Sanathan Textiles consol PAT falls 41% YoY to ₹23.8 Cr despite 79% revenue growth
PAT -41.08% YoY · revenue +79.08% · margins compressing
₹1,334.74 Cr
+79.08% YoY
₹23.82 Cr
-41.08% YoY
1.78%
-3.6pp YoY
₹2.82
On a consolidated basis (primary), Sanathan Textiles posted revenue of ₹1,334.74 Cr, up 79.1% YoY (₹745.34 Cr) and 14.2% QoQ (₹1,169.18 Cr), but consolidated PAT fell 41.1% YoY to ₹23.82 Cr even as it rose 10.4% QoQ (₹21.57 Cr). This is a sharp basis divergence worth flagging: standalone (parent-only) PAT actually grew 37.6% YoY to ₹64.95 Cr on modest 8.4% revenue growth (₹813.13 Cr vs ₹749.88 Cr) — the entire consolidated profit shortfall traces to the two subsidiaries, Sanathan Polycot Private Limited and Universal Texturisers Private Limited, which together generated ₹573.39 Cr of revenue this quarter but a combined net loss of ₹41.26 Cr, per the auditor's review report. There are no exceptional items on either statement, so this is an operating-cost story, not a one-off.
Q1 FY-2027 vs prior quarters
The margin bridge confirms a capex-ramp narrative rather than demand weakness: consolidated finance costs jumped to ₹38.63 Cr from ₹4.62 Cr a year ago (8.4x) and depreciation rose to ₹34.72 Cr from ₹11.71 Cr (3x), while consolidated other income shrank to ₹3.59 Cr from ₹2.11 Cr. Consolidated OPM held roughly flat sequentially at 8.10% (Q4 FY26: 8.08%) but compressed from 9.33% a year ago, and NPM fell to 1.79% from 5.41% YoY. This lines up with management's own framing from the prior (Q4 FY26) concall, where it guided FY27 consolidated revenue of ₹5,600-5,700 Cr and EBITDA above ₹500 Cr, explicitly flagging that margin improvement would accelerate only "as the Punjab facility stabilizes and product mix diversifies." This quarter's subsidiary losses and the finance-cost/depreciation surge are consistent with that stabilization phase rather than a deviation from it — consolidated EBITDA (PBT + finance costs + depreciation − other income) came to ₹108.08 Cr, about 21.6% of the full-year ₹500 Cr target, against revenue of ₹1,334.74 Cr, roughly 23.6% of the ₹5,650 Cr guidance midpoint. On that basis the quarter reads as on-track rather than a miss, though double-digit EBITDA margins guided for the year are not yet visible. No specific Street/consensus estimate for this quarter could be located in available previews, so vs-Street is unknown rather than assumed. Separately, the Board also approved doubling Technical Textiles yarn capacity at the Silvassa facility (9,000 to 18,000 MTPA), targeted for commercial commissioning in August 2026, adding to the capacity pipeline alongside the Punjab expansion already underway.
The stock went into the print at ₹489, up 9.9% over the past month of trading.
For context: PAT has now risen for 2 consecutive quarters; revenue is at a 6-quarter high.
Management provided a strong outlook for FY27, projecting consolidated revenue between INR 5,600 to INR 5,700 crores, with a significant increase in consolidated EBITDA to north of INR 500 crores. They anticipate an acceleration in margin improvement as the Punjab facility stabilizes and product mix diversifies, target
— This quarter: met
Going into Q2 FY27, the read-through is that consolidated profitability should track the pace at which the loss-making subsidiaries stabilize and the new Silvassa capacity starts contributing, while the standalone yarn business continues to compound profitably on its own.
W1
Subsidiary stabilization: combined subsidiary net loss was ₹41.26 Cr on ₹573.39 Cr revenue this quarter — watch for a swing to profit as the Punjab-linked capacity stabilizes, per management's FY27 double-digit EBITDA margin target
W2
FY27 guidance pacing: Q1 consolidated revenue ₹1,334.74 Cr is ~23.6% of the ₹5,600-5,700 Cr full-year guidance midpoint and consolidated EBITDA ₹108.08 Cr is ~21.6% of the >₹500 Cr target — watch whether subsequent quarters accelerate to close the gap
W3
Silvassa Technical Textiles capacity doubling (9,000 to 18,000 MTPA) targeted for commissioning in August 2026 — watch Q2 FY27 for its contribution to volumes and margins
Strong volume, margin pressure from capacity commissioning
The verdict, the claims that held up, the sharpest analyst exchanges, and the risks — the earnings call, decoded from the transcript.
