Intimation of Analyst/Investor Meet

Vardhman Textiles Limited

Scrip Code(s): Not provided in data

Vardhman Textiles Limited conducted its Q1 FY27 Earnings Conference Call on July 31, 2026. The event was an earnings call to discuss quarterly results and provide a strategic update.

Management Participants:

  • Mr. Neeraj Jain – Managing Director
  • Mr. Sushil Jhamb – Director, Raw Materials
  • Mr. Rajeev Thapar – Chief Financial Officer
  • Mr. Varun Malhotra – Head, Finance

Moderator: Ms. Aradhana Jain from 360 ONE Capital Markets

Key Discussion Points:

Financial Performance:

  • The company reported improvement in Q1 FY27 numbers in both percentage and absolute terms
  • Spinning business showed improvement due to better yarn realizations and partial trading gains from raw material price adjustments
  • Fabric business performance was below expectations due to two factors: missed U.S. sampling season because of tariff issues, and lag in passing yarn price increases to customers
  • Fabric utilization was lower due to addition of a new line in March that wasn't fully utilized
  • Spinning utilization remained full with good margins

Cotton Market Outlook:

  • Raw material stabilized in international market at USD 0.78-0.81 per pound (average ~USD 0.80)
  • Global cotton production concerns: India facing El Nino effects with quality concerns, Brazil area reduction by ~5%, Australia crop drop to 3.5 million bales (possibly 2.5 million next year), USA West Texas drought conditions, China reducing cotton growing areas
  • View that cotton prices may not decline significantly and could increase due to supply reduction and consumption increase
  • After 3 years, this may be the first year where production could be lower than consumption
  • Indian cotton prices increased from INR 55,000 to INR 64,000 per candy, aligned with international prices

Chinese Market Dynamics:

  • Chinese government selling reserve cotton at ~USD 1.15-1.16 per pound (after VAT reduction)
  • Strong Chinese demand for Indian yarn continues since November-December last year
  • Indian yarn exports increased from ~95-97 million kg to ~110 million kg, primarily to China
  • Chinese cotton prices at $1+ make Indian yarn competitive

Capacity and Industry Trends:

  • Industry estimated 12-13 million spindles closed permanently in India
  • New capacity additions minimal: 0.5 million spindles last year, estimated 700,000-800,000 this year
  • Yarn prices: 30s Combed at $3.20-3.30 internationally, aligned with Indian ex-mill prices

Capex Updates:

  • Biomass boiler in Baddi started last week
  • Another boiler in Madhya Pradesh expected in a month
  • Open-end project with 55-60 tons per day capacity started construction, expected in 10 months
  • Dhar PM MITRA park land expected by December 2026
  • Heavy investments in solar and wind power showing partial benefits, more expected in next 6 months

Synthetic Fabric Business:

  • New synthetic fabric line with 15 lakh meters per month capacity
  • Current utilization at 15-20%
  • Recent approvals from two big brands, production starting in August
  • Target: 70-80% utilization within next 6 months
  • Margin profile expected to be better than existing fabric business

Garment Business Expansion:

  • Capacity doubling from 2.2 million to 4.5 million shirts
  • Current capacity: 7,000 shirts per day (too small for customers)
  • Expected revenue at full capacity: ~INR 300 crores
  • Timeline: Full utilization expected in 1 year
  • Current mix: 30% export, 70% domestic brands

Q&A Highlights:

  • Order book: Export sold for 3 months, domestic for 45 days
  • Q2 should show better pricing benefits from April-May increases
  • Cotton inventory levels not disclosed
  • Yarn export composition: China and Bangladesh take 60% of Indian yarn exports
  • Total committed capex: INR 3,600 crores, with INR 800-900 crores spilling to next year
  • Margin outlook: Expected to moderate from current levels but not drop to previous lows of 10-11%; sustainable at 13-14% with conversion of $0.80-0.90 per kg
  • Cotton yarn spread in Q1: ~USD 0.90 per kg
  • ROCE improvement expected over 5-year horizon through better deployment of investment capital

Compliance Statement:

The call did not include specific statements about unpublished price sensitive information (UPSI).

Additional Notes Section

The conference call was a verbal discussion without presentation materials disclosed in the transcript. No financial data beyond what was discussed in the commentary was provided in this transcript. The call included detailed management commentary on business performance, market outlook, and strategic initiatives.