Vardhman Textiles (502986) Q4 24/25 earnings summary

Executive summary

• Q4 and FY25 results showed improvement over the previous quarter and the same quarter last year, despite ongoing global and domestic challenges in the textile sector.

• Audited standalone and consolidated financial results for the year ended March 31, 2025, were approved and reported with an unmodified auditor's opinion.

• The spinning business faced significant headwinds due to high domestic cotton prices and regulatory barriers on synthetic fiber imports, making Indian mills less competitive.

• Fabric segment delivered one of its best quarters, running at full capacity, driven by strong demand in key export markets and successful product positioning.

• Management remains optimistic about leveraging India's tariff advantages and ongoing modernization to drive future growth.

Financial highlights

• Standalone revenue from operations for FY25 was Rs. 9,587.21 crore, up from Rs. 9,298.68 crore in FY24.

• Standalone net profit after tax for FY25 was Rs. 879.07 crore, compared to Rs. 607.63 crore in FY24.

• EBITDA margin for the quarter was 11.4%, while textile EBIT margin was 12.5%, a reversal from historical trends due to unallocated costs and minor contributions from the acrylic fiber business.

• Other income saw a sharp increase due to a one-time land sale (~INR 25-26 crore) and foreign exchange gains.

• Basic and diluted EPS (standalone) for FY25 was Rs. 30.40, up from Rs. 21.01 in FY24.

Outlook and guidance

• Management expects fabric capacity expansion to be operational by Q3 FY26, with a 38% increase in production capacity by end-2025.

• Revenue from fabric is projected to rise by 10% in FY26 and 30% in FY27, adding up to INR 1,500 crore over two years.

• Margin improvement is anticipated from modernization, automation, and product mix changes, with a target of at least 15% return on new CAPEX.

• The board recommended a dividend of Rs. 5.00 per share, reflecting confidence in future performance.

• Short-term uncertainty persists due to global tariff changes, but India's lower relative tariffs could provide a competitive edge.