Filatex India Limited — Q2 FY26 earnings call

Call held 6 Nov 2025

Management summary

Filatex India reported a strong Q2 FY26, with revenue growing to INR 1,076 crores and EBITDA increasing by 14.36% QoQ to INR 88.93 crores, driven by healthy demand and improved operational efficiency. H1 FY26 saw a significant improvement in profitability, with EBITDA rising to INR 166.7 crores. The company's INR 650 crores investment plan for capacity expansion, recycling, and sustainability projects is on track, though the RE power project faces minor delays.

Highlights

  • Q2 FY26 Revenue grew to INR 1,076 crores, up from INR 1,049 crores QoQ, indicating healthy demand.

  • EBITDA for Q2 FY26 rose by 14.36% to INR 88.93 crores, and PAT increased by 16.8% to INR 47.58 crores QoQ, reflecting improved profitability.

  • H1 FY26 EBITDA sharply rose to INR 166.7 crores from INR 106.6 crores in H1 FY25, with PAT nearly doubling to INR 88.32 crores, driven by process optimization and better energy management.

  • All major projects, including additional yarn capacity (INR 235 crores), recycling, and steam infrastructure, are progressing as planned, with completion expected by June-September 2026.

  • Automation in post-winding operations (INR 40 crores investment) is expected to reduce manpower by 160-180 people and improve product quality.

Concerns

  • The proposed anti-dumping duty on MEG, a key feedstock, could increase production costs across the polyester ecosystem.

  • The renewable energy initiative is slightly delayed, with completion now expected by July/August 2026, due to statutory approvals.

  • Exchange fluctuation led to a notional loss in the current period, though management expects it to normalize.

Key financials

2 periods

Headline

  • Revenue
    ₹1,076 Cr
    QoQ +2.6%
  • Sales Volume
    1,01,391 metric tonnes
    QoQ +4.2%
  • EBITDA
    ₹88.93 Cr
    QoQ +14.4%
  • PAT
    ₹47.58 Cr
    QoQ +16.8%

H1

  • FY26 Revenue
    ₹2,125 Cr
    YoY +1%
  • FY26 EBITDA
    ₹166.7 Cr
    YoY +56.4%
  • FY26 PAT
    ₹88.32 Cr
    YoY +93%

What they filed

Q1 FY27: revenue up 9.2%, net profit up 19.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,049 1,069 1,080 1,049 1,076 +3%1,050 −2%985 −9%1,145 +9%
EBITDA41 78 71 68 83 +102%90 +15%73 +3%79 +16%
Net profit13 47 41 41 48 +269%55 +17%40 −2%49 +20%
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.

Capital allocation

high confidence
  • Capex ₹650 Cr INR 200 crores debt for recycle project, INR 125-130 crores debt for yarn expansion machinery, rest through internal accruals.
    • Additional yarn capacity project ₹235 Cr
    • Recycling project
    • Steam infrastructure project
    • Automation in post-winding operations ₹40 Cr
    Yes. See, so we would be taking around INR200 crores of debt for the recycle project. That's the outer side. Maybe we might not take if we have internal accruals better, we can reduce that. For the INR235 crores of the yarn expansion, we have already tied up for the machinery finance. So there, the loan amount would be around INR125 crores or INR130 crores. These are the two loans which we'll be taking up. Rest will be through internal accruals only. And that INR200 crores can go down if the internal accruals are healthy, we might reduce that.
  • Debt Debt disclosed
    • New borrowing Debt for recycle project, potentially reduced by internal accruals. ₹200 Cr
    • New borrowing Debt for yarn expansion machinery, up to INR 130 crores. ₹125 Cr
    • New borrowing ECB for German equipment, cheaper than INR debt by 0.5-1%. ₹200 Cr
    Yes. See, so we would be taking around INR200 crores of debt for the recycle project. That's the outer side. Maybe we might not take if we have internal accruals better, we can reduce that. For the INR235 crores of the yarn expansion, we have already tied up for the machinery finance. So there, the loan amount would be around INR125 crores or INR130 crores. These are the two loans which we'll be taking up. Rest will be through internal accruals only. And that INR200 crores can go down if the internal accruals are healthy, we might reduce that.

