Flair Writing Industries Ltd (NSE: FLAIR) Q1 2026 Earnings Call dated Jul. 29, 2025
Corporate Participants:
Unidentified Speaker
Mayur Gala — Chief Financial Officer
Sumit Rathod — Whole-time Director
Vimalchand Jugraj Rathod — Managing Director
Alpesh Porwal — Chief Financial Officer
Mohit Rathod — Whole-time Director
Analysts:
Unidentified Participant
Sneha Talreja — Analyst
Aradhana Jain — Analyst
JV Shekhawat — Analyst
Alia Sagar Sakira — Analyst
Rajesh Josi — Analyst
Resham Mehta — Analyst
Kishore Kumar — Analyst
Dipesh Sanchiti — Analyst
Presentation:
operator
Thank you. Good afternoon everyone. Welcome to the Flare Writing Industries Q1FY26 earnings conference call today. On the call we have Mr. Vimal Chandra, Managing Director, Mr. Mohit Rathor, Whole Time Director, Mr. Sumit Rathor, Whole Time Director and Mr. Alpesh Porwal, the Chief Financial Officer. A short disclaimer before we start this call, this call will contain some forward looking statements which may be based upon our belief, opinion and expectations of the company as of today. These statements are not a guarantee of future performance and will involve unforeseen risks and uncertainties. With that, I would now like to hand over the conference call to Mr.
Vimalchandrasod, the managing Director for his opening remarks. Thank you. And over to you sir.
Vimalchand Jugraj Rathod — Managing Director
Good afternoon everyone. I want to express my gratitude to all the participants who have joined the call. I hope everyone had the opportunity to go through our investor presentation and press release that have been uploaded on the Exchange. We delivered strong revenue growth in Q1 FY26 mainly driven by our own brand portfolio. It was heartening to see that both domestic and export market demonstrated robust demand of our branded products. This quarter has been particularly a standout quarter for our creative segment as new products innovations over the past year are finding their footholds in the market while the existing product portfolio continues to mature.
Additionally, remfab in house manufacturing of creative products have allowed us to respond more effectively to growing consumer demand and strengthen our position in the segment. We achieved broader segment growth in all the three business verticals with new product launches catering to a wide spectrum of customers. Our capex timeline remains on track with construction already underway at our new manufacturing facilitated world class spanning around 2 lakh square feet. As part of this expansion, we have placed orders of 60 injection molding machines, molds and assembly machines. This investment will greatly boost our production capacity and drive further growth in the coming quarters.
Given flexible nature of our production and machinery, the upcoming facility will benefit both pen segments as well as creative segment. I will further our commitment to increase shares in house creative manufacturing. I now hand over the call to Mr. Alfesh Porwal, our CFO to discuss in detail about our Q1 FY26 financial performance. Thank you.
Alpesh Porwal — Chief Financial Officer
Good afternoon everybody. Moving to the consolidated performance of the company for Q1FY26. Revenue from operations for Q1 26 was at 288.5 crores, an increase of 16.8% year on year compared to the corresponding quarter of the previous year. Gross profit for the quarter was rupees 144.2 crores which increased by 17.3% on over corresponding quarter of the previous year. Gross profit margin came in at 50% closer to the historical range of previous financial years mainly due to a change of product mix in favor of certain higher value products. Gross profit margin was approximately 24bps higher year on year and 138bps higher sequentially.
EBITDA for the quarter was rupees 49.5 crores, registering a growth of 17.9% year on year compared to the corresponding quarter of the previous year. EBITDA margin was at 17.2%, 16bps higher compared to Q1FY25 and 146bps higher sequentially compared to Q4FY25. Profit after tax for the quarter was at Rs. 29 crores increasing by 10.5% on a year on year basis. PAT margins for the quarter was 10%. On the qualitative front for the results, the overall revenue growth is in line with our stated growth guidance for a 15% to 16% CAGR over the medium term driven by a mix of stable compounders and high growth achievers.
There are certain areas which would like to throw light on about our employee expenses. As stated in the previous call, we have been working towards stabilizing employee expenses during this quarter. Employee expenses registered a 5.4% increase on a quarter over quarter basis. Going forward, we remain focused on maintaining this cost at a steady level. While employee cost seems to have risen sharply when compared to Q1FY26, this growth has been underpinned by rising headcount and hikes which includes rise in sales and marketing team as well as manufacturing workforce. As we look to quickly scale up our two divisions that is Creative and Steel bottles through higher in house manufacturing.
Both these businesses delivered very high growth during the quarter and it is for these scenarios for which we have been investing in our teams and would look to do so in the near future as well. However, as guided earlier, the sequential pace of increase will tend to moderate as we enjoy an operating lever as the year progresses. Overall, our other expenses grew modestly over the previous year and saw a decline over the Q4 FY25. While I would refrain from commenting over the quarter to quarter trend of expenses, however, I wish to emphasize something Over a period you will see expenses associated to higher in house manufacturing increase and being balanced out by a reduction in job work charges.
This gives us a greater operational controls. However, at the same time we would also be open to leveraging the option of job work to meet a swell in demand. It’s a mix of proactive and reactive decision making, but it is important to us given the dynamic market condition with respect to consumer needs and new emerging trends. Thus, while absolute numbers may rise as the business scales up, we do not foresee any sudden spikes in expenses. We are confident that the EBITDA margin trajectory will be maintained and will glide upwards as the year progresses. Through past couple of quarters our organization has been undergoing qualitative business transformation.
