West Coast Paper Closes 2.36% Higher Despite 54% Drop in Annual Net Profit

Synopsis:- Reporting a 54 percent drop in consolidated PAT to Rs. 155.73 crore for FY26  weighed down by sharply lower paper realizations through most of the year  West Coast Paper Mills has closed the year with a meaningful Q4 recovery, posting a 82 percent sequential jump in net profit alongside a Rs. 3 per share dividend recommendation, even as a lockout at subsidiary Andhra Paper’s Kadiyam plant adds a near-term operational overhang.

Shares of one of India’s oldest and largest paper manufacturers came into focus on May 27, 2026, after the company’s board approved audited standalone and consolidated financial results for the quarter and year ended March 31, 2026, from its registered office in Dandeli, Karnataka. The results present a picture of a business that absorbed a difficult full year with substantially compressed margins  but exited FY26 with considerably more momentum than it entered it.

With a market capitalization of Rs. 3,368.49 crore, the shares of West Coast Paper Mills Limited closed at Rs.516.95 per share, up 2.36 percent from its previous closing price of Rs. 505.05. It is trading at a P/E of 22.55. The divergence between the full-year and quarterly narratives is the defining feature of these results, and both are worth reading carefully.

For the full year FY26, West Coast Paper reported consolidated revenue of Rs. 4,278.79 crore, up 5 percent from Rs. 4,062.29 crore in FY25, a modest improvement. But EBITDA fell 24 percent to Rs. 527.32 crore from Rs. 691.58 crore, and PAT collapsed 54 percent to Rs. 155.73 crore from Rs. 335.64 crore. Consolidated PAT margin compressed from 8 percent to 4 percent. The standalone picture is similarly bruised; revenue was roughly flat at Rs. 2,498.49 crore, EBITDA fell 23 percent, and PAT declined 46 percent to Rs. 153.53 crore from Rs. 284.71 crore. EPS on a standalone basis came in at Rs. 23.25 for FY26, down from Rs. 43.11 in FY25.

The context is important. The paper industry in India went through a sustained period of realization pressure from late FY24 onwards, as domestic oversupply  driven by capacity additions and a flood of cheaper Chinese paper imports  weighed heavily on per-tonne pricing even as input costs (primarily pulp, chemicals, and power) remained elevated. West Coast was not alone in taking a margin hit; the company’s ROCE, which had touched 53 percent in FY23 during the post-COVID paper boom, fell to 11.5 percent by FY25 and has compressed further in FY26.

The Q4 FY26 numbers, however, tell a different story. Consolidated revenue for the quarter came in at Rs. 1,245.30 crore, up 20 percent sequentially from Rs. 1,035.82 crore in Q3 FY26. Consolidated EBITDA jumped 32 percent quarter-on-quarter to Rs. 160.34 crore, and consolidated PAT surged 82 percent to Rs. 53.98 crore from Rs. 29.58 crore in Q3. On a standalone basis, Q4 performance was even sharper, EBITDA rose 61 percent and PAT increased 163 percent sequentially to Rs. 48.86 crore.

Management attributed the improved performance to higher volumes with a better product mix and operational efficiency gains in the quarter. He also noted that the backward-integrated draw tower in the cable division has now stabilised, which is expected to provide stronger operational support to the Optical Fiber Plant going forward.

Segment Performance

West Coast operates across two primary segments: Paper and Paper Board, and Telecommunication Cables. For FY26, Paper and Paper Board contributed consolidated revenue of Rs. 3,937.08 crore (approximately 92 percent of total segment revenue), with segment profit before tax and interest of Rs. 213.97 crore  a sharp drop from Rs. 402.71 crore in FY25. The paper segment is the earnings engine and the primary source of the year’s pain.

The Telecommunication Cables segment, by contrast, had a materially better year at the consolidated level. Segment revenue grew to Rs. 341.64 crore in FY26 from Rs. 262.45 crore in FY25, and segment profit improved to Rs. 24.49 crore from Rs. 15.41 crore  a 59 percent jump that reflects the stabilisation of the draw tower and improving execution in West Coast Opticable Limited. The cables business is small relative to paper, but its trajectory this year ran counter to the parent, which is a notable positive.

Dividend 

The board recommended a dividend of Rs. 3 per share (150 percent on face value of Rs. 2) for FY26, subject to shareholder approval at the forthcoming AGM. This compares to Rs. 5 per share (250 percent) paid in FY25, reflecting the lower profitability of the year but confirming that the company intends to maintain a payout despite the earnings compression.

Andhra Paper Lockout 

The consolidated results carry a significant subsequent event disclosure that investors should not overlook. Operations at the manufacturing facility of subsidiary Andhra Paper Limited in Kadiyam, Andhra Pradesh were disrupted from April 27, 2026 due to an illegal strike by contract workmen demanding revision of their contractual terms. The company announced a lockout at the plant on May 1, 2026, which was ongoing as of the date of the board meeting.

Andhra Paper is one of West Coast’s three subsidiaries not audited directly by Singhi & Co.  the three subsidiaries collectively accounted for total assets of Rs. 2,564.70 crore and total revenue of Rs. 540.65 crore for FY26. A prolonged lockout at Kadiyam would affect Q1 FY27 consolidated production volumes and could add costs, though the company has not quantified the impact at this stage.

Business Overview

Established in 1955, West Coast Paper Mills Limited is headquartered in Dandeli, Karnataka. The company is one of India’s largest producers of printing, writing, and packaging paper, operating under the Wesco brand, alongside subsidiaries in optical fibre cables (West Coast Opticable), paper (Andhra Paper Limited), defence systems (Wesco Defence Systems Limited), and decorative products (Uniply Décor Limited).

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