Sanathan Textiles (SANATHAN) Q3 25/26 earnings summary

Executive summary

• Q3 FY26 was marked by industry volatility, global trade disruptions, regulatory changes, and shifting demand, but operations remained resilient with Silvassa at optimal capacity and Punjab ramping up from 350 to 450 TPD, targeting 700 TPD by Q4 FY26.

• Demand was impacted by elevated U.S. tariffs, GST rate changes, and new BIS/QCO norms, leading to temporary inventory buildup and margin pressure, but capacity was fully utilized by pivoting to domestic markets.

• Recent resolution of India-U.S. tariff issues and the India-E.U. trade agreement are expected to revive export demand and open new market opportunities, supported by government focus on man-made fibers.

• Strategic focus remains on disciplined capacity expansion, technical textile growth, and strengthening the integrated yarn portfolio, with new projects in Madhya Pradesh and Silvassa planned for FY27.

• Board approved unaudited standalone and consolidated financial results for Q3 and 9M FY26, and re-appointed Mrs. Rupal Vora as Additional Director for three years from April 1, 2026.

Financial highlights

• Q3 FY26 consolidated revenue was INR 1,078.67 crore, up 31.9% QoQ and 45.2% YoY, driven by Punjab facility ramp-up; normalized consolidated EBITDA was INR 59.9 crore (5.6% margin), with one-time costs for labor code and Punjab scale-up.

• Q3 FY26 standalone revenue was INR 768.07 crore, with PAT of INR 38.09 crore (5% margin); consolidated PAT was negative at INR -4.77 crore.

• For 9M FY26, consolidated revenue was INR 2,642 crore (up 16.6% YoY), normalized EBITDA INR 192.6 crore, and PAT INR 55.8 crore.

• One-time costs in Q3 included INR 2.7 crore for labor code-linked gratuity and INR 3.5 crore for Punjab capacity scale-up.

• Basic and diluted EPS (consolidated) for Q3 FY26 was ₹(0.57); for nine months, ₹6.60.

Outlook and guidance

• Q4 FY26 consolidated revenue is guided at INR 1,200 crore with EBITDA between INR 90-100 crore.

• FY27 guidance: consolidated revenue of INR 5,700 crore with double-digit EBITDA margin.

• Full phase one capacity at Punjab (700 TPD) expected by end of Q4 FY26, with phase II expansion to 950 TPD targeted for FY28.

• Technical Textile Yarn capacity at Silvassa to double to 18,000 MTPA in Q1 FY27, with full revenue impact from Q2.

• Cotton yarn project in Madhya Pradesh to commence post-monsoon 2026, with revenue contribution from H2 FY28.