Hold
confidence 6/10
Grade B
Hit revenue and EBITDA absolute targets. Missed PAT due to non-recurring depreciation (transparent disclosure). Reaffirmed FY27 guidance, but Q1 (108 Cr EBITDA) is only 22% of full-year guide, requiring 123 Cr/quarter Q2–Q4 avg—aggressive.
Cautiously Optimistic
next 1–2 quarters
Optimistic
multi-year
Strong operational execution (no lost production, capacity coming online) and maintained FY27 guidance (520–540 Cr EBITDA) signal credibility. But Q1 shows the margin headwind: consolidated EBITDA margin compressed 123 bps YoY to 8.1%, and PAT crashed -41% as Punjab depreciation and finance costs ($57 Cr) swamped operational gains. Standalone Silvassa is firing (+35% EBITDA), but consolidated drag is real. Upside hinges on Punjab margin recovery from current 2.2% to 10%+, which is unproven.
₹1334.74 Cr
Revenue · +79.08% YoY₹23.82 Cr
Reported PAT · −41.1% YoYCompressing
Margins · vs guidance: CorroboratedDid the claims hold up?
Consolidated revenue 1334.74 Cr, up 79% YoY
METDelivered 1334.7 Cr; aligns exactly
PAT crashed due to Punjab depreciation and finance costs
METDepreciation +23 Cr (11.7→34.7), finance costs +34 Cr (4.62→38.6); 57 Cr headwinds fully explain -41% YoY PAT
Consolidated EBITDA margin 8.1% broadly stable sequentially
OVERSTATEDDelivered 8.1%; but YoY margin fell 123 bps (9.33%→8.1%), contradicting 'stable' framing
Punjab achieved 80% utilization in Q1
METStated explicitly; 100k MT total sales, 46k MT from Punjab on 700 MT/day capacity implies ~80%
Standalone Silvassa EBITDA up 35.52% YoY
METDelivered from financial statement: 94.93 Cr vs 70.05 Cr = 35.5% growth
Earnings quality
What changed since the last call
Consolidated EBITDA margin compressed
DowngradeQ1 FY27 8.1% vs Q1 FY26 9.33% (−123 bps); standalone Silvassa margin +233 bps (9.34%→11.67%) masked by new facility drag
PAT collapsed despite revenue surge
Downgrade23.8 Cr vs 40.43 Cr YoY (−41%); ₹57 Cr depreciation + finance cost hit fully offsets ₹55% EBITDA growth
FY27 EBITDA guidance formally quantified
NeutralPrior call stated '>500 Cr'; now 520–540 Cr range given. Technically a clarification, not raised or cut.
Punjab trajectory confirmed on track
UpgradePhase 2 commissioning by Q1 FY28 as planned; Phase 1 80% utilization Q1, targeting 85–96% by Q3
Cotton plant expansion formally announced
NewNew capex commitment: ₹400 Cr for 72,500 spindles at MP; 0.8 asset turn = ₹350–375 Cr incremental revenue
The Q&A
Analysts pressed hard on margin path: Sagar Tanna challenged why Punjab can't hit 11–12% EBITDA margin; Paresh pivoted to ₹30k per-ton metric (deflection). Raman KV asked for spread figures; Paresh withheld (strategy hold?). Overall: tough but not hostile; management held firm on guidance without cracking.
Punjab profitability and margin path — Sagar Tanna, Alchemie Ventures
PartialParesh pivoted to EBITDA per ton (₹30k target for Punjab filament next year vs ₹11k Silvassa blended). Avoided direct margin % answer, emphasizing per-ton efficiency over margin ratios.
Technical textiles expansion timing — Charchit Maloo, Genuity Capital
AnsweredParesh: 'Very shortly' commissioning. Out of 9k MT additional capacity, expect 7.5k MT in FY27. Q2 onwards ramp visible.
Phase 2 timing and utilization ramp — Charchit Maloo, Genuity Capital
AnsweredParesh: On track. Phase 1 currently 80%, targeting 85–90% Q2, 95–96% Q3. Phase 2 adds 200 MT/day, 1.5–2 quarters to full capacity ramp.
Raw material inventory policy — Charchit Maloo, Genuity Capital
Answered8–10 days raw material inventory at quarter-end; normal management, not excessive buildup. Disciplined procurement.
EBITDA per ton metrics and facility comparison — Raman KV, Sequent Investments
AnsweredParesh: ₹30k for filament/polyester only at Punjab; ₹11k Silvassa is blended (polyester + cotton + technical). Not directly comparable.
Cotton plant capex and returns — Raman KV, Sequent Investments
Answered₹400 Cr capex for 72,500 spindles. Asset turn 0.8–0.85 = ₹350–375 Cr incremental revenue. Clear and direct.
