RSWM Ltd

RSWM Ltd reported a stable performance in Q3 FY26 despite a challenging demand environment, with revenue at ₹1,093 Cr. The company focused on enhancing business quality and profitability, leading to a gross margin of 39.2%, an improvement of 78 basis points QoQ and 310 basis points YoY. EBITDA for the quarter increased by 4% QoQ and 41.7% YoY to ₹82 Cr, with EBITDA margin rising to 7.4%. Profit after tax stood at ₹4 Cr, impacted by a one-time^📎 exceptional expense^📎 of approximately ₹10 Cr.

For the nine months ended December 2025, RSWM recorded a revenue of ₹3,412 Cr. EBITDA for this period was ₹242 Cr, marking a 56.9% YoY increase, with EBITDA margins improving to 7.0%. The company achieved a PAT of ₹17 Cr for 9M FY26, representing a strong turnaround from a loss in the corresponding period last year, driven by favorable product mix, stable raw material costs, and improved operating leverage.

The company is undertaking a knitted fabric expansion project with a capital expenditure of ₹92 Cr, expected to be fully operational in FY27 H1, increasing knitting capacity by 20% from 750 MT to 900 MT. This expansion includes the introduction of printed knit product lines, enabling entry into fashion-intensive segments like kids' wear and loungewear. Additionally, RSWM acquired a plant from Birla Advanced Knits Private Ltd for ₹54 Cr, which will provide a printing facility of 120 tonnes per month and modernize existing units.

RSWM's LNJ GreenPET project, a logical expansion of its bottle-to-fiber business, has a total project cost of ₹427 Cr, funded by approximately ₹300 Cr debt and ₹127 Cr internal accruals/equity. This facility, targeted to be operational within 12-15 months, will produce food-grade recycled resin, expanding into the packaging segment. The company also highlighted its commitment to sustainability, with 70% of power now from renewable sources, a shift from fossil fuels to biofuels for boilers, and 100% compliance with zero liquid discharge.

Disciplined cost reduction initiatives, including improved sourcing practices, inventory management, and better capacity utilization, contributed to margin expansion. Finance costs declined by approximately ₹4 Cr YoY in Q3 FY26, supported by a reduction in the repo rate from 6.5% to 5.2% and optimized working capital management. The company's cost of working capital is now less than 9%, aided by a vendor discounting platform.

Recent trade agreements, including an interim trade framework with the US reducing tariffs to 18% and a comprehensive FTA with the EU, are expected to significantly improve market access and competitiveness for Indian textile exporters. The EU FTA, likely to be effective next January, is projected to provide a level playing field by reducing tariffs to almost zero, potentially unlocking substantial growth opportunities in the higher value-added segments and driving an 8-10% CAGR in Indian textile exports.

Management expressed confidence in sustaining the current EBITDA margin of 7.4% in the near to mid-range quarters and aims to achieve a 'double-digit' EBITDA margin within the next 6-8 quarters. The Return on Capital Employed (ROCE) has improved from 3.3% to 5.1% YoY, with management committed to further increasing this ratio through continued focus on execution excellence and efficient capital deployment. The company targets an overall revenue of approximately ₹5,000 Cr by FY26-27.