Indo Count Industries Limited — Q4 FY25 earnings call

Call held 6 Jun 2025

Management summary

Indo Count Industries reported a record-breaking FY25 in terms of revenue and volume, driven by strategic expansion into value-added segments and brand building. However, Q4 FY25 saw a significant decline in revenue and profitability due to reduced consumer confidence, potential tariffs, and a shift in product mix towards lower-priced offerings. The company is in an investment phase, which has led to higher depreciation and interest costs, impacting PAT. Management remains confident in its long-term goal of doubling revenue by 2028, leveraging new acquisitions and capacity expansions despite short-term market volatility.

Highlights

  • FY25 Total Income grew 16.4% YoY to INR 4,191 crores, highest in company's history.

  • FY25 Sales Volume reached 106.4 million meters, a 9.8% YoY growth.

  • Q4 FY25 Total Income declined 5.9% YoY to INR 1,029 crores.

  • Q4 FY25 EBITDA was INR 88 crores, down 47% YoY, with margin impacted by product mix shift and strategic investments.

  • FY25 EBITDA stood at INR 573 crores, marginally lower by 5% YoY, with a margin of 13.7% (down 300 bps from 16.7% in FY24).

  • FY25 PAT was INR 246 crores, down from INR 338 crores in FY24, due to higher depreciation and interest costs from investments.

  • Net debt to equity increased to 0.42 as on March 31, 2025, from 0.32 in the previous year.

  • Board recommended a dividend of INR 2 per equity share for FY25.

Concerns

  • Reduced consumer confidence and potential tariffs in the US market

  • Fluid nature of tariff situation and market uncertainty

Key financials

3 periods

Headline

  • Net Debt to Equity (Mar 2025)
    0.42

Q4 FY25

  • Total Income
    ₹1,029 Cr
    YoY -5.9%
  • EBITDA
    ₹88 Cr
    YoY -47%
  • PAT
    ₹11 Cr
  • EPS
    ₹0.56
  • Sales Volume
    25.6 million meters
    YoY -10.8%

FY25

  • Total Income
    ₹4,191 Cr
    YoY +16.4%
  • EBITDA
    ₹573 Cr
    YoY -5%
  • EBITDA Margin
    13.7%
  • PAT
    ₹246 Cr
  • EPS
    ₹12.42
  • Sales Volume
    106.4 million meters
    YoY +9.8%

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

  • Utility Bedding & New Brands
    ₹125 Cr Revenue (Q4 FY25)₹100 Cr Revenue (Q3 FY25)11% Contribution to Q4 Revenue

Guidance & targets

Revenue

  • Total Revenue Revenue · by 2028 · High confidence $1 billion

    From $0.5 billion today

    As of FY '25, Indo Count has achieved revenues of approximately $500 million, and we remain confident and committed to our goal of doubling our revenue by 2028.

    — Mohit Jain, Executive Vice Chairman

  • Utility Bedding Business Revenue Potential Revenue · null · High confidence $175 million
    And for the utility bedding business, all put together is $175 million.

    — Mohit Jain, Executive Vice Chairman

  • North Carolina Greenfield Project (Phase 1) Peak Revenue Potential Revenue · null · High confidence $85-90 million
    We expect peak revenue potential from this phase to be at US$85 million to US$90 million.

    — Mohit Jain, Executive Vice Chairman

  • Brand Business (New Brands) Revenue Potential Revenue · null · High confidence $100 million
    Out of that increase in revenue, $275 million will come from 2 new businesses, which is the utility bedding business, approximately $175 million and $100 million from the brand business, the new brands and the like.

    — Mohit Jain, Executive Vice Chairman

Capex

  • North Carolina Greenfield Project (Phase 1) Investment Capex · by September 2025 · High confidence INR 130 crores
    The total investment is INR130 crores in first phase. So INR99 crores is pending, which will be done between April of this year to September. And the phase will get over by the first phase gets over by September, which is 18 million pillows capacity.

    — Mohit Jain, Executive Vice Chairman

Profitability

  • EBITDA to PAT Flow-through Improvement Profitability · over the next 2 years · Medium confidence 150 basis points
    As we scale our volumes and revenues, we expect better flow-through from EBITDA to PAT over the next 2 years.

    — Muralidharan, Group CFO

  • Overall Margin Profitability · null · Medium confidence 16-17%
    And overall, we maintain that as an organization, we would like to do between 16% to 17% margin across the board.

    — Mohit Jain, Executive Vice Chairman

  • Brand Segment Margin (higher than regular) Profitability · null · Medium confidence 15-20%
    So, Vaibhav, we've been saying that, I mean, once these businesses stabilize, we expect from our regular margins to do around 15% to 20% higher margin and specifically the brand segment of the business.

    — Mohit Jain, Executive Vice Chairman

Cost

  • Interest Cost Cost · annually · Medium confidence INR 120-130 crores
    So overall, I think the interest cost will be around INR120 crores, INR130 crores annually.

    — Muralidharan, Group CFO

Market Share

  • Market Share Market Share · FY26 · Medium confidence Maintain, then grow
    Of course, our objective is to maintain our market share and then grow it even in this year.

    — Mohit Jain, Executive Vice Chairman

Risks & concerns

  • Reduced consumer confidence and potential tariffs in the US market

    high

    Led to a decline in offtake and a shift in product mix towards lower to mid-priced offerings in Q4 FY25, impacting revenue and profitability.

    Management acknowledged

  • Fluid nature of tariff situation and market uncertainty

    high

    Management refrained from giving volume and margin guidance for FY26 due to ongoing uncertainty regarding tariffs and consumer behavior.