Guidance & targets

Profitability

  • EBITDA Margin Profitability · H2 FY26 · High confidence 8.5% to 9%
    See H1, according to me, the EBITDA margins for the H1 is 7.84%. And I think we should do at least 8.5% to 9% in the H2.

    — Madhu Sudhan Bhageria

  • EBITDA Margin Profitability · Full year FY26 · High confidence above 8%
    Yes, full year should be above 8% for sure.

    — Madhu Sudhan Bhageria

EBITDA Contribution

  • Steam infrastructure project EBITDA EBITDA Contribution · Full year of operation · High confidence INR 60 crores
    Steam is likely to add around INR60 crores of EBITDA in the full year of operation.

    — Madhu Sudhan Bhageria

  • New capacity addition (INR 235 crores) EBITDA EBITDA Contribution · Full year of operation · High confidence INR 70-75 crores
    And the new capacity addition, which we are doing of INR235 crores should give around INR70 crores, INR75 crores of EBITDA in the full year of operation.

    — Madhu Sudhan Bhageria

  • Recycling project EBITDA EBITDA Contribution · Full year of operation · High confidence INR 80-85 crores
    We are confident, we should do an EBITDA of around INR80 crores, INR85 crores in the virgin fiber businesses.

    — Madhu Sudhan Bhageria

Margin

  • Recycling project margin (chips) Margin · Ongoing · High confidence INR 30-35 per kg
    So our margins would be a little bit like maybe INR30, INR35 a kg.

    — Madhu Sudhan Bhageria

Project Completion

  • Additional yarn capacity project Project Completion · September 2026 · High confidence Completion by September 2026
    Additional yarn capacity project, INR235 crores, progressing well with major machinery orders placed, completion as per target by September 2026.

    — Madhu Sudhan Bhageria

  • Recycling project production start Project Completion · September 2026 · High confidence September 2026
    Production is scheduled to begin by September 2026.

    — Madhu Sudhan Bhageria

  • Steam infrastructure project Project Completion · June 2026 · High confidence June 2026
    Completion is expected by June 2026.

    — Madhu Sudhan Bhageria

  • Renewable energy initiative Project Completion · July/August 2026 · Medium confidence July/August 2026
    So that would get postponed to maybe something like July, August 2026.

    — Madhu Sudhan Bhageria

Raw Material Impact

  • MEG anti-dumping impact on EBITDA Raw Material Impact · Ongoing · Medium confidence 0.5% to 1%
    Of course, there will be some impact, and that impact could be on the yarn depending from INR0.50 to INR1 per kg kind of an impact can come if the anti-dumping is put. ... It's around 0.5% to 1%.

    — Madhu Sudhan Bhageria

Raw Material Prices

  • Raw material price stability Raw Material Prices · Q3 FY26 · High confidence similar levels, 1-2% edge up
    Yes, yes, it will be at a similar level. It can slightly edge up 1% or 2%, nothing more. So it will remain at the similar levels. Nothing major is happening right now.

    — Madhu Sudhan Bhageria

Revenue

  • Top line growth Revenue · H2 FY26 · High confidence 2-3% up/down
    Top line would be very similar. It can go up by 2%, 3% or remains at these levels. There will not be much change in H2 of top line.

    — Madhu Sudhan Bhageria

  • Top line growth Revenue · H2 FY27 · High confidence 10-12%
    H2, definitely it will go up by at least 10%, 12% of what it would have been. It will go up by the capacity, which we are putting for sure.

    — Madhu Sudhan Bhageria

Margin Expansion

  • Raw material margin expansion from GAIL/IOCL PTA facilities Margin Expansion · Post GAIL/IOCL commissioning · High confidence 2%
    See, both of them come in, I think we should have a margin expansion from the raw material at least of around 2%.

