Cosmo First Q1 FY27: From capex-heavy years to a sharper ROCE and scale agenda

Cosmo First entered FY27 with a clear message: the large capex cycle is largely behind it, and the next phase is about sweating assets, improving returns, and strengthening cash generation. The June 2026 quarter (Q1 FY27) reinforced that narrative with strong growth across the core films business and visible traction in newer verticals.

Consolidated net revenue for Q1 FY27 stood at INR 1,166 crore, up 46% year on year. EBITDA rose to INR 147 crore from INR 116 crore in Q1 FY26, while PAT increased to INR 54 crore from INR 43 crore. EBITDA margin, however, moderated to 12.6% from 14.5% a year ago. Management attributed the gap between revenue and volume growth to raw-material pass-through pricing and emphasized that contribution per kg improved across base, semi-specialty, and specialty categories.

A key transition is visible in the balance sheet and operating stance. Net debt at June 2026 was INR 1,166 crore, translating into 2.3 times net debt to EBITDA, improving from 2.9 times in June 2025. Management reiterated its target to bring leverage below 2.0 times within 12 to 18 months.

Q1 FY27 performance in numbers

The quarter delivered strong growth in absolute EBITDA, but the margin profile reflected both a denominator effect from raw-material-linked realizations and operational disruptions.

Management noted that EBITDA was suppressed by a 13% decline in export volumes due to port congestion. It also highlighted that base BOPP gross margin included stock gain, which it called non-repetitive.

Films remains the scale driver, with mix improvement as the margin lever

Cosmo Films continues to dominate the portfolio. In Q1 FY27, the Packaging Films segment reported sales of INR 1,034 crore and EBITDA of INR 140 crore. The company described itself as India’s largest flexible packaging film producer, with BOPP capacity of 277,000 MT per annum and exports contributing about 50% of revenue.

The near-term operating lever is utilization. Management stated films utilization was 85% in the quarter and indicated about 15% headroom that it expects to monetize largely over the next two quarters.

The structural lever is specialty mix. The company tracks per kg contribution across base, semi-specialty and specialty categories, and places strategic emphasis on driving the mix back towards pre-expansion levels. In Q1 FY27, specialty and semi-specialty mix was shown at 61%, improving from levels impacted by commissioning of new BOPP and CPP lines. Management said the objective is to move the mix towards 70%.

The quarter also reflected ongoing product development. The presentation and call referenced new launches including synthetic paper film for high-end digital printing, PVC-free green graphic films, and anti-fog transparent BOPET lidding films. Cosmo highlighted six active patents with eleven in the pipeline and reiterated that incremental capex in the next couple of years will be largely specialty-focused.

Non-films businesses are scaling, but consumer losses remain

Cosmo First’s strategy is not only about films. The company is pushing to increase the contribution of emerging businesses, which it refers to as additional growth engines.

Specialty Chemicals stood out as the highest-margin platform. In Q1 FY27 it reported revenue of INR 66 crore, up 34% year on year, and EBITDA of INR 17 crore with a 26% margin. Management described the business as high-ROCE and stated a FY30 revenue target of INR 400 to 500 crore. On the call, it said it is possible to surpass that target by FY29.

Cosmo Plastech showed a visible profitability inflection. Segment EBITDA moved from minus INR 6 crore in Q1 FY26 to plus INR 5 crore in Q1 FY27. The slide clarified that the quarter includes a one-time government incentive of INR 2.4 crore, and excluding this, normalized EBITDA margin was stated at 7%. Management also said it plans to augment capacity by 50% over the next two quarters with minimal capex to support future scale.

The consumer portfolio, however, remains in investment mode.

Cosmo Consumer, which includes window films and paint protection films, reported Q1 FY27 revenue of INR 11 crore with an EBITDA loss of INR 1 crore. Management said losses were largely due to marketing, and it started TV advertising from July 2026. It also indicated that the business can become profitable earlier than INR 100 crore of revenue, but brand-building choices may keep profitability volatile in the near term.

Zigly, the pet care platform, continued to grow but with widening losses in the quarter. Segment EBITDA loss increased from INR 10 crore in Q1 FY26 to INR 14 crore in Q1 FY27. Management explained that investments were made ahead of revenue, including new retail centers, hospital acquisitions, and private label launches. It stated that Zigly’s breakeven is expected around INR 250 crore of revenue and that profitability could still take a couple of years.

Balance sheet priorities, ROCE ambition, and what to watch

The company’s near-term priorities are explicit. It stated that more than INR 1,200 crore of strategic capex has been completed over the last three years, major capacities have been commissioned, and capex ahead will be limited. Management linked the transition to a focus on ROCE improvement and guided that ROCE could move to 15% to 20% over the next 12 to 24 months.

Deleveraging is central to the narrative. Net debt to EBITDA improved to 2.3 times by June 2026. Management reiterated a target to get below 2.0 times in 12 to 18 months and also spoke about reducing debt by INR 400 to 500 crore over the next two years, combining EBITDA growth with repayment.

There are also upcoming operating levers in cost and sustainability. The ESG section states renewable power usage is around 50%, with a plan to increase the mix to two thirds over 12 to 18 months and targeted savings of INR 25 crore per annum. On the call, management clarified these savings had not started in Q1 FY27 and expected one project to begin from Q3 FY27 and another from Q1 of the next financial year.

The quarter showed a company that is clearly trying to move from a capacity-building phase to a returns phase. Execution in films utilization, steady specialty mix improvement, and the durability of Specialty Chemicals margins will be key monitors. At the same time, consumer vertical losses and external disruptions such as raw material volatility and port logistics remain factors that can create quarterly noise.

The Q1 FY27 message is consistent with the stated direction. Cosmo First is now judged less by what it builds and more by how efficiently it uses what it has built.