Andhra Paper Profit Plunges 86% Despite Revenue Rise

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AuthorAnanya Iyer|Published at:
Andhra Paper Profit Plunges 86% Despite Revenue Rise
Overview

Andhra Paper Limited reported mixed Q3 FY26 results. While revenue grew 8.54% YoY to ₹418.69 Cr, net profit after tax (PAT) declined 15.45% to ₹9.85 Cr. The nine-month period saw a drastic 86.53% PAT drop to ₹10.89 Cr. Rising total expenses, up 13.36% in Q3, and significant adverse swings in tax expenses significantly impacted profitability, overshadowing revenue gains. The company also recognized the incremental impact of the new unified labour codes.

📉 The Financial Deep Dive

The Numbers:
Andhra Paper Limited announced its unaudited financial results for the quarter and nine months ended December 31, 2025 (Q3 FY26 and 9M FY26).

  • Revenue: The company reported revenue from operations of ₹418.69 crore for Q3 FY26, an increase of 8.54% year-on-year (YoY) from ₹385.70 crore in Q3 FY25. For the nine months ended December 31, 2025, revenue stood at ₹1,174.19 crore, a 3.55% rise YoY from ₹1,133.87 crore in the corresponding period last fiscal.

  • Profit After Tax (PAT): Despite revenue growth, profitability saw a marked decline. For Q3 FY26, net profit after tax was ₹9.85 crore, a decrease of 15.45% YoY from ₹11.65 crore in Q3 FY25. The nine-month period exhibited a severe profit contraction, with net profit declining by 86.53% YoY to ₹10.89 crore from ₹81.06 crore in the previous year.

  • Earnings Per Share (EPS): Consequently, the Earnings Per Share (EPS) for Q3 FY26 was ₹0.50, down from ₹0.59 in the prior year's comparable quarter. The nine-month EPS dropped significantly to ₹0.55 from ₹4.08 in the previous year.

The Quality:
The core issue lies in expenses outpacing revenue growth, coupled with significant tax expense movements.
  • Expense Escalation: Total expenses for Q3 FY26 increased by 13.36% YoY to ₹435.23 crore, significantly higher than the revenue growth. For the nine months, total expenses rose by 12.13% YoY to ₹1,226.72 crore.

  • Margin Compression: This expense escalation, alongside fluctuations in other income and substantial movements in tax expenses, critically impacted net profit margins. The total tax expense for Q3 FY26 was ₹23.30 crore, a sharp reversal from a tax credit of ₹(74.86) crore in Q3 FY25. This swing alone contributed significantly to the PAT decline.

  • Regulatory Impact: The company also noted the recognition of the incremental impact of the Government of India's consolidation of labour legislations into four unified labour codes, effective from November 21, 2025. This factor has been incorporated into the current quarter's and nine-month period's results.

The Grill:
No forward-looking guidance, outlook, or detailed balance sheet and cash flow information was provided in this announcement, limiting visibility into future performance drivers or management's strategic response to current cost pressures and profitability trends. The statutory auditors, M/s. MSKA & Associates LLP, have issued an unmodified limited review report.

🚩 Risks & Outlook

  • Specific Risks: The primary risks revolve around the continued escalation of operating expenses relative to revenue, the volatile impact of tax provisions (especially given the recent swing), and the potential ongoing adjustments related to the new labour codes. The lack of forward guidance means management's expectations for mitigating these pressures are unclear.
  • The Forward View: Investors will need to closely monitor the company's ability to control its cost base and manage tax liabilities in the upcoming quarters. The long-term impact of the unified labour codes on operational costs and employee relations will also be a key watchpoint. Without explicit guidance, the outlook remains uncertain, with profitability heavily dependent on cost management and potential price increases in the paper market.
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