Himatsingka Seide Limited — Q1 FY26 earnings call

Call held 13 Aug 2025

Management summary

Himatsingka Seide reported a 10.4% Y-o-Y revenue decline to INR 661 crores in Q1 FY26, largely impacted by U.S. tariff uncertainties, though EBITDA margin held at 19%. The company is actively pursuing diversification, aiming to reduce U.S. revenue share below 50% and significantly grow its India business to INR 800-1,000 crores. Despite strong spinning utilization, sheeting and terry segments remain underutilized, and management acknowledges ongoing revenue pushback from tariffs.

Highlights

  • Net debt reduced to INR 2,405 crores from INR 2,425 crores (March 31, 2025), indicating financial deleveraging.

  • Spinning capacity utilization remained strong at 99% during the quarter.

  • Company is actively expanding its global client base, now serving 35 non-U.S. jurisdictions.

  • India business targeted to double from the previous fiscal, aiming for INR 800-1,000 crores in the next few years.

  • Other expenses saw a 30% Y-o-Y reduction and are expected to remain range-bound.

Concerns

  • Total revenues declined 10.4% Y-o-Y to INR 661 crores, primarily due to U.S. tariff uncertainties.

  • Sheeting and Terry divisions experienced lower capacity utilization at 60% and 68% respectively.

  • Proposed additional 25% U.S. tariffs have created significant market uncertainty and a 'wait-and-watch' approach from clients.

  • Management noted 'pushback on the revenue front' and 'disruptions and delays' in their trajectory due to the tariff situation.

Key financials

  1. Revenue ₹661 Cr -10.4%YoY
  2. EBITDA Margin 19%
  3. Net Debt ₹2,405 Cr
  4. Capacity Utilization (Spinning) 99%
  5. Capacity Utilization (Sheeting) 60%
  6. Capacity Utilization (Terry) 68%
  7. Other Expenses — -30%YoY

What they filed

Q1 FY27: revenue down 5.4%, net profit down 54.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue694 692 657 657 630 −9%611 −12%617 −6%621 −5%
EBITDA139 112 118 121 99 −29%95 −15%50 −58%88 −27%
Net profit22 22 12 11 42 +94%8 −65%1 −88%5 −54%
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
  • Debt Net ₹2,405 Cr
    Our net debt stood at INR 2,405 crores versus INR 2,425 crores during the end of March 31, 2025.

Guidance & targets

Revenue

  • India Business Revenue Growth Revenue · next fiscal · Medium confidence double
    We expect our India business -- India business to close to double from the previous fiscal.

    — Shrikant Himatsingka

  • India Business Revenue Revenue · next few years · Medium confidence INR 800 crores to INR 1,000 crores
    taking India to close to INR 1,000 crores, INR 800 crores to INR 1,000 crores over the next few years.

    — Shrikant Himatsingka

  • Total Revenue Revenue · in a 2-year timeframe · Medium confidence approximately INR4,000 crores
    And we believe that in a 2-year timeframe, we were looking at essentially sweating our capacities, and we felt that we should be able to optimize our utilization levels, take it to the high 90s and be in a position to deliver revenues of approximately INR4,000 crores and stay within our EBITDA band of 18% to 22%.

    — Shrikant Himatsingka

Margin

  • EBITDA Margin Band Margin · at any given time · High confidence 18% to 22%
    our EBITDA margin band is 18% to 22%, and that's where we believe our model should deliver.

    — Shrikant Himatsingka

Market Share

  • US Revenue Share Market Share · over the next 18 months · Medium confidence below 50%
    my aim was that Himitsingka should be below 50% over the next 18 months was what we were aiming 18 to 24 months was what we were aiming for in a normalized scenario.

    — Shrikant Himatsingka

  • Liv Brand Points of Sale Market Share · at this point · Medium confidence over 10,000, 12,000 points of sale
    And we intend to take our Liv brand to over 10,000, 12,000 points of sale at this point.

    — Shrikant Himatsingka

What to watch in Q2 FY26

US Revenue Share Reduction

Next 18-24 months
Current ~60%
Target Progress towards below 50%

Why it matters

Diversification away from the US market is a key strategic goal to mitigate tariff risks and reduce market concentration.

my aim was that Himitsingka should be below 50% over the next 18 months was what we were aiming 18 to 24 months was what we were aiming for in a normalized scenario.

Risks & concerns

  • US Tariffs (additional 25% and above)

    high

    Uncertainties prevail due to tariffs imposed by the United States, especially those above the 25% threshold, which are proving to be a significant challenge.

    Management acknowledged

  • Revenue pushback and trajectory disruptions

    high

    The company is battling pushback on the revenue front, leading to disruptions and delays in achieving its growth trajectory.

    Management acknowledged

  • Client 'wait-and-watch' approach

    medium

    Client feedback is largely a 'wait-and-watch' regarding the higher tariffs, pending diplomatic discussions, which impacts order visibility.

    Management acknowledged

  • Inability to relocate production facilities

    medium

    Limitations due to underlying regulations and assets prevent the company from relocating manufacturing facilities in response to tariffs.

    Management acknowledged

Q&A highlights

5 direct, 1 evasive
Relocating production to other countries due to tariffs Evasive
There are limitations in doing so, Survankar, because of the underlying regulations and the assets that are involved in the process. So we don't have any specific plans of relocating any manufacturing facilities at this point.

