Summary
Garware Hi-Tech Films Limited - Q3 FY 2026 Earnings Call Summary Monday, February 02, 2026 11:00 AM
Event Participants
Executives Abhishek Agarwal – Chief Financial Officer, Deepak Joshi – Director of Sales and Marketing
Analysts Akhil Parekh, Ankit Gupta, Dhwanil Desai, Jay, Mahesh Bendre, Priyank Agarwal, Rahul Jain, Suruchi Jain, Swechha Jain, Vinay Nadkarni, Viraj Parekh
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹459 crores | -1.6% YoY; decline limited despite full impact of 50% U.S. tariffs through controlled supply chain moves. |
| EBITDA | ₹86.7 crores | -7.4% YoY; margins maintained at 18.9% (-118 bps) via cost optimization and high-end product mix. |
| Profit After Tax (PAT) | ₹55.8 crores | -8.2% YoY; impact cushioned by operational efficiencies and reallocation of exports. |
| Export Share | 74.3% | Stable YoY; sustained global demand despite geopolitical volatility and tariff headwinds. |
| Cash & Liquid Investments | ₹669 crores | Robust liquidity position; company remains debt-free as of Dec 31, 2025. |
| PPF Capacity Utilization | 65% | New line ramping up; old line running at full capacity as demand shifts to the dedicated facility. |
| Application Studios | 250+ units | On track to cross 300+ stores by end of FY26, strengthening Tier 1-3 domestic presence. |
Geographic & Segment Commentary
- United States: Contribution dropped slightly to 40% (vs 43% YoY) due to the 50% tariff impact. Management is holding 100 days of inventory (vs 60-75 normally) in bonded warehouses to calibrate supply and await potential favorable trade/legal decisions.
- Middle East & North Africa (MENA): Revenue share doubled to 8% in 9M FY26. Company is establishing a wholly-owned trading subsidiary in a UAE free zone to capture rapid architectural film growth and optimize tax structures.
- Consumer Products Division (CPD): Revenue mix consists of 44% Sun Control, 26% Paint Protection Film (PPF), and 30% Industrial Products (IPD). Architectural films within this segment are targeted to reach ₹400-500 crores in revenue by FY27.
Company-Specific & Strategic Commentary
- Direct-to-Consumer (D2C) Expansion: Launched “Garware Home Solutions” (GHS) and global application studios to engage directly with premium real estate and retail consumers, aiming for higher brand equity and margins.
- Backward Integration (TPU Line): Commissioning of the Thermoplastic Polyurethane (TPU) line is set for October 2026. 25% of capacity is earmarked for R&D in medical and architectural applications to create a new high-margin vertical.
- Operational Resilience: Navigated a potential ₹40-50 crore PBT hit from tariffs by passing partial costs to distributors and re-routing exports early destined for the U.S. to other growing geographies.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | 15% - 20% CAGR | Targeted for FY27 based on robust order books and non-U.S. market expansion. |
| EBITDA Margin | 20% + | Targeted for Q4 FY26 and FY27 as seasonal mix shifts toward high-margin IR products. |
| Architectural Revenue | ₹1,000 crores | Long-term target for FY30, driven by GHS and global certifications (GreenPro, GRIHA). |
| TPU Commissioning | October 2026 | Expected to enhance PPF margins and unlock new product categories. |
Risks & Constraints
| Risk | Context |
|---|---|
| Tariff Volatility | The 50% U.S. tariff remains the primary headwind; any failure to secure a reduction (to 25% or less) may pressure long-term U.S. competitiveness. |
| Inventory Risk | Carrying 100 days of inventory in U.S. bonded warehouses increases working capital tied up in the short term. |
| Geopolitical Factors | Ongoing volatility affects export logistics and tariff structures beyond the U.S. market. |
Q&A Highlights
U.S. Tariff Navigation
- Question: How has the company maintained margins despite the 50% tariff? (Rahul Jain)
- Answer: Absorption of costs through operational efficiencies, passing a small fraction to distributors, and prioritizing high-end “Near Infra-Red” (IR) products (Deepak Joshi).
- Question: Is the tariff booked as a cost or sales reduction? (Mahesh Bendre)
- Answer: Increased selling prices to distributors are reflected in sales, while the actual tariffs paid are booked as expenses (Abhishek Agarwal).
Segmental Growth & Strategy
- Question: What is the revenue potential for the Architectural segment? (Jay)
- Answer: Aiming for ₹400-500 crores by FY27 and ₹1,000 crores by FY30 with the help of the GHS vertical (Deepak Joshi).
- Question: Why the 65% utilization on the new PPF line? (Ankit Gupta)
- Answer: High absolute prices of PPF make the tariff impact severe in the U.S., though growth in India (where PPF is 20% of sales) and MENA is offsetting this (Deepak Joshi).
Future Capex and TPU
- Question: What is the strategic intent for the 25% reserved TPU capacity? (Dhwanil Desai)
- Answer: It will focus on non-PPF applications like medical and architectural films to build a new independent vertical (Deepak Joshi).
Key Takeaway
Garware Hi-Tech Films Limited demonstrated significant resilience in Q3 FY26, largely maintaining revenues at ₹459 crores despite the full impact of 50% U.S. tariffs. The company successfully defended its EBITDA margins at 18.9% through a strategic pivot toward high-margin architectural products and aggressive cost optimization. Strategic initiatives, including the doubling of PPF capacity and the upcoming October 2026 TPU line commissioning, underscore a commitment to deep backward integration. Management is proactively diversifying geographic risk by establishing a UAE subsidiary to service the fast-growing MENA region, where sales have already doubled. While the U.S. remains a challenge, the company’s shift toward a D2C brand model and expanding studio network (target 300+) provides a stable growth floor. Looking ahead, Garware expects a 15-20% CAGR and a return to 20%+ EBITDA margins as seasonal demand for sun control films peaks and new verticals scale.
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