Company Overview

S.P. Apparels Limited (SPAL) is a leading manufacturer and exporter of knitted garments with a vertically integrated manufacturing model spanning spinning, dyeing, processing, and garmenting. The company specializes in infant wear and children's apparel for global markets, catering to customers across the US, Europe, and UK.

Financial Performance

S.P. Apparels reported strong financial results for FY26 with consolidated revenue of ₹15,786.37 million (13.2% growth from FY25) and net profit after tax of ₹1,009.45 million (6.15% growth). Standalone performance showed revenue of ₹11,134.38 million (13.4% growth) and PAT of ₹878.42 million. Key financial ratios included a current ratio of 1.42, debt-to-equity ratio of 0.31, and inventory turnover ratio of 1.48 (improved from 1.27 in FY25).

Subsidiary Performance and Acquisition

The company completed 100% acquisition of Young Brand Apparel Private Limited for ₹1,523.01 million, resulting in goodwill of ₹178.74 million. Subsidiaries showed mixed performance: Young Brand Apparel reported ₹3,212.6 million revenue but was impacted by US tariff developments; S.P. Retail Ventures improved EBITDA to ₹(6.1) million loss; S.P. Apparels (UK) turned EBITDA positive at ₹11.0 million; and the new Sri Lanka operations achieved approximately ₹450 million exports in their first year.

Corporate Actions and Capital Structure

The Board recommended a dividend of ₹3 per equity share (30% on face value) and approved a 5:1 stock split subject to shareholder approval. The company allotted 46,283 equity shares under its ESOP plan. Total borrowings stood at ₹4,002.19 million with net debt-to-equity ratio of 38%. The company maintained strong credit ratings of [ICRA]AA- stable for long-term and [ICRA]A1+ for short-term facilities.

Risk Management and Foreign Exchange Exposure

The company faces significant foreign exchange risk with exposure to USD, GBP, and EUR currencies. A 10% rupee weakening would decrease profit by ₹60.36 million. Derivative financial instruments showed ₹134.40 million in liabilities with forward contracts outstanding for USD 15.51 million, EUR 8.53 million, and GBP 6.56 million. Interest rate risk exposure included ₹3,346.35 million in variable rate instruments where a 100 bps increase would decrease profit by ₹33.46 million.

Operational Highlights and Expansion

The company expanded manufacturing to Sri Lanka with plans to scale to four factories within 12 months. It maintained 86% renewable power consumption from windmills and solar. Export performance remained strong benefiting from India-UK FTA providing duty-free access and export incentives under RoDTEP and RoSCTL schemes. Geographic revenue split was 85.2% outside India and 14.8% within India.

Related Party Transactions and Contingencies

Significant related party transactions included ₹709.68 million in loans to associates and ₹20.48 million in royalty payments. Contingent liabilities included ₹12.70 million ESI demand under appeal, ₹334.82 million EPCG license obligations, ₹57.02 million GST demand under appeal, and ₹1,028.25 million in corporate guarantees to subsidiaries.

Regulatory Compliance and Governance

The company complied with SEBI Listing Regulations and Companies Act requirements, receiving an unqualified auditor's opinion. The board composition includes eight directors with structured committees for audit, nomination, risk management, and CSR. CSR activities focused on education, skill development, and healthcare with ₹25.23 million spent against obligation of ₹25.30 million.