This process is fueled out of the need to build dependable pillars as we look to enter the next phase of growth. You may be aware of the more pronounced aspects of this plan beat our ongoing capex cycle, augmenting our teams, increasing our range of products and entering into high potential segments. However, let me also share with you some of the softer aspects of this transformative journey. As part of our sustainability and growth initiatives, we have installed a rooftop solar system with a capacity of 1.85 megawatts at an approximate cost of 4.5 crores. This investment is expected to reduce our dependence on grid electricity and lead to a measurable decrease in scope 2 GHG emissions apart from bringing cost efficiencies Besides the rooftop solar project, we have in the recent past invested in institutionalized practices such as rainwater harvesting and established robust effluent treatment plants ETPs to recycle water within our operations.
Besides integrating sustainability within our operations, we are also leveraging technology in our operations. There has been an increased focus on automation within production and assembly lines to enhance efficiency. We already had a dedicated field force application to enhance the efficiency and accountability for sales and marketing teams. The digital tool facilitates real time tracking of secondary sales, daily coverage reporting and a generation of actionable MIS supports. Also, we have recently kick started a major digital transformation initiative through the replacement of our legacy ERP system which will be undertaken shortly. This transformation will span multiple functional areas, providing a more cohesive platform for decision making.
It will also enable us to streamline business processes with a particular focus on manufacturing environment. Stewardship combined with effective technology implementation will further improve our organizational agility. Now on the Business Segment Highlights Our own brand sales have continued a strong upward trajectory with consistent growth across both the domestic market and export market. Overall, our own brand sales grew by 23% year on year to rupees 264 crores. We are pleased to see strong performance from the export market similar to domestic market, registering a heartening rebound from stable growth of the previous financial year. Coming to our OEM sales, Overall OEM sales declined by 24% year on year driven largely by the decline in domestic OEM sales specifically related to our Penn OEM customer export OEM was stable at INR 17 crores in Q1FY26 compared to INR 18 crores in Q1FY25.
Coming on to the product segments PENS business, The pen segment grew 3% year on year to Rupees 202 crores for Q and FY26. During this quarter we released eight new pens across all three price segments, mass, Mid, Premium and Premium. Because the PEN segment’s revenue is made up of different pieces, some nuances necessary from our side without getting to specifics of numbers. First, the own brand sales, specifically domestic owned brand sales which forms the largest part of the pie. Domestic owned brand sales grew in high single digit with a mix of both volume and value growth.
Second, our own brand export sales which grew strongly in high double digits. This was a very encouraging rebound from the past year which was largely marked by geopolitical turmoil. Traditionally Latam and Middle east have been important contributing markets. We’re actively trying to diversify our presence by exploring new countries that are underserved and show good potential. Third, Export OEM we share a long standing relationship with our export OEM partners. As you all are well verse in the quarter this piece of business was stable and in fact grew marginally. Fourth, domestic OEM of which Penn is a part of and this was a sort of growth driver during the quarter it saw a material decline but as previously stated we have not taken its contribution while setting up for our consolidated growth expectations set for the medium term guidance.
With respect to the domestic OEM PEN segment, we are quite confident of creating alternating channels through other segments that would support our overall business we achieved our revenue growth guidance in quarter despite domestic OEM pen segment being impacted in terms of new diversified revenue channel. We have distributed, we have distribution partnership with MAPED for their creative products which will be revenue accretive. However, let me preface that currently it is at a nascent stage and we would develop this business over time and thus it too will further contribute to our revenue. Other than mapip, there is still some capex underway at Flomax Stationary facility in Surat for a new range of products within pencils.
With its commencement expected soon, it too will further provide an additional revenue stream. Thus, overall as these new channels mature further, we are confident that we would be undeterred from achieving our consolidated revenue growth expectations of 14 to 15%. Next, our standout the Creative segment. The Creative segment achieved impressive growth of 77% year on year growth for Q1FY26. The revenue contribution stood at INR 65 crores for the quarter we expanded our product portfolio by introducing six fresh offerings under the Creatives range during the quarter as on 06-30-2026 we have a total of 223 product offerings in Creative.
Our focus within the segment is twofold, introduce new innovative products and build in house manufacturing capability amongst the product categories. We are approaching pencils with a renewed focus by also leveraging our strategic venture in Flomax Stationary. We believe our strength in pens will translate us to being another major player within the broader pencil space in the near future. Coming to Steel Bottle Segment we continue to scale the steel bottle segment as a revenue contribution for the quarter increased by 55% year on year to rupees 13 crores. We are consistently working to expand our portfolio base and strengthen our distribution network.
Consumer demand alternates between single walled and double walled bottles based on the season and our goal is to have a very comprehensive portfolio of attractive and innovative production bottles, flasks, mugs, et cetera, catering to wider corporate and educational sector. Looking back at the quarter, we are pleased with our business performance and look forward to building on this growth trajectory. We remain well equipment to scale as a resilient organization that is known for its ability to deliver standout quality products from time to time. All the time. Thank you and I request the moderator to open the floor for question and answer session.
Questions and Answers:
operator
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question, press start and one on the Touchstone phone. If you wish to remove yourself from the question queue, you may Press Star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sneha Talreja from Nuvama. Please go ahead.