Spread movement Q4 to Q1 — Raman KV, Sequent Investments
PartialParesh: 'Spreads improved across divisions, all three verticals.' Did not provide individual figures. Vague.
Inventory by product vertical — Raman KV, Sequent Investments
AnsweredPolyester: 12–13 days (normal 10–12), cotton: ~7 days (target). Slightly elevated but within policy.
Post-June demand outlook — Parth Sodha, Trinetra Asset Managers
AnsweredExpecting better demand Q2–Q3, especially from end-Aug onwards as conditions normalize.
FY27 EBITDA guidance hold — Parth Sodha, Trinetra Asset Managers
AnsweredParesh: 'Maintaining guidance of EBITDA between about ₹520 crores to ₹540 crores.' Firm reaffirmation.
PTA/MEG raw material availability — Amit Kumar, Determined Investor
AnsweredImports still ~2M tonnes/year; GAIL facility commissioning now (Q2), IOCL Paradip by year-end will reduce dependence. Punjab: all from IOCL Panipat. Silvassa: 50–60% imported, 40% domestic (contracted).
Long-term PTA contracting strategy — Amit Kumar, Determined Investor
AnsweredParesh: In talks but not finalized. Will transition from import to domestic in phased manner as new plants come online.
Guidance
FY27 consolidated revenue path to 5.6–5.7k Cr (implied by 520–540 Cr EBITDA at ~9–10% margin)
HighAnchored on Q1 base (1,335 Cr), Phase 2 ramp, technical textile expansion. But requires Q2–4 avg ~380–390 Cr/quarter
Consolidated EBITDA margin target 9–10% implied for FY27 (520–540 Cr / 5.6–5.7k Cr)
MediumCurrent 8.1% margin suggests mid-single-digit expansion needed; depends entirely on Punjab margin recovery from 2.2% baseline
Double-digit EBITDA margins for mid-term (post-Phase 2, post-technical textile ramp)
LowStandalone Silvassa at 11.67% shows it's achievable; consolidated depends on bringing Punjab to 10%+ (unproven)
Phase 2 Punjab capex complete by Q1 FY28; cotton plant (MP) 400 Cr capex ongoing
HighPhase 1 commissioned Q1 FY27 on track; Phase 2 add 200 MT/day. Cotton plant not yet started; multi-year build
Risks the call surfaced
Capacity execution
HighThree concurrent expansions (Phase 2 Punjab, technical +7.5k MT FY27, cotton 72.5k spindles). Complexity high; any delay pushes FY27–28 EBITDA guidance miss.
Punjab profitability
HighPunjab generated ₹550 Cr revenue Q1 but only ₹12 Cr EBITDA. Needs 5x margin uplift to justify ₹1,000+ Cr capex. Risk: capacity utilization plateaus, product mix suboptimal, or price competition erodes spreads.
Raw material volatility
MediumQ1 saw sharp PTA/MEG and cotton inflation; buyers deferred purchases. GAIL (PTA) commissioning now, IOCL Paradip by year-end will reduce imports. Risk: commissioning delays, pricing stays high, or supply chains disrupt again.
Demand normalization risk
MediumQ1 buyers deferred purchases in April–May due to price shock. June showed early recovery. But if raw material prices normalize rapidly, will buyer demand stick or collapse as deferrals cancel out? Q2–Q4 could miss consensus.
Capex intensity and returns
MediumCotton plant expected ₹350–375 Cr incremental revenue from ₹400 Cr capex (0.87 asset turn). Implies single-digit returns post-margin. If margins compress (as they have), or execution delays, IRR could be 5–6%. Competes for capital vs margin recovery at existing assets.
Management
Score 7/10. Paresh and Sammir clear on operational metrics and capacity roadmap. Sanjay Shah numbers-focused, no spin. But spread figures and segment-wise margin path withheld; deflection on Punjab EBITDA % target (pivoted to per-ton). Transparency moderate. Phase 1 Punjab commissioned on schedule. Standalone Silvassa delivering (+35.52% EBITDA YoY). But consolidated PAT missed YoY due to depreciation (explained but real). FY27 guidance maintained despite soft Q1; credible but requires aggressive ramp.
1 · Q2 FY27 (Jul-Sep)
Demand recovery post-June normalization; technical textiles commercial production launch
2 · Q3 FY27
Punjab Phase 1 utilization target 95–96%; renewable power (32 MW) phases online
3 · Q1 FY28
Punjab Phase 2 commissioned (700→900 MT/day); technical textile expansion at full capacity
Upside hinges on Punjab margin recovery from current 2.2% to 10%+, which is unproven.