Himatsing. Seide

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.

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.

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 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.

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.

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.