Sneha Talreja
Hi, good afternoon team and congratulations on great set of numbers both on the revenue as well as margin front. Just a couple of questions from my end. While you’ve seen a great amount of growth in creatives on other side, your OEM business both in the domestic and exports side seem to be down on a QOQ basis. Could you give some color on that?
Vimalchand Jugraj Rathod
Hi Neha, thank you. So, answering your question on the OEM front. So as we mentioned in the last couple of quarter calls also that as far as the domestic front is concerned in our growth projection, we haven’t taken any of that factor in the consideration that will hamper our growth going forward. But yes, when we talk about exports, it’s been stabilized. Of course, OEM is a major chunk in export business and it has stabilized over the years. And I think going forward also we’re going to see a consistent level of, you know, business in oem.
There’s not going to be a major change in OEM as far as exports is concerned.
Sneha Talreja
Understood. Secondly, on the creative side, of course you’ve guided for a 40% growth during the year, but you’ve started on a great note of 77.6 and what’s driving this growth and on an annualized basis, would you like to, you know, revise numbers or guidance?
Alpesh Porwal
Yes. So basically in creative segment, as we mentioned in last couple of quarter calls, that we are building our in house capacity for meeting the demand of creative products in all the categories that we have entered, be it from the scholastic range of pencils, eraser sharpeners, Geo boxes, to the office supply ranges, to the kits and the coloring range. So all the category we are doing, you know, the demand has been very, very positive. So the Overall contribution of 77% growth in Q1 is because of those factors. And also lately last couple of products which we have launched in last few quarters have been doing extremely exceedingly well.
And going forward also we are expecting a similar trend. Of course when we compare Q1 last year it was the base was low. But going forward we’re going to streamline at 45, 50% growth going forward.
Sneha Talreja
That’s helpful to me. On the employee expenses, I recall, you know, you’re stating in the last con call also that you’re building up new divisions, be it steel bottles, Be it creative. And that is why you are seeing around 30 odd growth on a y wide basis on this employee expenses side. But what’s the run rate likely to stabilize as we move forward?
Alpesh Porwal
Employee stabilization. As far as the employees are concerned with the higher employee expenses on year on year basis on account of strengthening of sales and marketing team. Overall employee headcount increased and given trend of higher in house manufacturing also which added to the increase in the wages and salary hikes. And if I were to talk about, can you repeat the question once again?
Sneha Talreja
Just wanted to understand what would be the annualized level of employee expenses? Can we see further increases happening even from here?
Alpesh Porwal
No, the employee sales. But we have put it into optimal now here. Like I said, we would not shy away if we have to kind of add employees. But as of today this number has moderated and going forward it will be within these moderated limits.
Sneha Talreja
And this last question, if at all, I mean on the steel bottle, as far as I understand this is purely driven by a domestic market. Any visibility that now we have found from the exports oriented fund.
Vimalchand Jugraj Rathod
So for the steel bundle perspective, yes, we are trying to have a little traction in the international market as well. But I think still our major concentration is still more towards the domestic front. And still there’s a long way to go. Only in the domestic as well. But we are trying to open new avenues in the export market as well.
Sneha Talreja
Thanks. Thanks a lot team and all the very best.
Vimalchand Jugraj Rathod
Thank you.
operator
Thank you. The next question comes from the line of Aradhana Jain from BNK Securities. Please go ahead.
Aradhana Jain
Hi. Thank you for the opportunity. I have a couple of questions. My first question is on the PEN segment. If we see that the PEN segment has just grown by 3% and the guidance that was given was around 19% for the entire year. So do you think that you will be able to still reach that 9, 10% growth which is 3% growth in the first quarter. And given that the domestic OEM in the PEN segment has seen a bit of drag because that has not done well for them for us. So do you think that that will revise from these levels or should the overall 15% growth be driven by the other two categories and Penn would still be in the maybe 5, 6% range for the overall year.
That’s my first question.
Vimalchand Jugraj Rathod
So thank you, Arana. So to answer your question regarding the Penn growth, we would still stick to the guidance what we have stated in high single digit growth. Of course, you know, OEM was a dragon considering the other two categories doing well in Terms of creative and houseware at 77% and 55% growth. But yes, the OEM overall was a drag in the pen category. But the growth, if we look at the overall growth barring oem, we are still at the high single digit growth which we had projected. So as far as the traction is concerned in the domestic market as well as the export market, the traction is still the same.
It’s extremely good what we’ve been seeing for last two quarters. We’re going to continue the same level of traction next few quarters as well. So overall the guidance for the pent would remain the same as what we have guided during the early.
Aradhana Jain
And how much of this 10 segment growth was value and volume.
Alpesh Porwal
So if it. If you look at the overall thing, when we talk about 80% it was mainly a value growth in the OEM.
Aradhana Jain
Thing and how much of the contribution was from above rupees 10 category and the 5 and 10 rupee category. Like what is the sort of mix.
Vimalchand Jugraj Rathod
The same as compared to what we did in Q4. There is no change in the ratio between the mass and net premium and premium category. We are still at the similar level of what we did in Q4.
Aradhana Jain
So close to like 50, 50% or 60% coming from.
Sneha Talreja
62% and 38%.
Vimalchand Jugraj Rathod
62 coming from sub 10 rupees from Marc.
Alpesh Porwal
Yeah, 10 to be category.
