Himatsingka Seide Limited — Q4 FY25 earnings call

Call held 30 May 2025

Management summary

Himatsingka Seide reported a largely range-bound FY25 total income of INR2,843 crores, with Q4 seeing a marginal 3% decline due to ongoing portfolio recalibration. Despite this, the company significantly reduced net debt to INR2,425 crores and increased net worth to INR2,032 crores. Management highlighted challenges from US tariffs impacting Q1 FY26 but remains optimistic about India's growth, targeting INR100-200 crores in FY26, and is focused on improving working capital efficiency.

Highlights

  • Consolidated net debt reduced to INR2,425 crores from INR2,634 crores in the previous year, reflecting deleveraging efforts.

  • Net worth significantly increased from INR1,558 crores to INR2,032 crores, strengthening the balance sheet.

  • FY25 EBITDA margin stood at 20.6%, aligning with the company's typical range of 18-22%.

  • The India branded business achieved revenue closer to INR100 crores in FY25, with strong growth targets for FY26.

  • Balance sheet shrunk by approximately INR140 crores, indicating efforts to right-size assets.

Concerns

  • Q4 FY25 total income marginally corrected by approximately 3% to INR682 crores compared to INR702.8 crores in the previous year, due to portfolio recalibration.

  • FY25 total income remained largely range-bound at INR2,843 crores, a slight decrease from INR2,862 crores in FY24.

  • Working capital days are currently 'well north of 200 days' and acknowledged as 'not to our satisfaction'.

  • A goodwill impairment of INR94.6 crores was recorded for the quarter and the full fiscal year due to brand portfolio recalibration.

  • US tariffs are expected to have a 'slight impact on revenues and operating margins' and specifically on Q1 FY26 results.

Key financials

3 periods

Headline

  • Goodwill Impairment
    ₹94.6 Cr

Q4

  • Total Income
    ₹682 Cr
    YoY -3%

FY25

  • Total Income
    ₹2,843 Cr
    YoY -0.66%
  • Consolidated Net Debt
    ₹2,425 Cr
    YoY -7.9%
  • Net Worth
    ₹2,032 Cr
    YoY +30.4%
  • EBITDA Margin
    20.6%

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
  • Capex ₹60 Cr
    We are going to have a muted -- although we typically have an organic capex requirement of approximately INR60 crores, we don't foresee capex of any consequence in FY '26 at this point.
  • Debt Net ₹2,425 Cr
    our consolidated net debt stands at INR2,425 crores, versus INR2,634 crores during the previous year. ... we expect over INR100 crores between INR100 crores and INR200 crores of reduction in leverage. ... we should look at bringing down debt to the INR1,500 crores to INR1,700 crores levels deploying various initiatives, including but not limited to, organic retirers of term debt, working capital optimization, issuances of equity, which we have gone through with and conversion, if any of our FCCBs that have been issued, non-core asset monetization and things of this nature.

Guidance & targets

Revenue

  • Annual Impact from Portfolio Recalibration Revenue · Annual · High confidence INR150 crores
    So Sunny, we are nearly in the fag end this calibration exercise. We have approximately another INR150-odd crores of annual impact to make up for approximately.

    — Shrikant Himatsingka

  • India Revenue Revenue · next 4 to 5 years · High confidence INR800-1,000 crores
    I had said and shared with stakeholders that our revenues from India should be in the region of approximately INR800 crores to INR1,000 crores in the next 4 to 5 years.

    — Shrikant Himatsingka

  • India Revenue Revenue · FY26 · High confidence INR100-200 crores
    we should comfortably cross the INR100 crores mark and be between INR100 crores and INR200 crores mark during FY '26 is where we plan to head to.

    — Shrikant Himatsingka

Debt

  • Debt Reduction Debt · FY26 · High confidence INR100-200 crores
    we expect over INR100 crores between INR100 crores and INR200 crores of reduction in leverage.

    — Shrikant Himatsingka

  • Long-term Debt Target Debt · 2 to 3 year horizon · High confidence INR1,500-1,700 crores
    we should look at bringing down debt to the INR1,500 crores to INR1,700 crores levels deploying various initiatives...

    — Shrikant Himatsingka

Working Capital

  • Receivable Days Working Capital · next 18 months · High confidence 90 days
    And we would like to eventually see this come back to the approximately 90-day numbers over the next 18-odd months.

    — Shrikant Himatsingka

Capacity

  • Terry Towel Capacity Capacity · High confidence 40,000 tons
    And our plan to take it to approximately 40,000 tons still intact...

    — Shrikant Himatsingka

  • Terry Towel Capacity Expansion Timeline Capacity · next 18 to 24 months · High confidence 18 to 24 months
    from a time frame standpoint, I would say I would think over the next 18 to 24 months.

    — Shrikant Himatsingka

Margin

  • India Branded Business EBITDA Margins Margin · once stable · High confidence 15%
    we had said that we expect India once it's stable to be clocking approximately 15% margins EBITDA levels, which we continue to hold our view on.

    — Shrikant Himatsingka

  • India Branded Business EBITDA Margins Scale Margin · once revenue inches towards INR200 crores · High confidence INR200 crores
    It will reach that once it inches towards the INR200 crores mark.

