Summary
Flair Writing Industries Limited - Q3 FY 2026 Earnings Call Summary Friday, January 30, 2026 11:30 AM IST
Event Participants
Executives 4 Alpesh Porwal (CFO), Mohit Rathod (Whole-Time Director), Sumit Rathod (Whole-Time Director), Vimalchand Rathod (MD)
Analysts 6 Aradhana Jain (B&K Securities), Kapil Jagasia (Carnelian Asset Management), Manpreet Arora (Aurora Wealth Advisors), Nilesh Doshi (Prospero Wealth), Resha Mehta (GreenEdge Wealth), Sneha Talreja (Nuvama Wealth Management)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹317.7 crores | +20.1% YoY; Surpassing 15% CAGR guidance due to diversification. |
| Own Brand Sales (Total) | ₹286.0 crores | +23.3% YoY; Domestic own brand up 22.5%, Export own brand up 29.9%. |
| EBITDA | ₹56.9 crores | +25.7% YoY; Operating leverage and automation driving gains. |
| EBITDA Margin | 17.9% | +80 bps YoY; Improvement despite slight gross margin compression. |
| Profit After Tax (PAT) | ₹33.1 crores | +13.2% YoY; Growth trailed EBITDA due to lower other income vs Q3 FY25. |
| Gross Profit Margin | 50.9% | -95 bps YoY; Decrease primarily due to changes in product mix. |
| Pens Revenue | ₹212.9 crores* | +7.3% YoY; Own brand volumes grew 18% in Q3; realization stable at ₹5.4. |
| Creative Segment Rev | ₹77.0 crores (Q3) | +68.7% YoY; 9M growth at 71.8% to ₹211 cr; driven by 18 categories. |
| Steel Bottles & Houseware | ₹25.0 crores (Q3) | +116.2% YoY; 9M growth at 102.2% to ₹64 cr; benefits from new designs. |
| Working Capital Cycle | ~100-110 days | Management target to reduce cycle by 10 days by end of FY26. |
*Calculated based on segment growth commentary.
Geographic & Segment Commentary
- Creative Segment: This segment reached ₹211 crores in 9M FY26, highlighting a 71.8% YoY increase supported by 240 product offerings across 18 categories. Strategy involves increasing in-house manufacturing to 80%+, leveraging the Disney licensing partnership, and the Maped distribution alliance for premium products.
- Steel Bottles & Houseware: Significant scale-up to a ₹25 crore quarterly run rate (from ₹12 crore) driven by vacuum-insulated tumblers and in-house lacquering. Distribution focus remains on general trade, modern retail, e-commerce, and quick commerce.
- Exports: Total export growth stood at 26.5% for Q3, led by strong traction in South America, Middle East, and UAE. While US tariffs had negligible impact (3% of topline), the company expects momentum from the EU FTA and growing OEM exports (+22.4%).
Company-Specific & Strategic Commentary
- Manufacturing Expansion: The new Valsad facility is slated for partial operation in Q4 FY26, aiming for full commissioning by Q1 FY27 to boost writing instrument capacity.
- In-house Manufacturing: Creative segment in-house production rose to 75%, with a target of 80%+ to improve quality control and margins.
- Flomaxe Joint Venture: Operationalized in FY26, this subsidiary has already contributed ₹6 crores in new domestic OEM revenue and is expanding into wooden and polymer pencils.
- Segment Mix Shift: Management anticipates the revenue mix will progressively shift toward Creatives and Steel Bottles, which currently grow at 2-3x the rate of the core Pen business.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | >15% CAGR (FY26) | Management confident in surpassing 15% target due to 9M 18.6% growth momentum. |
| Pen Segment Growth | High Single Digit (FY27) | Sustained growth expected from domestic own-brand market share gains. |
| EBITDA Margins | Gradual Improvement | Expected as economies of scale kick in from new units (Valsad/Surat). |
| Capital Expenditure | ₹80-90 crores (FY26) | Focus will shift to maintenance and mold-related CAPEX once Valsad is operational. |
Risks & Constraints
| Risk | Context |
|---|---|
| Working Capital Pressure | High inventory levels (100+ days) remain a constraint due to new product launches and stocking for Chinese New Year. Management is targeting a 10-day reduction but remains at a higher cycle than peers. |
| OEM Volatility | Domestic OEM business previously dropped to zero; replacement revenue is being built through Flomaxe but remains subject to customer forecast changes. |
| Product Mix/Margins | Gross margins saw a 95 bps compression this quarter due to the shift toward lower-margin high-volume mass categories in the Pens segment. |
Q&A Highlights
Growth Strategy & Segment Performance
- Question: What is driving the 72% growth in Creative and is it sustainable? (Kapil Jagasia)
- Answer: Growth is driven by 18 categories and increased throughput per outlet. Management believes momentum will continue for the next 2 years as they deepen distribution (Mohit Rathod).
- Question: Why has the Pen segment growth been lower than other categories? (Aradhana Jain)
- Answer: While overall Pen growth is 5-7%, our own brands grew 12% in value and 18% in volume this quarter. The gap is due to the deliberate exit from a problematic domestic OEM relationship (Mohit Rathod).
Financials & Returns
- Question: Why are receivable days increasing while payables decrease? (Manpreet Arora)
- Answer: This is a conscious strategy to provide higher credit in mass/premium ranges to capture market share. We expect a 10-day improvement in the cycle by year-end (Alpesh Porwal).
- Question: When will ROE (currently 11-12%) move toward the 20% seen by competitors? (Nilesh Doshi)
- Answer: ROE is currently suppressed by high CAPEX and new segment gestation. As capacity utilization at Valsad hits and economies of scale kick in, ROE will improve significantly (Alpesh Porwal).
Exports & Regulation
- Question: Is the Steel Bottle growth due to competitors’ non-BIS inventory being exhausted? (Resha Mehta)
- Answer: Partly, but primarily due to our own range expansion from 12 to 50+ SKUs. We are still small compared to leaders but catching up in range (Mohit Rathod).
Key Takeaway
Flair Writing Industries delivered a robust Q3 FY26, with revenue growing 20.1% to ₹317.7 crores and EBITDA increasing 25.7%, reflecting strong operating leverage. While the core Pen business grew a steady 7.3%, the Diversified segments (Creative and Steel Bottles) surged by 78.5% YoY, now acting as primary growth engines. Strategically, the company is transitioning to an 80%+ in-house manufacturing model and expanding its distribution reach via alliances with Disney and Maped. Management raised expectations to surpass their 15% CAGR guidance for FY26, supported by the upcoming Valsad facility and a strong 9M performance. However, high working capital days and the ongoing dilution of promoter stake to 75% remain key watch points. The company remains positioned to transition from a pure-play pen manufacturer to a diversified stationery and houseware major with improved margin profiles in the coming years.
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