Himatsingka Seide Limited — Q2 FY26 earnings call

Call held 13 Nov 2025

Management summary

Himatsingka Seide reported a challenging Q2 FY26 with a 9.3% revenue decline to INR629 crores, primarily due to persistent 50% tariffs in the U.S. market, which also led to a 400 bps slip in EBITDA margins. Despite this, the company saw a significant boost in other income from forex gains and managed to reduce net debt. Management is focused on mitigating tariff impacts, enhancing capacity utilization, and diversifying revenue streams away from the U.S., with plans for an INR500 crore equity raise within 12 months.

Highlights

  • Net debt reduced to INR2,436 crores in Q2 FY26 from INR2,680 crores in Q2 FY25.

  • Other income surged to INR77.70 crores in Q2 FY26, up from INR6 crores in Q2 FY25, driven by INR66 crores in forex gains.

  • Spinning division maintained high capacity utilization at 99%.

  • Domestic business (India) showed consistent year-on-year growth and expansion in MBO, large-format, e-commerce, and private label client spaces.

Concerns

  • Consolidated revenue from operations declined by 9.3% YoY to INR629 crores due to persistent 50% tariff overhang in U.S. markets.

  • EBITDA margin slipped by approximately 400 basis points from a typical 20% range, primarily due to tariff impacts and price benefits extended to customers.

  • Capacity utilization for Sheeting (60%) and Terry Towel (66%) divisions remained range-bound and below optimal, with enhancement delayed due to tariff issues.

Key financials

  1. Revenue from Operations ₹629 Cr -9.4%YoY
  2. Other Income ₹77.7 Cr
  3. Forex Gains (Total) ₹66 Cr
  4. Forex Gains (Realized) ₹8 Cr
  5. Net Debt ₹2,436 Cr
  6. EBITDA Margin (Estimated) 16%
  7. Spinning Capacity Utilization 99%
  8. Sheeting Capacity Utilization 60%
  9. Terry Towel Capacity Utilization 66%

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 ₹2,436 Cr
    our net debt was range bound vis-a-vis what it stood in Q1, and it came in at INR2,436 crores. It was INR2,680 crores during the same period last year.

Guidance & targets

Revenue Diversification

  • U.S. Revenue Stream Share Revenue Diversification · next couple of years · High confidence below 50%
    we aim to bring our U.S. revenue streams to below 50% over the next couple of years.

    — Shrikant Himatsingka

Profitability

  • EBITDA Margin Impact from Tariffs Profitability · going forward · Medium confidence rein that in and improve from here
    I also feel that hopefully, some of our mitigation measures of the 4% to 5% should also kick in. So we should be our endeavor would be to rein that in and improve from here.

    — Shrikant Himatsingka

Capital Raising

  • Equity Raise Amount Capital Raising · under 12 months, if not sooner · High confidence INR500 crores
    So we have taken up a resolution to raise up to INR500 crores. We have not yet zeroed in on which instrument. It will be subject to market conditions and getting our timing right. But this is essentially in line with our thinking of continuing to deleverage our balance sheet. ... I would say we are looking at subject to market conditions and other external factors, we are looking at this in the short term. So -- it's not something that's medium or long term. We have passed this resolution because we are focused on doing this. And I think the definition of short-term would be under 12 months, if not sooner.

    — Shrikant Himatsingka

What to watch in Q3 FY26

Resolution of U.S. Tariff Issues

Next quarter/soon
Current 50% tariff continues
Target Tariff revision/conclusion

Why it matters

Resolution of tariffs is expected to normalize business operations, improve revenue streams, and alleviate margin pressure.

although there are enough media reports about reaching conclusion soon in terms of a tariff revision, but nothing is out there as yet in terms of what the new tariff rates could potentially be. So as we speak, it still continues at 50%.

Risks & concerns

  • Persistent U.S. Tariffs

    high

    50% tariffs continue to affect revenue streams from the U.S. markets, causing a 9.3% YoY revenue decline and delaying business normalization.

    Management acknowledged

  • Margin Compression

    high

    EBITDA margins slipped by approximately 400 basis points from a typical 20% range due to tariff impacts and price benefits extended to customers.

    Management acknowledged

  • Capacity Underutilization

    medium

    Enhancement of capacity utilizations for Sheeting (60%) and Terry Towel (66%) divisions has been delayed due to the tariff overhang, impacting efficiency.

    Management acknowledged

Q&A highlights

7 direct
Impact of Tariffs on Financials Direct
So essentially, there are two forms of impacts that the tariff has had on our operating performance. One is in the form of subdued revenues, which we just chatted about. Pretty much all of the revenue reduction is attributable to that. And the second piece is really dilution in our margin profile.

Clarifies that tariffs directly impacted both top-line revenue and bottom-line margins, with an estimated 400 bps hit to EBITDA.

Asked by Prerna Jhunjhunwala

Quantification of Tariff Impact Direct
No, I would say that in the region of anywhere between 4% and 5% on a weighted average basis is what the impact would be as far as we are concerned.

