Paper Boat parent profit falls to Rs 2 crore in FY26
Hector Beverages grew FY26 revenue 13.8% to Rs 760 crore, but profit after tax collapsed 96% to Rs 2 crore. The cause sits in a shift from making its own drinks to buying them.
- Hector Beverages reported Rs 760 crore in operating revenue in FY26, up 13.8% from Rs 668 crore in FY25.
- Profit after tax fell 96% to Rs 2 crore from Rs 46 crore, while EBITDA dropped 39.7% to Rs 41.4 crore.
- Traded goods revenue rose 30.2% to Rs 574 crore, now 75% of revenue, as manufactured goods fell 18.6% to Rs 184 crore.
- Total expenditure grew 22% to Rs 776 crore against 13.8% revenue growth, with job work charges more than doubling to Rs 25 crore.
Hector Beverages, the maker of Paper Boat, reported Rs 760 crore in operating revenue for FY26, up 13.8% from Rs 668 crore. Total income was Rs 778 crore including Rs 18 crore of other income. Profit after tax came in at Rs 2 crore against Rs 46 crore a year earlier, a decline of 96%.
Revenue held. The cost base did not. Total expenditure rose 22% to Rs 776 crore from Rs 636 crore, a gap of more than eight points over revenue growth. EBITDA fell 39.7% to Rs 41.4 crore and the EBITDA margin narrowed to 5.4% from 10.3%.
The driver sits in the product mix. Traded goods revenue grew 30.2% to Rs 574 crore and now accounts for 75% of operating revenue, while manufactured goods fell 18.6% to Rs 184 crore. Hector is buying more of what it sells instead of making it. Job work charges more than doubled to Rs 25 crore. Material consumption ran to Rs 485 crore, 62.5% of all expenses. Advertising and promotion rose 55.6% to Rs 28 crore, though at 3.7% of revenue that is not a marketing splurge. Employee cost actually fell, to Rs 88 crore from Rs 90 crore. Cash and bank balance dropped 29% to Rs 101 crore.
One gap deserves naming. EBITDA fell by Rs 27.2 crore while profit fell by Rs 44 crore. Roughly Rs 17 crore of the decline sits below EBITDA, in depreciation, finance cost or tax. Entrackr’s report does not break those lines out, so the full bridge is not visible from the numbers disclosed.
For a D2C beverage founder the lesson is about where outsourcing surfaces. Going asset-light on production reads as a balance sheet win, and it is one. But the margin does not vanish. It moves to the co-packer and lands in your books twice, once inside cost of materials and again as job work charges. Paper Boat traded roughly Rs 42 crore of manufactured revenue for about Rs 133 crore of bought-in revenue and gave up half its EBITDA margin doing it. Model the mix shift line by line before you sign the contract manufacturing deal. Top line growth from traded goods is the cheapest growth to buy and the most expensive to keep.
Zane’s analysis draws on original reporting by Entrackr. Read the original report.