Aradhana Jain
Okay. And one thing I wanted to understand on the own brand segment. What I understand is that obviously the own brand segment is better margin business for us, right? So given that the contribution of own brand has increased from 87% to 91% in this quarter, why has the margins not improved in line to the improvement in the own brand contribution going up? Like is the understanding correct?
Alpesh Porwal
Are you referring to the pat or you referring to Ebitda is clear.
Aradhana Jain
I’m saying own brand business contribution has gone up on a year on year basis. Like last year first quarter the contribution of own brand was around 87%. This quarter it’s around 91%. So I’m just trying to understand that doing that not health in also improving our margins or there is no direct correlation with own brand business going up.
Aradhana Jain
And margina, just to add here, since our own branded business is going up and also we need to understand the fact that we are also entering into a lot of new creative categories where we are new in terms of the new verticals within the stationery category where you know, as a new entrant we have to let go in terms of margin but we are focusing more on the Market share in that category. So overall if you look at it, yes, there is an improvement in overall EBITDA level margins compared to what we did in Q1.
25.
Aradhana Jain
Okay, just two more questions from my end. One is on the steel bottles. The last three quarters. If I see we’ve been hovering around the 1213 crore number. So what is the expectation for the entire year? Given that we were expecting like a 50% CAGR growth in the steel bottle segment, that would take us to closer to a 70 odd crore number for the entire year. So are we still in line to reach those sort of numbers? Because if I see the current run rate, we close maybe to 55, 60 odd crores. So how are we expecting the growth in the steel bottle segment to improve from the current levels? Because it’s been stagnated in the last three quarters currently?
Vimalchand Jugraj Rathod
I would say from the overall perspective we are still targeting and going to maintain the same growth trajectory that we have mentioned earlier. Regarding the current quarter, I would say still there’s a lot of material in the market. From the input perspective was already in the market, which is slowly getting lower in the market.
Alpesh Porwal
But one of the both positive notes. From our side is that we are getting a lot of traction in terms of volume growth as well as a little bit of value growth. And we are penetrating more and more into the domestic market and we are getting a lot of traction even for the new range of models that we have launched in the last quarter. And going forward, I think we are going to increase as we keep on increasing our portfolio in terms of the product list, I think this traction will keep on increasing and we are quite confident that we’ll maintain the trajectory that we have aimed for.
Aradhana Jain
Sure. Just last thing, in terms of guidance, is it fair to assume that the 10 segment will contribute close to 9, 10% for the entire year? I just wanted to understand in terms of whether we are pursuing our guidance or not segment wise. So 99% of growth in 1030, 35% of growth in creatives and a 50% growth in skill boxes. Is it fair to argument that we’ll be able to deliver on these sort of progress?
Vimalchand Jugraj Rathod
Yes, we are maintaining our guidance and. The EBITDA margins closer to 17.2, 17.5% range. Operating leverage.
Alpesh Porwal
So yeah, as the operating leverage kicks in, we would try to maintain the EBITDA level margins. Yeah.
Aradhana Jain
And any sense on how much of the creative business is coming from the Disney products on maped? Like in terms of contribution? Any sense?
Vimalchand Jugraj Rathod
No. So we just mentioned that Maped is at a nascent stage. So while we build the market for this Maped products, which is a different range of products, we are testing the waters, we’re testing the market and once we are kind of through, we will see the accretion from Mapled also.
Alpesh Porwal
It’s too early stage. I think in the coming quarters you will see more of attraction from a. Maped sale and Disney. Disney a table of what we were doing earlier in past few quarters. So the main traction, what you see in Q1 is mainly energy, our own brand.
Aradhana Jain
Okay, got it. Thank you so much. Thank you for answering all the questions. Thank you.
operator
Thank you. The next question comes from the line of JV Shekhawat from Ambit Capital. Please go ahead.
JV Shekhawat
Sure. So my first question is on your creative business. It doesn’t seem that you’re winning market share or the growth that you’re seeing is by aggressively discounting because we have not really seen any impact on margins. So if you could possibly expand in terms of what you’re doing right, what product gap you’re able to address effectively and also who do you think in your opinion you’re taking away market share from? This is the market research you might have done. And also we are hearing more legacy pen players also trying to enter into a creative and office supply range.
So how do you sort of plan to again continuously grow on this segment? That will be my first question.
Vimalchand Jugraj Rathod
Yeah, thank you, JB. So answering your question regarding the creative, as we mentioned that in last couple of quarters we have entered into many verticals, be it geo boxes, wooden pencils, the kit categories. So all those categories are performing well. So overall, if you see the kind of growth, what we got in Q1 is to do a lot with the kind of innovation and the kind of the freshness we have bought to the entire product portfolio. And when we talk about the market share, I would say we are gaining market share and at the same time we are also gaining benefiting from the overall increase in the market industry as a whole.
So I wouldn’t pinpoint any particular competitor. But yeah, it’s overall, you know, the market is also doing well.
JV Shekhawat
Understood. Second, on your expenses, I see that there is a sequential QQ decline that has happened. How much of that is due to the shift to the in house manufacturing from job work that you are doing earlier.
Vimalchand Jugraj Rathod
We won’t have the exact numbers of the shift because from in house. Or if there are any other larger reasons which has driven that decline in expenses. Employees and job work, other expenses is because of the Job work charges etc, we have rationalized the employee expenses. So jv, to just answer your question, if I’ve understood correctly, let me know. But then if you’re talking of other expenses, the major part is job work which is a part of the other expenses and then it has gone down because that’s where we see bringing more optimization in the leveraging and optimization in the employee cost and employee case. When I say if I were to look at the total employee cost is the line item which you see is the employee benefit and the other one is what comes from other expenses, the job work which appears in other expenses and as announced production increases we will see the expenses coming down gradually.
