Decent growth, margin beat, but fabric profitability strained by input costs

Delivered 14.9% YoY growth (₹1155 Cr to ₹1322 Cr)

EBITDA ₹116 Cr (Q2 FY26: ~₹94 Cr) = 23.2% QoQ, ~23% YoY growth

Delivered ₹25.6 Cr, up from ~₹6 Cr YoY (327% growth, claim implied ~300%)

Numbers stated in call match delivered segment growth; strong domestic lead

₹116 Cr / ₹1,322 Cr = 8.77% (slight rounding in call, meets guide)

Q1 call: 'expect quarters similar to or better than 8% EBITDA margin.' Q2 delivered 8.7%. H2 outlook stated as 'similar or slightly better' vs H1, not a formal numeric raise or cut.

Q1 call did not highlight denim profitability issue. Q2 reveals fabric PBIT negative for 3 straight quarters. Yarn/polyester inflation not expected to ease until Q3-Q4, delaying recovery.

Knitting expansion (₹92 Cr) on track for December (Q4) completion. GreenPET (₹500 Cr capacity) still pre-commissioning, targeting Q1 FY28 ramp. NDS9 JV still in negotiation/setup, 12+ months from now.

New emphasis on value-added, downstream (garments, premium knits). Stepping away from commodity yarn/fabric. Strategic shift to higher-margin segments; execution risk but directionally positive.

Input costs crushed margins: fiber/yarn prices up ₹16K/candy (₹60/kg); polyester ₹96→₹146; gas/dyes/chemicals up. Despite 100% utilization, can only pass 25-50% to customers. Temporary. Expect 'at least in 4th quarter we will be better.' Discussions ongoing for next season pricing with brands and domestic accounts.

Priority is debt repayment (₹95 Cr in H1). Then two ongoing projects (B2B NDS9, garment JV) with equity participation from operations. Both are growth-stage; normal capex post-expansion.

Interest only; depreciation not started (project not commissioned). Cost headwinds also impacting EBIT. Knitting ramp will improve Q4+. Fabric EBITDA targeting double digits (from current 8.7%). ROCE will improve once expansions operational. Cannot quantify benefit precisely.

Yarn/fiber prices increased, we able to pass largely to customers. But created issues with fabric manufacturers. Initially booked orders, price increases happened sharper than pass-on. Now discussions for next season. Difficult to share numbers. External environment challenging. Expected performance similar or slightly better comparing H1 to possible H2.

Cotton stocking gains <1/5 of revenue; not a trading business. Focused on efficiency, product mix, value-added. Internal steps being taken. Expect H2 'slightly better' than H1. This is estimate/projection, not firm. Second half likely better than first half reported.

Three focuses: (1) consolidate, improve product mix, right product per segment; (2) growth via projects — B2B NDS9 will complete next quarter, LNJ GreenPET likely Q1 FY28 operational (~₹200 Cr revenue), LNJ NDS9 garment JV 12+ months to complete; (3) focus on consolidating and growing both.

Q1 EBITDA margin 8.0%; Q2 delivered 8.7%; confirms guidance met/beat. No change to forward FY27 view.

H1 revenue ₹2,484 Cr (7.1% YoY growth). H2 expected 'slightly better.' Vague; contingent on cost stabilization and capex ramp.

₹92 Cr capex due completion December (Q4). Expected to add revenue and EBITDA. Magnitude not quantified. 250 MT printing capacity also coming online Q4.

Currently 8.7% overall. Denim is negative; if denim improves with yarn normalization, blended could reach 9-10%. But timeline unclear; no near-term commitment.

Targeting Q1 FY28 operational. ₹500 Cr capacity; management expects ₹200 Cr revenue, implying ~₹30 Cr EBITDA at 15%. Still pre-commissioning; execution risk.

Currently 6.5% (H1 FY27). Large capex and JV investments will dilute ROCE short-term before payoff.

On schedule. Will add capacity for knitting and 250 MT printing capacity. Expected to improve utilization and margins in Q4+ onwards.

RSWM 74% stake, partnership with Spain-based NDS9. Premium denim/knit garments for international clients. Will start contributing late FY28 or FY29.

B2B bottle-to-bottle recycling. ₹200 Cr incremental annual revenue expected. Is a subsidiary (100% RSWM), but capex externally financed (debt + equity support).

Yarn prices up ₹16K/candy (₹60/kg), polyester +₹50, dyes/chemicals +. Only 25-50% passthrough to customers. Denim at 100% utilization still runs negative PBIT. Escalation erodes margins faster than pricing negotiation.

Fabric division (denim & knit) PBIT negative for 3 consecutive quarters. Currently ~26% of revenue. Management calls it temporary; recovery expected Q4 with capex (₹92 Cr knitting expansion) and cost normalization. But timeline uncertain and no firm margin recovery target provided.

Three major projects underway: (1) Knitting expansion (₹92 Cr, on track Q4), (2) GreenPET (₹500 Cr capacity, targeting Q1 FY28), (3) NDS9 JV (₹208 Cr, 12+ months). All pre-operational. Delays or cost overruns would stress FCF and dilute ROCE further. Interest burden already ₹31.5 Cr in H1.

West Asia tensions (US, Israel, Iran), apparel exports experiencing slowdowns reflecting uneven demand. Order flow cited as 'challenging.' Exports are ~31% of H1 revenue (₹730 Cr). Uncertainty in international trade, commodity prices, and supply chains.

NPM at 1.9% (Q2), PAT ₹25.6 Cr on ₹1,322 Cr revenue. High operational leverage to commodity prices (yarn, polyester, chemicals). Any further cost escalation or demand softness could quickly turn profits negative, especially in fabric division already at risk.