Himatsing. Seide

Himatsingka Seide reported a marginal correction in total income for Q4 FY25, decreasing by approximately 3% to INR682 crores from INR702.8 crores in the previous year. This was attributed to ongoing portfolio recalibration initiatives. For the full fiscal year 2025, total income remained largely range-bound at INR2,843 crores, a slight decrease from INR2,862 crores in FY24. Capacity utilization for the quarter stood at 99% for the spinning division, and 60% and 68% for the sheeting and terry divisions, respectively.

The company is in the final stages of a portfolio recalibration exercise, which is expected to have an annual impact of approximately INR150 crores that needs to be offset. This strategy involves reducing exposure to certain international brands while strengthening the domestic brand portfolio, which includes Himeya, Atmosphere, and Liv. Management noted that some new initiatives are not yet fully reflected in revenue due to the offsetting pressure from discontinued portfolios, requiring time to recuperate.

The recently imposed US tariffs are anticipated to make products 10% more expensive for clients, leading to a 'slight impact on revenues and operating margins' and specifically on Q1 FY26 results. However, these tariffs could also create potential opportunities for India to gain market share due to differential rates compared to China. The India-UK FTA is expected to bring benefits, but its full effect is projected to materialize only after it comes into force, estimated to be about a year away, with no immediate margin impact.

Himatsingka Seide continued its deleveraging efforts, successfully reducing consolidated net debt to INR2,425 crores from INR2,634 crores in the previous year. The company aims for a further reduction of INR100-200 crores in FY26 and targets bringing down debt to INR1,500-1,700 crores over the next 2-3 years. This will be achieved through organic debt retirement, working capital optimization, and non-core asset monetization. The company's net worth also significantly increased from INR1,558 crores to INR2,032 crores.

The company's working capital days are currently 'well north of 200 days,' which management acknowledged as unsatisfactory. The goal is to reduce this to approximately 90 days over the next 18 months. The increase in receivable days was attributed to higher credit requirements from certain clients, the company's strategic push for slightly higher credit in some cases to align with client needs, and elongated supply chains. Management does not expect further material increases in receivables.

The domestic market remains a key strategic focus, with three brands (Himeya, Atmosphere, Liv) covering a broad range of home textile products across price points. The company is currently present in approximately 4,000 points of sale and plans to expand to over 15,000 for mass-market brands. India revenue for FY25 was closer to INR100 crores, with a target to reach INR100-200 crores in FY26 and INR800-1,000 crores in the next 4-5 years, aiming for approximately 15% EBITDA margins once stable.

The company recorded a goodwill impairment of INR94.6 crores for the quarter and the full fiscal year. This was a result of repositioning and calibrating the brand portfolio, specifically related to earlier brand acquisitions and license rights. Management stated this was a necessary step to right-size the balance sheet, contributing to a total balance sheet shrinkage of about INR140 crores, and does not foresee further impairment on the horizon.