JV Shekhawat
Understood? Very well understood. Last question. Could you talk about your existing capacities that you have across all these segments and then given that you have outlined 80, 90 crores, I mean how would those capacities impose that?
Vimalchand Jugraj Rathod
So from the overall perspective, from the capacity I think in the steel bottle, as have mentioned earlier, the sea bottle segment, we still have the capacity in line to grow with the target that we are aiming for. And when it comes to creative and pen there’s a category I think along with time, along the time as the requirement arises we have already planned in the CapEx for the future growth of these particular two segments. And as new and new cashing come in house we will be adding, you know, more facility for those respective portfolio.
Alpesh Porwal
Or if you could just break down how much of capex is going into different segments. I understand not much is going to steel bottles but between creative and 10, how would that fit between. Between that 1890cr.
Vimalchand Jugraj Rathod
Overall from the pen perspective you say the overall volume will be around 2.4 billion as a overall in terms of pen as a category and when you’re talking about the capex for FY26, a planned capex of 8090 crores has been embarked to support the key strategic initiatives including the establishment of new manufacturing facility in balsaar dedicated to writing instrument as well as creative as a segment. And of this 26 crores are deployed in Q1. FY26 is a part of budgeted capital plan. So we have placed around new injection molding machine and chip machine, you know machines order.
And we are planning to span the Valsa manufacturing facility spanning to 2 lakh square feet in overall which is going to be a new under construction facilities. And also to add here jv to answer your question, as you know most of our facilities are fungible so it will be very difficult to say whether we are building capacity for creative or the Pen division. So it’s more to do with more fungible asset we are building. So I would say it’s going to be contributing to both the categories.
JV Shekhawat
That’s very clear. Last question if I may. I see a lot of your new product launches. I think these also, as you were rightly mentioning, more appealing to especially kids. You’ve got a lot of these cartoon characters as well, Avengers, Disney. Is that also one of the factors that’s helping you in terms of getting market share are those sort of projects not available and then of course there must be IP rights as well associated with them. It sort of also insulates competition from copying you.
Vimalchand Jugraj Rathod
Yeah, it’s also to do with, you know, I would say as I mentioned earlier, it’s the overall change of portfolio. What we have done in last quarter, couple of quarters, you know, our focus is more and our endeavor is to bring more and more freshness in the product and the innovative side to do with the combinations and the overall designing. We have really worked very hard. The entire R and D team has worked hard on the designing part of it. So I think now, you know, we are seeing in the kind of response we are getting, we are seeing that result.
JV Shekhawat
Sure. Thank you so much and all the best.
Vimalchand Jugraj Rathod
Thank you.
operator
Thank you. Ladies and gentlemen. In order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to per participant. Should you have a follow up question, we would request you to rejoin the queue. The next question comes from the line of Alia Sagar Sakira from Motilal Oswal. Please go ahead.
Alia Sagar Sakira
Hi, this is Ali from Motilal Oswal Mutual fund. So a couple of questions. One is on the margin. You have indicated that you know your scope to improve margin by 200 waves and part of that can come from operating leverage. So just if you can share, you know, what kind of revenue scale or what kind of growth in the next couple of years will make you achieve. You know, I don’t. We have indicated, you know, kind of growth. So I just wanted to, you know, understand how much is the margin linked to the, you know, revenue and the mix of the business so that we can measure the, you know, improvement in margin from that point of view.
Vimalchand Jugraj Rathod
So. Hey Adiyashgar. Hi. Just to share with you that we maintain the short term, medium term projections which we have shared with you earlier. So the margins are also like last quarter we had said that the projections for the coming period will be, will maintain a minimum margin which we saw EBITDA margin which we saw in the previous year, the entire year. And this is only. We only kind of see it going up north by. And that would be because we have creative as a segment where we are doing lot of in house manufacturing and that adds to the margin and that is where we have also kind of invested in man and machines here which will see the operating leverage to improve the EBITDA margin in the coming quarters.
So the short and medium term we look at a growth of 14, 15% for the next two years. And this is with a given set of production range and the given set of business which we are in.
Alia Sagar Sakira
Got it. So can you just indicate, I mean if you are doing this mid teens growth then with this mid teens growth you should be able to achieve the 200 day margin improvement in what, two years, three years time. And what makes the believe by then creatively achieve.
Vimalchand Jugraj Rathod
A mix of. Can you repeat the question again?
Alia Sagar Sakira
Question is just follow up on this basically when you’re seeing mid teens growth that you can do at overall basis and then you know this should allow you each to under the margin improvement. Right. In the next two, three years. Correct. So if you can just indicate what is the mix of creative in the overall business till that time.
Vimalchand Jugraj Rathod
The revenue mix has been changing since last year. When we see the creatives contribution is increasing, visage spends. But then that is all given within the firm the total revenue going up. So none of the individual section segments revenue will only increase. But proportion of creative is certainly going to increase in the coming period for the next two periods till we see a stabilized number of whatever because the base is still very small. Last year we were just at 170 and this year we’re gonna just grow year on year. Revenue mix up still bottle and creative.
