Indo Count Industries Limited — Q1 FY26 earnings call

Call held 13 Aug 2025

Management summary

Indo Count Industries reported a mixed Q1 FY26, with revenue showing modest 2% YoY growth to INR967 crores, primarily driven by new businesses. However, profitability was impacted by lower volumes, an unfavorable product mix, and incubation costs of new ventures, leading to a 23% YoY decline in EBITDA to INR119 crores and a PAT of INR38 crores. The company is navigating significant U.S. tariff volatility, which has led to some demand cutbacks and potential down-trading, but remains committed to its 2x growth guidance and long-term strategic initiatives, including the relaunch of the Wamsutta brand and expansion in utility bedding.

Highlights

  • Total income grew 2% YoY to INR967 crores in Q1 FY26.

  • EBITDA declined 23% YoY to INR119 crores, with margin at 12.26% (vs 16.17% in Q1 FY25).

  • PAT stood at INR38 crores in Q1 FY26, down from INR78 crores in Q1 FY25.

  • Sales volume decreased 7% YoY to 23.6 million meters.

  • New businesses (utility bedding & USA brands) contributed 13% of Q1 FY26 revenue, up from 7% in FY25.

  • Revenue from new businesses rose to INR130 crores in Q1 FY26 from INR125 crores in Q4 FY25.

  • Debt reduced by approximately INR60 crores in the quarter.

  • Non-U.S. business now contributes ~30% of core business revenue.

Concerns

  • US Tariff Situation Volatility

Key financials

  1. Total Income ₹967 Cr +2%YoY
  2. Sales Volume 23.6 million meters -7%YoY
  3. EBITDA ₹119 Cr -23%YoY
  4. EBITDA Margin 12.3% -24.2%YoY
  5. PAT ₹38 Cr -51.3%YoY
  6. EPS ₹1.91
  7. Debt Reduction ₹60 Cr

What they filed

Q1 FY27: revenue up 11.7%, net profit up 67.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue991 1,009 865 733 828 −16%779 −23%758 −12%819 +12%
EBITDA150 122 52 88 81 −46%63 −48%67 +29%114 +30%
Net profit83 67 8 40 42 −49%25 −63%37 +363%67 +68%
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.

Segment breakdown

  • Core Business
    16% CAGR (FY23-FY25)30% Non-U.S. Revenue Contribution70% U.S. Revenue Contribution10% U.K. Revenue Contribution20% Rest of World Revenue Contribution
  • New Businesses
    13% Revenue Mix (Q1 FY26)₹130 Cr Revenue (Q1 FY26)₹125 Cr Revenue (Q4 FY25)4× Growth (FY23-FY25)50% Utility Bedding Capacity Utilization

Guidance & targets

Revenue

  • Overall Revenue Growth Revenue · Medium confidence 2x growth
    our commitment to achieving our 2x growth guidance remains unwavering.

    — Mohit Jain

  • US Manufacturing Business (Utility Bedding) Revenue Revenue · Over a 3-year period (starting FY26) · High confidence $175 million
    over a period of 3 years, starting this financial year, we are quite optimistic of achieving $175 million in revenue, so in this category of business of utility bedding, which is being manufactured in the United States.

    — Mohit Jain

Profitability

  • Incubation Costs Impact Duration Profitability · FY26 · High confidence continue until the end of this year
    Costs that we have indicated will persist until the end of this year.

    — Mohit Jain

  • Margins and Sales Volumes Pressure Profitability · Near term (until U.S. tariff environment stabilizes) · High confidence remain under pressure
    In the near term, both margins and sales volumes are expected to remain under pressure until the U.S. tariff environment stabilizes.

    — Mohit Jain

  • US Brands Business Margin Profitability · Longer period of time · Medium confidence between 16% to 18%
    this particular segment should give us a higher margin than our core business... we are striving to be between 16% to 18%.

    — Mohit Jain

  • EBITDA to PAT Conversion Profitability · Next 2 years · Medium confidence stronger
    As volumes in the core business scale up and the new businesses show more traction, we expect stronger EBITDA to PAT conversion over the next 2 years.

    — Manish Bhatia

  • Overall EBITDA Margin Profitability · Once things in the world normalize · Medium confidence between 16% to 18%
    our target is to be between 16% to 18% once things in the world normalize.

    — Mohit Jain

Market Share

  • ROW Market Share and Contribution Market Share · Near future · Medium confidence grow
    we expect our market share and contribution from ROW markets to grow in the near future.

    — Mohit Jain

Capex

  • Regular Capex Capex · This year (FY26) · High confidence INR65 crores
    I think we've shown INR65 crores for this year.

    — Mohit Jain

  • ZLD Project Start Capex · FY26 · High confidence end of this year
    It should be taken up towards the end of this year. We'll start at the end of the project.

    — Mohit Jain

Revenue Mix

  • New Business Contribution to Overall Revenue Revenue Mix · Remaining period (FY26) · High confidence around these levels (13%)
    Yes, around these levels, yes. I mean.

    — Mohit Jain

Risks & concerns

  • US Tariff Situation Volatility

    high

    Initial 10% tariff increased to 25%, then to 50% from end of August, leading to significant uncertainty, demand cutbacks, and inventory control prioritization by customers.

    Management acknowledged

  • Demand Softness and Product Mix Headwinds

    medium

    Overall demand sentiment showed signs of softness due to tariffs, impacting volumes and revenues, with an unfavorable product mix and pricing pressures in the core bed linen segment.

    Management acknowledged

  • Incubation Costs of New Businesses

    medium

    Incubation costs for new businesses are contributing to margin contraction (~200 bps) and are expected to persist until the end of the year.

    Management acknowledged

  • Down-trading in US Market

    medium

    Due to higher tariff impact, there has been some down-trading in the product portfolio as customers are less willing to invest in luxury goods.

    Management acknowledged

Areas of evasion (3)

  • Specific details on tariff pass-through and margin impact
  • Precise short-term market predictions
  • Specific details on HDPS land type (irrigated vs rain-fed)

Q&A highlights

2 direct, 1 evasive
Impact of increased tariffs on margins and pass-through. Evasive
Sure. So we have taken calls on a case-to-case basis. Due to business sensitivity, we would not like to get into further details.

Management declined to provide specific details on how tariff increases are impacting margins and the extent of pass-through, citing business sensitivity.

Asked by Prerna Jhunjhunwala

Sustainability of premium appetite in the US market given tariffs. Direct
we have seen a little bit of down trading happen in the product portfolio that people do not want to invest too much in luxury goods so that -- because the tariff impact is higher.

Management acknowledged that higher tariffs are leading to some down-trading in the US market, which could affect product mix and realizations.

Asked by Surya Narayan Nayak

Margin profile of the new US brands business and overall margin targets. Direct
on an overall basis right now, we yet have a 150 to 200 basis point hit on our EBITDA margin, which will continue till the end of the year. Once this stabilizes, then these businesses, I mean, in the short term, should do the same level of margin as our parent business. So overall, as I said, our target is to be between 16% to 18% once things in the world normalize.

Management quantified the current margin drag from new businesses (150-200 bps) and reiterated the long-term overall EBITDA margin target of 16-18% once these businesses mature.

Asked by Raman K.V.

3 min read 6 chapters

Detailed narrative

Q1 FY26 Performance Overview

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.

Strategic Reclassification and New Business Growth

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.

US Tariff Headwinds and Market Dynamics

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.

Geographical Diversification and FTA Benefits

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.

Domestic Market Expansion and Cotton Cultivation Initiative

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.

Margin Outlook and Capex Commitments

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.

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