Indo Count Inds.

The company highlighted the recent conclusion of FTAs with Europe and the United States as truly transformative for the Indian textile sector. These agreements are expected to provide duty-free access to Europe, a market of over USD 260 billion, and ease tariff uncertainty with the US. This development positions India more competitively against other exporting countries, creating a level playing field for Indian players. Indo Count is already in discussions with customers and evaluating strategies to capitalize on this 'golden opportunity'.

Indo Count commenced commercial production at its new greenfield pillow manufacturing facility in Kernersville, North Carolina, in January 2026. This is the company's third and largest US manufacturing unit, adding 18 million pillows annually and increasing total utility bedding capacity to 31 million pillows per annum. This expansion strengthens the company's US footprint, improves customer proximity, and enhances operational flexibility. The utility bedding business is expected to contribute approximately USD 175 million to the consolidated top line over the next few years, with the new Kernersville facility contributing USD 85-90 million to this target.

Despite operating in a challenging 50% U.S. tariff environment, Indo Count delivered a stable performance in Q3 FY26. Total income stood at ₹1,074 crores, a slight decrease from ₹1,082 crores in Q2 FY26. Sales volume for Q3 FY26 was 24.8 million meters. The company maintained volumes by undertaking calibrated product mix adjustments and partially absorbing tariffs. New businesses largely offset the impact on core business revenues, contributing 20% to the total top line and growing 16% QoQ to ₹210 crores.

EBITDA for Q3 FY26 was ₹102 crores, down from ₹123 crores in Q2 FY26, resulting in an EBITDA margin of 9.5% (adjusted 10.4%). This decline was attributed to partial tariff absorption and a ₹9.2 crore impact from the new Labor Code. Management aims to restore EBITDA margins to 15-16% in the long term and expects margin pressure to gradually ease. The 150-200 basis points impact from incubation costs for new businesses is anticipated to conclude by the end of Q4 FY26, further supporting margin recovery.

Indo Count significantly strengthened its ESG leadership position, with its S&P Global ESG score rising to 78 from 45 over the last two years, placing it within the top 3 percentile globally among textile, apparel, and luxury goods peers. The company's portfolio of licensed brands, including Wamsutta, Fieldcrest, Waverly, and GAIAM, continues to be strong growth drivers. The newly relaunched Wamsutta brand is performing well, receiving encouraging customer feedback and strong product reviews.

For FY26, Indo Count initially planned ₹214 crores in capital expenditure, with ₹131 crores invested up to the first nine months. An additional ₹20 crores is expected in Q4, bringing the total for FY26 to approximately ₹150 crores. Some capex, particularly for Zero Liquid Discharge (ZLD) projects, will spill over into the next fiscal year. The company has reduced its net debt by ₹215 crores compared to March '25 and expects no major fluctuations in debt, with the worst behind it, as it focuses on working capital management for revenue growth.

Management noted that retail sales during the holiday season were decent, but retailers increased prices, which had a slight impact on demand. While the U.S. economy remains resilient, consumer sentiment has been 'a little bit muted' in the last two quarters. However, the company anticipates a rebound in demand levels after 2-3 quarters as market conditions stabilize. The recent trade agreements are expected to provide clear visibility for customers, aiding decision-making and supporting future demand.