FLAIR - Flair Writing Industries Limited Share Price

Flair Writing Industries Limited has provided a positive outlook for FY '26, highlighting significant revenue growth and operational developments. In Q1 FY '26, the company reported a revenue of INR 288.5 crores, reflecting a year-on-year increase of 16.8%. The gross profit was recorded at INR 144.2 crores, with a gross profit margin of 50%. The EBITDA for the quarter reached INR 49.5 crores, indicating a growth of 17.9% year-on-year, while the profit after tax was INR 29 crores, representing a 10.5% increase.

Management reaffirmed their growth guidance of a 15% to 16% CAGR over the medium term. They noted that the strong performance is driven by the Own Brand segment, which grew by 23% year-on-year, reaching INR 264 crores. The Creative segment achieved an impressive 77% growth with revenues of INR 65 crores for the quarter, bolstered by new product innovations.

Key forward-looking points include the ongoing construction of a new manufacturing facility in Valsad, which spans 2 lakh square feet and involves an investment in 60 new injection molding and assembly machines. The facility is expected to enhance production capacity for both the pen and Creative segments.

Management emphasized the importance of in-house manufacturing, which has improved margins and operational control, particularly in the Creative and steel bottles segments. As part of sustainability efforts, the company installed a 1.85 megawatt solar system at a cost of INR 4.5 crores and introduced practices like rainwater harvesting and robust effluent treatment plants.

In conclusion, Flair Writing Industries is well-positioned for continued growth, with multiple product launches, an expanding manufacturing base, and solid guidance for revenue and margins in the upcoming quarters.

1. Question: While you've seen a great amount of growth in Creatives, your OEM business seems to be down on a Q-o-Q basis. Could you give some color on that?
   Answer: Yes, for the OEM front, we haven't factored in any declines into our growth projections. Domestic OEM has seen challenges, but our export OEM has stabilized and is expected to maintain consistent levels going forward.

2. Question: On the Creative side, you've guided for 40% growth this year but started strong at 77%. What's driving this growth, and will you revise your numbers?
   Answer: The 77% growth in Q1 stems from our bolstered in-house manufacturing capacity and innovative product launches. Moving forward, we expect to streamline this at around 45%-50% growth but will adjust our guidance based on market performance.

3. Question: Regarding employee expenses, what's the run rate likely to stabilize at as we move forward?
   Answer: Our employee expenses have risen due to new hires and increases in salary, particularly in our sales, marketing, and manufacturing teams. We expect this number to stabilize moving forward and won't be increasing significantly from current expenditures.

4. Question: On the steel bottles front, is this purely driven by the domestic market? Any visibility from the export OEM side?
   Answer: For steel bottles, our primary focus remains on the domestic market. However, we are exploring new avenues for export and are optimistic about gaining traction internationally in the coming quarters.

5. Question: The pens segment has grown by just 3%, while guidance was around 9-10%. Can you still achieve those figures?
   Answer: We still stand by our guidance of high single-digit growth in the pens segment for the year. Despite the drag from OEM, the traction in domestic and export markets remains strong, and we expect this will drive growth in the upcoming quarters.

6. Question: Given that Own Brand has increased its contribution, why have margins not improved in line?
   Answer: While our Own Brand contribution increased, entering new Creative categories meant sacrificing some margin for market share. However, we are maintaining overall EBITDA level margins despite the changes.

7. Question: What are the expectations for the steel bottles segment, given stagnation in recent quarters?
   Answer: We remain committed to our 50% CAGR growth target for the steel bottles segment. Increased traction in both volume and value is anticipated as we expand our product range and address market demand.

8. Question: So if you are aiming for mid-teens growth, can we expect a 200 bps margin improvement within 2-3 years?
   Answer: Yes, with a sustained mid-teens growth rate, we foresee a 200 bps margin improvement over the next 2-3 years, primarily driven by increased in-house manufacturing in the Creative segment.

9. Question: Can you elaborate on the distribution for the Creative segment and future growth potential?
   Answer: Currently, we reach 68,000 outlets for our Creative products. Our focus is to enhance each outlet's throughput before expanding further. The growth potential remains significant across the stationery market as we continue to innovate and expand our product offerings.

10. Question: What products are standing out in the Creative segment for growth?

Answer: While we prefer not to disclose specific product data for competitive reasons, our overall product portfolio has received positive feedback, and we expect many to contribute meaningfully to our growth trajectory this year.