 2.05%; diluted EPS ₹0.71.
• Revenue grew 36.3% YoY; paper volume 42,922 MT.

Strategic initiatives & sustainability

• New OGR paper for food wrapping on PM2.
• Saplings produced 17.28 lakh; plantation area up 1,299 acres to 19,655.
• Export footprint to 26 countries; 100+ dealers.

Capital structure & liquidity

• Borrowings: long-term ₹5,897 Mn; current ₹2,701 Mn (FY26).
• Equity ₹12,283 Mn; cash ₹409 Mn.
• Market cap ₹6,601.5 Mn; shares outstanding 87.3 Mn.

Outlook & risks

• Debottlenecking and upgrades to ~50% capacity increase.
• Industry 4.0 (IoT/AI) for efficiency; diversified feedstock reduces risk.
• Forestry expansion to 75,000 acres by 2030.

Governance

• No material governance changes disclosed.

Q1 FY27 unaudited results

• Total revenue from operations: INR 303.75 cr; up ~36% YoY.
• Total income (1+2): INR 306.60 cr.
• Total expenses: INR 295.83 cr.
• PBT: INR 10.77 cr.
• Total tax expense: INR 4.54 cr (deferred tax).
• Net profit: INR 6.23 cr.
• EPS: 0.71 (basic and diluted).
• QoQ revenue growth: ~0.7% to INR 303.75 cr.
• YoY net profit declined to INR 6.23 cr from 12.06 cr.
• Standalone results; single operating segment: Paper; no subsidiaries.
• Auditor's review: Limited Review with unmodified opinion.
• Paid-up equity: INR 8.73 cr; Reserves: INR 1,219.59 cr.

Financial results and fund-raising

• Unaudited standalone results for quarter ended 30 June 2026 approved; limited review unmodified by auditors.
• Proposed fund-raising via private placement of up to Rs 100 crore in unlisted, senior, secured NCDs.
• NCDs to be issued in one or more series, terms to be determined; not listed.
• Annexures disclose details per SEBI LODR; board approved borrowing within approved limits.
• As of 30 June 2026, company has no subsidiaries; standalone results only.
• Auditor's review report: unmodified opinion; no material misstatement disclosed.

Meeting Details

• Date and time: 14 August 2026, 15:00 IST.
• Type/mode: Analyst/institutional earnings conference call (group meet, virtual).
• Event: Q1FY27 Result Conference Call.
• Organizer: Kuantum Papers Limited.

Participants

• Role: Vice Chairman and Managing Director.
• Role: Wholetime Director & CEO Operations.
• Role: Chief Financial Officer.
• Role: Chief Strategy Officer.

Purpose

• Discuss unaudited quarterly results for June 30, 2026.

Additional Notes

• Details: Detailed invite and dial-in details attached.

Rating Action Details

• Rating agency: India Ratings and Research (Ind-Ra).
• Bank loans: IND A-/Stable/IND A2+; Affirmed; size INR 11,413.4 million.
• Fixed deposits (330 million) rated IND A-/Stable; Affirmed.
• Fixed deposits (70 million) rated IND A-/Stable; Assigned.
• Outlook: Stable for all ratings.
• Rationale: No explicit rationale provided in this excerpt.
• Material changes since last rating: Not mentioned.
• Revenue/financial highlights: None quoted.