Revenue Grows 14% as Higher Operating Costs Significantly Impact Profitability
Hector Beverages, the parent company of Paper Boat, reported a 13.8% year-on-year increase in operating revenue for FY26, while a sharp rise in operating expenses led to a steep decline in profitability.
According to the company’s financial statements sourced from the Registrar of Companies (RoC), operating revenue rose to ₹760 crore in FY26 from ₹668 crore in FY25. Including ₹18 crore in other income, total income stood at ₹778 crore, compared to ₹682 crore in the previous fiscal.
Traded Goods Drive Revenue Growth
The company’s growth was largely driven by its traded goods business. Revenue from traded goods increased 30.2% to ₹574 crore, contributing more than 75% of the company’s operating revenue.
Meanwhile, revenue from manufactured products declined 18.6% to ₹184 crore, reflecting a shift in the company’s product mix during the year.
Hector Beverages operates under the Paper Boat brand and competes with leading beverage companies such as Dabur, PepsiCo, Coca-Cola and several regional juice and traditional beverage brands.
Rising Costs Weigh on Margins
Despite healthy revenue growth, expenses increased at a much faster pace. Total expenditure rose 22% to ₹776 crore in FY26 from ₹636 crore a year earlier.
Material consumption remained the largest expense at ₹485 crore, accounting for nearly 63% of total costs. Employee benefit expenses remained largely stable at ₹88 crore.
The company also increased investments in brand building and operations. Advertising and promotional expenses surged 55.6% to ₹28 crore, while selling and distribution expenses rose 15.5% to ₹67 crore. Job work charges more than doubled to ₹25 crore, alongside higher spending on legal, professional, travel and rental expenses.
EBITDA and Profit Decline Sharply
As costs outpaced revenue growth, Hector Beverages’ EBITDA declined 39.7% to ₹41.4 crore from ₹68.6 crore in FY25. Consequently, the EBITDA margin narrowed to 5.4%, compared to 10.3% in the previous fiscal.
The pressure on margins significantly impacted the bottom line, with profit after tax falling 96% to ₹2 crore in FY26 from ₹46 crore a year earlier.
Financial Position
As of March 31, 2026, Hector Beverages reported total assets of ₹522.5 crore. Its cash and bank balance declined 29% to ₹101 crore, while current assets stood at ₹365 crore, reflecting continued investments in business operations.
Outlook
Hector Beverages continues to strengthen the market presence of the Paper Boat brand, but FY26 highlights the growing pressure of rising input, marketing and distribution costs. Going forward, improving operational efficiency, managing costs and restoring margins will be critical as the company balances growth with profitability in India’s increasingly competitive packaged beverages market.
