Pakka returns to Q2 profit as paper and pulp rebounds

Pakka Limited returned to consolidated profit of Rs 2.67 crore in the quarter ended 30 September 2026, compared with a Rs 2.11 crore loss a year earlier. Pakka’s Paper & Pulp segment moved from a Rs 55.42 lakh loss to Rs 10.49 crore of profit before tax, while Moulded Products remained loss-making despite higher revenue.

How did Pakka return to profit in Q2 2026?

Pakka returned to profit as consolidated profit before exceptional items and tax rose to Rs 8.70 crore in the quarter ended 30 September 2026, from a Rs 2.02 crore loss in the corresponding quarter of 2025. Total income increased to Rs 126.25 crore from Rs 79.39 crore, while total expenses rose to Rs 117.55 crore from Rs 81.41 crore.

An exceptional loss of Rs 4.66 crore on disposal of property, plant and equipment reduced reported profit before tax to Rs 4.04 crore. After tax expense of Rs 1.37 crore, Pakka reported profit after tax of Rs 2.67 crore. In the year-earlier quarter, tax expense was Rs 9.27 lakh and the company recorded a consolidated loss of Rs 2.11 crore.

The sequential result was lower than the Rs 5.89 crore profit reported for the quarter ended 30 June 2026, although total income rose from Rs 119.40 crore to Rs 126.25 crore. Profit before exceptional items and tax increased from Rs 8.40 crore to Rs 8.70 crore, but the September-quarter disposal loss affected the reported profit figure.

Which segment drove Pakka’s Q2 improvement?

Paper & Pulp drove Pakka’s year-on-year improvement, with segment revenue rising to Rs 107.46 crore from Rs 63.65 crore in the September 2025 quarter. Segment profit before tax reached Rs 10.49 crore, compared with a Rs 55.42 lakh loss a year earlier, exceeding the group’s Rs 8.70 crore pre-exceptional profit before tax after unallocable expenditure.

Paper & Pulp profit before tax was slightly below Rs 10.64 crore in the preceding quarter, even as revenue increased from Rs 100.94 crore. For the half year ended 30 September 2026, the segment reported revenue of Rs 208.40 crore and profit before tax of Rs 21.13 crore, against Rs 133.18 crore and Rs 87.37 lakh respectively in the prior-year half.

Moulded Products increased quarterly revenue to Rs 18.80 crore from Rs 15.74 crore a year earlier, but remained loss-making at the segment level. Its loss before tax was Rs 1.20 crore, wider than the Rs 1.06 crore loss in the September 2025 quarter but narrower than the Rs 1.62 crore loss reported for the June 2026 quarter.

For the half year ended 30 September 2026, Moulded Products generated revenue of Rs 37.25 crore, up from Rs 29.52 crore in the prior-year period. Its segment loss widened to Rs 2.82 crore from Rs 1.67 crore, showing that the revenue increase had not produced a positive segment result in the filed results.

What changed in Pakka’s costs and per-share earnings?

Pakka’s costs increased alongside revenue in the September 2026 quarter, with material consumption at Rs 41.65 crore, power and fuel at Rs 16.64 crore, and finance costs at Rs 6.83 crore. The respective year-earlier amounts were Rs 29.63 crore, Rs 12.51 crore and Rs 2.66 crore.

Cost of traded goods sold rose to Rs 11.41 crore from Rs 2.70 crore, employee-benefit expense rose to Rs 11.17 crore from Rs 6.04 crore, and other expenses increased to Rs 21.61 crore from Rs 17.16 crore. Depreciation and amortisation were broadly unchanged at Rs 4.16 crore, compared with Rs 4.15 crore in the corresponding quarter.

Basic and diluted earnings per share were Rs 0.57 for the September 2026 quarter, compared with a loss per share of Rs 0.47 a year earlier. For the half year ended 30 September 2026, both measures were Rs 1.90, compared with a loss per share of Rs 0.81, alongside consolidated profit of Rs 8.56 crore against a Rs 3.64 crore loss in the prior-year half.

Finance costs for the half year rose to Rs 11.69 crore from Rs 5.63 crore in the corresponding period. Consolidated non-current borrowings stood at Rs 450.91 crore on 30 September 2026, compared with Rs 309.91 crore at 31 March 2026, while current borrowings declined to Rs 90.60 crore from Rs 149.23 crore.

How is Pakka funding the Jagriti project and investment?

Pakka raised Rs 425 crore through secured non-convertible debentures on a private-placement basis during the half year ended 30 September 2026. The company said the proceeds were used for repayment of existing borrowings, the ongoing Jagriti project and other permitted purposes set out in the debenture trust deed.

The company also raised Rs 51.10 crore through a preferential issue of 27,20,000 equity shares and 77,00,000 warrants. It received Rs 21.18 crore as upfront consideration, or 25% of the warrant issue, and said the proceeds have been or will be used for debt repayment, the Jagriti project and other purposes disclosed in the extraordinary general meeting notice.

Consolidated operating activities generated Rs 46.93 crore in the half year, while investing activities used Rs 190.95 crore, including Rs 186.87 crore for property, plant and equipment, intangible assets, capital work in progress and capital advances. Financing activities were reported at Rs 127.34 crore, and cash and cash equivalents were Rs 1.26 crore at 30 September 2026, down from Rs 17.94 crore at 31 March 2026.

Capital work in progress increased to Rs 766.91 crore at 30 September 2026 from Rs 586.69 crore at 31 March 2026. Total consolidated assets rose to Rs 1,260.57 crore from Rs 1,116.65 crore, while total equity increased to Rs 522.58 crore from Rs 463.28 crore over the same period.

Conclusion

Pakka’s September-quarter turnaround was principally driven by Paper & Pulp, which moved from a Rs 55.42 lakh segment loss to Rs 10.49 crore of profit before tax. Moulded Products recorded Rs 18.80 crore of quarterly revenue, but its Rs 1.20 crore segment loss meant that revenue growth did not translate into a positive operating result for that business.

Next, investors will be able to watch progress on the Jagriti project, for which Pakka identified its Rs 425 crore debenture proceeds and Rs 51.10 crore preferential issue as funding sources. They will also watch the merger of wholly owned subsidiary Pakka Impact Limited into Pakka, for which the National Company Law Tribunal, Allahabad reserved its final order on 13 October 2026 and no financial effect has been recorded pending approval.