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VTM — Q4 FY26 earnings call

Call held 11 Jun 2026

Management summary

For Q4 FY26, VTM reported an 8% revenue growth and a 75% year-on-year decline in PAT to 11 crores, with an EBITDA margin of 7.43%. This performance was significantly impacted by 20 crores in tariff discounts to US customers, a 2.3 crore mark-to-market loss on foreign currency loans, and a 15% rise in raw material costs. Looking ahead, the company targets 12-14% revenue growth and 10-11% EBITDA margin for FY27, driven by new market diversification and operational efficiencies. Management is actively negotiating to reduce persistent discounts and optimize high inventory levels.

Highlights

  • Business remained intact and marginally grown from previous quarters, despite challenges.

  • Company holds a good order backlog of 6.5 million as on May 31st, indicating continued sales trend.

  • Management is targeting an improved EBITDA margin of 10-11% for the current financial year (FY27), up from 7.43% in FY26.

  • New markets like Japan, Europe, UK, and Australia are being explored to de-risk from US dependency, with efforts expected to bear fruit in 2-3 quarters.

  • Capex investments made in FY26, including new looms, will come into full-fledged operation in Q1 and Q2 of FY27, contributing to future growth.

Concerns

  • Profit after tax (PAT) for FY26 shrunk by 75% year-on-year to 11 crores.

  • Revenue growth for FY26 was modest at 8%.

  • The company incurred a hit of approximately 20 crores due to tariff discounts given to US customers.

  • A mark-to-market loss of 2.3 crores was recorded due to foreign currency convertible (PCFC) loans.

  • Raw material prices, particularly cotton, increased by 15% due to geopolitical factors.

  • The current year's (FY26) EBITDA margin was 7.43%, significantly lower than the 19% achieved in FY25.

Key financials

2 periods

Headline

  • Revenue
    ₹401.76 Cr
    YoY +8%
  • PAT
    ₹11 Cr
    YoY -75%
  • EBITDA Margin
    7.4%

Q4 FY26

  • PBT
    ₹4.1 Cr
    QoQ -15.8%

What they filed

Q1 FY27: revenue up 36.7%, net profit down 58.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue73 104 109 72 90 +23%100 −3%110 +1%98 +37%
EBITDA13 27 18 8 5 −63%7 −74%7 −61%6 −31%
Net profit10 18 12 5 2 −76%3 −81%1 −93%2 −58%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue
₹372 Cr Total
  • Home Textiles (FY25) ₹190 Cr 51.1%
  • Greige Fabrics (FY25) ₹182 Cr 48.9%

Capital allocation

medium confidence
  • Capex ₹25 Cr
    Madhur Rathi: Sir, thank you for the opportunity. Sir, just, I wanted to understand, we did a capex of 25 crores this year.
  • Debt Debt disclosed
    • New borrowing Borrowing in PCFC (Foreign Currency Convertible) loans ₹64 Cr
    P Senthil Kumar: So, we have restated the, borrowing in the PCFC, which is roughly around some 64 crores.

Guidance & targets

Revenue

  • Top Line Growth Revenue · Current financial year (FY27) · High confidence 12-14%
    K Thiagarajan: No, Capex is over this year, so in the current financial year, we aim to have about 12% to 14% increase in top line.

    — K Thiagarajan

  • Turnover Increase Revenue · Current financial year (FY27) · High confidence 10-15%
    P Senthil Kumar: But definitely, given the situation, the global, geopolitical situations improve under the normalcy is back with respect to the U.S. tariff conditions. Definitely the company will, see a better profitability and a very good growth. We welcome your, questions and other points from you. Thank you.

    — P Senthil Kumar

  • Peak Revenue Potential Revenue · This year or next financial year · Medium confidence 500-600 crores
    K Thiagarajan: If it is operating at full capacity, which is at 80%, as I explained to you, the greige fabrics, you know, does not operate at 100%, The, top-line growth this year, we're expecting about, you know, 12% will be the top-line growth. And there is also an outsourcing which is happening in the home textiles, so that is the that is what is attributing to your, you know, question, that we are outsourcing certain bits of the operation. ... K Thiagarajan: We are being a little conservative on that front. But we're definitely not understating here, but we are being conservative on the numbers. There is good potential for a run rate of 500 to 600 CR. If we get the right product mix, and if all the, you know, outsourcing, capacities are also fully utilized, and everything goes well with a higher, you know, price realization, with, you know, better, higher quality products and all that, then definitely 500 to 600 CR is something that is, possible, and You know, maybe this year, or in next financial year.

    — K Thiagarajan

Profitability

  • EBITDA Margin Profitability · Current financial year (FY27) · High confidence 10-11%

    Previously 7.43% → 10-11%

    P Senthil Kumar: Current year, we achieved a 7.43 percentage. We are targeting to achieve 10-11 percentage.

