Summary
GSM Foils Limited - Q3 FY26 Earnings Call Summary Monday, February 02, 2026 11:00 A.M. IST
Event Participants
Executives 1 Sagar Girish Bhanushali (Whole Time Director & CFO)
Analysts 8 Anshal Jain (Individual Investor), Bhaskar Kanrar (3 Head Capital), Charu Manral (Individual Investor), Devesh Rathi (Individual Investor), Kashyap Desai (Richbond Capital), Masood (Individual Investor), Nilay (Individual Investor), Priyanshu Jain (Growthfiniti), Urmish Shah (Moneywisers)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹66.33 crores | +84% YoY; Driven by strong demand in pharma packaging and scaling operations. |
| EBITDA | ₹7.89 crores | +95% YoY; Growth supported by higher operating leverage. |
| EBITDA Margin | 11.89% | +65 bps YoY; Improved from 11.24% in Q3 FY25. |
| Net Profit (PAT) | ₹5.33 crores | +96% YoY; Significant growth due to scaling and cost efficiency. |
| PAT Margin | 8.04% | +49 bps YoY; Expansion from 7.55% driven by execution efficiency. |
| 9M FY26 Revenue | ₹176.47 crores | +100% YoY; Validates business model strength and demand. |
| 9M FY26 PAT | ₹13.56 crores | +118% YoY; Reflects sustainabilty of high-growth performance. |
Geographic & Segment Commentary
- Ahmedabad Unit (Gujarat): Recently commenced operational facility spread over 17,000 sq. ft. on leased premises. Currently operating at 20-30% utilization with a target of 50% (₹10-12 crores monthly revenue) by March 2026. The unit features lower cost structures than Vasai, expected to provide a 100-200 bps margin cushion.
- Vasai Unit (Maharashtra): Existing facility currently operating at 85-87% capacity utilization. Management expects to reach 100% utilization (₹28-30 crores monthly revenue) by year-end through minor machine-speed debottlenecking.
- Domestic Market: Strong focus on Western and Northern India; currently assessing expansion into new units within the Vasai region to meet incremental demand.
- International: Indirect exports via merchant exporters to Yemen, Vietnam, Europe, and the US; direct export strategies are currently under exploration but have not yet seen significant breakthroughs.
Company-Specific & Strategic Commentary
- Capacity Expansion: Following the Ahmedabad launch (10,000 MT/year capacity), the company is evaluating 3-4 proposals for a third unit in Mumbai to be finalized by end-FY26.
- Product Innovation: Exploring entry into laminates (Aluminum + PPE/Plastics) for food and pharma segments to improve margins. Full execution is slated for FY27.
- Working Capital Strategy: Maintains a 35-45 day inventory level and 45-60 day payment cycle. Management prioritizes “B+ category” clients over top-tier pharma majors (like Sun/Cipla) to avoid 120-150 day credit cycles and low margins.
- Pricing Mechanism: Pass-through model based on Hindalco monthly weighted average prices; recent commodity price volatility is managed through inventory adjustments.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| FY26 Revenue | ₹240 crores | Management confirmed they are on track to achieve this target. |
| Capacity Utilization | 100% by FY27 | Aiming for 100% utilization at the Ahmedabad plant within one year. |
| Monthly Run Rate | ₹55-60 crores | Target combined monthly revenue from Vasai and Ahmedabad by FY27 end. |
| Main Board Migration | 1.5 - 2 Years | Strategic intent to migrate from SME to the Main Board based on current growth trajectory. |
Risks & Constraints
| Risk | Context |
|---|---|
| Commodity Volatility | Aluminum prices saw a sharp decline in late January; sustained downward trends could impact the inventory-led profitability gains seen during rising price cycles. |
| Working Capital Stress | Business model relies heavily on credit (45-60 days) and high inventory; CFO noted cash flows are negative due to investment in debtors and stock to drive growth. |
| Customer Concentration | Avoiding top-tier pharma majors due to their 120-150 day payment cycles limits volume growth but protects margins; however, this restricts penetration into the largest market spenders. |
Q&A Highlights
Operational Scaling
- Question: What is the expected utilization and revenue for the Ahmedabad plant by March 2026? (Priyanshu Jain)
- Answer: Target is 50% utilization, representing ₹10-12 crores monthly. Currently at ₹5-6 crores monthly (Sagar Bhanushali).
Margins & Aluminum Pricing
- Question: How do you deal with aluminum price fluctuations? (Priyanshu Jain)
- Answer: Prices are based on Hindalco average weighted prices passed on the 1st of every month. Rising trends benefit margins via inventory; sudden drops are managed by restricting purchases and rapid 2-day conversion cycles (Sagar Bhanushali).
Capacity & Capex
- Question: What is the current capacity of the Vasai plant? (Charu Manral)
- Answer: Reached 85-87%. Planning minor capex to increase machine speed to reach 100%, targeting ₹28-30 crores monthly from this unit alone (Sagar Bhanushali).
Market Strategy
- Question: Why not cater to big players like Sun Pharma or Cipla? (Priyanshu Jain)
- Answer: Big players demand 90-150 day credit and offer low margins via tenders. GSM prefers B/B+ categories where they can negotiate 45-60 day payments and better margins (Sagar Bhanushali).
Key Takeaway
GSM Foils reported a robust Q3 FY26 with an 84% YoY revenue increase to ₹66.33 crores and a 96% jump in PAT, validating the company’s aggressive scaling strategy. The management successfully commercialized the Ahmedabad facility, which is expected to reach 50% utilization by March 2026, complementing the near-saturated Vasai plant. Strategically, the company continues to prioritize margin-accretive “Tier 2” clients over major pharma conglomerates to maintain a sustainable 45-60 day working capital cycle and double-digit EBITDA margins. Looking ahead, GSM Foils is on track to hit its ₹240 crore FY26 revenue target and is evaluating a third manufacturing unit in Mumbai to sustain growth into FY27. Investors should monitor aluminum price volatility and the company’s ability to maintain high inventory turnover as it scales towards a projected ₹60 crore monthly revenue run rate.
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