Alia Sagar Sakira
Okay, okay, I’ll bring this upline as some follow ups here. Second question is on the creative side. So your creative growth obviously is coming also from lot of new product development that you are doing. But can you just explain what is the overlapping distribution is creative entirely, you know, part of the pens distribution and what is the penetration today in our overall network that we have in creative and how much scope do we have? So you know, I was just trying to understand the growth that Creative can get from distribution expansion.
Vimalchand Jugraj Rathod
So when we talk about the overall coverage of creative as a category, we are already at 68,000 outlets. We are planning, you know, to grow from here further. But at the same time, you know, consolidating the distribution network of 68,000 outlets, you know, we would like to further increase the per outlet share for at least next few quarters. And from there on we will try to increase the number of offsets.
Alia Sagar Sakira
So the lever is more basically increase in consumption per outlet than actually the increase expansion. Okay, understood. That is clear. I’ll come back in a queue.
Vimalchand Jugraj Rathod
Thank you.
operator
Thank you. The next question comes from the line of Rajesh Josi from Chris Capital. Please go ahead.
Rajesh Josi
Yeah, welcome sir. Am I audible? Yes, sir. So my first question would be on the gross margin. Do you allude to the fact that the gross margin expanded due to a change in the mix? So was this mix largely market driven or did we take some portfolio changes during the quarter and how do you see this going ahead?
Vimalchand Jugraj Rathod
So the margin of when you said asking was it because of the portfolio chain of products mix, it was a combination of both. It was market driven. Obviously when we kind of are introducing products and the market like we got in the creative segment, it is all market driven to cater to the market taste and expectations. Plus we also have our own innovations which can create new market for us products. So our products also create new market. So the entire thing is a mix of both.
Rajesh Josi
Right. So I’m actually coming from sense of, you know, mass. This is premium, you know, mix which affected the gross margin. So on that front how we see things. No, so the gross margin, when you talk about the gross margin it is obviously because of better product mix. The change in the product mix and of high value products Company enjoyed higher AHP in Q4.Company was trading and increasing its creative portfolio and there was a lower gm. So once we started off, we increased the share of in house manufacturing. Obviously it increases our gross margins too.
Vimalchand Jugraj Rathod
Got it on the segmented margins. So EBITDA margins, specifically the bottles business I believe was breakthrough last quarter. So this quarter how would that be. Division the last quarter or when we were EBITDA positive. So we came EBITDA positive and we continue to kind of scale up on that front.
Rajesh Josi
Thanks so much.
operator
Thank you. The next question comes from the line of Resham Mehta from Green Edge Wealth. Please go ahead.
Resham Mehta
Yes, thank you. Compliments on the margin. Come back and good to see, you know, some very differentiated new product launches on the presentation. So the first question is on the, you know, sales growth. So sorry for just harping on this but if you look at, you know, while in the last two quarters both Q4 and Q1 we’ve grown very healthily. But if I look at H2 of the last financial year, the base was very high. We grew by 18%. So on that Base just wanted to check is a 15, 16% kind of CAGR that you know, we have spoken about.
Is that something that is, you know, possible?
Vimalchand Jugraj Rathod
Yeah, exactly. So we are working towards that only. And so that’s 1516 growth is very, very achievable looking at the current trend and the, you know, traction, what we’re getting from the market.
Resham Mehta
Got it. And you know, on the margin side, so when you say, you know, the margins will be maintained. So when you say maintained, do we look at Q1 margins for the full financial year? So at 17, so what FY26 margins, what do they look like? So do they tend to be more towards the 17% that we have seen in Q1 or they may, you know, go up to like 18 kind of a number?
Vimalchand Jugraj Rathod
No. So Resha, here what happens when we say maintain is that we had the entire FY25 margin which was at 17.1% and when there would be different margins for Q4 in other quarters, when we say maintain that we are going to maintain this margin and only go northwards once we kind of start benefiting from the operating leverage which will go to increase the EBITDA margin.
Resham Mehta
Got it. So at least 17, 17.12% is something that you know, we’ll try and maintain for this financial year. Right, we will maintain that. And you know creators, what is our target for in house manufacturing share for this financial year and what were the margins in FY25 for creative?
Vimalchand Jugraj Rathod
So as such we don’t have any separate, have a separate data for creative as a category or pen because the, the facility and the resources used are common for stationery and pens. So we don’t have a separate percentage category category wise. But yes, to answer your other question, almost 70% of the products now are in out which will go the further increase to almost 80, 85% in next couple of quarters.
Resham Mehta
And on the working capital, you know, we had guided for some modest improvements in working capital. So in this quarter have we seen some improvements in inventory and debtor days.
Vimalchand Jugraj Rathod
Working capital. It’s a mix of what products, new products which we are getting in. And also every time we have these new products we say that the working capital goes up. But I would say that it is just a matter of time. As the products, the new products and new launches stabilize, we will see the work, we see capital coming back to our original levels. So because previous call also we are discarding, we are expanding our product basket and as a result we must stock up on multiple SKUs before these levels rationalize. As the product discovers itself.
So once the products mature you will see the inventory levels coming down. On the receivables front we have extended higher credit period driven by typical business nature of the export on the export front.
Resham Mehta
So I think would it be safe to assume that sequencing is working?
Vimalchand Jugraj Rathod
Maybe. Request that you return to the question.
Resham Mehta
I just have two quick questions if that’s okay. Yeah, thank you. So would it be fair to assume that maybe working capital would have, you know, kind of seen slight deterioration sequentially?