Management clarifies that relocating production is not a feasible option due to regulatory and asset-related constraints, limiting strategic responses to tariffs.

Asked by Suvankar Mallick

Exploring new markets/customers to offset US business impact Direct
We absolutely are. As I said earlier in my business update, other than the U.S., we are currently serving 35 jurisdictions globally. And we service a client roster of over 70 clients non-U.S. We are working round the clock under the circumstances to be able to push and expand our presence in non-U.S. jurisdictions as fast as possible.

Confirms that diversification into non-U.S. markets is a top priority and actively being pursued to reduce dependency on the volatile U.S. market.

Asked by Suvankar Mallick

FY26 revenue and margin guidance Partial
Survankar, Himansinka does not give guidances on revenues and margins. As far as margins is concerned, we have shared with stakeholders earlier that our EBITDA margin band is 18% to 22%, and that's where we believe our model should deliver.

Management avoids specific FY26 guidance due to current uncertainties but reiterates its long-term EBITDA margin band, indicating confidence in its business model.

Asked by Suvankar Mallick

Client absorption of initial 10% tariff and current margin stability Direct
To the best of our knowledge, as far as Phase 1 is concerned, it's been absorbed by most of the large retailers, and they haven't materially passed on anything at this moment.

Explains how the initial 10% tariff impact was largely absorbed by clients, contributing to the relatively stable 19% EBITDA margin despite revenue decline.

Asked by Bhavin Chheda

Client feedback on 25-50% tariffs and possibility of rollback Partial
The last 25 to 50 bucket, there has been no discussions yet because quite honestly, it's been just a week since it's been imposed... It's on a wait-and-watch mode, and it's being worked out at this point.

Highlights the ongoing uncertainty and lack of clear client response regarding the higher tariff rates, indicating a cautious approach from both sides.

Asked by Bhavin Chheda

Newspaper reports of order cancellations due to tariffs Direct
There is no such things as client cancelling orders of Indian exporters... I can say that nothing has occurred vis-à-vis Himatsingka.

Management directly refutes claims of order cancellations for Himatsingka, providing reassurance against broader market rumors.

Asked by Bhavin Chheda

US vs non-US revenue exposure and target for diversification Direct
pure U.S. should be in the region of 60% going south... my aim was that Himitsingka should be below 50% over the next 18 months was what we were aiming 18 to 24 months was what we were aiming for in a normalized scenario.

Provides current U.S. revenue exposure and a clear strategic target for reducing it, underscoring the company's commitment to market diversification.

Asked by Prerna Jhunjhunwala

Challenges in increasing capacity utilization despite diversification Direct
we were also unfortunately in a position where we had to face revenue loss because of key customers that were not part of our portfolio anymore vis-à-vis BBB and things of that nature. And we also had to face revenue loss on account of brand recalibration because of the brand expenses and model being not as attractive as earlier.

Explains that current underutilization is a result of past customer losses and brand strategy adjustments, rather than a failure of current diversification efforts.

Asked by Prerna Jhunjhunwala

2 min read 5 chapters

Detailed narrative

Q1 FY26 Performance and Tariff Impact

Himatsingka Seide reported a 10.4% year-on-year decline in total revenues, reaching INR 661 crores in Q1 FY26, down from INR 738 crores in the prior year. This revenue contraction is primarily attributed to uncertainties arising from U.S. tariffs. Despite the top-line pressure, the company managed to maintain an EBITDA margin of 19% for the quarter, indicating some resilience in profitability.

Strategic Diversification and Global Expansion

To mitigate risks from U.S. tariffs, Himatsingka is aggressively expanding its presence in non-U.S. jurisdictions, currently serving 35 markets globally. The strategic aim is to reduce the pure U.S. revenue share from approximately 60% to below 50% over the next 18-24 months. This diversification effort is reinforced by the pursuit of opportunities in the UK following the India-UK FTA, expected to formalize in July 2025.

India Business Growth Initiatives

The company is strongly committed to expanding its India business, targeting a doubling of revenue from the previous fiscal year. The long-term vision is to achieve INR 800-1,000 crores in India revenue over the next few years. This growth will be driven by its three brands (Himeya, Atmosphere, Liv) across various channels, including multi-brand outlets, large-format stores, institutional sales, private label, e-commerce, and QCO channels, with the Liv brand targeting over 10,000-12,000 points of sale.

Capacity Utilization and Debt Management

Capacity utilization levels varied across divisions in Q1 FY26, with Spinning at a robust 99%, while Sheeting and Terry divisions operated at 60% and 68% respectively. Management noted that underutilization in these segments was influenced by past revenue losses from key customers and brand recalibration efforts. Financially, the company continued to deleverage, with net debt reducing to INR 2,405 crores from INR 2,425 crores at the end of March 31, 2025.

Outlook and Challenges from Tariffs

Himatsingka aims for approximately INR 4,000 crores in revenue within a two-year timeframe, maintaining its EBITDA margin band of 18-22%. However, the company is currently facing 'pushback on the revenue front' and 'disruptions and delays' due to the U.S. tariff situation, particularly tariffs above the 25% threshold. Management is in a 'wait-and-watch' mode regarding these higher tariffs, awaiting outcomes from diplomatic channels.

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