Key Financial Performance

FY26 Performance:

  • Total Income: INR 4,065 crores, representing 4% growth over previous year
  • EBITDA margin sustained at previous year's level despite significant headwinds
  • Company provided net discount of over INR 90 crores to customers to offset tariff burden
  • Net debt increased by INR 395 crores primarily due to capex investments, additional investments in BTPL, and increased working capital

Q4 FY26 Performance:

  • India operations grew by 2% despite steep tariffs
  • Africa business grew by 17% YoY supported by AGOA extension
  • Indian apparel exports declined by 10% during the period

Operational Highlights

Capacity and Expansion:

  • Committed capital expenditure of INR 170 crores for new capacity creation during FY26
  • Africa capacity: 40 million pieces at average realization of $2.5 per piece
  • India capacity: 52 million pieces at average realization of INR 500 per piece
  • Added 12 million pieces total capacity (7.5 million in India, 4.5 million in Africa)
  • Bhopal unit to add INR 175 crores revenue at steady state
  • Karnataka unit to add INR 125 crores revenue at steady state
  • Two additional units in planning stage could add another INR 300 crores revenue

BTPL Merger and Performance:

  • Merger with BTPL expected to conclude in Q3 FY27 subject to NCLT approval
  • BTPL Q4 FY26 revenue: INR 190 crores
  • BTPL EBITDA margin: -4% to -5% in Q4 FY26
  • BTPL capacity: 70 lakh meters per month, currently utilizing 50 lakh meters
  • Capacity can be expanded to 100 lakh meters with INR 50-60 crores additional capex
  • Expected FY27 revenue: INR 1,000+ crores
  • Target: EBITDA breakeven in H1 FY27, 6-7% EBITDA margin in H2 FY27

Tariff Impact and Normalization

Historical Impact:

  • Reciprocal tariff imposed at 50% for significant part of FY26
  • Africa business declined 19% due to AGOA uncertainties, resulting in INR 180 crores revenue drop
  • Most H1 FY27 orders booked during penal tariff regime

Current Status:

  • Withdrawal of penal 25% tariff in February 2026
  • U.S. Supreme Court ruling led to 10% tariff until July 24, 2026
  • AGOA restored until December 2026
  • Competitive position of production centers restored

Future Outlook:

  • Section 301 tariff possibility from July 2026, expected to be around 20% (similar to competing Asian nations)
  • Africa not under Section 301 investigation, likely to remain at 10% tariff

Business Development

New Customer Acquisition:

  • India operations: Signed two new premium customers (one American, one European) to yield revenue from FY27
  • Africa operations: Onboarded two new customers (one American, one European) to begin operations in FY27
  • Contribution from new customers expected to be ~5% of total revenue in first year

Market Trends:

  • U.S. retail sales grew 8% in CY25, UK grew 6%
  • U.S. sales remain strong in early 2026, UK showing signs of waning
  • Retailers paring down imports from second half CY25 due to market uncertainties
  • Consolidation in favor of stronger suppliers continues
  • China diversification trend benefits other regions including India

Raw Material and Cost Environment

Input Cost Pressures:

  • U.S./Iran war impacted textile value chain with increased costs of fuel, packaging, polyester, and trims
  • Cotton prices rose due to higher yarn exports to China, weather disruptions, and substitution from MMF to natural fibers
  • Shipping costs increased
  • Labor cost inflation: 35% wage increase in Haryana, 25% in UP from April 1

Hedging Policy:

  • Hedge 80% of revenues for two quarters ahead
  • Hedge 50% of revenues for subsequent two quarters
  • Current hedges at INR 87-91 to USD
  • Rupee depreciation advantage not yet realized due to hedging

Regional Business Outlook

Africa Operations:

  • FY26 revenue: ~$80 million
  • FY27 target: $115-120 million revenue
  • EBITDA margin target: 8-10% in H2 FY27
  • Currently operating 20-25% of one factory on two shifts
  • Labor availability better than India for second shift operations

India Operations:

  • FY27 growth expected to be higher than 10-12%
  • EBITDA margin target: 13-13.5% in steady state (FY28)
  • Labor availability challenges in South and NCR regions
  • Better labor availability in Central India, Madhya Pradesh, and Ranchi

Working Capital and Financial Position

Working Capital:

  • Increased by INR 200 crores in FY26 due to:
  • INR 50-60 crores additional inventory for Q1 FY27 order execution (Chinese holidays)
  • Customer mix changes affecting receivables
  • Volume increases in Gokaldas and Atraco
  • Plan to reduce working capital by INR 75-100 crores in FY27
  • BTPL merger will bring additional working capital requirements

Debt Position:

  • Net debt increased by INR 395 crores in FY26
  • Driven by capex investments, BTPL investments, and working capital needs

Strategic Initiatives and Guidance

Capacity Expansion Plans:

  • Two new factories in planning stage
  • Estimated capex: INR 80-100 crores spread over 2 years
  • Decision on new capacity to be taken in next quarter based on tariff/geopolitical situation

Margin Outlook:

  • Expect 2%+ improvement in margins YoY in FY27
  • H1 FY27 still affected by sharper pricing given during high tariff period
  • H2 FY27 to benefit from normalized pricing
  • Long-term steady state targets: India 13-13.5%, Africa 10-10.5%, BTPL 12-14%

Revenue Guidance:

  • Expect much more than 10-12% growth in FY27
  • Growth driven by tariff normalization, new customers, and capacity expansion
  • Not factoring in potential UK or EU FTA benefits until implemented

Risk Factors

Geopolitical Risks:

  • Section 301 tariff decision expected July 2026
  • AGOA expiry December 2026 (likely to be extended)
  • Middle East conflict impacting raw material costs
  • Ukraine war continuing to pressure EU markets

Market Risks:

  • Inflation across economies could impact consumer spending
  • Inventory paring by retailers may affect short-term demand
  • Raw material cost volatility
  • Currency volatility despite hedging policy