RSWM Q1 FY27 earnings call

RSWM Ltd reported a revenue from operations of ₹1,161 crores in Q1 FY27, marking a sequential growth of 1.7% from ₹1,142 crores in Q4 FY26. Domestic sales were a key driver, increasing to ₹825 crores from ₹774 crores QoQ, while export revenue stood at ₹336 crores, lower than the preceding quarter. The company achieved a gross profit of ₹466 crores, with margins expanding to 39.8% from 37.4% in Q4 FY26, leading to an EBITDA of ₹94 crores, a 10.1% sequential and 16.1% year-on-year increase, with EBITDA margin at 8%.

Profit Before Tax (PBT) for Q1 FY27 increased significantly by 33.5% QoQ and 153.7% YoY to ₹24 crores, with the PBT margin improving to 2.1% from 1.6% in Q4 FY26 and 0.8% in Q1 FY26. Profit After Tax (PAT) stood at ₹17 crores, up from ₹7 crores in Q1 FY26. It was noted that Q4 FY26 PAT included a 'significant one-time^📎 tax benefit' from the concessional corporate tax regime, making the underlying earnings trajectory healthy despite a lower PAT compared to the immediately preceding quarter.

The textile industry faced a 'gradually improving yet uncertain environment' in Q1 FY27, characterized by mixed demand trends. Domestic demand remained healthy, but export markets, particularly parts of the Middle East, were subdued. Geopolitical developments, including the West Asia conflict, led to supply chain disruption^🌐s, delayed transit, and high freight costs, impacting export revenue. Elevated crude oil prices also influenced input costs for synthetic yarn, contributing to market volatility^🌐.

RSWM is actively pursuing new product development, including graphene technology in collaboration with Birla Cellulose for viscose and polyester fiber applications. The company plans to establish a graphene plant and expects commercialization 'within this financial year.' Additionally, RSWM received principal board approval for a joint venture to establish a denim garment unit, with RSWM as the 'major majority shareholder.' Phase 1 of this project aims for a capacity of '5 lakh pieces per month,' with further expansion planned in two more phases.

The company is making 'steady progress' on the LNJ Greenpet's bottle-to-bottle recycling project, a B2B initiative to produce food-grade granules for bottle manufacturing. Civil construction is underway, and critical machine orders have been placed. This project is expected to be completed for trials by Q4 FY27, with commercial production commencing in Q1 FY28. It targets a '50,000 metric ton per year capacity,' projecting '₹500 Cr revenue' and an industry-standard 'EBITDA of around 15%.'

RSWM has significantly improved its power consumption efficiency, with renewable energy sources now accounting for 'around 60%' of power consumption in Q1 FY27, up from mid-20s last year. This has resulted in an 'almost a 10% decrease' in power and fuel costs QoQ, from ₹123 crores to ₹112 crores. The company targets full-year power cost savings of 'around ₹100 crores' and a reduction of 'more than 1 per unit' on an average year-over-year basis.

RSWM is expanding its knitting operations with a ₹92 crore investment. This expansion will increase capacity from '650 tons to 900 tons per month,' including a new '150 tons of printing' capacity. This initiative aims to enrich the product mix, offer a complete range to customers, and is expected to see trials and production scale-up from Q3 FY27.