Record quarter, but working capital slipped—growth confirmed, execution to watch

Revenue ₹1,045.3 Cr delivered; YoY growth 33.0%; PAT ₹53.4 Cr (130.9% YoY)

PAT ₹53.4 Cr and EBITDA ₹127 Cr match claim exactly; corroborate highest-ever

H1 PAT ₹94 Cr puts company at 113% of annualized FY26 PAT; H2 requires ₹72 Cr (~35% of H1 run-rate) to hit ₹166 Cr target. Pace is on track.

Claim is forward-looking, not yet fully reflected. Current ~35% of energy from captive power (up from ~10% YoY); end-FY27 target 50%. Benefit partially accrued, exact split opaque.

Debtor days rose from 67 (March) to 77 (Sept), driven by government business (~10% revenue, long-cycle) and export delays. Management promised improvement by March; still unverified.

Debtor days rose 67→77 days (10-day deterioration) due to government orders (₹200 Cr in H1, long-cycle) and export delays. Prior quarter guidance on normalization not met.

Net D/E rose to 1.15 from 1.0 due to capex financing. Management reiterated long-term target 1.0–1.1x; this is expected, not a miss.

April call aspired to double PAT in FY27 (~₹166 Cr). Call reiterates 'aspire' and 'relatively confident'; no new/higher numeric target. Tone cautious despite 131% YoY delivered.

₹900 Cr disclosed for H2 FY27. Yarn capacity to reach 60–70% on cotton side. Other work still in progress; will detail more in coming quarters.

We did not give formal guidance last call. We aspire to do it and are 'relatively confident' we are on track. So, being conservative may be better, but let us see where numbers land.

Already in energy costs, so portion already on the books. ₹50–55 Cr still pending realization on commissioned hereon. Renewable is seasonal; numbers may vary quarterly.

D/E at 1.15 is elevated due to capex phase; will come back to 1.0–1.1x in longer run. Capex 70–75% debt-funded. Expected to reach ₹1,000–1,500 Cr net debt at end of cycle, then come down with repayment.

Garment is new to us (2% of revenue). Seasonal demand; some orders on-call basis. H2 should be better. Still learning as we speak.

Case-by-case basis. No fixed policy. Yarn prices easier to pass through than denim. We don't hedge cotton prices. Cotton stocks peak at March; now at lower levels.

Order visibility is 45–60 days across divisions. This is typical; remains constant throughout the year.

Still <10% of revenue. We are wary of risk. Govt. orders need L1 credentials and technical qualification. Margins protected; we qualify for most that we bid. It is a risk-reward business.

Asset turnover will be hard to determine due to in-house denim use and machinery modernization. ROCE is 12–13% today; we aspire to 15%+ long-term; ROE at 13.5–14%, aiming for 16–18%.

Receivables high due to govt. orders (long-cycle) and exports (delayed shipments). We aspire to bring them back to March levels (45–60 days). Expect operating cash flow positive by March.

H1 ₹1,906 Cr; at current run-rate (₹1,045 Q2), H2 pace ~₹850–900 Cr (normal seasonal). No capex-driven acceleration visible yet in near-term.

Q2 OPM 11.4%; renewable benefit partially pending. Garment margin not separately disclosed; denim and yarn margins aligned per mgmt. EBITDA margin expansion structural.

₹600–620 Cr on yarn capacity (60–70% adder), ₹200+ Cr renewable energy, ₹100+ Cr on machinery modernization. Debt-funded 70–75%.

Debtor days rose from 67 to 77 days in Q2 due to government orders (~₹200 Cr in H1, long-cycle) and export delays. Cash flow remains negative despite EBITDA growth.

Net D/E elevated to 1.15x from prior 1.0x due to capex phase. ₹1,500 Cr capex planned; 70–75% debt-funded. Net debt expected to reach ₹1,500 Cr at peak before repayment cycle.

Garment business utilization only 37% in Q2, expected 50–60% full year. Garment is new to Sangam (~2% of revenue). Seasonal orders and learning curve create execution risk.

Management noted Bangladesh and Vietnam are mainly into garmenting; Sangam competing on yarn/denim where it has cost advantage. Cotton prices volatile; no hedging program in place.

Renewable energy claimed to yield ₹50–55 Cr EBITDA annually; some already accrued, some pending. Seasonality means quarterly variation. Capex ₹900 Cr in H2 FY27 still under execution.