Indo Count Industries announced stable Q3 FY26 results despite a challenging 50% tariff environment. Key achievements include commencing commercial production at the new North Carolina facility, increasing total US utility bedding capacity to 31 million pillows annually. The company anticipates significant tailwinds from the newly concluded EU FTA, which will make Indian textile exports duty-free to Europe, a market valued at over USD260 billion.
Q3 FY26 Performance Amidst Tariffs
Indo Count Industries reported a stable performance in Q3 FY26, successfully navigating a challenging 50% tariff environment through calibrated product mix adjustments. Total income for the quarter stood at INR1,074 crores, a marginal sequential decline from INR1,082 crores in Q2 FY26. Profit After Tax (PAT) for Q3 FY26 was INR24 crores, down from INR39 crores in Q2 FY26. Adjusted EBITDA margin for the quarter was 10.4%, reflecting a 100 bps quarter-on-quarter degrowth due to the full impact of the 50% US tariff and the new Labor Code impact of INR9.2 crores.
Transformative Trade Developments
The management highlighted significant positive developments for the Indian textile sector starting 2026:
- US Trade Deal: Tariff uncertainty has significantly eased for the core business.
- EU Free Trade Agreement (FTA): Textile exports to Europe will become duty-free, offering a structural advantage in a market that imports over USD260 billion.
These agreements are expected to drive customer confidence and provide incremental tailwinds for expanding non-U.S. market presence, which currently contributes 30% of core business revenue.
Key Internal Developments and Capacity Expansion
The company started 2026 positively with internal growth:
- US Manufacturing: Commercial production began at the new greenfield pillow facility in Kernersville, North Carolina.
- Capacity Boost: This third US unit adds 18 million pillows annually, raising total utility bedding capacity to 31 million pillows per annum.
- New Business Growth: New business revenues (utility bedding and US brands) doubled year-over-year. The utility bedding segment is achieving an annualized run rate of nearly USD100 million and is expected to contribute approximately USD175 million to the consolidated top line over the next few years.
- Brand Performance: The relaunched Wamsutta brand is performing well, reflecting the strategy to build a differentiated portfolio.
Furthermore, Indo Count achieved an S&P Global ESG score of 78, placing it in the top 3 percentile globally among textile peers.
Financial Outlook and Margin Trajectory
The management reiterated the long-term vision of doubling revenues by 2028. Regarding margins:
- The 100 basis point EBITDA margin hit in Q2/Q3 due to tariffs is expected to start reversing.
- Special tariff-related discounts given to customers will gradually reverse, with benefits expected to be visible from Q1 FY27 onwards.
- The objective is to return to historical EBITDA margins of 15% to 16%.
The incubation cost impacting margins (150 to 200 basis points) related to new businesses is expected to subside by the end of Q4 FY26 (March 2026). Net debt has been reduced by INR215 crores since March ’25, and no major new capex is planned for the next 18 to 24 months, suggesting debt reduction should continue into FY27.
Source: BSE
