Satia Industries , a leading manufacturer of writing, printing, and specialty paper, has reported a decline in both revenue and net profit for the first quarter. The company's financial results, approved by the Board of Directors on August 11, reveal the challenges faced during the period.

Financial Performance

Satia Industries' net profit for Q1 stood at ₹316.00 crore, marking a significant decrease from ₹511.00 crore reported in the same quarter of the previous year. This represents a year-over-year decline of approximately 38.16% in net profit.

The company's revenue also experienced a downturn, decreasing to ₹371.00 crore from ₹399.00 crore in the corresponding period last year, reflecting a 7.02% reduction.

Segment-wise Performance

The company operates in three business segments: Paper, Co-Generation, and Agriculture. Here's a breakdown of their performance:

Operational Highlights

During the quarter, Satia Industries undertook a planned shutdown of PM-4 for 9 days, which resulted in a slight dip in production volume. This operational decision likely contributed to the decrease in revenue and profit figures.

Financial Position

As of June 30, Satia Industries reported total assets of ₹15,283.83 crore, with the Paper segment accounting for the largest portion at ₹12,576.92 crore. The company's total liabilities stood at ₹4,481.08 crore.

Management Commentary

Rajinder Kumar Bhandari, Joint Managing Director of Satia Industries, signed off on the financial results, indicating the board's approval of the figures presented.

Investor Information

Satia Industries has made its detailed financial results available to investors on its website ( www.satiagroup.com ) as well as on the websites of BSE ( www.bseindia.com ) and NSE ( www.nseindia.com ).

The company continues to operate as an independent entity without any subsidiaries, associates, or joint ventures as of June 30.

Despite the challenges faced in Q1, Satia Industries maintains its position in the paper industry, with its diverse business segments providing a foundation for potential future growth.

India Ratings and Research (Ind-Ra) has reaffirmed Satia Industries Limited (SIL) bank loan ratings at 'IND A+'/Stable while assigning ratings to additional credit facilities. The rating agency's decision reflects SIL's strong market position and robust financial performance, despite recent challenges in the paper industry.

Key Rating Drivers

Integrated Operations and Market Position

Satia Industries, with its 205,000 MTPA paper manufacturing facility in Punjab, maintains a significant 10-15% market share in the state textbook segment. The company's integrated operations, including in-house pulp manufacturing and captive power generation, contribute to its operational efficiency.

Financial Performance

SIL reported revenue of INR 15,120.00 million, marking a 12.10% year-on-year decline due to softening paper prices. Despite this, the company maintained a healthy EBITDA margin of 17.90%, though down from 24.30% in the previous year.

Credit Metrics and Liquidity

The company's credit profile remains strong with net leverage below 1x. SIL had unencumbered cash and current investments of INR 1,139.00 million, indicating adequate liquidity.

Upcoming Capacity Upgrade

SIL plans to upgrade its paper machine (PM-3) over a six-to-nine-month period starting November 2025. This upgrade is expected to add 18,000-20,000 MTPA to its capacity, potentially boosting volume growth from FY28 onwards.

Rating Sensitivities

Ind-Ra noted that steady growth in scale and profitability, along with a diversified product mix leading to net leverage remaining below 1.25x on a sustained basis, could be positive for the ratings. Conversely, a deterioration in profitability or large debt-funded capex resulting in net leverage exceeding 1.75x could negatively impact the ratings.

Industry Outlook

The paper industry faces challenges from low-cost imports and cyclical demand. However, Ind-Ra believes that fundamental demand prospects for paper remain stable over the medium term, particularly in the education sector.

Conclusion

While Satia Industries faces near-term challenges, including a potential decline in EBITDA due to planned shutdowns and market conditions, the rating agency expects a gradual recovery to mid-cycle levels by the second half of FY27. The company's integrated operations, market position, and planned capacity upgrades are expected to support its medium-term growth prospects.