Cosmo First Limited has responded to a surveillance query from BSE Limited regarding the recent increase in trading volume of its shares. The exchange had sought clarification through its letter reference L/SURV/ONL/PV/SG/ 2025-2026 / 939 dated February 26, 2026.

Company's Official Response

In its formal response dated February 26, 2026, the company clarified that it has been consistently informing stock exchanges about all events and information affecting its operations and performance. The management emphasized that there is no undisclosed price sensitive information requiring disclosure to the exchanges at this time.

Market-Driven Volume Movement

The company attributed the increased trading volume to market conditions, stating that the surge is purely market-driven. This explanation suggests that external market factors rather than company-specific developments have contributed to the heightened investor activity in the stock.

Regulatory Compliance Assurance

Jyoti Dixit, Company Secretary and Compliance Officer, digitally signed the response and provided assurance regarding future compliance. The company reaffirmed its commitment to promptly inform exchanges of all material events, information, and actions as required under SEBI (LODR) Regulations, 2015.

The response demonstrates the company's proactive approach to regulatory queries and its adherence to transparency requirements in capital markets.

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.