    — Madhu Sudhan Bhageria

Efficiency

  • Manpower reduction from automation Efficiency · Post automation implementation · High confidence 160-180 people
    This will reduce our dependence on the manpower by almost 160 to 180 people, we'll be able to reduce by putting this.

    — Madhu Sudhan Bhageria

What to watch in Q3 FY26

Renewable energy initiative commissioning

Next quarter / H2 FY26
Current Slightly delayed, awaiting statutory approvals
Target Commissioned by July/August 2026

Why it matters

Successful commissioning will contribute to energy efficiency and cost savings.

Renewable energy initiative being implemented under MoU with Torrent Power, it is currently awaiting statutory approvals. ... So that would get postponed to maybe something like July, August 2026.

Risks & concerns

  • Proposed anti-dumping duty on MEG

    medium

    Could increase production costs across the polyester ecosystem, though management believes it may not be implemented or can be mitigated by US imports.

    Management acknowledged

  • Global uncertainty and raw material price volatility

    medium

    Despite stable domestic demand, global uncertainty and raw material price volatility remain, though prices are currently stable with minor fluctuations.

    Management acknowledged

  • Exchange fluctuation

    low

    Caused a notional loss due to partial hedging, but management expects it to normalize and hedging costs are high.

    Management acknowledged

  • Delay in Renewable Energy project

    low

    Slightly delayed to July/August 2026 due to statutory approvals for connectivity.

    Management acknowledged

  • Manpower availability

    low

    Getting workers is becoming a challenge day-by-day, driving automation initiatives.

    Management acknowledged

Q&A highlights

7 direct
QoQ margin improvement despite stable/slightly lower ASP Direct
See, regarding the pricing, there is a slight fall in the finished goods pricing, but the raw material has fallen much more than that. So that's why the margins have improved.

Clarifies the driver behind margin expansion, indicating raw material cost reduction outpaced finished goods price decline.

Asked by Surya Narayan Nayak

Delay in RE power project Direct
Only the RE power might get a little delayed because the company with whom we had the tie-up, they are facing some issues in the from the government getting the connectivity and all those things. We are exploring from others also if we can get power from some other sources. ... So that would get postponed to maybe something like July, August 2026.

Highlights a specific project delay and its new timeline, indicating potential impact on energy cost savings.

Asked by Surya Narayan Nayak

Recycling project input tie-ups and post-consumer vs pre-consumer waste Direct
This supplier is for the post-consumer. They buy fabrics, tone fabrics and that they will supply to us. ... Only post-consumer, the sorting is a big issue because we need to know what is there in the fabric.

Provides insight into the complexities of sourcing for the recycling project, particularly for post-consumer waste, and the current tie-up's scope.

Asked by Surya Narayan Nayak

Future expansion plans for recycling vs virgin fiber Direct
Based on the performance of this plant, we will definitely be going for multiple plants or a bigger plant. That will decide after this production comes in. Definitely, we will putting up more plant. This is just a starting plant only. ... There will not be any major expansion in the virgin. Main focus would be only recycle after this.

Outlines the company's long-term strategic focus on expanding its recycling capacity rather than virgin fiber, pending the success of the initial plant.

Asked by Surya Narayan Nayak

Impact of exchange fluctuation Partial
We had hedged only a portion of our outstanding, which we were supposed to pay in this year, we had hedged it. But the rest of it, we didn't hedge it. And because of that, the loss is there. That's a notional loss.

Explains the reason for the notional loss due to partial hedging, indicating exposure to currency volatility.

Asked by Varun

Impact of anti-dumping duty on MEG Direct
So, there is an anti-dumping which has been recommended by DGTR. Although you might have seen there are a lot of advertisements in the paper by the MEG producer and from our association also regarding that the government should not put it because Finance Ministry has the discretion whether to put it or not put it. ... But even if it is put, then also see there's a lot of material available from U.S.A. U.S.A. doesn't have anti-dumping.