    — P Senthil Kumar

Capacity

  • New Looms Production Capacity · Q1, Q2 (current financial year) · High confidence Come into production
    K Thiagarajan: And we have also additionally installed some looms this year, which will all come into production during, you know, Q1, Q2.

    — K Thiagarajan

Inventory

  • Inventory Levels Inventory · Next two quarters · High confidence Return to previous year's levels

    From 150 crores (from 92 crores) today

    K Thiagarajan: So, our business model is as such, where you're expected to, have, inventory of certain items. And as I already told you, we are now. Improving our, lean management, area. And, we are going more just in time. We have a core team of industrial engineers who are putting things in place. So, we wish to, be aimed to come back to the previous year's levels in the next two quarters.

    — K Thiagarajan

What to watch in Q1 FY27

EBITDA Margin Improvement

Next quarter / Current financial year (FY27)
Current 7.43% (FY26)
Target Progress towards 10-11%

Why it matters

EBITDA margin is a key profitability metric, and management has set a clear target for significant improvement, crucial for investment thesis.

P Senthil Kumar: Current year, we achieved a 7.43 percentage. We are targeting to achieve 10-11 percentage.

Risks & concerns

  • US Tariff Discounts

    high

    The company took a 20 crore hit from tariff discounts to US customers, and an 18% discount persists despite tariffs reducing to 10%, impacting profitability.

    Management acknowledged

  • Raw Material Price Volatility (Cotton)

    high

    Raw material prices, particularly cotton, increased by 15% due to geopolitical events, leading to higher input costs.

    Management acknowledged

  • Single-Geography Dependency (US)

    medium

    Heavy reliance on the US market for home textiles poses a risk, prompting diversification efforts into new markets like UK, Europe, Japan, and Australia.

    Management actively diversifying

  • Inventory Buildup

    medium

    Inventory turnover days increased to 122 days, with inventory rising from 92 crores to 150 crores, impacting working capital efficiency.

    Analyst acknowledged

  • Mark-to-Market Loss on PCFC Loans

    low

    A 2.3 crore mark-to-market loss was incurred due to foreign currency convertible (PCFC) loans, contributing to the PAT decline.

    Management acknowledged

Q&A highlights

7 direct
FY27 EBITDA Margin Target vs FY25 (19%) Direct
It is a bit uncertain, because in the 2025, what we achieved is, something phenomenal, achievement. But given the uncertainties, what we have discussed now, we hope to have a better margin than the current year. Current year, we achieved a 7.43 percentage. We are targeting to achieve 10-11 percentage.

Clarifies that FY25's 19% EBITDA was an anomaly and sets a realistic, lower target of 10-11% for FY27, providing a clear expectation for investors.

Asked by Keshav Garg

Peak Revenue Generating Potential Direct
If it is operating at full capacity, which is at 80%, as I explained to you, the greige fabrics, you know, does not operate at 100%, The, top-line growth this year, we're expecting about, you know, 12% will be the top-line growth. And there is also an outsourcing which is happening in the home textiles, so that is the that is what is attributing to your, you know, question, that we are outsourcing certain bits of the operation. ... K Thiagarajan: We are being a little conservative on that front. But we're definitely not understating here, but we are being conservative on the numbers. There is good potential for a run rate of 500 to 600 CR. If we get the right product mix, and if all the, you know, outsourcing, capacities are also fully utilized, and everything goes well with a higher, you know, price realization, with, you know, better, higher quality products and all that, then definitely 500 to 600 CR is something that is, possible, and You know, maybe this year, or in next financial year.

Provides insight into the company's maximum revenue potential with current assets (500-600 crores) and explains the role of outsourcing in home textiles.

Asked by Keshav Garg

Impact of FY26 Capex on Revenue Direct
Capex will come into full-fledged operation only in the current financial year. The investments made in the last financial year have started, you know, coming into full play only in this current financial year.

Clarifies the timeline for capex benefits, indicating that the 25 crores spent in FY26 will contribute to revenue growth in the current financial year (FY27).

Asked by Madhur Rathi

High Inventory Levels and Discounts to Quince Partial
Yeah, so we have spoken to the customer, we've had long calls with the CEO also, and in fact, in one or two products, we have got a slight increase in price. Which will definitely, you know, start reflecting in our, you know, balance sheet from this quarter onwards.

Addresses concerns about high inventory and unfavorable business dealings with a major customer, indicating ongoing negotiations and potential for margin improvement from Q1 FY27.

