Summary
Linc Limited - Q3 FY26 Earnings Call Summary Thursday, February 12, 2026, 4:00 PM IST
Event Participants
Executives 3 N.K. Dujari (Director Finance & CFO), Rohit Deepak Jalan (Whole-Time Director), Sanjeev Sancheti (IR Advisor)
Analysts 1 Rakesh (Nine Rivers Capital)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Operating Income | ₹129.29 crores | +5.8% YoY; growth described as “measured” due to strategic focus on product portfolio over aggressive expansion. |
| Operating EBITDA | ₹12.9 crores | 10% margin; impacted by a one-time increase in employee benefit expenses from new labor regulations. |
| Adj. EBITDA Margin | 10.7% | Normalized margin excluding the non-recurring labor regulation impact. |
| Net Profit (PAT) | ₹6.77 crores | -191 bps YoY contraction in margin (to 5.2%) due to lower operating margins and ₹83 lakhs in JV losses. |
| Total Pen Volume | 16.4 crores units | ~20% YoY growth; writing instrument volumes saw a significant increase despite lower revenue growth. |
| Pentonic Volume | 6.5 crores units | Represents ~40% of total volumes; Pentonic realization remained stable. |
| Average Selling Price (ASP) | ~₹5.00 | Decreased from ₹6.30 in previous periods due to a deliberate product mix shift toward the sub-₹5 mass segment. |
| Cash Flow from Ops | ₹33.81 crores | Strong cash generation; company maintains a net free cash position of ₹10.14 crores. |
| Asset Productivity | 4.05x | Fixed asset turnover remains healthy, indicating efficient utilization of the existing asset base. |
| Cash Conversion Cycle | 61 days | Improved from 63 days in FY25, reflecting continued financial discipline. |
Geographic & Segment Commentary
- Domestic Market: Growth is driven by a strategic re-entry into the ₹5 MRP mass segment to capture a larger market share. While this reduced the overall ASP, the company plans to balance this with future high-value launches.
- Export Segment: Revenue share remained steady at approximately 20% (cr. ₹25-26 crores for the quarter). Growth has been stagnant around the ₹100 crore annual mark due to uncertainties in specific markets and structural shifts in East Africa.
- East Africa (Kenya): Sales momentum is beginning to pick up through the Kenya subsidiary. Management expects the positive trend to strengthen as the subsidiary replaces direct exports to the region.
Company-Specific & Strategic Commentary
- Mitsubishi Pencil JV: The partnership with the Japanese major remains stable; recent product launches have received positive market feedback.
- Turkish Joint Venture: Operations have commenced and are undergoing a transition toward automation; the order book for 2026 is reported as “promising.”
- Morris Korea Subsidiary: The project is slightly behind schedule due to delays in the Bengal manufacturing facility; it is now expected to be operational by Q1 FY27.
- Category Expansion: Early traction in the Marker category is encouraging; the product is currently in 2-3 zones and will be scaled pan-India as manufacturing capacity increases.
- Linc On Subsidiary: Operations have officially commenced, with meaningful financial traction expected to materialize in FY27.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Bengal Facility | Operational by Q1 FY27 | Delay from previous timelines; essential for the Morris Korea subsidiary ramp-up. |
| JV Profitability | Moderating losses | JVs remain in the investment phase, but scale-up costs are stabilizing as they move toward maturity. |
| Product Strategy | Gradual ASP Improvement | While the current focus is on the ₹5 segment, the long-term strategy targets higher price points to improve margins. |
Risks & Constraints
| Risk | Context |
|---|---|
| Margin Compression | Rising employee benefit costs from regulatory changes and a lower ASP due to product mix shifts are weighing on EBITDA. |
| Execution Delay | The delay in the Bengal manufacturing plant directly impacts the timeline for the Morris Korea venture’s contribution. |
| Export Volatility | Geopolitical and market uncertainty in specific international geographies has led to stagnant export growth over a multi-year period. |
Q&A Highlights
Operational Performance & Volumes
- Question: Why is revenue growth only ~6% when pen volumes grew by ~20%? (Rakesh)
- Answer: The mismatch is due to a change in product mix. The company deliberately focused on the sub-₹5 segment to capture market share, causing the Linc brand ASP to drop to ₹5 from over ₹6 previously (N.K. Dujari).
Export Stagnation
- Question: Why has export revenue remained flat at around ₹100 crores for the last 2-3 years? (Rakesh)
- Answer: There is uncertainty in certain markets. Specifically, direct exports to East Africa dropped because they are being transitioned to the local Kenya subsidiary. International brand building takes longer as it relies on distributor sales teams (Rohit Deepak Jalan).
Market Expansion & Capacity
- Question: Why hasn’t the Marker category been launched pan-India yet? (Rakesh)
- Answer: Expansion is being phased to match manufacturing capacity. The company is currently active in 2-3 zones and will scale as capacity increases (Rohit Deepak Jalan).
Key Takeaway
Linc Limited delivered a stable Q3 FY26 with a 5.8% YoY revenue growth to ₹129.29 crores, characterized by a significant 20% surge in volumes (16.4 crore units) offset by a strategic shift into the mass ₹5 price segment. This mix change, alongside a one-time ₹0.9 crore impact from labor law changes, pressured operating margins to 10% (10.7% adjusted). Strategically, the company is navigating the investment phase of multiple international ventures, with the Turkish JV showing a promising 2026 order book, though the Morris Korea tie-up faces delays due to the Bengal plant’s rescheduled Q1 FY27 opening. While the transition to lower-priced products has temporarily diluted ASPs, the management maintains a disciplined balance sheet with ₹10.14 crores in net cash and improved working capital cycles. Investors should monitor the timely commissioning of the Bengal facility and the stabilization of JV losses as the company seeks to pivot back toward premium segments in FY27.
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