    — Shrikant Himatsingka

What to watch in Q1 FY26

Revenue growth post Q1 FY26

Next quarter (Q1 FY26 results)
Current Q1 FY26 expected to be muted due to tariffs
Target Organic growth to resume and sweat capacities

Why it matters

To assess if the tariff impact is temporary and if the company can achieve organic growth as planned after the initial Q1 impact.

I don't think we will see growth come through in any meaningful way because of the tariffs as far as Q1 is concerned. ... But from there on, I continue to feel that we should see organic growth come through and sweat our capacities in line with what we have said earlier.

Risks & concerns

  • US Tariffs Impact

    medium

    Recently imposed US tariffs are expected to make products 10% more expensive for clients, leading to a 'slight impact on revenues and operating margins' and specifically on Q1 FY26 results.

    Management acknowledged

  • High Working Capital Days

    medium

    Working capital days are currently 'well north of 200 days,' which management stated is 'not to our satisfaction' and is an area of focus for reduction.

    Management acknowledged

  • Goodwill Impairment

    low

    A goodwill impairment of INR94.6 crores was recorded due to the recalibration of the brand portfolio, though management views it as a positive step for the balance sheet and not indicative of future impairments.

    Management acknowledged

Q&A highlights

8 direct
Revenue recalibration and Q1 FY26 growth outlook Direct
So Sunny, we are nearly in the fag end this calibration exercise. We have approximately another INR150-odd crores of annual impact to make up for approximately. And as far as growth is concerned, obviously, I don't think we will see growth come through in any meaningful way because of the tariffs as far as Q1 is concerned.

Clarifies the ongoing impact of portfolio recalibration and the immediate negative effect of tariffs on Q1 revenue, indicating muted growth for the quarter.

Asked by Sunny Gosar

Working capital rationalization and debt reduction targets Direct
our consolidated net debt stands at INR2,425 crores, versus INR2,634 crores during the previous year... we expect over INR100 crores between INR100 crores and INR200 crores of reduction in leverage... we should look at bringing down debt to the INR1,500 crores to INR1,700 crores levels deploying various initiatives, including but not limited to, organic retirers of term debt, working capital optimization, issuances of equity...

Provides specific short-term and long-term debt reduction targets and strategies, acknowledging high working capital days as an area of focus.

Asked by Sunny Gosar

Increase in sundry debtors/receivable days Direct
So I don't think we should see any further any material increases further. Our goal will be to bring this down over the next 18 months as discussed earlier. And some of the key reasons that have led to this is higher credit requirements by certain clients and us also pushing for slightly higher credit in some cases to align with client requirements and also by elongated supply chains, which have triggered enhanced receivable cycles.

Addresses a key working capital concern, explains the reasons for the increase, and sets a target for reduction over the next 18 months.

Asked by Vidit Shah

Terry Towel segment capacity expansion and timeline Direct
So we are focusing on getting those utilization levels up. And our plan to take it to approximately 40,000 tons still intact... from a time frame standpoint, I would say I would think over the next 18 to 24 months.

Confirms commitment to expanding capacity in a high-margin segment but clarifies a phased approach based on current utilization levels and a timeline of 18-24 months.

Asked by Shashwat

Macroeconomic environment, US tariffs, and FTA impact on business Direct
At this point, we are subject to a 10% tariff... it will have a slight impact on Q1 is what we estimate... the FDA will come into force in approximately a year. So the FDA will have no bearing in the immediate, let's say, a few months...

Provides management's view on the immediate and future impact of significant trade policies, noting a short-term tariff impact and a delayed FTA benefit.

Asked by Darshil Jhaveri

Impact of tariffs and FDA on margins Direct
the FDA will be margin neutral because in as far as first quarter, second quarter is concerned... That could have some marginal impact. And if there is any muting of any revenue streams during the period of tariffs... However, it could lead to minor movements in margin profile, but nothing substantial.

Clarifies that the FDA is expected to be margin neutral, while tariffs might cause marginal, but not substantial, movements in margin profile.

Asked by Darshil Jhaveri

Update on India branded business growth and profitability Direct
we are currently present in approximately 4,000 points of sale, and we continue to expand that footprint... we should comfortably cross the INR100 crores mark and be between INR100 crores and INR200 crores mark during FY '26 is where we plan to head to... we expect India once it's stable to be clocking approximately 15% margins EBITDA levels...

Details the progress and future targets for the domestic market, including revenue and margin expectations, highlighting it as a key growth driver.

Asked by Prerna Jhunjhunwala

Reason for goodwill reduction/impairment Direct
Goodwill is subject to impairment tests. We have been very clear about the fact that we are repositioning and calibrating our portfolio of brands... we have taken an INR94.6 crores hit in goodwill impairment for the quarter and for the year... We don't see any impairment on the horizon...

Explains a significant one-time charge, linking it to strategic portfolio recalibration and indicating it's a non-recurring event that strengthens the balance sheet.

Asked by Prerna Jhunjhunwala

3 min read 7 chapters

Detailed narrative

Q4 & FY25 Financial Performance Overview

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.

Strategic Portfolio Recalibration and Market Presence

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.

Macroeconomic Factors: US Tariffs and FTAs

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.

Debt Reduction and Balance Sheet Strengthening

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.

Working Capital Management and Receivables

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.

India Branded Business Growth and Profitability

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.

Goodwill Impairment and Balance Sheet Adjustments

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.

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

More Textiles earnings calls