Vedant Poly Fabs shifts to manufacturing, lifting FY26 PAT margin

Vedant Poly Fabs Limited lifted its profit after tax (PAT) margin to 9.52% in FY26 from 5.63% in FY25 by shifting its revenue mix toward flexible-packaging manufacturing. Manufacturing contributed 96.37% of FY26 revenue from operations, versus 62.75% a year earlier, while trading revenue fell 86.14% to Rs 4.18 crore.

How did Vedant Poly Fabs change its revenue mix?

Vedant Poly Fabs moved from a mixed trading and manufacturing model to one led overwhelmingly by manufacturing in FY26. Manufacturing revenue rose 118.23% to Rs 110.96 crore from Rs 50.84 crore in FY25, while trading revenue declined to Rs 4.18 crore from Rs 30.18 crore. Manufacturing's share of revenue from operations therefore increased by 33.62 percentage points to 96.37%, and trading's share fell to 3.63% from 37.25%.

The company said it progressively phased out trading in favour of manufacturing. Its trading activity involved billet strips supplied directly from vendors to customers under a bill-to-ship arrangement, without inventory held at its facility. Vedant Poly Fabs stated that trading generated a margin below 1%, while its implied manufacturing earnings before interest, tax, depreciation and amortisation (EBITDA) margin was about 17.56% in FY26.

The transition began before FY26. Trading represented 56.12% of Rs 49.53 crore of revenue from operations in FY24, while manufacturing represented 43.88%. By FY25, manufacturing had overtaken trading, and FY26 revenue from operations rose a further 42.11% to Rs 115.14 crore despite the reduction of Rs 26.00 crore in trading revenue.

Why did Vedant Poly Fabs' FY26 PAT margin reach 9.52%?

Vedant Poly Fabs reached a FY26 PAT margin of 9.52% because manufacturing growth more than replaced lower-margin trading turnover and increased the share of value added within its operations. PAT increased 140.45% to Rs 10.97 crore from Rs 4.56 crore in FY25, and profit before tax rose to Rs 14.73 crore from Rs 6.61 crore. The restated profit and loss statement shows PAT at 9.51% of total income, while the key performance indicator calculates the net profit ratio at 9.52% of revenue from operations.

The sales-mix change coincided with higher company-level gross profitability and operating scale. Gross profit margin increased to 22.67% in FY26 from 15.53% in FY25. Vedant Poly Fabs reported EBITDA of Rs 19.18 crore, equal to 16.66% of revenue from operations, compared with Rs 8.30 crore, or 10.44%, in FY25; separately defined operating EBITDA, which excludes other income, was Rs 19.00 crore and the operating EBITDA margin was 16.50%.

Total expenses rose 34.16% to Rs 100.59 crore in FY26, below total income growth of 41.35% to Rs 115.31 crore. As a result, the total-expense-to-total-income ratio declined to 87.23% from 91.89% in FY25. For this margin profile to continue, the manufacturing-heavy mix and the relationship between income and expenses would need to be maintained.

What did the manufacturing expansion require in capital and working capital?

Vedant Poly Fabs incurred Rs 22.27 crore of FY26 capital expenditure on a new flexible-packaging converting line and allied plant and machinery. The investment increased gross block to Rs 32.39 crore at March 31, 2026 from Rs 5.81 crore at March 31, 2025, alongside manufacturing revenue of Rs 110.96 crore. It also increased depreciation and amortisation expense by 291.82% to Rs 2.55 crore.

Borrowings and inventory increased with the expanded manufacturing activity. Total borrowings rose to Rs 46.82 crore at March 31, 2026 from Rs 13.32 crore a year earlier, while finance cost increased 84.34% to Rs 2.20 crore. Inventories rose 57.67% to Rs 24.29 crore, including Rs 6.58 crore of raw materials, Rs 10.75 crore of work in progress and Rs 6.95 crore of finished goods.

Working-capital movements differed from FY25, when trading activity had created substantial payables. Trade payables fell 92.15% to Rs 1.68 crore at March 31, 2026 as trading-related balances were settled, and payable days declined to about five from 96. Trade receivables declined 4.71% to Rs 28.38 crore despite higher revenue, reducing receivable days to about 90 from 134; however, the manufacturing model continued to require funding for raw materials and work in progress.

Which factors could affect the manufacturing-led margin?

Vedant Poly Fabs' manufacturing-led margin depends on manufacturing volumes, raw-material procurement, demand and the utilisation of its expanded production capacity. Cost of materials consumed increased 92.01% to Rs 89.70 crore in FY26 as manufacturing volume rose. Within manufacturing revenue, the material-cost ratio fell to 80.84% from 91.88% in FY25, contributing to the changed margin profile.

Customer additions and quarterly concentration are relevant to sustaining volumes. Vedant Poly Fabs added 76 customers in FY26, generating Rs 28.90 crore of incremental revenue, and reported 232 active customers. The January-to-March quarter accounted for 47.60% of FY26 revenue from operations, or Rs 54.80 crore, compared with 46.92% in FY25, reflecting the disclosed cyclical procurement pattern of institutional packaging buyers.

The company identified demand and supply conditions, government regulations, taxes, competition, technology and dependence on a limited number of customers, suppliers or brands as factors that could affect results. Its employee count increased to 70 in FY26 from 60 in FY25, taking employee-benefit expense to Rs 2.24 crore from Rs 1.62 crore. Finance costs, depreciation, electricity and maintenance expenses are also linked to the Rs 22.27 crore capacity investment and its use.

Conclusion

Vedant Poly Fabs' FY26 profitability improvement was principally a revenue-mix change rather than sales growth alone. Manufacturing revenue more than doubled and represented 96.37% of revenue from operations, replacing most of a trading activity that the company said generated margins below 1%. Together with expense growth below income growth, the shift raised PAT to Rs 10.97 crore and the PAT margin to 9.52%.

The next disclosures should show whether the new converting line sustains output, manufacturing mix, inventory levels and borrowing requirements after FY26. Vedant Poly Fabs has said it will disclose the stated key performance indicators at least annually for one year after listing, or until full utilisation of fresh-offer proceeds if later, creating a defined period for tracking the margin profile.