Huhtamaki India Q1 2026: Stable sales, stronger margins, and a one-time depreciation clean-up

Huhtamaki India Limited closed the March 2026 quarter with steady revenue but a clear improvement in operating profitability. Sales of products and services were INR 5,936.3 million in Q1 2026, up 0.1 percent year on year from INR 5,930.4 million. The quarter’s defining feature was margin expansion. EBITDA increased 24.8 percent year on year to INR 620.8 million, taking EBITDA margin to 10.5 percent versus 8.4 percent in Q1 2025.

The company attributed the profitability improvement to a favourable sales mix, operational efficiencies, and higher interest income, partially offset by one-off non-recurring charges. Management also reiterated that the operating stance remains aligned with Huhtamaki’s global strategy, with focus on profitable growth, disciplined capital allocation, and stronger accountability.

Profitability improved, but reported earnings carried a prior-period depreciation adjustment

A key accounting item shaped the quarter’s reported profitability: a one-time depreciation adjustment of INR 88 million relating to FY 2024 and FY 2025, along with an INR 22 million deferred tax impact. The CFO explained on the call that depreciation in the prior two years was calculated in error using written-down value instead of the straight-line method. The company chose to recognize the correction in Q1 2026, stating it did not breach materiality thresholds.

This adjustment created a noticeable gap between the “underlying” operating performance and the reported profit line. In the investor presentation, the company provided a view that excludes the prior-period depreciation impact. Under that presentation view, EBIT in Q1 2026 is shown at INR 473.7 million versus INR 370.7 million in Q1 2025, implying a 27.8 percent year-on-year increase and an EBIT margin of 8.0 percent.

In a separate reported view, EBIT for Q1 2026 is shown at INR 385.7 million versus INR 370.7 million in Q1 2025, a 4.0 percent increase, with an EBIT margin of 6.5 percent. Profit after tax in that reported view is INR 256.0 million, down 2.1 percent year on year.

Financial summary (Q1 2026 vs Q1 2025)

Note: Values converted from millions of INR to INR crore (1 crore = 10 million INR). The presentation contains two EBIT views, one excluding prior-period depreciation impact and another reflecting the impact.

Operating stance: selective participation and efficiency-led improvement

Management commentary on the call reinforced that revenue stability is a deliberate outcome of portfolio choices rather than a lack of market opportunity. The Managing Director stated that the company has been selective in the business it participates in and is focusing on higher-value segments aligned with its strengths, particularly innovation, premiumisation, and sustainability.

In response to investor questions about industry growth and whether Huhtamaki India may be ceding market share, management emphasized that headline growth rates vary significantly depending on which customer segment is observed. The call differentiated between large multinational FMCG customers and smaller regional players. Management stated that the company’s “sweet spot” is serving customers who value premium and sustainability-linked packaging solutions, and it may not participate in segments that are not aligned with that value proposition.

This approach is consistent with the quarter’s margin trajectory. EBITDA and EBIT improvement were explained as a combination of mix and operational efficiencies. The CFO also noted that profitability improvement has been visible sequentially and is not a one-quarter jump.

Geopolitical volatility: raw material inflation, but pass-through largely executed

A prominent topic on the call was the impact of geopolitical developments on raw materials. Management said prices began rising significantly towards the end of March, and estimated the overall raw material impact as low to medium double-digit inflation. The company stated there was no issue with availability, though there can be shipment delays for overseas-sourced materials.

On pricing, management stated it has been successful in passing on most cost increases to customers. The MD indicated the company acted quickly and that by end of March it had almost all future orders locked in with updated pricing. The company described its pricing mechanism as pragmatic, considering both existing inventory at older prices and newer procurement at higher prices.

Management also explained that raw material pass-through is not a one-time action. Given customers have their own visibility into market pricing, Huhtamaki India stated it adjusts prices up or down as raw material conditions change, maintaining transparency.

Other income also contributed to profitability in the quarter. In Q&A, the CFO attributed the increase in other income to interest on an income tax refund, higher fixed deposit interest, and foreign exchange gains linked to exports as the rupee weakened. The interest component on the income tax refund was quantified at about INR 6.5 crore.

Sustainability execution: solar captive power, solvent reduction, and ZLD focus

The company highlighted progress across its sustainability pillars. On safety, total recordable incidents were reported to have reduced by 67 percent year on year. Management framed safety as a “license to operate” and referenced activities and training during National Safety Week.

On climate actions, Huhtamaki India executed a formal agreement for a solar captive electricity project at the Khopoli plant, expected to go live in H2 2026. Management stated the company expects to begin reaping benefits in the second half of 2026.

On nature and water stewardship, management highlighted that multiple plants, including Khopoli, Rudrapur, and Silvassa, continue to hold a zero liquid discharge status, treating and reusing water on-site.

On product sustainability, the company stated it is continuing solvent reduction initiatives across sites and has invested in equipment such as solvent cooling. It also noted increasing adoption of post-consumer recycled materials for non-food product lines, framing this as aligned with long-term goals and a way to stay ahead of expected regulatory shifts in India.

Other disclosures: ECB repayment timeline and property sale

During Q&A, management also addressed an ECB loan from the parent company. The CFO said the repayment timeline is governed by RBI guidelines and the remaining portion is to be repaid by June 2027.

The call also disclosed a non-core asset action: a property in Daman has been put up for sale after curtailing operations there.

Takeaways

Huhtamaki India’s Q1 2026 narrative is primarily about profitability discipline. Sales were stable, while EBITDA margin improved meaningfully on the back of mix and operational efficiency. At the same time, reported earnings were influenced by a one-time prior-period depreciation correction.

From a forward-looking perspective, the quarter suggests three themes that investors are likely to track closely: the ability to sustain higher margins while remaining selective in participation, the effectiveness of raw material pass-through during a volatile geopolitical period, and the execution of sustainability-linked projects such as the Khopoli solar captive power initiative expected in H2 2026.