Q2 FY26 Results: Adverse impact of GST rate, imports, high wood prices and subdued realizations weighed on JK, TNPL and ITC-PSPD’s performance

Q2 FY26 Results: Adverse impact of GST rate, imports, high wood prices and subdued realizations weighed on JK, TNPL and ITC-PSPD’s performance

- The performance of the JK Paper’s packaging conversion subsidiaries improved during the quarter
- Initial signs of moderation in wood prices with improving availability
- More focus is being given by TNPL for increasing the market share of higher contribution products as a measure to improve the profitability

The Pulp and Paper Times

India’s paper industry experienced a tough Second quarter of FY25-26, grappling with rising raw material costs, a surge in imports, and falling market prices. Major companies such as JK Paper Ltd., Tamil Nadu Newsprint and Papers Ltd. (TNPL), and ITC-PSPD. posted mixed financial results, with profitability strained by elevated wood prices and reduced realizations. Nevertheless, these firms are maintaining their focus on enhancing operational efficiency, advancing sustainability efforts, and pursuing strategic growth initiatives to adapt to the shifting market environment.

JK Paper Ltd., (JKPL) one of India’s largest Paper & Packaging Solutions Companies, recorded its highest consolidated Turnover of Rs. 1,870.34 Cr with EBITDA of Rs.243.66 Cr and Profit after Tax (PAT) of Rs.74.75 Cr, for the Quarter ended September,2025. For the Half Year ended September, 2025, the Consolidated Turnover, EBITDA and PAT stood at Rs.3,655.22 Cr, Rs.515.86 Cr and Rs.155.98 Cr respectively.

Commenting on the results, Shri Harsh Pati Singhania said, “Paper and Paper Board segment continue to face challenges arising from higher wood cost and lower sales realisation due to cheap imports. This has adversely impacted profitability across the product segments despite increased sales volume over the corresponding period. The performance of the Company’s packaging conversion subsidiaries improved during the quarter.”

He further added “recent changes in GST rates have also had an adverse impact on the Paper & Board Industry. While GST on Paper and Boards has gone up from 12% to 18%, it has been reduced to 5% on converted products (Mono Cartons & Corrugated Boxes), resulting in inverted duty structure. In the case of Notebooks GST has become Nil, resulting in manufacturers in this sector being denied input credit. The disruption caused due to these GST changes has serious implications across the Paper and Board value chain, resulting in more expensive input costs for convertors, blockage of working capital, besides opening up the market to further cheap imports which do not have to bear the embedded taxes in domestic Paper and Board supplies. Representations have been made by Indian Paper Manufacturers Association (IPMA) and the converting industry regarding this anomaly to the Government and GST Council.”

ITC-PSPD

ITC's Paperboards and Specialty Papers Division (ITC-PSPD) has disclosed its financial results for the second quarter of FY25-26, revealing a 5% year-on-year increase in revenue, totaling INR 2,220 crore. Competitive pressures from low-priced Chinese supplies in global markets, sluggish domestic demand, and high wood prices & subdued realisation are creating a challenging environment for the paper sector, ITC said in its media release.

ITC-PSPD has reported a PAT of INR 191 crore for Q2 FY26, reflecting a 21.2% year-on-year decline, compared to INR 242 crore earned by the paper segment in Q2 FY25. However, paper segment performance improves sequentially with profit up 17% (margins up 90 bps QoQ)

Paperboards, Paper and Packaging Segment remains impacted due to Low-priced supplies, subdued realisations & elevated wood prices; Initial signs of moderation in wood prices with improving availability.

The Business continues to focus on accelerating plantations in core areas, developing new areas, collaborating with other wood-based industries and implementing satellite-based plantation monitoring systems, among others. The sustainable paperboards/packaging solutions portfolio maintained its strong growth momentum leveraging cutting-edge innovation platforms and has grown to 2.6x over last 4 years.

The Education and Stationery Products Business of ITC sustained its leadership position amidst heightened competitive intensity especially from regional/local players on the back of sharp reduction in paper prices as a result of dumping of low-priced paper imports. The Business continued its focus on portfolio premiumisation & innovation and launched ‘Classmate Pulse’ notebooks with detachable separators in select markets.

ITC-PSPD continues to focus on accelerating plantations in core areas, developing new areas, collaborating with other wood-based industries and implementing satellite-based plantation monitoring systems, among others. Representations continue to be made at appropriate forums for introduction of trade remedies to safeguard domestic industry.

Tamil Nadu Newsprint and Papers Ltd 

TNPL reported total revenue of Rs.1128.39 Crore for the quarter ended 30th September, 2025 as against Rs.927.87 Crore in the corresponding quarter of the previous year. 

After providing Rs.78.42 Crore towards depreciation & amortization and Rs.50.02 Crore for finance cost, the company earned Profit before tax of Rs.12.93 Crore for the quarter ended 30th September, 2025 as against a profit of Rs.5.05 Crore in the corresponding quarter of the previous year. Profit after tax is Rs.8.10 Crore as against a profit of Rs.2.59 Crore in the corresponding quarter of the previous year.

The company reported total revenue of Rs.2282.94 Crore for the half year ended 30 September, 2025 as against Rs.2057.71 Crore in the corresponding period of the previous year. The company earned Profit before Interest, Depreciation and Tax (EBITDA) of Rs.255.29 Crore during the half-year ended 30th September, 2025 as against Rs.299.28 Crore during the corresponding period of the previous year. After providing Rs.155.75 Crore towards depreciation & amortization and Rs.98.43 Crore for finance cost, the company earned a Profit before tax of Rs.1.11 Crore as against a profit of Rs.39.10 Crore in the corresponding period of previous year. Profit after tax is Rs.0.69 Crore as against a profit of Rs.24.49 Crore in the corresponding period of the previous year.

"Overall market demands remain subdued with import of paper at lower prices etc., and the recent GST 2.0 rate changes with regard to Paper Industries have created few uncertainty in the marketplace which we expect to get settled over time" TNPL said.

TNPL has gone for product upgradation and improvisation with renewed focus on product quality and customer service. Also, more focus is being given for increasing the market share of higher contribution products as a measure to improve the profitability.

Paper production for the quarter ended 30th September 2025 is 107094 MT against 106143 MT in the corresponding quarter of the previous year. Packaging Board production is 50360 MT against 44884 MT in the corresponding quarter of the previous year.
 

Web Title: Q2 FY26 Results: Adverse impact of GST rate, imports, high wood prices and subdued realizations weighed on JK, TNPL and ITC-PSPD’s performance