Discusses a significant regulatory risk that could impact raw material costs, and management's view on its likelihood and potential mitigation strategies.

Asked by Niraj Mansingka

Automation impact on manpower Direct
This will reduce our dependence on the manpower by almost 160 to 180 people, we'll be able to reduce by putting this.

Quantifies the expected reduction in labor costs and improved efficiency from automation, highlighting a key operational benefit.

Asked by Niraj Mansingka

Chinese vs Indian PTA prices and margin impact Direct
Today, that gap is around $35 per tonne in PTA. Chinese are $35 per tonne cheaper than the BIS and the local producers. So that's why I said our margins could improve by around 2%, which is around INR2, we should get extra margin because of PTA becoming cheaper in India compared to what it is today.

Provides a specific quantification of the price difference between Chinese and Indian PTA and the expected margin benefit once domestic PTA capacity comes online.

Asked by Surya Narayan Nayak

3 min read 6 chapters

Detailed narrative

Q2 FY26 Performance Overview

Filatex India delivered a strong Q2 FY26, with revenue growing to INR 1,076 crores from INR 1,049 crores in Q1 FY26, representing a QoQ increase of 2.57%. Sales volume also saw a healthy increase, reaching 101,391 metric tonnes from 97,263 metric tonnes in the previous quarter. This performance was driven by healthy demand and improved capacity utilization. Profitability significantly improved, with EBITDA rising by 14.36% QoQ to INR 88.93 crores and PAT increasing by 16.8% QoQ to INR 47.58 crores.

H1 FY26 Performance Review

The first half of FY26 demonstrated steady improvement across all key metrics. Revenue for H1 FY26 stood at INR 2,125 crores, a slight increase from INR 2,103 crores in H1 FY25, despite a challenging external environment. Sales quantity increased to 198,654 metric tonnes, up from 192,218 metric tonnes in the same period last year. Profitability saw a sharp rise, with H1 FY26 EBITDA at INR 166.7 crores, up from INR 106.6 crores in H1 FY25, and PAT nearly doubled to INR 88.32 crores from INR 45.77 crores in H1 FY25, reflecting strong operating leverage and internal efficiency initiatives.

Capacity Expansion & Project Updates

The company is executing a total investment plan of around INR 650 crores, focusing on capacity expansion, sustainability, and energy efficiency. The additional yarn capacity project (INR 235 crores) is progressing well, with major machinery orders placed and completion targeted by September 2026. The recycling project's civil construction is underway, with production scheduled to begin by September 2026. The steam infrastructure project is in the implementation phase, expected to be completed by June 2026, and is projected to add INR 60 crores to EBITDA annually.

Raw Material Outlook & Policy Impact

Domestically, demand for polyester yarn remains stable. Raw material prices are expected to remain stable in Q3 FY26, with a slight potential increase of 1-2%. The upcoming PTA capacity additions from GAIL, IOCL, and Reliance Industries are expected to significantly reduce India's dependence on imports, lower freight costs, and improve supply chain stability. This could lead to a 2% margin expansion from the raw material side. However, the proposed anti-dumping duty on MEG is a concern, as it could increase production costs, potentially impacting EBITDA by 0.5% to 1%.

Recycling Business Strategy

Filatex is confident in its recycling project, expecting an EBITDA contribution of INR 80-85 crores from the virgin fiber businesses, with margins of INR 30-35 per kg for chips. The company has tie-ups with two companies for waste supply and is in advanced talks with other brands. While pre-consumer waste sourcing is straightforward, post-consumer waste presents sorting challenges. The long-term strategy is to expand waste-to-chips plants rather than yarn production, leveraging the first-mover advantage in this segment, as other players are expected to commission similar plants only by 2027-28.

Operational Efficiency & Automation

The company has initiated automation in labor-intensive post-winding operations, investing INR 40 crores. This automation is expected to reduce manpower dependence by 160-180 people and improve product quality by minimizing human touch in the process. This move addresses the challenge of securing manpower and enhances overall operational efficiency, contributing to improved profitability.

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