Banswara Syntex Limited Q2 & H1 FY27 Earnings Call Summary

Management Participants

  • Mr. Ravindra Kumar Toshniwal – Vice Chairman
  • Mr. Shaleen Toshniwal – Managing Director
  • Ms. Kavita Gandhi – Chief Financial Officer
  • SGA, Investor Relations Advisors

Overall Financial Performance (Q2 FY27)

  • Total Income: INR 358.4 crores, registering a quarter-on-quarter growth of 11.2%.
  • EBITDA: INR 36.5 crores, increased by 23.9% quarter-on-quarter (corrected from a misstatement of 23.9% margin growth).
  • EBITDA Margin: 10.2%, improving from 9.1% in Q1 FY27.
  • Profit After Tax (PAT): INR 8.1 crores, increased by 84% quarter-on-quarter from INR 4.4 crores in Q2 FY26.

Overall Financial Performance (H1 FY27)

  • Total Income: INR 680.8 crores, a growth of 3.6% year-on-year compared to INR 657.1 crores in H1 FY26.
  • EBITDA: INR 66 crores, increased by 18.9% year-on-year from INR 55.5 crores.
  • EBITDA Margin: 9.7% overall, improving from 8.5% in H1 FY26.
  • Profit After Tax (PAT): INR 12.5 crores, increased significantly by 124.6% year-on-year compared with INR 5.6 crores in H1 FY26.

Balance Sheet & Capital Structure

  • Net Debt: Stood at INR 515 crores as of 30th September 2026.
  • Debt Increase: Increased by INR 43.28 crores during the first half, primarily due to working capital requirements driven by increased raw material prices.

Divisional Performance Review

Yarn Division (Q2 FY27)
  • Revenue: INR 103 crores (compared to INR 112 crores in Q2 FY26).
  • H1 FY27 Revenue: INR 199 crores (compared to INR 222 crores in H1 FY26). The drop is attributed to a significant increase in internal consumption.
  • Capacity Utilization: Improved to 84% in Q2 (from 81% in Q2 FY26 and 70% in Q1 FY27).
  • Challenges: Elevated raw material prices and export freight costs impacted performance. Expected orders from regular export customers were lower due to freight challenges.
Fabric Division (Q2 FY27)
  • Revenue: INR 157 crores, a growth of about 5% from INR 149 crores in Q2 FY26.
  • Sales Volume: 58 lakh meters (compared to 59 lakh meters in Q2 FY26).
  • H1 FY27 Revenue: INR 303 crores, a 14% increase from INR 266 crores in H1 FY26.
  • H1 FY27 Sales Volume: 118 lakh meters, an 8% growth from 109 lakh meters.
  • Capacity Utilization: Improved to 82% in Q2 (from 77% YoY) and 81% for H1 (from 73% YoY).
  • Outlook: Order visibility for Q3 FY27 remains encouraging.
Garment Division (Q2 FY27)
  • Revenue: INR 90 crores, up 13% year-on-year and 30% sequentially.
  • Sales Volume: 10 lakh pieces in Q2.
  • H1 FY27 Revenue: INR 160 crores (compared with INR 155 crores in H1 FY26).
  • H1 FY27 Sales Volume: 18 lakh pieces.
  • Capacity Utilization: Stood at 74% in H1 FY27 (corrected from a misstatement; was 78% in H1 FY26).
  • Outlook: Strong order book, particularly in jackets. Positive momentum expected to continue in Q3 and H2 FY27, boosted by UK and EU Free Trade Agreements (FTAs).

Guidance & Outlook

Management reconfirmed its FY27 guidance, expecting a stronger second half supported by healthy order books in both garments and fabrics. The priority remains efficient execution and improving operational efficiency.

Capital Expenditure (Capex) Update

  • FY27 Guidance: INR 130-140 crores.
  • H1 FY27 Spend: INR 36 crores.
  • Management Commentary: No significant delay; maximum projects, including ETP [Effluent Treatment Plant] and environment-related works, are expected to be completed in H2 FY27.

Expansion Projects

  • Surat Garment Facility: Awaiting customs NOC as it is in an SEZ. Expected to be de-notified by January or February 2027 and become operational by April 2027 (Q1 FY28).
  • Expected Output: The Surat facility is projected to contribute an additional top line of INR 150-200 crores once fully operationalized over two years.
  • Associated Capex: Estimated between INR 30-50 crores for the Surat expansion, depending on the level of automation.

Key Operational & Strategic Highlights from Q&A

  • Volume vs. Value: Management emphasized a strategic focus on selling value-added products over volume, which drove margin improvement despite some volume declines.
  • Raw Material Price Pressure: Prices for key inputs like PTA, MEG, and polyester have increased by 25-30% due to the West Asia crisis, creating a lag in fully passing costs to customers.
  • Working Capital Management: Focus is on reducing slow-moving yarn inventory, improving accounts receivable, and reducing production cycle times to manage working capital.
  • Growth Markets: Europe is identified as the strongest growth opportunity due to an expected FTA by June/July 2027. The UK FTA is already operational.
  • New Client Onboarding: Successfully onboarded new clients including C&A (expected INR 5 Cr orders in FY27, INR 20 Cr+ potential next year) and Reserved (a Polish company). In advanced talks with Marks & Spencer.
  • Margin Expectations: EBITDA margins for European garment business are expected to be between 12% to 15%.
  • Internal Consumption: Approximately 40% of yarn production is consumed internally, supporting vertical integration and value-added fabric production.
  • Product Mix: Significant increase in sale of stretch fabrics (up 30-40% YoY), consuming 450-500 tons of stretch yarn per month internally.