Cosmo First Limited delivered robust financial performance in Q3 FY26, reporting consolidated sales of ₹899 crores, representing a significant 28% increase compared to the December 2024 quarter. The growth was primarily driven by a substantial 29% increase in volumes, reflecting the benefits of recently commissioned capacity additions.

Financial Performance Overview

The company's EBITDA for the quarter increased by 19% to ₹103 crores compared to ₹86 crores in Q3 FY25. This improvement was supported by three key positive factors: higher sales volumes from new capacities, enhanced specialty margins due to better product mix, and improved performance from the specialty chemical subsidiary.

However, the company faced several margin pressures that limited EBITDA growth. BOPP core film margins declined due to increased imports in India during mid-Q2, with carry-over effects continuing into Q3. The seasonal impact post-Diwali and Christmas holidays also affected demand patterns.

Product-Wise Margin Analysis

The company experienced mixed performance across its product portfolio during Q3 FY26:

BOPET films showed significant sequential improvement, doubling from ₹6 per kg in Q2 FY26 to ₹12 per kg in Q3 FY26, though still below the previous year's levels. Management indicated that both BOPP and BOPET margins have continued improving since December 2025.

Operational Challenges and One-Time Impacts

Several factors adversely impacted the quarter's performance, with a combined negative effect of approximately ₹19 crores:

• US Tariff Impact: Higher tariffs implemented mid-Q2 continued affecting margins throughout Q3, with an estimated ₹8 crores additional impact
• Production Disruption: Volume loss of about 6% due to shutdown of one BOPP line, resulting in ₹4 crores impact
• Inventory Loss: Non-repetitive inventory loss of ₹8.40 crores due to raw material price declines
• Employee Benefits: One-time increase in gratuity liability of ₹4 crores under new labor codes

Business Vertical Performance

Specialty Chemicals

The specialty chemical subsidiary maintained strong momentum, posting sales of ₹52 crores with 25% EBITDA margins in Q3 FY26. The business has developed three new products recently, which are expected to be commercialized in coming quarters post customer approvals.

Rigid Packaging

Cosmo Plastech, the company's rigid packaging vertical, achieved EBITDA breakeven in December 2025, reaching close to 70% capacity utilization in Q3. The focus now shifts to achieving higher profitability through increased capacity utilization and improved operational efficiency.

Consumer Businesses

Both consumer verticals continued their scaling trajectory:

Debt Position and Capital Allocation Strategy

The company's net debt decreased by ₹20 crores during the quarter to ₹1,215 crores as of December 2025. Key debt metrics include:

Management outlined a clear debt reduction roadmap, targeting annual reductions of ₹200-250 crores over the next 2-3 years, representing 15-18% annual reduction in net debt position. This strategy is supported by the completion of the major capex cycle, with over ₹1,100 crores invested in strategic capacity additions.

Outlook and Strategic Focus

The company expects double-digit revenue growth in coming quarters driven by enhanced utilization of recently added capacity. The reduction in US tariffs is expected to improve profitability from Q1 FY27 once higher duty-paid inventory is exhausted. Management emphasized that the capex cycle is largely complete, with focus shifting to maximizing returns from existing assets and growing the specialty business segment.

The specialty business, which temporarily declined from 70% of total sales volume in FY25, is expected to reach about 50% in FY27 once new capacities achieve full utilization. The company targets returning this ratio to approximately 70% within a couple of years through continued specialty product development and market expansion.

Cosmo First Limited has announced its entry into a strategic agreement to acquire a stake in a renewable energy special purpose vehicle, marking a significant step towards sustainable power sourcing for its manufacturing operations. The company disclosed this development through a regulatory filing dated February 16, 2026, under Regulation 30 of SEBI listing requirements.

Strategic Acquisition Details

The company has entered into a Security Subscription and Shareholders' Agreement with Hexa Sunshine Private Limited and its holding company. This transaction involves acquiring up to 26% shareholding in the SPV through cash consideration.

Target Entity Profile

Hexa Sunshine Private Limited serves as a special purpose vehicle specifically created for renewable energy projects. The entity was incorporated on April 16, 2024, and operates in the renewable power sector.

Strategic Objectives

The acquisition is designed to secure hybrid renewable power supply for Cosmo First's manufacturing plants located in Gujarat. This arrangement will operate on a group captive consumer basis, providing the company with dedicated renewable energy access for its production facilities.

The transaction is not classified as a related party transaction, indicating arm's length dealings between the parties involved. No governmental or regulatory approvals are required for this acquisition.

Transaction Timeline

The proposed transaction remains subject to execution of definitive agreements and completion of customary conditions precedent. The company has not specified an exact timeline for completion, indicating that standard due diligence and documentation processes are still underway.

This strategic move aligns with the growing trend of manufacturing companies securing dedicated renewable energy sources to support their operations while potentially reducing long-term power costs and environmental impact.