💰 Financial Performance

Revenue Growth by Segment

Total revenue grew 9% YoY to INR 370 Cr in FY25 from INR 339 Cr in FY24, primarily driven by the Kraft Paper segment which includes Corrugation, Fluting Paper, and Carry Bag Paper. The company achieved a 4-year revenue CAGR of 33%.

Geographic Revenue Split

The company serves both domestic and international markets; however, specific percentage splits per region were not disclosed in the available documents.

Profitability Margins

Gross Profit stood at INR 122 Cr (33% margin) in FY25. Net Profit Margin improved slightly to 6.2% in FY25 from 6.1% in FY24, with PAT reaching INR 23 Cr, an 11% YoY increase.

EBITDA Margin

EBITDA margin improved to 13.5% in FY25 compared to 11.9% in FY24. EBITDA grew 24% YoY to INR 50 Cr, driven by operational improvements and cost control measures.

Capital Expenditure

The company has planned a capital expenditure of INR 50 Cr for setting up a 9 MW Waste-to-Energy power plant, funded through IPO proceeds of INR 67.54 Cr raised in May 2025.

Credit Rating & Borrowing

Total borrowings increased to INR 223 Cr in FY25 from INR 189 Cr in FY24. The Interest Coverage Ratio stood at 2.98, a slight decline from 3.05 YoY, indicating a stable but pressured ability to service debt.

⚙️ Operational Drivers

Raw Materials

Key raw materials include wood pulp, recycled/waste paper, and chemicals. Cost of Goods Sold (COGS) accounted for INR 248 Cr, representing 67% of total revenue in FY25.

Import Sources

The company sources recycled paper and wood pulp from both domestic and international markets to mitigate supply chain risks, though specific countries were not listed.

Capacity Expansion

Current capacity includes PM-1 (150 TPD) and PM-2 (250 TPD). PM-1 operates at 86% utilization (130 TPD) and PM-2 at 90% utilization (225 TPD). Total production in FY25 was 1.08 lakh metric tons at 82% overall utilization.

Raw Material Costs

Raw material costs (COGS) rose 11% YoY to INR 248 Cr. The company utilizes a procurement strategy focused on recycled inputs to manage price volatility in global wood pulp markets.

Manufacturing Efficiency

Manufacturing efficiency is driven by high capacity utilization (82% overall) and the integration of automation to optimize production costs and reduce waste.

Logistics & Distribution

The company is optimizing its supply chain and procurement processes to improve efficiency and reduce distribution costs, though specific INR values were not provided.

📈 Strategic Growth

Expected Growth Rate

7-8%

Growth Strategy

Growth will be achieved through a transition to 100% green energy via the 9 MW RDF plant (reducing costs), entering the B2C segment to connect directly with consumers, and expanding the product portfolio into specialty paper grades for international markets like Dubai, Cairo, and Kenya.

Products & Services

Kraft paper, Corrugation paper, Fluting paper, and Carry bag paper.

Brand Portfolio

Nikita Papers.

New Products/Services

The company is developing advanced Kraft paper grades and specialty segments to cater to specific brand requirements in the B2C market.

Market Expansion

Targeting global expansion through exhibitions in Dubai, Cairo, Dhaka, Saudi Arabia, and Kenya to increase international sales volumes.

Market Share & Ranking

The Kraft paper market is projected to grow at a 10% CAGR to 12.5 million tons by FY30; Nikita aims to capitalize on this as a leading name in recycled paper.

Strategic Alliances

The company is working with brands to certify their paper quality, which helps in enrolling converters that supply to those specific brands.

🌍 External Factors

Industry Trends

The industry is shifting toward sustainable packaging and green energy. The Kraft paper market is growing at 10% CAGR, and Nikita is positioning itself by transitioning to 100% renewable power within 18 months.

Competitive Landscape

Faces competition from both domestic and international paper manufacturers and substitute packaging products influencing market share and pricing.

Competitive Moat

The company's moat is built on 35+ years of industry experience and a cost leadership strategy derived from captive waste-to-energy power generation, which provides a sustainable competitive advantage over non-integrated peers.

Macro Economic Sensitivity

The company is sensitive to global economic uncertainties and inflationary pressures which affect commodity prices and interest rates (Interest Coverage Ratio at 2.98).

Consumer Behavior

Increasing consumer demand for sustainable and recycled packaging products is driving the shift toward Kraft paper over plastic-based alternatives.

Geopolitical Risks

Geopolitical tensions influence volatile commodity prices and trade regulations, which could impact the cost of imported raw materials and export profitability.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by pollution control standards and sustainable sourcing requirements. The company has integrated sustainability into its business model to mitigate regulatory risks.

Environmental Compliance

The company must adhere to strict environmental norms regarding emissions and effluent treatment; non-compliance poses risks of penalties and operational disruptions.

Taxation Policy Impact

Tax expenses for FY25 were INR 10 Cr, representing an effective tax rate of approximately 30% on PBT of INR 33 Cr.

Legal Contingencies

The Secretarial Audit for FY25 reported no significant instances of non-compliance with the Companies Act or SEBI regulations; no specific pending court case values were disclosed.

⚠️ Risk Analysis

Key Uncertainties

Raw material price volatility and global economic shifts are the primary uncertainties, with potential to impact margins by 5-10% if not managed through cost-plus pricing or efficient sourcing.

Geographic Concentration Risk

The company operates primarily from Shamli, Uttar Pradesh, indicating a concentration of manufacturing assets in a single region.

Third Party Dependencies

Dependency on waste paper suppliers and chemical vendors; the company is mitigating this through supplier diversification.

Technology Obsolescence Risk

The company mitigates technology risk by investing in modern paper machines (PM-2 installed in 2021) and digital transformation for process optimization.

Credit & Counterparty Risk

Debtors turnover remained stable at 3.11, indicating consistent collection cycles, though the corrugation segment recycling receipts can take longer periods.