GHCL Textiles

GHCL Textiles delivered a strong performance in FY25, with revenue growing 10% year-on-year to INR1,168 crores. EBITDA for the full year increased by 31% to INR117 crores, and PAT saw a significant jump of 123% to INR56 crores. For Q4 FY25, revenue was flat at INR285 crores, but EBITDA improved by 9% year-on-year and 24% quarter-on-quarter to INR32 crores, reflecting operational efficiency despite a challenging market.

The company is executing a committed investment plan of INR1,000 crores, with INR500 crores already deployed. This includes the addition of 25,000 new spindles, expected to commence operations by June '25, contributing approximately INR250 crores in incremental revenue. A new project to install 40 knitting machines with a capex of INR38 crores is also underway, with the first 10 machines expected to be operational by September '25. These initiatives are aimed at vertical integration into value-added products like knitting and weaving, with a target of 30% of total revenue coming from these segments in the next 3-4 years.

The textile sector experienced sluggish demand in Q4 FY25. Domestic cotton prices are stable around INR55,000 per candy, with international prices also showing steady trends. The company maintains a 90-day cotton inventory, confident in the stable outlook and availability from sources like CCI, which has procured 100 lakh bales. Management believes that potential removal of import duties on cotton could further stabilize prices and improve overall availability, without necessarily expanding margins but enhancing competitiveness.

In FY25, GHCL Textiles deployed INR158 crores in growth capex. The company released INR54 crores in working capital through better inventory management, contributing to a net debt of INR58 crores at year-end. For FY26, a capex of INR114 crores is budgeted, primarily for retail projects and knitting machines. The company projects a peak debt of INR128 crores for FY26 (up from INR63 crores in FY25) and aims to maintain a healthy debt-equity ratio of 0.35, with an overall peak debt of INR600 crores for the entire expansion process.

GHCL Textiles aims to double its turnover in the next 3-4 years, with 30% of this revenue expected from value-added products like knitting, weaving, and processed fabric. The company is confident in achieving a long-term EBITDA margin of 17-20% once market conditions normalize, driven by vertical integration and cost discipline. While FY26 revenue growth is projected at 14-15%, it is expected to be skewed towards the second half of the fiscal year as new investments ramp up.

The company acknowledges the unpredictability introduced by recent US tariff adjustments but sees a strategic advantage for India as competitors face higher duties. While inquiries for orders have increased, a 90-day pause period by the US is delaying conversion into firm orders. Management believes that once this uncertainty settles, the Indian textile industry, including GHCL Textiles, will benefit significantly from shifting global trade dynamics.