Detailed Narrative
Strong Q4 and FY26 Financial Performance
GHCL Textiles delivered robust financial results for Q4 and FY26. Q4 revenue increased by 31% year-on-year to ₹375 crores, with EBITDA at ₹52 crores and PAT at ₹28 crores. For the full fiscal year 2026, revenue grew 14% to ₹1,335 crores, and EBITDA saw a significant 34% increase to ₹156 crores. The company's balance sheet remains strong with net debt of ₹118 crores, translating to a low 0.1x net debt to equity ratio.
Market Dynamics and Demand Tailwinds
The company experienced improved market conditions, particularly in Q4 FY26, driven by both volume and pricing. Key demand tailwinds included the resolution of US reciprocal tariffs, the signing of the India-EU Free Trade Agreement, and increased yarn demand from China (though this has tapered since March). Domestic market demand also strengthened across knitting and weaving segments. Spreads improved from ₹123 per kilo in Q3 to ₹148 per kilo in Q4, with management expecting this to continue in Q1 FY27.
Operational Enhancements and Capacity Expansion
GHCL Textiles maintained optimum utilization across its units. The new 25,000 spindle unit has stabilized and is operating at full capacity. The initial batch of knitting machines has been successfully installed, receiving encouraging customer feedback. Additionally, rooftop solar capacity commissioned during FY26 is now contributing to energy cost efficiency, with further expansion planned for FY27.
Strategic Vertical Integration and Future Growth
The company is committed to broadening its value-added portfolio and deepening vertical integration. Management aims for fabric to contribute almost 15% of revenue in FY27, up from 12% in FY26, with 50% of this coming from in-house knitted fabric. Approval for land allocation in PM MITRA Park Virudhunagar is a strategic step for future scale growth and product integration, with significant capital investment planned for fabric and processing capabilities.
Raw Material Management and Working Capital
Cotton prices moved upwards, from approximately ₹55,000 per candy in December '25 to around ₹62,000 currently. GHCL Textiles strategically procured cotton ahead of anticipated price rises, resulting in approximately 120 days of inventory as of March 31, 2026. While this temporarily increased working capital, it is expected to provide a cost advantage. The company plans to optimize working capital, targeting a reduction from current levels towards 110-120 days.
FY27 Capex and Long-Term Targets
For FY27, GHCL Textiles plans a capital expenditure of ₹100-120 crores, primarily for a 10 MW on-ground solar project (₹35 crores) and additional knitting machines (₹15 crores). The company reiterates its long-term target of achieving ₹2,000 crores in revenue with a 15-18% EBITDA margin by FY29-FY30. The objective is also to achieve double-digit Return on Capital Employed (ROCE) going forward⏳.