Vardhman Textiles (502986) Q4 17/18 earnings summary

Executive summary

• FY18 performance faced GST transition issues, rupee appreciation, synthetic imports and volatile cotton costs; revenues rose, while profit fell sharply versus a prior year with significant one-off gains.

• Modernisation, capacity expansion, cost control and niche-product investment were positioned to support stronger revenue momentum and margins as markets recover.

Financial highlights

• Standalone revenue from operations rose 2.8% YoY to ₹5,851.37 crore; PAT fell to ₹545.76 crore from ₹1,001.59 crore, and basic EPS was ₹96.41 versus ₹163.67.

• Consolidated revenue was ₹6,248.27 crore versus ₹6,029.95 crore; PAT was ₹592.44 crore versus ₹994.27 crore, and basic EPS was ₹106.56 versus ₹163.11.

• Standalone EBITDA was ₹1,043.62 crore versus ₹1,759.43 crore; prior-year other income included ₹313.01 crore from the VYTL stake sale, ₹52.80 crore from asset transfer and ₹36.38 crore from a share-buyback gain.

• Standalone exports rose 0.21% YoY to ₹2,211.43 crore; domestic yarn volumes increased 3% to 75.87 million kg, while yarn exports rose 1.31% to 75 million kg.

Outlook and guidance

• Planned FY19–FY20 capex of ~₹1,400 crore, split equally between yarn and fabric, targets ~100,000 additional spindles and processing capacity growth to 180 million metres annually by FY20.

• Additional fabric production lines were expected to be ready by Feb–Mar 2019; optimal utilisation and full-year impact were expected in FY20.

• Yarn strategy prioritises emerging export markets, quality and new product lines; fabric plans focus on wider offerings aligned with changing consumer preferences.

• Management expected Indian textile consumption to benefit from GDP and per-capita income growth and expressed optimism about industry prospects.