The brokerage expects Flair to deliver a revenue, Ebitda, and PAT CAGR of 16 per cent, 21 per cent, and 21 per cent, respectively, over FY25–28E. This growth will be driven by stable expansion in its own-branded pen business, strong momentum in emerging categories, improving operating leverage supporting margins, and better working capital efficiency aiding free cash flow generation.
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Here’s why Antique Stock Broking is bullish on Flair Writing:
Emerging segments to drive incremental growth
According to the brokerage, the company’s core pens segment, which contributes around 68 per cent of sales, has witnessed muted growth of 4.8 per cent Y-o-Y during 9MFY26, largely due to a decline in domestic OEM demand. However, the company has steadily increased its focus on its own brands, with their contribution rising from 83 per cent in FY23 to 91 per cent in 9MFY26.
Flair’s re-entry into the ₹5 price point and the strong performance of Hauser XO in the ₹10 segment have supported volume momentum, with own-brand volumes growing 11 per cent during 9MFY26, the brokerage said.
Additionally, emerging segments are expected to remain the key growth driver, with management targeting over 45 per cent CAGR during FY25–FY28, supported by aggressive new launches, expansion in creative stationery sub-categories, and wider distribution in steel bottles and housewares. These segments are expected to contribute around 40 per cent of the overall business by FY28.
Ebitda margin bottoming out
Antique expects Flair’s operating leverage to support Ebitda margins over the medium term. In recent quarters, Ebitda margin pressure was observed due to gross margin volatility and higher employee-related investments in the emerging segments.
The brokerage expects gross margins to stabilise at around 51 per cent in FY27 and FY28, supported by economies of scale and an increasing contribution from premium products. Flair has also stepped up hiring across marketing and sales functions to support growth in emerging categories, with employee expenses rising 29 per cent Y-o-Y during 9MFY26.
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Improvement in working capital to generate free cash flow
Flair’s working capital cycle has gradually deteriorated in recent years, driven by the launch of new SKUs that required higher inventory levels and longer credit periods. The extended credit is being used to support the initial product offtake and gather market feedback on new launches.
While management had earlier guided for a 10-day improvement in FY26 over FY25, this now appears unlikely amid geopolitical disruptions that have impacted inventory and receivables, particularly in export markets, it said.
Over the medium term, working capital days are expected to improve to around 142 days by FY28, compared with 166 days in FY25. This improvement is likely to support stronger free cash flow generation, which can be deployed towards additional capex or inorganic expansion opportunities.
Disclaimer: View and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers’ discretion is advised.
