Summary
Kuantum Papers Limited - Q3 FY 2026 Earnings Call Summary Monday, February 09, 2026, 04:00 PM
Event Participants
Executives 3 Pavan Khaitan (Vice Chairman & Managing Director), Vikram Kumar Khaitan (CFO), Prachi Sharma (VP – Corporate Strategy)
Analysts 8 Bhavesh (Individual Investor), Daisy Bharucha (Individual Investor), Jayesh Lad (Centra Insights), Keshav Garg (Counter Cyclical PMS), Madhav Jhawar (SKP Securities), Madhur Rathi (Counter Cyclical Investments), Manan Poladia (MKP Securities), Niteen Dharmawat (Aurum Capital), Prashant Kale (Star Capital)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Operational Income | ₹290 crores | +4% QoQ; Driven by ₹1,701 MT higher sales volume and ₹850/ton price increase. |
| EBITDA | ₹39 crores | +14% QoQ; Improved due to lower wood chip and chemical costs offsetting wheat straw hikes. |
| EBITDA Margin | 13.55% | +125 bps QoQ; Rebounding from Q2 lows as realizations begin to recover. |
| Net Profit (PAT) | ₹10 crores | +131 bps margin expansion QoQ; Reflects improved operational reliability post-upgrades. |
| Net Debt (Long Term) | ₹600-650 crores | Peak debt expected at ₹750 crores; Repayment scheduled at ~₹30 crores per quarter. |
| Production Volume | Record Highs | PM 4 reached 8,758 MT in Dec 2025; PM 1 reached 91.4 MT/day on Dec 31. |
Geographic & Segment Commentary
- Domestic Market: Management remains focused on Northern India, particularly Delhi (the largest paper market), which provides insulation from low-priced coastal imports due to ₹4,000-5,000/ton inland freight costs.
- Writing & Printing Paper: This core segment is seeing a 6% CAGR driven by government focus on education; management notes demand for textbooks/notebooks remains resilient despite digitalization.
- Export Markets: Stable operations in the Gulf, UAE, and North Africa; freight issues in the Red Sea have normalized, and the India-EU FTA is expected to aid future exports of specialty grades.
Company-Specific & Strategic Commentary
- Mill Upgradation (Project Nirmaan): Rebuild of PM 1 was completed in Dec 2025, increasing capacity to 80+ TPD. Upgrades for PM 2 (Feb 2026) and PM 3 (May 2026) are underway to reach a total capacity of 2.35 lakh TPA by FY28.
- Product Innovation: Launched ‘Kuantum Kopio’ (Copier brand) and ‘Kuantum Pura’ (65% Agro Pulp furnish) to capture the sustainable products market and enhance realizations.
- Backward Integration: Doubled PCC capacity to 50,000 TPA to reduce dependence on external fillers; social forestry program expanded to 40 lakh saplings/year with a target of 1 crore/year to secure wood supply.
- Digitization (Industry 4.0): Phase 1 of Advanced Process Control (APC) rollout for PM 4 is scheduled for early 2026 to optimize pulping yields and reduce chemical consumption.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue | ~₹1,100 crores (FY26) | Based on Q4 being seasonally strong with expected production stability. |
| Annualized Revenue | ₹1,800 crores (FY27 Run-rate) | Expected once all four machines (post-upgrades) are fully operational. |
| EBITDA Margin | 20% - 22% (Medium Term) | Targeted through cost efficiencies and recovery in domestic paper realizations. |
| Capacity | 2.35 lakh tons (FY28) | Final capacity target following the completion of full mill expansion program. |
Risks & Constraints
| Risk | Context |
|---|---|
| Raw Material Inflation | Wheat straw prices remain elevated (₹6,000-6,400/ton) due to Punjab floods; relief only expected after April harvest. |
| Import Pressure | Low-priced imports from China/ASEAN ($680-$750/ton) depress industry sentiment, though Kuantum’s inland location offers a buffer. |
| Shutdown Impact | Planned upgrades for PM 2 (30 days) and PM 3 (45 days) in H1 2026 will temporarily take those specific lines offline. |
Q&A Highlights
Pricing & Realizations
- Question: What is the trend for realizations in Q4? (Madhav Jhawar)
- Answer: Realizations improved by ₹850/ton in Q3. An industry-wide hike of ₹2,000/ton was taken in early Feb, with another ₹2,000/ton expected by month-end (Pavan Khaitan).
Debt & Capex
- Question: What is the peak debt and repayment strategy? (Manan Poladia/Bhavesh)
- Answer: Long-term debt will peak at ₹750 crores. Strong cash flows from upgraded machines will cover ₹30 crore quarterly repayments; internal accruals will fund the remaining ₹735 crore total project cost (Vikram Khaitan).
Input Costs
- Question: Why are agro fiber costs still high despite flood recovery? (Madhav Jhawar)
- Answer: Scarcity persists in Punjab, but supply is guaranteed as paper mills use only 10% of total state straw production. Costs are expected to moderate post-April (Pavan Khaitan).
Future Expansion
- Question: Any plans for the Tissue segment? (Prashant Kale)
- Answer: Management is planning a 50 TPD high-quality tissue machine (₹70-80 crore investment) with an 18-month implementation timeline once finalized (Pavan Khaitan).
Key Takeaway
Kuantum Papers reported a resilient Q3 FY26, with revenue reaching ₹290 crores and EBITDA margins expanding 125 bps sequentially to 13.55%. Despite localized raw material pressures from high wheat straw prices in Punjab, the company achieved record production on PM 4 and successfully commissioned the PM 1 upgrade. Strategically, Kuantum is pivoting toward higher-margin branded copiers and specialty papers while aggressively pursuing cost-reduction through Industry 4.0 initiatives and doubling its PCC capacity. Management remains confident in a structurally strengthening domestic market, guiding for a ₹1,800 crore revenue run-rate by FY27 as all four paper machines complete their modernization. While import pressures from China remain a sector-wide watch point, the company’s inland location and focus on the education-driven writing and printing segment provide a significant competitive moat. Kuantum is positioned for an earnings uptick in Q4 FY26 and beyond as realization hikes of ₹4,000/ton converge with lower post-harvest input costs.
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