Recently, while screening for stocks for our Premium Members, I came across Linc Ltd.
As I dug deeper, realized it’s the same company which makes LINC pen.
The first thought was this must be a slow growing or declining category with all the digitization all around; however, on reading further realized that company is aiming for 15-20% sales CAGR on the back of premiumization, diversification and exports.
Below, we have shared notes from Q4 FY 25 concall of the company to understand management’s perspective on Product segment, diversification both product wise and geographically and growth plans.
Before that: Here’s the list of new stock recommendations made recently:
- On 3rd Jul’25, we released a new recommendation under “Insider Bets” subscription. Herein the Promoters have infused substantial capital into the company and all through preferential allotment of shares to themselves. You can read about it by clicking HERE
- On 9th Jul’25, we released a new Special situation opportunity for our Alpha + members. It’s based on Promoter change in a company with downside protection through open offer price. You can read about it by clicking HERE
- On 30th Jul’25, we released a new long term stock recommendation for our Alpha/Alpha + members. It’s a chemical company trading at deep valuation discount and Promoter recently bought shares from open market. You can read about it by clicking HERE
Linc Ltd Q4 FY 25 concall notes
- Financial Performance
- Q4 FY25 revenue: INR 15,393 lakhs (+9.3% YoY, +26% QoQ).
- FY25 revenue: INR 54,348 lakhs (+7% YoY).
- Operating EBITDA for FY25: INR 6,440 lakhs (11.8% margin, +74bps YoY).
- PAT for FY25: INR 3,804 lakhs (+11.2% YoY, margin 6.9%).
- Net free cash position: INR 1,869 lakhs at year-end.
- Proposed Dividend: INR 1.5/share (23.5% payout ratio).
- Business Drivers and Product Focus
- Premiumization strategy: Pentonic brand now contributes 35.6% of revenue (up from 34.3%).
- Portfolio diversification: Strong expansion beyond pens into markers, highlighters, pencils, and calculators.
- Product launches: Recent (and upcoming) launches in premium gel pens, sketch pens, brush pens, fine liners, crayons, and more under Linc and Pentonic brands.
- Focus on innovation-led differentiation and brand loyalty.
- Segmental and Channel Update
- E-commerce and modern trade: Significant gains; continued to be key growth channels.
- Exports: Remained resilient with over “90%+ sales in own-branded products.” Key markets include Brazil, USA (~9-10% of exports), Africa, Middle East; emphasis on building exclusivity with local distributors.
- Export margins higher than company average. Recent years hampered by geopolitical disruptions in major export markets (Myanmar, Sudan), but active focus on new stable countries.
- Strategic Initiatives
- Large TAM opportunity: Expanding addressable market from INR 6,640 crores to INR 38,500 crores via entry into broader stationery categories.
- Multiple new products: Markers (Swipe brand in western zone), mechanical pencils, art materials; initial launch with outsourced manufacturing, all tooling owned by Linc.
- JV/Partnerships: Recent approval for a new e-commerce JV (65% Linc stake), Mitsubishi Pencil JV (bringing in new pen product lines at lower price points for India).
- Operational Insights
- Advertising & promotion spend: Budgeted at 2.5-3% of topline.
- Gross profit: Pentonic brand at 40% GP; ASP increased to INR 6.21/pen (from INR 5.67 last year), led by premiumization.
- Capex: Modernization of Kolkata facility on-track, targeting completion in Q2/Q3 FY26.
- Growth & Prioritization
- Future growth guidance: Targeting 15-20% top-line growth for next few years; EBITDA expected to increase 100bps for each 10% sales growth.
- ROCE focus: All new projects benchmarked to be ROCE-accretive.
- Working capital: Expected to improve with scale; inventory/debtor days to remain steady or improve.
- Challenges & Observations
- Volume decline: Drop in the low-margin Linc brand, offset by growth in Pentonic segment (volumes +10%).
- Export stability: Recent years’ export growth flat due to disruptions; targeting growth faster than domestic business going forward.
- Continued premiumization focus: Driving average realization increases, even as low-value products get discontinued:
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Disclaimer: This is not a recommendation to buy/sell any of the stocks mentioned above. The securities quoted are for illustration only and are not recommendatory.
Ekansh Mittal
Research Analyst
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