Nath Industries - Nath Industries
Financial Performance
Revenue Growth by Segment
Total revenue grew 32% YoY to INR 424 Cr in FY2025 from INR 321 Cr in FY2024. The Paper division contributes approximately 67-70% of revenue, while the Chemicals division contributes the remaining 30-33%. Revenue is projected to grow another 10% to INR 470 Cr in FY2026 due to increased capacity utilization and better realisations.
Geographic Revenue Split
Not specifically disclosed in available documents, though the company imports a large part of its wastepaper requirements, indicating significant international supply chain exposure.
Profitability Margins
Operating margins improved from 4.9% in FY2024 to an estimated 6.5% in FY2025. H1 FY2026 operating margins reached 6.1% compared to 5.4% in H1 FY2025. PAT margin increased significantly from 0.15% in FY2024 to 2.3% in FY2025, driven by better fixed cost absorption and power cost savings.
EBITDA Margin
Operating margin (EBITDA proxy) improved by 160 basis points YoY to 6.5% in FY2025. This was driven by the commencement of a co-generation plant and solar power utilization, which reduced energy overheads despite rising material costs.
Capital Expenditure
The company undertook debt-funded capex in FY2024 which led to a temporary moderation in debt metrics. Future capex is described as moderate and expected to be funded through internal cash accruals of INR 18-20 Cr per year.
Credit Rating & Borrowing
Crisil reaffirmed 'Crisil BBB/Stable/Crisil A3+' ratings. Borrowing includes a working capital limit of INR 60 Cr (87-90% utilized) and interest-free sales tax loans of INR 31 Cr from the government.
Operational Drivers
Raw Materials
Key raw materials include wastepaper (primary input for paper), sulphur, chlorine, and other chemicals. Wastepaper represents a significant portion of the cost structure and is largely imported.
Import Sources
Not specifically disclosed by country, but documents confirm a 'large part' of wastepaper requirements are imported, making the company vulnerable to global demand-supply and forex fluctuations.
Capacity Expansion
Current revenue growth is driven by increased capacity utilization. A 3.3 MW turbine was installed in the Chemical unit to achieve power self-sufficiency. Specific MTPA capacity figures were not provided.
Raw Material Costs
Raw material costs rose in FY2025 due to volatility in wastepaper prices. The company manages this through a partial pass-through mechanism to customers, though margins remain susceptible to sharp price spikes.
Manufacturing Efficiency
Efficiency is improving through better fixed cost absorption as revenue scales from INR 321 Cr to a projected INR 470 Cr. The chemical division is now self-sufficient in power.
Strategic Growth
Expected Growth Rate
9-10%
Growth Strategy
Growth will be achieved through increased capacity utilization, improved realisations in both chemical and paper segments, and cost-side benefits from the new co-generation and solar power plants. The company is leveraging its established market position in niche segments like thermal and absorbent paper.
Products & Services
Laminate paper, absorbent paper, speciality paper, core board paper, tube grade paper, thermal paper (ATM slips), sulphuric acid, sulphur dioxide, oleum, and chloro-sulphuric acid.
Brand Portfolio
Nath Industries (formerly Rama Pulp and Papers).
New Products/Services
Not specifically detailed, but the company focuses on high-value niche products like thermal paper for ATM slips and absorbent paper.
Market Expansion
The company is focusing on deepening its presence in industries such as textiles, banking (ATM slips), and real estate (laminates).
Market Share & Ranking
The company is a leader in tube grade paper and thermal paper and is one of the few players in the absorbent paper segment in India.
Strategic Alliances
The company was formed through the amalgamation of Nath Pulp and Paper Mills Ltd (NPPL) and Nath Industrial Chemicals Ltd (NICL) with Rama Pulp and Papers Limited.
External Factors
Industry Trends
The paper and chemical industries are commoditized and cyclical. Future outlook is stable with a trend toward self-sufficiency in power to protect margins from utility price hikes.
Competitive Landscape
Operates in a commoditized market but maintains an edge in speciality grades where there are fewer players (e.g., absorbent paper).
Competitive Moat
Moat is built on niche product leadership (thermal/absorbent paper) and operational synergies from the paper-chemical merger. Sustainability is supported by long-term client relationships exceeding 20 years.
Macro Economic Sensitivity
Highly sensitive to real estate cycles (for laminate paper) and global commodity prices (for wastepaper and sulphur).
Consumer Behavior
Increased demand for ATM slips and automated banking services supports the thermal paper division.
Geopolitical Risks
Global demand-supply scenarios for wastepaper directly impact input costs; trade disruptions could affect the 70% of revenue tied to the paper segment.
Regulatory & Governance
Industry Regulations
Subject to standard manufacturing and pollution norms for chemical and paper industries; secretarial audit confirms compliance with the Companies Act 2013 and SEBI regulations.
Environmental Compliance
The company has invested in solar power and co-generation plants to meet energy needs and likely comply with evolving environmental norms.
Taxation Policy Impact
The company benefits from interest-free sales tax loans of INR 31 Cr from the government, which acts as a long-term fiscal incentive.
Legal Contingencies
The company has a pending excise duty liability. Other than this, there are no pending litigations that would materially impact the financial position.
Risk Analysis
Key Uncertainties
Volatility in wastepaper prices and demand cyclicality in the real estate sector are the primary risks. A fall in operating margins below 4% is a key downward rating sensitivity.
Geographic Concentration Risk
Not disclosed, but manufacturing is centered in Maharashtra (Aurangabad and Mumbai).
Third Party Dependencies
High dependency on global wastepaper suppliers; any disruption in import channels would halt the paper division's production.
Technology Obsolescence Risk
The company is mitigating tech risk by upgrading to self-sufficient power generation (3.3 MW turbine) and diversifying into speciality papers like thermal paper.
Credit & Counterparty Risk
Receivables quality is not explicitly detailed, but the 'Adequate' liquidity rating suggests manageable counterparty risk.