Vardhman Textiles Limited announced improved performance for the second quarter of FY27, primarily driven by its yarn business. The company highlighted an increase in yarn demand and prices, influenced by export market strength and rising raw material costs. Management also discussed ongoing capex plans, fabric business recovery, and long-term growth strategies, including potential expansion and sustainability initiatives, anticipating a better business outlook ahead.
Vardhman Textiles Announces Q2 FY27 Performance
Vardhman Textiles Limited has reported an improved performance for the second quarter and the first half of the financial year 2027. The company’s management attributed this growth to significant improvements in its yarn business. This segment experienced a surge in demand, coupled with an increase in yarn prices, which were bolstered by strong demand from the export market. Additionally, rising raw material costs allowed for a price pass-through, contributing positively to the results.
Key Business Segment Updates
Yarn Business
Neeraj Jain, Managing Director, noted that the yarn business showed substantial improvement. This was driven by two main factors: enhanced overall yarn demand over the last six months and improved yarn prices, partly due to strong export market demand. The increase in raw material prices, particularly cotton, also enabled the company to pass on costs, leading to better realization. The company’s strategic purchase of imported cotton at favorable rates also contributed to its performance.
Fabric Business
Sagrika Vir, Executive Director, provided an update on the fabric business, acknowledging that the second quarter presented challenges, with both top-line and bottom-line figures lower than the previous year. Key factors included lower export volumes amidst tariff uncertainty and pricing pressure in the domestic market due to higher input costs. However, the company is focusing on maximizing spring/summer bookings, expanding its customer base, and strengthening its product portfolio. The recent commissioning of processing capacity and ongoing modernization efforts are expected to improve performance in the second half of the year.
Capital Expenditure and Future Outlook
Regarding capital expenditure, the company has announced an open-end project with a capacity of 50 tons per day, expected to be operational within six to seven months. Further plans include development on land acquired in Madhya Pradesh. Vardhman Textiles is exploring various modernization and expansion projects, with a potential investment of INR1,000-1,200 crore for a new spinning plant of approximately 100,000 spindles. The company anticipates steady growth with an EBITDA margin guidance of 16%-20% over the long term and a revenue growth CAGR of 5%-8%.
Sustainability and Operational Efficiency
Vardhman Textiles is investing in sustainability initiatives, including solar power projects and biomass boilers, aiming for greener operations and cost savings. These initiatives are expected to yield benefits within the next three to four months, with a reduction in power generation costs anticipated.
Market and Cotton Price Insights
The management discussed the volatility in cotton prices, influenced by New York futures and rupee devaluation. Current cotton prices are in the range of INR64,000-INR65,000 per candy. The company expects a stable business environment for yarn pricing in the near term, influenced by factors like cotton availability and government policies. The company is also working to improve capacity utilization in its fabric and technical textile segments, aiming for full utilization within the next six to eight months.
Source: BSE