    Management acknowledged

  • Impact of strategic investments on short-term profitability

    medium

    Higher depreciation and interest costs (approx. 150 bps impact) and initial losses in new utility bedding/brand businesses are affecting current margins, though expected to stabilize in 12-18 months.

    Management acknowledged

  • Capacity underutilization in new US manufacturing facilities

    medium

    Acquired Fluvitex and Modern Home Textiles facilities are currently operating at approximately 50% capacity utilization, with gradual ramp-up expected.

    Management acknowledged

Areas of evasion (1)

  • Specific Q1 FY26 margin guidance

Q&A highlights

3 direct
Impact of tariffs and product mix on Q4 margins Direct
In our case, it is an impact of change in product mix on both our raw material and fixed costs. Roughly, the split is 30-70 between raw material and fixed costs, which includes both employee and other expenditure. You've got to keep in mind that overall, if you look at the full year, our growth has been 16%.

Analyst questioned the significant margin decline in Q4 despite tariffs being implemented later, and management clarified it was primarily due to a shift to lower-priced products and fixed cost under-absorption, not just tariffs.

Asked by Rajesh Kothari

Profitability of new utility bedding and brand businesses Direct
So the pillow and quilt, as I said, is INR125 crores out of INR1,029 crores. So that is approximately 11% is coming from that category. And those categories are losing money as we speak because, I mean, the investment in those categories in terms of talent, overhead cost is much higher than the revenue we are going to generate at this point of time.

Revealed that the newly acquired utility bedding and brand businesses are currently operating at a loss due to significant upfront investments in talent and infrastructure, explaining part of the margin pressure.

Asked by Jatin Damania

Consumer sentiment and demand for branded vs. affordable products in the US Direct
No, I mean, the trend will continue, but we are not seeing any jitteriness when we are taking our brands to the customer. In fact, they are very receptive because they also want to differentiate their floor, their retail space. So if it's a meaningful brand with enough consumer data and traction, then they're happy to take it up.

Addressed concerns about weak consumer sentiment impacting branded product demand, with management indicating continued retailer receptiveness to meaningful brands despite the overall shift to affordable products.

Asked by Surya Narayan

3 min read 6 chapters

Detailed narrative

FY25 Performance & Q4 Headwinds

Indo Count Industries achieved its highest-ever revenue in FY25, growing 16.4% YoY to INR 4,191 crores, with sales volume up 9.8% to 106.4 million meters. This growth was attributed to continued customer trust and leadership in home textiles. However, Q4 FY25 presented significant challenges, with total income declining 5.9% YoY to INR 1,029 crores and EBITDA plummeting 47% YoY to INR 88 crores. This was primarily driven by reduced consumer confidence, uncertainty around potential tariffs, and a product mix shift towards lower to mid-priced offerings, impacting average selling prices by approximately 6%.

Strategic Investments & Indo Count 2.0 Transformation

FY25 marked a 'transformational' year with multiple capacity and capability-enhancing projects under 'Indo Count 2.0'. The company invested approximately INR 460 crores over the past 12-15 months in brand acquisitions, capacity expansion, and talent. Key initiatives include acquiring the Wamsutta brand, adding Fieldcrest and Waverly to its licensed portfolio, and expanding into utility bedding through acquisitions of Fluvitex and Modern Home Textiles. These investments are aimed at diversifying the product portfolio and strengthening market position.

Utility Bedding & Brand Business Expansion

The utility bedding segment in the US, a $4 billion market, is a key focus. Indo Count acquired Fluvitex and Modern Home Textiles, with annual revenue potentials of $50 million and $35 million respectively. A greenfield project in North Carolina, focused on pillow manufacturing, is also underway with Phase 1 expected to be completed by September 2025, targeting $85-90 million in peak revenue potential. Total investment for Phase 1 is INR 130 crores, with INR 99 crores pending. The utility bedding and new brand segments contributed INR 125 crores to Q4 FY25 revenue, but are currently operating at a loss due to significant upfront investments.

Long-Term Revenue Doubling Target

Despite short-term challenges, management reiterated its confidence in doubling revenue to $1 billion by 2028, from approximately $500 million in FY25. This growth is expected to be fueled by the ramp-up of branded and licensed offerings, optimal utilization of the US utility bedding business, and continued strength in core bed sheet operations. The new utility bedding business is projected to contribute $175 million, and the new brand business $100 million to this incremental revenue.

Impact of Tariffs and Trade Agreements

The India-UK Free Trade Agreement (FTA) is expected to significantly boost India's textile exports by eliminating 10-12% duties, making Indian products more competitive. The UK market currently contributes approximately 10% to Indo Count's overall business. Discussions for an India-EU FTA are also ongoing, which could further accelerate growth. In the US, a 90-day pause on tariffs was announced, but an additional baseline tariff of 10% is in effect for all countries except China, which faces compounded tariffs. This fluid tariff situation contributed to market uncertainty and the company's decision to withhold FY26 guidance.

Profitability & Cost Structure

FY25 EBITDA margin stood at 13.7%, down 300 bps from 16.7% in FY24, primarily due to strategic investments and weaker Q4 performance. PAT for FY25 was INR 246 crores, lower than INR 338 crores in FY24, impacted by higher depreciation and interest costs (approximately 150 bps). Management expects better flow-through from EBITDA to PAT over the next two years as investments stabilize. Interest costs are projected to be around INR 120-130 crores annually. The company aims to maintain overall margins between 16-17% and expects 15-20% higher margins from the branded segment once stabilized.

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