Why Did JK Paper Witness a Dip in Profit Despite Revenue Growth in Q2 FY26?
About JK Paper and its business overview
JK Paper, one of India’s leading producers of writing and printing paper, reported its Q2 FY26 consolidated results showing steady revenue growth but margin pressure due to input cost inflation. The company operates three paper manufacturing units and has diversified into packaging boards to offset cyclical paper fluctuations.
Despite moderate demand recovery in institutional and packaging segments, profitability dipped due to higher wood and chemical prices. Management remains focused on cost optimization and capacity enhancement.
Financial highlights of Q2 FY26
| Metric | Q2 FY26 | YoY Change | QoQ Change |
| Revenue | ₹1,870 Cr | ↑ 5% | ↑ 5% |
| EBITDA | ₹345 Cr | ↓ 3% | ↓ 3% |
| EBITDA Margin | 18.49% | ↓ 1.66% | ↓ 1.56% |
| Net Profit | ₹77.88 Cr | ↓ 40% | ↓ 9% |
Revenue improved mainly due to a stronger product mix and increased packaging board demand. However, margins compressed as input prices and maintenance costs rose during the quarter.
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Peer comparison
| Company | Revenue Growth (YoY) | EBITDA Margin |
| JK Paper | 5% | 18.5% |
| West Coast Paper | 7% | 19% |
| Andhra Paper | 6% | 16% |
| TNPL | 4% | 17% |
Peers also faced raw material cost pressures, but efficient sourcing and scale advantages kept their margins relatively stable. JK Paper’s packaging board segment is expected to narrow this gap in coming quarters.
Strengths and Weaknesses
✅ Strong brand equity and leading market share in premium paper categories.
✅ Diversification into packaging boards to offset cyclical risk.
⚠️ Rising input costs impacting margins.
⚠️ Dependence on cyclical demand from education and corporate printing sectors.
Opportunities and Threats
💡 Increasing demand for eco-friendly packaging offers growth opportunities.
💡 Government policy promoting sustainable paper products provides long-term support.
📉 Risk of cheap imports from ASEAN nations under free trade agreements.
📉 Global pulp price volatility could keep margins uncertain.
Valuation and investment view
At current valuations, JK Paper trades at a reasonable earnings multiple compared to peers, with stable dividend yield. Long-term investors may consider accumulating on declines, given structural demand from packaging and paperboard segments.
- Short Term: Watch for cost normalization and raw material price trends.
- Medium Term: Margin recovery expected with input cost moderation.
- Long Term: Packaging diversification ensures sustainable growth trajectory.
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Indian-Share-Tips.com’s market analysts believe JK Paper remains well-positioned in a consolidating industry. Explore more research-backed insights at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related queries on JK Paper earnings and valuation
- What led to JK Paper’s profit decline despite revenue growth?
- How does JK Paper’s packaging board segment aid diversification?
- Is the current valuation of JK Paper attractive for long-term investors?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
