NRAIL - N R Agarwal Inds

📊 NSE: NRAIL 🏢 Paper 📅 Last Updated: 12/14/2025 10:11

💰 Financial Performance

Revenue Growth by Segment

Overall revenue grew 9% to INR 1,766.1 Cr in FY2023, but declined 26.8% to INR 1,293.1 Cr in FY2024 due to falling realizations in the Writing and Printing Paper (WPP) segment and the closure of Unit III. For FY2025, revenue is projected to grow 20-25% driven by the commencement of the new 1,50,000 MTPA duplex board plant.

Geographic Revenue Split

Domestic sales are concentrated in Western India (Gujarat/Maharashtra). Exports contribute between 10% and 20% of total revenue (specifically 14% in FY2023 and 11% in FY2024), providing a partial natural hedge against import costs.

Profitability Margins

Operating margins (OPBDIT/OI) fluctuated from 10.5% in FY2023 to 14.6% in FY2024, before dropping sharply to 7.1% in H1 FY2025 and further to 3.7% in Q1 FY2026. Net Profit Margin (PAT/OI) fell from 9.7% in FY2024 to 1.5% in H1 FY2025 due to high interest costs and low sales realizations.

EBITDA Margin

EBITDA margin stood at 14.6% in FY2024 but compressed to 7.1% in H1 FY2025. This 51% YoY margin compression was caused by higher expenses during the stabilization phase of the new plant and pressure from cheap imports affecting net sales realizations.

Capital Expenditure

Completed a major debt-funded capex of INR 650 Cr between FY2022-FY2024 for a new duplex board unit. Planned additional capex of INR 150 Cr in FY2025 for infrastructure development, with further debt-funded capex planned for FY2026 and FY2027.

Credit Rating & Borrowing

Long-term rating reaffirmed at [ICRA]A (Stable) and short-term at [ICRA]A1. Borrowing costs are impacted by a sharp decline in interest coverage from 17.9x in FY2024 to 1.9x in H1 FY2025, following the end of the moratorium on the INR 425 Cr term loan.

⚙️ Operational Drivers

Raw Materials

Wastepaper (75-80% of total raw material costs) and Coal (used for power generation).

Import Sources

Imports account for 56% to 62% of raw material requirements, sourced primarily from North America, West Asia, and Europe.

Key Suppliers

Sourced through various international and domestic indenting agents; specific supplier company names are not disclosed in the documents.

Capacity Expansion

Current total installed capacity is 4,40,000 MTPA across units in Vapi and Sarigam, Gujarat. This includes a recent expansion of 1,50,000 MTPA in the duplex paper board segment completed in March 2024.

Raw Material Costs

Wastepaper costs represent 75-80% of total RM costs. Margins improved in FY2024 as wastepaper prices fell faster than finished paper realizations, but margins were squeezed in FY2025 as realizations dropped while input costs remained volatile.

Manufacturing Efficiency

Maintained healthy capacity utilization levels of ~100% in FY2024. Efficiency was temporarily impacted in Q1 FY2026 by a 20-day maintenance shutdown in Unit I.

Logistics & Distribution

Distribution is managed through an established network of agents and dealers focused on Western India, serving FMCG and pharmaceutical packaging needs.

📈 Strategic Growth

Expected Growth Rate

20-25%

Growth Strategy

Ramping up the new 1,50,000 MTPA duplex board facility to capture demand in e-commerce and pharma packaging; shifting product mix toward value-added premium products; and implementing price hikes (undertaken in July 2025) to recover margins.

Products & Services

Duplex paper boards (used for packaging boxes), Writing and Printing Paper (WPP), and premium value-added paper products.

Brand Portfolio

N R Agarwal Industries Limited (NRAIL).

New Products/Services

Focusing on premium duplex boards from the new Unit IV, expected to contribute to a 20-25% revenue jump in FY2025.

Market Expansion

Increasing market share in the duplex board segment by doubling capacity; targeting growth in export markets to utilize new capacity.

Market Share & Ranking

Strong presence in Western India; recent capacity expansion of 1,50,000 MTPA is intended to significantly increase domestic market share in the board segment.

🌍 External Factors

Industry Trends

The industry is shifting toward packaging (duplex boards) due to e-commerce growth, while the Writing and Printing Paper (WPP) segment faces disruption from increasing digitization.

Competitive Landscape

Faces competition from domestic players and cheap international imports, particularly in the WPP and board segments.

Competitive Moat

Moat is based on a 30-year track record, established distribution network in Western India, and economies of scale from a 4,40,000 MTPA capacity. Sustainability is challenged by the commodity nature of paper and lack of pricing power against imports.

Macro Economic Sensitivity

Highly sensitive to domestic GDP growth as paper demand is linked to FMCG and industrial activity. Low per-capita paper usage in India provides a long-term structural growth tailwind.

Consumer Behavior

Shift toward eco-friendly packaging and e-commerce is driving demand for duplex boards, while digital adoption is reducing demand for traditional printing paper.

Geopolitical Risks

Vulnerable to trade regulations affecting wastepaper availability and global coal prices due to high import reliance.

⚖️ Regulatory & Governance

Industry Regulations

Subject to wastepaper import regulations and environmental pollution norms for paper mills in Gujarat.

Environmental Compliance

Exposed to environmental risks inherent in paper manufacturing (water usage, chemical handling); company invests in training to manage hazardous chemicals.

Taxation Policy Impact

Effective tax rate not specified, but Profit Before Tax fell from INR 137.6 Cr (FY2024) to INR 15.9 Cr (FY2025).

Legal Contingencies

Not disclosed in available documents; however, internal financial controls were reported as operating effectively as of March 31, 2025.

⚠️ Risk Analysis

Key Uncertainties

Volatility in wastepaper prices (80% of RM) and the ability to ramp up the new facility to service debt. A DSCR of less than 2.0x is a negative rating trigger.