Skip to content

    RSWM Ltd

    RSWM
    Textiles·7 May 2026
    Management Summary

    RSWM Ltd reported a strong turnaround in FY26, achieving a positive PAT of ₹52 crores and a 40.5% YoY growth in EBITDA to ₹327 crores, driven by strategic transformation and operational efficiencies. Despite a challenging Q4 with revenue decline due to geopolitical headwinds and US tariffs, the company focused on profitability over volume. Capital allocation remained disciplined, with debt reduction and planned investments in knitting expansion and a new GreenPET project, aiming for continued margin expansion and sustainable growth.

    Highlights

    5

    • FY26 PAT of ₹52 crores, a significant turnaround from a loss of ₹41 crores in FY25.

    • FY26 EBITDA grew 40.5% YoY to ₹327 crores, with EBITDA margin expanding 231 bps to 7.1%.

    • Total borrowing reduced by 6.8% YoY to ₹1,510 crores from ₹1,621 crores.

    • Gross profit improved 1.4% YoY to ₹1,753 crores, with margin expanding 246 bps to 38.1%.

    • 70% of the company's energy mix is now from sustainable sources, enhancing competitiveness.

    Concerns

    3

    • Q4 FY26 revenue declined 9.1% YoY to ₹1,142 crores, primarily due to weaker export demand and closure of Chhata spinning operations.

    • Geopolitical factors (Gulf War, Iran-Israel disturbance) led to gas availability issues and increased costs (gas, dyes, chemicals, freight).

    • Lag in passing on increased costs to customers, particularly in the Denim business, impacting spreads.

    Key financials

    Single quarter

    06 metrics
    1. 01Revenue₹4,554 Cr-5.6%YoY
    2. 02EBITDA₹327 Cr+40.5%YoY
    3. 03EBITDA Margin7.1%
    4. 04PAT₹52 Cr
    5. 05Total Borrowing₹1,510 Cr

    Capital allocation

    3
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Debt

    Gross ₹1,510 crores

    Maturity: Repaying loans year-over-year, hoping to minimize current loan outstanding in 3-4 years.

    Liquidity

    Liquidity disclosed

    Financial assets increased to ₹387 crores from ₹299 crores, primarily due to investment in Adani Power, strengthening overall liquidity.

    Guidance & targets

    6
    CategoryTargetPriority
    Profitability
    EBITDA Improvement (Knitting Business)
    3-4% improvement
    		High
    Capacity Utilization
    Mélange Yarn Utilisation
    85-90%
    		Medium
    Capacity Utilization
    Denim Utilisation
    85-90%
    		Medium
    Capacity Utilization
    Knit Operations Utilisation
    +85%
    		Medium
    Cost Savings
    Power Cost Reduction
    ₹1 per unit
    		High
    Topline
    RSWM Topline
    ₹6,200 to ₹6,500 crore
    		Low

    Mélange Yarn Utilisation

    within this quarter or early next quarter
    Current65-70%
    Target85-90%

    Why it matters

    Improvement in utilisation is key to enhancing profitability and asset efficiency in this segment.

    In mélange yarn, the utilisation is to the tune of 65% to 70%, which we expect to go back to 85% to 90% level, maybe within this quarter or early next quarter.

    How to verify

    guidance_and_targets[metric='Mélange Yarn Utilisation']

    Risks & concerns

    5
    RiskSeverity

    Geopolitical factors and trade disruptions

    Continuous challenges due to geopolitical factors, Gulf War, Iran-Israel disturbance, impacting trade flows, gas availability, and increasing freight costs. — Management acknowledged

    high

    US Tariffs

    US tariffs have created significant issues for the textile industry, impacting major exports and contributing to revenue degrowth. — Management acknowledged

    high

    Raw material and energy cost volatility

    Volatility in key raw material costs, dyes, chemical costs, and significantly increased gas costs due to Gulf War, impacting overall cost structure. — Management acknowledged

    medium

    Demand slowdown in Western countries

    Cautious discretionary spending in Western countries is impacting overall demand for textile products. — Management acknowledged

    medium

    Lag in cost pass-through to customers

    Increased costs (gas, dyes, chemicals, freight, yarn prices) cannot be immediately passed on to customers, especially for existing orders, leading to margin pressure. — Management acknowledged

    medium

    Q&A highlights

    8

    “Now, when we say that we are better hopeful or we expect things to be better off in the coming quarter, one reason is that we expect things to be normalising and normalcy to prevail in this period. But at the same time, we are also looking at for better utilisation of assets, particularly denim and knit. These are the two businesses which were impacted largely because of this geopolitical situation. Our other businesses, synthetic yarn and sustainable textile business, which is a recycled blister, are more domestic businesses, and the challenges are comparatively less.”

