Vardhman Textiles (502986) Q1 24/25 earnings summary

Executive summary

• Business performance improved due to strategic raw material coverage, favorable yarn prices early in the quarter, and robust international demand driven by the China Plus One trend, especially from US buyers, with India gaining as a preferred sourcing destination.

• Company leveraged cost efficiencies and internal initiatives to maintain margins despite market volatility.

• Consolidated revenue from operations for Q1 FY25 was ₹2,308.59 crore, down from ₹2,459.41 crore in the previous quarter but nearly flat year-over-year.

• Consolidated net profit after tax stood at ₹239.77 crore, up from ₹202.13 crore in the previous quarter and ₹136.60 crore in Q1 FY24.

• Board approved the unaudited financial results on July 30, 2024, after review by the Audit Committee and statutory auditors.

Financial highlights

• Achieved 15% margin in Q1 FY25, a significant improvement after a prolonged period.

• Q1 revenue was approximately INR 2,300 crore; annualized, this could reach INR 9,200 crore, with a stretch target of INR 10,000 crore for FY25.

• Gross debt as of June stood at INR 1,150 crore (INR 900 crore long-term), with cash and investments at INR 1,800 crore.

• Standalone net profit after tax was ₹226.90 crore, up from ₹186.63 crore in the previous quarter and ₹131.43 crore in Q1 FY24.

• Earnings per share (consolidated, not annualised) for the quarter was ₹8.38, up from ₹7.05 in the previous quarter.

Outlook and guidance

• Management is optimistic about reaching INR 10,000 crore in sales for FY25, though this is considered an optimistic target given current capacity.

• Sustaining 15% margins will be challenging due to high domestic cotton prices and global price pressures; improvement depends on volume growth and product mix.

• Expansion and modernization expected to deliver cost and flexibility benefits over the next 1.5 years.

• No explicit forward-looking guidance provided, but results reflect improved profitability and stable revenue in a challenging market.