Vimalchand Jugraj Rathod
I wouldn’t say deterioration but I would share the numbers in the half yearly outlook and when you say it is going to be at the same levels and only better. So when we share the numbers.
Resham Mehta
Right. And on the export fund you mentioned that bottles we are not seeing any export revenues but on the creative side are we seeing any export revenues be it in our own brand or oem. And the last question is that Napid, while, you know, it’s at a very nature stage, but how is the response wherever we’ve launched it in the limited number of markets and do we also get the mandate for manufacturing for them sometime soon?
Vimalchand Jugraj Rathod
So when we talk about Creative as a category in export market, the demand is there but we are not able to meet their expectations. So we are focusing more on domestic sales rather than exports for the Creative as a category.
Resham Mehta
Okay. And, and on MapID and just a follow up there. So when we say we are not able to meet their expectations in terms of the product, probably it is not as per their specification or what is it?
Vimalchand Jugraj Rathod
Capacity. Capacity. So for mad, I think like you mentioned, it’s very early I think but in the current quarters the product is mix that we have for the domestic market. It’s a very, you know, mid premium, you know, kind of a category. So along with that I think we’ll, we are confident that we’ll be able to penetrate the market and create a substantial, you know, growth number or I would say a contribution number, you know, by Q3 and Q4 you will see the number.
Resham Mehta
And on your previous question it is not about the expectations of the product lines, it’s more of the capacity constraint and we are focusing more on domestic to increase our market share. Understood. MapID Manufacturing. Overall creative as a category because as we said we are increasing the manufacturing base for Creative to increase it from 70% to 85% to bring it in house.
Vimalchand Jugraj Rathod
But I think initially the mandate was just for distribution. So have we also now, you know, got the.
Resham Mehta
So this is for Creative from a domestic, our own brand perspective when you Ask the question. For the export market and for Mayed. Yeah, it is for marketing, distrib marketing and distribution for the domestic market.
operator
Thank you. The next question comes from the line of Kishore Kumar from Unified Capital. Please go ahead.
Kishore Kumar
Thanks for the opportunity. Sir, I just have one question. So given the sizable growth in creatives and bottle segment, is the aggressive market because of the credit period or the higher credit period is actually driving the demand or organically the industry expansion is also helping the brand.
Vimalchand Jugraj Rathod
The credit period, what we are talking about has been same as what we’ve been doing for last couple of years. There’s no increase in credit period. But yes, the product appreciation and the response and the traction, what we are getting is much better than what we were getting. And last year also couple of quarters we could not grow because of the capacity constraint. But once the capacity we built up the capacity. Now we are growing because we are able to meet the demand in the market.
Kishore Kumar
Got it, sir. So Overall you mentioned 70 to 80 percentage is in house. Now is this number for the creatives or for friends as well? Okay, 70 to 80% is for creatives in house. Got it sir. Got it.
Vimalchand Jugraj Rathod
Thank you.
operator
Thank you. The next question comes from the line of Dipesh Sanchiti from Manya Finance. Please go ahead.
Dipesh Sanchiti
Hi. Am I audible?
Vimalchand Jugraj Rathod
Yes. Yes.
Dipesh Sanchiti
Okay. Congratulations on a great set of numbers. Just one question. ROE has dipped from almost 24% to 11%. Now I heard that you were mentioning that you were planning to grow about 15% 15 to 16% phr every year in terms of revenues. Just wanted to know what ROE we should be looking at which the company will be able to maintain over the next two, three years.
Vimalchand Jugraj Rathod
So primarily with the operating leverage kicking in once the new plant also gets operational and as the EBITDA margins further improve, the bottom line contribution will definitely, you know, is targeted that we improve on the roe. Definitely we will be not the right place to give you the guidance on that at this stage. Let at least one more quarter go and we will be able to tell.
Dipesh Sanchiti
You that as in are we looking at a particular number of 15% or something? I mean, should we as an investor look at around 15% as a reasonable the company will be able to maintain in the next two, three years.
Alpesh Porwal
Yes, our target would be to achieve even slightly higher than that as we go because we have the right product mix. The installed capacity would be in place at that time. You know, on all trends we are growing. So definitely we will look forward to that. And where does this growth come from? Because this time the pen’s revenue was about a growth of about 3% whereas creative and houseware actually got our revenues up. So I’m talking about the next one or two years. Where will the actual growth come from?
Vimalchand Jugraj Rathod
So from pence on a higher digit growth of higher single digit growth is what we are envisaging. This particular 3% is only because of a drag on the OEM domestic OEM primarily which has been a known factor for to all of you. So on own brand to of course we have grown substantially and that actual contribution came to about higher single digit even on the own brand. So hopefully we will continue to maintain the 9% what we had indicated.
Dipesh Sanchiti
Okay, and are we planning any significant capex and any debt which we are going to plan for this kind of capex on?
Vimalchand Jugraj Rathod
We already explained in the part of the call CapEx that we have an ongoing, ongoing CapEx program of 80 to 90 crores of which 26 crores were deployed. In the Q1 of FY26 we ordered about 50 plus injection moldings and machines. So it’s part of the growth plan as NBC.
Dipesh Sanchiti
And this is going to, this is going to sustain this kind of capex. So we should expect around a capex of around 1900 crores coming every year.