    Provides a detailed breakdown of capacity utilization across segments and the factors influencing future profitability.

    asked by Saket Kapoor

    3 min read7 chapters

    Detailed Narrative

    01

    Strategic Transformation and FY26 Performance Turnaround

    FY26 marked a period of strategic transformation and disciplined execution for RSWM, resulting in a significant turnaround from a negative PAT of ₹41 crores in FY25 to a positive PAT of ₹52 crores. The company's EBITDA grew 40.5% YoY to ₹327 crores, with the EBITDA margin expanding 231 basis points to 7.1%. This improvement reflects a focus on enhancing the quality of earnings rather than solely chasing volumes, driven by a shift towards value-added products and improved operational efficiencies.

    02

    Navigating Global Headwinds and Industry Challenges

    The global textile landscape remained complex in FY26, characterized by a soft patch in demand, cautious discretionary spending in Western countries, and significant geopolitical factors. US tariffs, the Gulf War, and Iran-Israel disturbances disrupted trade flows, leading to volatility in raw material costs, increased dye, chemical, and freight expenses. Gas availability issues, particularly in March, also impacted the denim division's production, highlighting the challenging operating environment.

    03

    Proactive Shift to Renewable Energy and Cost Management

    RSWM has made a proactive shift towards renewable energy, with approximately 70% of its energy mix now sourced from sustainable wind and solar power. This strategic move serves as a key differentiator, helping to mitigate energy cost volatility and strengthen long-term competitiveness. For FY26, power and fuel costs were reduced by 3.4% YoY, contributing to an overall reduction of ₹17.6 crores, demonstrating effective cost control and energy optimization.

    04

    Product Mix Optimization and Operational Efficiency

    The company's strategy involves strengthening its product mix, driving value-added growth, and improving operational efficiencies. This included curtailing operations at the Chhata spinning unit, which contributed to approximately ₹250 crores of revenue degrowth but improved overall profitability. Management emphasized focusing on profitable revenue streams and continuous efforts to enhance internal processes and operational controls.

    05

    Disciplined Capital Allocation and Balance Sheet Strengthening

    RSWM maintained disciplined capital allocation, prioritizing CAPEX projects with short payback periods (1-3 years) for modernization and productivity improvements. The balance sheet strengthened, with net worth increasing to ₹1,372 crores in FY26 from ₹1,308 crores in FY25. Total borrowing reduced by 6.8% YoY to ₹1,510 crores, reflecting continued deleveraging and a stable capital structure. Working capital efficiency also improved, with inventory reducing to ₹620 crores and trade receivables declining to ₹631 crores.

    06

    Knitting Business Expansion and GreenPET Project

    The company is executing a ₹92 crore expansion in its knitting business, aiming to increase capacity from 600 tons to 900 tons and introduce a new printing segment, with an expected EBITDA improvement of 3-4% by Q3 FY27. Additionally, RSWM is undertaking a ₹427 crore GreenPET (B2B) project in Ratlam, Madhya Pradesh, with construction slated to begin mid-May and operations expected by Q1 FY27. This project is funded by ₹300 crores of project financing and ₹127 crores from a mix of equity and loans from holding companies.

    07

    Market Diversification and Future Growth Outlook

    RSWM is actively diversifying its revenue streams by focusing on new geographies and markets, such as adding customers in Europe and Sri Lanka, to reduce dependence on a few markets. The company anticipates new opportunities from upcoming FTAs with the UK, EU, and New Zealand. Management expressed confidence in India's textile sector growth, aligning with government targets of $100 billion in exports and $250 billion in the domestic market, and believes RSWM is well-positioned for profitable and sustainable growth.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.