Navneet Education focuses on brand building, curriculum-led growth, and export recovery; expects stationery margins to improve in FY27

Navneet Education focuses on brand building, curriculum-led growth, and export recovery; expects stationery margins to improve in FY27

- The difference between volume and value growth was primarily due to declining global paper prices and aggressive pricing pressure from unorganized regional competitors

The Pulp and Paper Times

Mr. Sunil Gala, Managing Director of Navneet Education Limited, addressed investors during the Q4 FY26 conference call, discussing the company's domestic and export businesses, future growth strategy, and profitability outlook.

Presenting the company's financial and strategic performance for Q4 and FY25-26, Mr. Gala stated that Navneet demonstrated resilience despite intense regional competition, changing trends in the stationery market, global trade disruptions arising from geopolitical tensions, and tariff-related challenges in the United States.

During Q4 FY26, revenue remained largely stable at INR 394 crore, compared with INR 389 crore in the corresponding period last year. However, full-year revenue declined to INR 1,683 crore from INR 1,733 crore in FY25, reflecting the impact of global macroeconomic headwinds that led to a 3% contraction in the company's top line. Despite this, the company’s domestic businesses delivered stronger operational momentum.

Publication Business Positioned for Curriculum-Driven Growth

Navneet’s publication division reported stable full-year revenue of INR 719 crore. Looking ahead, the company expects a significant growth phase between FY27 and FY29 as major curriculum revisions are scheduled to be implemented in Maharashtra and Gujarat, where Navneet maintains a strong market presence.

According to Mr. Gala, previous curriculum transition cycles have historically generated healthy double-digit growth for the publication business. The company believes it is well positioned to capitalize on this opportunity, which is also expected to support operating margin expansion over the coming years.

Domestic Stationery Volumes Grow Despite Pricing Pressure

The domestic stationery business recorded a 4% increase in value terms to INR 366 crore, while volumes grew by 6%. Mr. Gala explained that the difference between volume and value growth was primarily due to declining global paper prices and aggressive pricing pressure from unorganized regional competitors.

As raw material costs declined, product prices were also reduced, resulting in stronger volume growth relative to revenue growth.

Profitability in the domestic stationery segment was affected by several factors, including the exemption of paper stationery products from GST. The change prevented the company from claiming input tax credits on inventory held at the time of implementation. In addition, uncertainty among vendors regarding GST applicability during the initial months created operational challenges, although Navneet continued procurement to maintain business continuity.

Aggressive Brand Investments and Product Diversification

To strengthen its competitive position, Navneet has adopted a two-pronged strategy.

The first focuses on strengthening its brand through increased nationwide branding initiatives and expansion of management and manpower resources to compete more effectively against regional players.

The second pillar is portfolio diversification. The company is accelerating growth in higher-margin non-paper stationery products and expanding its digital commerce presence. While these strategic investments are expected to affect domestic margins in the short to medium term, management considers them essential for securing long-term market leadership.

Mr. Gala emphasized that Navneet is transitioning from a traditional paper stationery manufacturer into a diversified, digitally focused consumer brand. He noted that sustainable long-term growth will increasingly depend on creating stronger brand pull, particularly in non-paper stationery categories where brand recognition remains relatively limited.

As a result, the company plans to invest aggressively in building awareness for both its paper and non-paper stationery brands.

Export Business Impacted by U.S. Tariffs

Navneet’s export stationery revenue declined by 10%, resulting in a 3% reduction in divisional EBITDA margins for the stationery segment.

Mr. Gala attributed the decline primarily to tariff-related challenges in the United States. To maintain business continuity and protect market share, the company deliberately reduced product prices for customers, allowing them to partially absorb the impact of higher tariffs.

A favorable exchange rate movement provided a partial offset, contributing approximately a 4% cushion against the pricing reductions. Nevertheless, export revenues and margins remained under pressure during the year.

Management stated that preserving long-term customer relationships was a priority despite the short-term impact on profitability. With improved clarity on tariff policies, Navneet now expects export revenues to gradually recover during FY27.

Gujarat Plant and Non-Paper Expansion Strategy

Discussing future investments, Mr. Gala stated that the company’s paper manufacturing facilities are operating at approximately 80% annual capacity utilization, despite the seasonal nature of the business. He noted that Navneet also outsources a considerable portion of production during peak demand periods.

For non-paper stationery products, the company has established a manufacturing facility in southern Gujarat, primarily focused on plastic-based products. Additional product categories planned under the non-paper portfolio will initially be outsourced and marketed under the Navneet brand rather than requiring immediate manufacturing investments.

Margin Outlook for FY27

Responding to investor questions regarding profitability, particularly in light of the planned INR 30–40 crore annual advertising and brand-building expenditure, Mr. Gala said the company expects stationery EBITDA margins to improve as market conditions normalize.

He indicated that the stationery business is expected to achieve approximately 9% EBITDA margin in FY27, even after accounting for the higher branding investments. Margins are expected to improve further to 9.5–10% in subsequent years, compared with the historical level of around 13% achieved under normal operating conditions.

Mr. Gala acknowledged that export markets have faced recurring external challenges over the last two years, often beyond the company’s control. He noted that excessive dependence on exports for growth and profitability may become increasingly risky, reinforcing the importance of strengthening Navneet’s position in the domestic market through sustained brand investments and category expansion.
 

Published at : Jul 17, 2026 06:25 AM (IST)

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