Summary
Control Print Limited - Q3 FY2026 Earnings Call Summary Friday, January 30, 2026 02:00 PM IST
Event Participants
Executives Jaideep Barve (Chief Financial Officer), Shiva Kabra (Joint Managing Director)
Analysts Ansh Khimavat, Madhur Rathi, Moksh Ranka, Nikunj Bhanushali, Nitin Grover, Prateek Jha, Rahul K., Rushikesh Bhise, Saket Kapoor, Samarth Singh, Shubham Jain, Trushank Jani, Vikram Hirawat, Vinit Thakur
Financials & KPIs (Standalone)
| Metric | Reported | Commentary |
|---|---|---|
| Total Revenue (9M) | ₹322 crores | +15% YoY from ₹280 crores; driven by coding and marking segment growth. |
| Operating Revenue (Q3) | ₹109 crores | +16% YoY from ₹94 crores; coding and marking represents 92% of the business. |
| COGS | 41% | -100 bps YoY from 42%; management aims for further reduction through procurement optimization. |
| EBITDA Growth | 21% | YoY increase; reflects operational efficiency despite higher overheads in specific segments. |
| Employee Costs | 19% | +200-300 bps QoQ/YoY; impacted by ₹2 crore provision for new labour code and staff incentives. |
| Other Expenses | 14% | Steady YoY at 13-14%; included higher travel and business promotion expenses. |
| PAT Growth | 19% | Lags PBT growth (35%) due to higher tax provisions in the current quarter. |
| Printer Sales (9M) | 2,100+ units | Core hardware growth contributing to the 22,000+ total installed base. |
Geographic & Segment Commentary
- Coding and Marking: Remains the core business contributing 92% of revenue. Growth is driven by pipes, food, healthcare, and dairy verticals, with market leadership in cement, plywood, and sugar.
- Packaging Division (V-Shapes): Currently loss-making but seeing traction in co-packing activities. Four machines sold in India; management is addressing “niggling technical issues” and expects Indian operations to breakeven by Q1/Q2 FY27.
- International Subsidiaries: Italy (V-Shapes) remains the primary loss-maker due to high R&D (€800k) and delayed machine shipments. Codeology (UK) and Markprint (Netherlands) are operating near or at breakeven.
- Track and Trace: Reported as marginally profitable on an absolute basis. Strategic focus on moving from plain compliance to high-value-added business intelligence for pharmaceutical customers.
Company-Specific & Strategic Commentary
- R&D and IP Strategy: All R&D is expensed (not capitalized) to maintain a conservative balance sheet. The company holds fundamental patents for V-Shapes technology until 2036 and is developing single-polymer recyclable materials.
- Manufacturing Localization: A pilot line for packaging materials is being commissioned in Nalagarh for April/May 2026. This is expected to significantly reduce costs vs. current imports from Europe.
- Product Innovation: Launching new “single polymer” recyclable materials and paper-based packaging (>70% paper) to meet sustainability demands.
- Middle East Expansion: Establishing a lean niche setup (4-5 people) to service specific industries like steel where the company has a technological edge.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | 15% - 16% (FY26) | Expects to maintain mid-teens growth by outperforming the 10-12% industry average. |
| Packaging Breakeven | Q3/Q4 FY2027 | Consolidated packaging business (India + Italy) expected to breakeven by H2 FY27. |
| Italy Performance | Breakeven by H2 FY27 | Recovery tied to shipping the current backlog of machines and resolving quality control hurdles. |
| Capacity Utilization | 65% - 70% | Current capacity is sufficient for growth; no major CapEx planned for core coding segment. |
Risks & Constraints
| Risk | Context |
|---|---|
| Subsidiary Losses | Italy operations continue to bleed due to R&D intensity and execution delays, though losses are on a declining trajectory. |
| Regulatory Adoption | Track & Trace growth in non-pharma (seeds/agrochemicals) depends on the speed of government notification and enforcement. |
| Competitive IP | Chinese competitors are entering the lower-end sachet market; CPL relies on legal enforcement and superior technical complexity to defend V-Shapes. |
| Talent Costs | New labor codes and aggressive incentive structures have spiked employee costs by ~5% of sales in Q3. |
Q&A Highlights
Italy Subsidiary Losses (Shiva Kabra)
- Question: What factors led to lower profits on consolidation? (Saket Kapoor)
- Answer: Primarily R&D expensing (€800k) and a decision to delay machine shipments until quality control reached “100% reliability.” Revenue from the backlog will hit in Q4 and Q1.
Employee Cost Spike (Jaideep Barve)
- Question: Why did employee costs rise 22% QoQ? (Ansh Khimavat)
- Answer: Impacted by the new labour code (effective 21st Nov) requiring absorption of past service costs for gratuity and a ₹2 crore staff incentive provision.
Laser Printer Competition (Shiva Kabra)
- Question: Do lasers pose a threat to the consumable-heavy CIJ business? (Vikram Hirawat)
- Answer: Lasers have fundamental limits (lack of contrast, safety risks with PVC/chlorinated pipes, and high capital replacement frequency). They remain a niche, not a displacement technology.
Track & Trace Strategy (Shiva Kabra)
- Question: How is the solution different from competitors like ACG? (Madhur Rathi)
- Answer: While others focus on compliance (L1-L5), CPL is integrating printing and software to provide business intelligence that resolves “burning” supply chain issues.
Key Takeaway
Control Print Limited reported a steady 16% growth in 9M FY26 standalone revenue, reaching ₹322 crores, anchored by a dominant 92% contribution from its core coding and marking segment. While standalone profitability remains robust with a 21% EBITDA growth, consolidated margins were pressured by ongoing losses in the Italian V-Shapes subsidiary and a one-time ₹2 crore provision for the new labor code. Strategically, the company is shifting from importing packaging materials to local production at its Nalagarh facility (expected April 2026), which is critical for margin expansion in the packaging vertical. Management anticipates a “homogenization” of standalone and consolidated results by late FY27 as the packaging business reaches breakeven. Investors should monitor the execution of the machine order backlog in Italy and the commercial rollout of high-value track-and-trace pilots in the pharmaceutical sector.
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