Asked by Madhur Rathi

US Tariff Discounts and Negotiations Direct
Yes, that is correct, and the 18% discount happened when the tariff was when our goods were being tariffed between 50% and 60%. Okay, so in order to share that burden with the customer, we had extended the 18%, and yes, you're right, the tariffs have now come down to 10%, and like I said, we are trying to negotiate that down as we speak.

Explains why the 18% discount persists despite reduced US tariffs (now 10%) and confirms active negotiations to reduce this significant margin pressure.

Asked by Rajat Setiya, Keshav Garg

New Customer Acquisition in UK/Europe (FTA impact) Direct
In home textiles, to onboard a new customer typically takes approximately one year, so that process is in full swing for the UK, Europe, Middle East, Japan. and Australia as well. So, these efforts, we are hoping, will bear fruit in about 2 or 3 quarters.

Provides a timeline for the benefits of market diversification efforts, which are crucial for reducing dependency on the US market and achieving sustainable growth.

Asked by Rohit Balakrishnan

Home Textile vs Greige Fabric Contribution to Revenue & Margins Direct
190 crores came from Home Textile sales... About 52% came from home textiles, and the remaining from greige... the fabric market, which is our traditional business, always earns a kind of 7-9 percentage. But what is the growth we have seen in the EBITDA in the past two years is the. because of the Home Textile division's margin.

Clarifies the revenue mix (52% home textiles, 48% greige in FY25) and highlights that home textiles, despite being newer, are the primary driver of EBITDA growth due to higher margins compared to the traditional 7-9% from greige fabrics.

Asked by Dheeraj Kumar Reddy Dosakayala

Reason for Inventory Increase (92 cr to 150 cr) Direct
So, our business model is as such, where you're expected to, have, inventory of certain items. And as I already told you, we are now. Improving our, lean management, area. And, we are going more just in time. We have a core team of industrial engineers who are putting things in place. So, we wish to, be aimed to come back to the previous year's levels in the next two quarters.

Explains the inventory buildup (from 92 crores to 150 crores) and outlines management's plan to implement lean management and reduce inventory levels within the next two quarters, addressing working capital concerns.

Asked by Finportal

2 min read 7 chapters

Detailed narrative

Financial Performance Overview & Profitability Decline

For the year ended March 31, 2026 (FY26), VTM reported an 8% revenue growth, with profit after tax (PAT) shrinking by 75% year-on-year to 11 crores. The current year's EBITDA margin stands at 7.43%, a significant drop from the 19% achieved in FY25. This decline is primarily attributed to significant tariff discounts, mark-to-market losses, and increased raw material costs, impacting overall financial health.

Key Factors Impacting Profitability

Profitability was severely impacted by several factors, including a 20 crore hit from tariff discounts given to US customers to maintain business, a 2.3 crore mark-to-market loss on foreign currency convertible (PCFC) loans due to rupee depreciation, and a 15% increase in raw material prices, particularly cotton, exacerbated by geopolitical events. Additionally, provisioning for gratuity computation due to new labor codes and other discounts contributed to the margin pressure.

Strategic Initiatives & Market Diversification

To de-risk from its heavy reliance on the US market, VTM is actively exploring new geographies such as Japan, Europe, UK, and Australia, leveraging new Free Trade Agreements (FTAs). The company expects these efforts to onboard new customers and bear fruit within the next 2-3 quarters, contributing to better visibility and profitability. This geographical diversification is considered crucial given past tariff experiences.

Capacity Utilization and Expansion

The company operates at approximately 80% overall capacity utilization, with greige fabrics running at 80-83%. New looms installed this year are expected to come into full production during Q1 and Q2 of the current financial year, contributing to future growth. Management aims for a peak revenue potential of 500-600 crores with current assets and full capacity utilization, potentially achievable this year or next.

Inventory Management & Working Capital

VTM's inventory turnover days currently stand at 122 days, with inventory increasing from 92 crores to 150 crores. Management acknowledges this buildup and is implementing lean management principles and has hired an industrial engineering consultant to optimize stock turnaround and reduce inventory levels. The goal is to return to previous year's inventory levels within the next two quarters, improving working capital efficiency.

Persistent Tariff Discounts & Negotiation Efforts

Despite US tariffs on goods reducing from 50-60% to 10%, VTM continues to provide an 18% discount to its US customers to maintain market share and business continuity. Management is actively negotiating with customers to reduce this discount, and some price increases have been secured for specific products. These renegotiated terms are expected to start reflecting positively in the balance sheet from the current quarter onwards.

Outlook & Future Targets

For the current financial year (FY27), VTM targets a revenue growth of 12-14% and aims to achieve an EBITDA margin of 10-11%, a significant improvement from the 7.43% recorded in FY26. This improved outlook is contingent on geopolitical situations stabilizing, the benefits from new market entries and operational efficiencies materializing, and successful reduction of customer discounts.

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