Summary
Pakka Limited - Q3 FY 2026 Earnings Call Summary Monday, February 02, 2026 09:30 AM IST
Event Participants
Executives 5 Gautam Ghosh, Neetika Suryawanshi, Pranay Pasricha, Shubham Ashok Tibrewal, Ved Krishna
Analysts 6 Aditya Nahar, Deepak G, Jeet Gala, Kaustav, Kenil Jasani, Ravishankar Shanbhag
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue (Consolidated) | ~₹100 crores | -4% YoY; Impacted by lower realizations and shutdown extensions. |
| Other Income | ₹2.2 crores | -₹2 crores YoY; Drop in interest income from equity funds/fixed deposits. |
| EBITDA | ~₹20 crores | Quarterly run-rate; Management focused on operational efficiency to offset price drops. |
| Project Jagriti Spend | ₹515 crores | Total committed spend to date; funded via ₹198cr equity and ₹308cr debt. |
| CWIP | ₹287 crores | Primarily represents progress on Project Jagriti and US/Guatemala assets. |
| B2C Segment Growth | +80% | YoY growth for food services; driven by expansion in marketplaces and touchpoints. |
Geographic & Segment Commentary
- India (Pulp & Paper): Performance stabilized following PM3 (Paper Machine 3) shutdown extensions. Focus is now on the “Jagriti” expansion project with commissioning targeted for August 2026.
- Food Services (CHUK): Revenue improved QoQ but losses widened due to inventory liquidation schemes and plant equipment upgrades. B2C share is increasing, which carries higher gross margins.
- International (US & Guatemala): Strategic decision to “pause” operations and Capex to preserve bandwidth for India. Staffing has been reduced, and sugarcane bagasse/land contracts have been put in abeyance.
Company-Specific & Strategic Commentary
- Project Jagriti: The ₹500+ crore expansion remains the primary focus; the new power plant and recovery sections are expected to go live by late March or early April 2026.
- Strategic Pause: Management has delayed international expansion in Guatemala for 6-9 months to ensure the stabilization of domestic operations and Project Jagriti.
- Product Innovation: Launching a leak-proof delivery range for the food service segment to target gravy-based Indian cuisines. This range commands a 25-30% price premium over traditional options.
- Leadership: Shifted from hiring an external CEO to developing internal business leads. MD Ved Krishna has relocated to Ayodhya to oversee project stabilization personally.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Commissioning (Jagriti) | August 01, 2026 | Revised timeline for full project startup; repayment of debt to begin in Q3 FY27. |
| Production Capacity | 8,000 - 9,000 TPM | Combined target for paper machines and pulp sales by the end of the calendar year. |
| Equity Infusion | ₹60 crores | Required to bridge the Jagriti funding gap; to be completed in Feb-March 2026 through promoter/internal funds. |
| Revenue Run-rate | ₹300 crores / quarter | Target post-Jagriti stabilization based on 100 TPD incremental capacity and ₹110-130/kg realization. |
Risks & Constraints
| Risk | Context |
|---|---|
| Market Resistance | FMCG brands are showing resistance to the higher costs of compostable/barrier-coated flexible packaging due to lack of regulatory/public pressure. |
| Funding Gap | A remaining ₹60 crore equity gap must be filled by March 2026 to maintain the project timeline without external bridge funding. |
| Execution Delay | Past optimism led to unmet commitments; the management is now toning down forward-looking statements to align with realistic stabilization timelines. |
Q&A Highlights
Project Funding & Equity
- Question: What is the current equity gap and how will it be funded? (Jeet Gala)
- Answer: There is a ₹60 crore gap to reach the required ₹259 crore equity base for Jagriti. This will be funded through internal accruals (~₹20cr EBITDA/quarter) and promoter infusion in Feb-March 2026. (Neetika Suryawanshi)
International Strategy
- Question: Is the Guatemala project (Kawak) being shelved due to lack of funds? (Kaustav)
- Answer: No, it is a “pause” to focus management bandwidth on Jagriti. Rothschild was ready to raise funds, but the company decided to stabilize India first. Contracts are in abeyance, not canceled. (Ved Krishna)
Flexible Packaging Barriers
- Question: Where do we stand on non-metallized (NM) barrier trials? (Ravishankar Shanbhag)
- Answer: The market is currently backpedaling on sustainability commitments due to cost. We are refocusing on specific applications like tea bags and back-in-box instead of primary chocolate/cracker packaging. (Ved Krishna)
Product Launch (Delivery Range)
- Question: What is the scale and target for the new delivery range? (Manali Gala)
- Answer: Starting with 8 machines (400kg/day each). It targets the 360-degree cost of delivery (eliminating taping/leakage issues) and will be launched via strategic partnerships with major food aggregators. (Shubham Tibrewal)
Key Takeaway
Pakka Limited reported a transitional third quarter as it pivoted from a period of operational shutdowns to the stabilization of Paper Machine 3. While consolidated revenue remained flat near ₹100 crores due to pricing pressures and a 4% drop in realizations, the food service segment (CHUK) saw a significant 80% YoY jump in B2C transactions. Strategically, the company has elected to pause its US and Guatemala expansions (Project Kawak) to concentrate all financial and managerial resources on the ₹500+ crore Project Jagriti in India. This project is now slated for an August 2026 commissioning, which is expected to triple the quarterly revenue run-rate to ₹300 crores. Despite a ₹60 crore equity gap and market resistance to premium sustainable packaging, management remains committed to promoter-led funding and internal development of flexible barrier papers. The company enters FY27 focused on domestic execution and cost-effective barrier-coating innovations.
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