Vimalchand Jugraj Rathod
No, no, this was part of our the IPO process also and the regular growth that comes in. We have been investing in our molds and all from time to time with new product launches. So every year there is always a CAPEX program. But this year we are ending with all the what we had been committed on the ipo.
operator
Thank you. The next question comes from the line of Aradhana Jane from BNK Securities. Please go ahead.
Aradhana Jain
Thank you for the opportunity. Just a couple of follow up questions. One on the capacity utilization. While you did mention that you know you have CAPEX across 10 and creatives and then there’s a fungibility aspect to it. But just in terms of capacity utilization across your 10/4 writing instruments or creatives and steel bodies. If you could just throw some light on that how utilization standing.
Vimalchand Jugraj Rathod
So historically also when we reach an optimum of around 70 75% of our capacity we tend to you know develop new manufacturing facility for the same. So like mentioned earlier, we have CAPEX in plan and we have already in the and the momentum towards installing a new manufacturing facility in Walsad for which we have already given molding machine and we already placed the mold order and also assembly machines are in place. So I think for the future growth, for the growth coming Forward we will be, we are in place with the capex in the facility which will help us assist in the targets that we have for each year respective brands, especially for the creative and pen as a category.
Aradhana Jain
So is it fair to assume that we’ve reached the 70, 75% peak capacity for writing and creative? That is why we are expanding the capacities with the new.
Vimalchand Jugraj Rathod
More or less we are on that line of 70% capacity but because as you know, we’ll have to pre advance because we have to create a facility. So as per our historic norms, we are moving towards creating a new facility. And in steel bottles. So steel bottle, like I mentioned earlier, we have capacity for this year’s target so we have little room to achieve those numbers. But going forward, as our overall turnover increases, we will be adding facility as and when required.
Aradhana Jain
With the 40 odd crores that we put in, that has an asset turn of close to around 3x. Right. So maybe till the time we reach 100, 120 odd crores of top line, the current capacities should be sustainable, right?
Unidentified Speaker
Yeah. So more or less on the similar lines other than some minor small machines. And in terms of steel bottles, where are we selling it? Like what are the channels where we are selling these steel bottles and what is the TAM for your steel bottle coverage? Like the retail footprint?
Vimalchand Jugraj Rathod
I think overall from the domestic front we are available in all the fronts. We are actively and aggressively making traction in the domestic front as well as the modern trade and you know, the E. Com platform. So and we are also trying to focus a little bit from the, you know, international market perspective where we are trying to make little room and trying to, you know, get little export done in Architect.
Dipesh Sanchiti
So have you started exporting to Newell again for the Steam customers?
Vimalchand Jugraj Rathod
So very small, so very small volume. We have been exporting for the export market. So I think going forward we will try and increase that share as well.
Dipesh Sanchiti
And in terms of your creative, like you said that around 68,000 outlets you’ve reached and you said that you want to now focus more towards increasing your throughput per store. But what would be the TAM there and why are we wanting to settle down at the 68, 70,000 outlets right now? Like if in case the time is higher and do we have all our products across all the outlets or it’s selective? And what is the update on your mechanical pencils and how much is the contribution of mechanical pencils in creatives right now?
Vimalchand Jugraj Rathod
So see, the overall TAM as you compare with the overall stationery market is huge, of which we are doing only 68,000 outlets. So I would say, you know, and also when we look at the individual product wise coverage, we feel there is still a lot of room left for us to improve in that. And that’s the reason why we want to consolidate and increase our throughput in those 68,000 outlets rather than focusing on getting new outlets.
Alpesh Porwal
That is number one. Number two is when we talk about the mechanical pencils I would say it has helped us but also the other products has helped us achieve this kind of growth and this kind of number.
Dipesh Sanchiti
My question was more to understand the new mechanical pencils that we introduced last year in the second half. How is that panning out and have we been able to reach Pan India with this pencil for their still supply constraints there? Just to understand, you know, growth aspect.
Vimalchand Jugraj Rathod
As we said last time also the response was very good and you know now there is no supply constraint and we are launching almost Pan India. We have launched the product and we are just hoping to grow from there.
Alpesh Porwal
Okay, just last in terms of any hero product that you have across all your three categories, is there anything that’s you know standing out across all your three categories which is pens? I know Hauser XO is your. Yeah, I just have this last question. So how’s your exo is one. So if you could just help me understand that is in creative. Any particular product standing out.
Aradhana Jain
So it’s a you know, competition sensitive data. So we would not like to talk about it. But yes, there are many products. Not as I said, there’s not individual products but there are many products which are doing well. And the kind of projection what we have I think we will need. We have to be dependent on seven, eight categories rather than one category to grow. So I think we are in the right direction in terms of the kind of products what we are launching and the kind of response what we are getting. And you know we are, you know quite confident that by the year end we will be meeting our expectation.
Vimalchand Jugraj Rathod
Thank you. Thank you.
Dipesh Sanchiti
Thank you. Thank you.
operator
Ladies and gentlemen, in the interest of time, that was the last question. I would now like to conference management for closing comments. Thank you and over to you sir.
Sumit Rathod
Thank you everyone for taking time out to participate in this call. In case of any queries, reach out to our investor relations advisor, MMFG Investor Relations. We wish you all the best and hope to interact with you soon. Thank you so much.
operator
Thank you. On behalf of MUFG In Time India Private Limited. That concludes this conference. Thank you for joining us and you may now disconnect your line. Thank you.