Indo Count Inds.

Indo Count Industries reported a total income of INR967 crores in Q1 FY26, marking a 2% year-on-year growth, though revenue declined 6% quarter-on-quarter. EBITDA for the quarter stood at INR119 crores, a 23% year-on-year decrease, with the EBITDA margin contracting to 12.26% from 16.17% in Q1 FY25. PAT for Q1 FY26 was INR38 crores, down from INR78 crores in the previous year, while EPS was INR1.91. Sales volume also saw a decline of 7% YoY to 23.6 million meters.

The company has reclassified its portfolio into two verticals: Core Business (bed linen, non-USA brands) and New Businesses (utility bedding, USA brands). New businesses demonstrated strong growth, expanding nearly four-fold from FY23 to FY25, and now contribute 13% to overall revenue in Q1 FY26, up from 7% in FY25. Revenue from these new segments increased to INR130 crores in Q1 FY26 from INR125 crores in Q4 FY25, with utility bedding operating at approximately 50% capacity utilization.

The U.S. tariff situation remains highly volatile, with tariffs increasing from an initial 10% to 25%, and now to 50% from the end of August. This has led to demand cutbacks and customers prioritizing inventory control, impacting volumes and revenues in the core bed linen segment. Management noted some 'down trading' in the product portfolio as consumers are less willing to invest in luxury goods due to higher tariff impacts, though they confirmed the ability to pass on raw material duty increases to retailers with some lag.

Indo Count is actively diversifying its geographical footprint, with non-U.S. business now contributing approximately 30% of the core business revenue. The U.S. accounts for about 70% of core business, with the U.K. contributing around 10% and the rest of the world 20%. The recently signed FTA with the U.K. is expected to eliminate 10-12% duties on Indian textile products, significantly enhancing competitiveness. The company also anticipates the finalization of an EU FTA by the end of the calendar year.

The domestic business, currently contributing about 2.25% of total revenue, is seen as a key growth driver, with brands like Boutique Living and Layers expanding their presence to over 2,000 MBOs pan-India. In a sustainability initiative, the Indo Count Foundation's collaboration with the Maharashtra Government has led to the successful adoption of the high-density planting system (HDPS) across 12,000 hectares in Kolar district by 2025. This system enables nearly 3x planting density (29,500 plants per acre) and boosts yields from 450 kg/hectare to an impressive 1,250 kg/hectare.

Q1 FY26 EBITDA margins were impacted by approximately 200 basis points due to incubation costs of new businesses, which are expected to continue until the end of the year. Despite near-term pressures, management aims for overall EBITDA margins of 16-18% once market conditions normalize and new businesses mature. The company remains committed to its capex plans, having already spent INR72 crores out of the budgeted INR200+ crores for projects like the North Carolina plant and ZLD, with regular annual capex projected at INR65 crores for FY26.