Kuantum Papers Limited , a key player in the Indian paper industry, has reported a significant 25.5% sequential growth in operational income for Q2 FY26, despite facing challenges in maintaining profit margins. The company's performance reflects both its strategic initiatives and the impact of external factors on its operations.

Revenue Growth and Production Milestones

Kuantum Papers achieved an operational income of Rs. 280.00 crores in Q2 FY26, marking a substantial increase from the previous quarter. This growth was primarily driven by higher paper production following the upgradation of paper machine 4. The company reached new production milestones, including:

• Highest ever monthly production of 8,303 metric tons in September
• Highest daily production of 360 tons in July 2025

These achievements underscore the company's efforts to enhance its production capabilities and meet market demand.

Margin Pressure and Challenges

Despite the impressive revenue growth, Kuantum Papers faced significant margin pressure during the quarter:

• EBITDA margins contracted to 12.3% from the previous quarter
• Net sales realization declined by Rs. 3,200.00 per ton
• Production costs increased by Rs. 1,300.00 per ton

The margin contraction was largely attributed to higher agro and wood-based raw material prices, exacerbated by floods in Punjab. Additionally, the company is grappling with challenges arising from recent GST rate changes, which have created an inverted duty structure in the paper industry.

GST Impact and Strategic Shift

The recent changes in GST rates have introduced complexities for Kuantum Papers:

• Paper and boards: GST increased from 12% to 18%
• Converted products: GST reduced to 5%
• Notebooks: Made nil-rated

In response to these changes and market dynamics, Kuantum Papers is strategically moving away from the notebook segment. Instead, the company is focusing on higher value-added Maplitho grades and specialty papers, aiming to optimize its product mix and profitability.

Future Outlook and Expansion Plans

Kuantum Papers has outlined plans for growth and margin improvement:

• Capacity expansion: From current 450 tons per day to 650 tons per day
• Target volume growth: 30-40% in FY27
• Expected EBITDA margins: 18-20% post-expansion

Management expects these initiatives to boost the company's performance and profitability in the coming years.

Financial Performance Overview

To provide a clearer picture of Kuantum Papers' financial performance, here's a comparison of key metrics for Q2 FY26 against the previous quarter:

The table highlights the company's strong revenue growth, but also illustrates the significant impact on profitability due to the challenges faced during the quarter.

In conclusion, while Kuantum Papers has demonstrated robust growth in production and revenue, it faces near-term challenges in maintaining profitability. The company's strategic shift towards higher-value products and its capacity expansion plans indicate a focus on long-term growth and margin improvement.

Kuantum Papers Limited, a leading paper manufacturer, has reported a significant decline in its quarterly profit for the period ended September 30, 2025. The company's financial results reveal a challenging quarter marked by increased costs and reduced profitability.

Key Financial Highlights

Kuantum Papers reported a net profit of ₹5.77 crore for the quarter ended September 30, 2025, marking a substantial 80.70% decrease from ₹29.90 crore in the same quarter last year. The company's revenue from operations saw a marginal increase of 0.91%, rising to ₹278.42 crore from ₹275.90 crore in the corresponding quarter of the previous year.

Cost Pressures and Operational Challenges

The significant drop in profitability can be attributed to several factors:

1. Rising Finance Costs: The company's finance costs increased to ₹11.90 crore from ₹9.41 crore in the same quarter last year, indicating higher borrowing costs.

2. Increased Operational Expenses: Other expenses, including power and fuel costs and chemical consumption, saw a notable rise, impacting the company's bottom line.

3. Depreciation and Amortization: These expenses increased to ₹16.30 crore from ₹13.00 crore in Q2 2024, suggesting ongoing investments in assets.

Half-Yearly Performance

For the half-year period ended September 30, 2025, Kuantum Papers' performance also showed a downward trend:

• Revenue decreased by 9.82% to ₹500.34 crore from ₹554.84 crore in H1 2024.
• Net profit dropped by 73.82% to ₹17.83 crore from ₹68.09 crore in the same period last year.

Industry Context

The paper industry continues to face headwinds from increasing raw material costs and energy prices. Kuantum Papers' ability to manage these challenges and improve operational efficiency will be crucial for its performance in the coming quarters.