RSWM Ltd

RSWM Ltd reported an encouraging Q4 FY25, with PAT turning positive at ₹1.6 crore, recovering from a ₹8 crore loss in Q3 FY25. Q4 revenue grew 7.2% YoY to ₹1,256 crore, and EBITDA rose 44.8% YoY to ₹79 crore, with margins improving by 163 bps to 6.2%. For the full FY25, revenue increased 18.9% YoY to ₹4,825 crore, and EBITDA grew 76.8% to ₹233 crore, with margins expanding from 3.2% to 4.8%. However, FY25 concluded with a net loss of ₹41 crore, primarily due to elevated finance and depreciation costs.

The company's "RSWM 2.0" transformation focuses on agility, cost-effectiveness, smart manufacturing, and sharper execution, already yielding visible improvements in productivity and client satisfaction. Management emphasized internal efficiencies, consumption norm optimization, and a shift towards value-added products and customers. They are also exploring new markets in the Middle East, Europe, and America, prioritizing customers seeking sustainable and environment-friendly products rather than purely geographical expansion.

India's favorable tariff position, particularly with the India-UK Free Trade Agreement, presents a significant opportunity for textile exporters. RSWM aims to increase India's share in the UK apparel market from 6% to 15-20%, potentially unlocking $1 billion in additional exports. The company is well-positioned to capitalize on this, especially in denim and knitting segments. However, the clarity on US import tariffs remains a watch item, though RSWM's indirect export model mitigates direct impact.

RSWM is deeply committed to sustainability, operating as a liquid zero-discharge company with all manufacturing facilities utilizing recycling. The company is actively converting most of its normal boilers to biofuel, with the majority of this conversion expected within FY26. Currently, mid-20% of its power is sourced from green energy (solar and wind), and efforts are ongoing to increase this proportion. Innovation efforts include investing in product centers for blends and functional textiles (antibacterial, moisture-wicking, UV protection) and a development agreement with Birla Cellulose and TACC for Graphene-based textiles.

The company's total debt stands at ₹1,700 crore, comprising ₹700 crore in term loans and the remainder in working capital facilities. Elevated finance costs, partly due to the Ginni Filaments acquisition and higher working capital, contributed to the FY25 net loss. Management is actively working to improve its debt profile through refinancing high-cost borrowings, prepaying selected loans, and optimizing working capital, with a target to lower the debt-to-equity ratio and improve interest coverage. No major CAPEX is planned for FY26 beyond normal maintenance and efficiency enhancements.

The acquisition of Ginni Filaments for approximately ₹160 crore included both spinning and knitting divisions. While the knitting division has been successfully integrated, overcoming initial teething troubles and showing good performance, the spinning division faces challenges due to old and inefficient machines. Despite this, RSWM is not planning any major modernization for the Chhata spinning unit in FY26, instead focusing on minimizing losses through product mix optimization and utilization.