Provides a specific numerical range (4-5%) for the direct tariff impact on the company's financials.

Asked by Prerna Jhunjhunwala

Future Tariff Impact and Mitigation Direct
I think it should be range bound. And I also feel that hopefully, some of our mitigation measures of the 4% to 5% should also kick in. So we should be our endeavor would be to rein that in and improve from here.

Addresses concerns about escalating tariff impacts in Q3 and outlines management's strategy to mitigate these effects, aiming for margin improvement.

Asked by Prerna Jhunjhunwala

Current U.S. Revenue Exposure Direct
U.S. is in the -- it hovers between 60% and 65% somewhere there, nearer to the 60% mark core U.S. revenues.

Quantifies the company's significant reliance on the U.S. market, which is currently affected by tariffs, highlighting the need for diversification.

Asked by Prerna Jhunjhunwala

Equity Capital Raise Plan Direct
So we have taken up a resolution to raise up to INR500 crores. We have not yet zeroed in on which instrument. It will be subject to market conditions and getting our timing right. But this is essentially in line with our thinking of continuing to deleverage our balance sheet.

Confirms the company's plan to raise INR500 crores to further deleverage, indicating a strategic capital allocation move for balance sheet strengthening.

Asked by Maanasaa Jeyaraman

Timeline for Equity Raise Direct
I would say we are looking at subject to market conditions and other external factors, we are looking at this in the short term. So -- it's not something that's medium or long term. We have passed this resolution because we are focused on doing this. And I think the definition of short-term would be under 12 months, if not sooner.

Provides a clear timeline (within 12 months) for the capital raise, indicating management's urgency and focus on this strategic initiative.

Asked by Maanasaa Jeyaraman

Tariff Benefit on U.S. Imported Cotton Direct
if the product has U.S. cotton in it, then to the extent of U.S. cotton, the importer of the goods though doesn't have to pay tariff on the quantum of U.S. cotton in the product.

Explains a specific mechanism that partially mitigates the 50% tariff, which is important for understanding the true net impact on the company and its clients.

Asked by Maanasaa Jeyaraman

Intercompany Receivables (HIMA vs HSL) Partial
This is more an intercompany movement between HIMA and HSL. But the group's consolidated receivable is what you should be really focused on. But as far as working on the HIMA piece is concerned, something that's still work in progress and maybe we can share with you once we are a little more firmed up with our plans.

Highlights an internal receivable issue that management is working on but defers specific details, suggesting it's not yet resolved or ready for public disclosure, prompting further monitoring.

Asked by Maanasaa Jeyaraman

2 min read 6 chapters

Detailed narrative

Revenue Performance and Tariff Impact

Himatsingka Seide reported a consolidated revenue from operations of INR629 crores for Q2 FY26, marking a 9.3% year-over-year decline from INR694 crores in the same quarter last year. This reduction is primarily attributed to the persistent 50% tariff overhang affecting revenue streams from the U.S. markets. Management noted that while the tariff continues, the offtake of goods has remained largely stable, with no material interruptions to the order book.

Other Income and Forex Gains

The company saw a significant increase in other income, which rose to INR77.70 crores in Q2 FY26, compared to approximately INR6 crores in the prior year. This surge was predominantly driven by foreign exchange gains, amounting to approximately INR66 crores. Of these forex gains, about INR8 crores were realized during the quarter, with the remainder being unrealized mark-to-market gains, benefiting from the rupee's depreciation against the U.S. dollar.

Profitability and Margin Compression

The tariff impact led to a dilution in the company's margin profile, with EBITDA margins slipping by approximately 400 basis points from their typical 20% range. This correction is due to price benefits extended to customers to navigate the tariff challenge. Management estimates the weighted average impact of tariffs to be between 4% and 5% on the company's financials, which they are actively working to mitigate through efficiency optimization, exchange rate benefits, and product specification tweaks.

Capacity Utilization Overview

Capacity utilizations remained range-bound during the quarter. The Spinning division maintained a high utilization rate of about 99%. However, the Sheeting division operated at 60%, and the Terry Towel division at 66%. Management emphasized that enhancing these capacity utilizations is a key focus, but progress has been delayed due to the ongoing tariff overhang, which they expect to normalize once tariff issues are resolved.

Debt Position and Capital Raising Plans

The company's net debt stood at INR2,436 crores in Q2 FY26, a reduction from INR2,680 crores in the same period last year, indicating a range-bound debt position. To further deleverage its balance sheet, Himatsingka Seide has passed a resolution to raise up to INR500 crores through an equity round. This capital raise is considered a strategic priority and is targeted for completion in the short term, within 12 months.

Geographic Diversification and Domestic Growth

Himatsingka currently services 38 jurisdictions and is actively working to enhance revenue streams from non-U.S. markets, with an aim to reduce U.S. revenue streams to below 50% over the next couple of years. The domestic India business, operating under brands like Himeya, Atmosphere, and Liv, continues to demonstrate consistent year-on-year growth, expanding its footprint in MBO spaces, large-format stores, e-commerce, and private label clients.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Textiles earnings calls