Sanathan Textiles Q1 FY27 earnings call

Sanathan Textiles reported a consolidated revenue of INR1,334.74 crores for Q1 FY27, marking a substantial 79.08% year-on-year growth, primarily driven by higher selling prices. Consolidated EBITDA increased by 55.38% YoY to INR108.08 crores. However, consolidated PAT stood at INR23.82 crores, a decline from INR40.43 crores in Q1 FY26, attributed to significantly higher depreciation (INR34.7 crores vs INR11.7 crores) and finance costs (INR38.6 crores vs INR4.62 crores) due to the full commissioning of the Punjab facility. Standalone performance was robust, with EBITDA up 35.52% YoY to INR94.93 crores and PAT growing 37.64% YoY to INR64.95 crores.

The quarter was characterized by an unusual degree of raw material price volatility, with both polyester yarn (PTA, MEG) and cotton experiencing sharp increases due to geopolitical tensions and global supply chain disruption^🌐s. This led to buyers deferring purchases in April and May, moderating industry operating rates. Despite these challenges, the company's disciplined procurement, timely imports, and strong supplier relationships ensured uninterrupted operations at both Silvassa and Punjab facilities, demonstrating strong operational resilience.

Sanathan Textiles has completed the installation of plant and machinery for its technical textile capacity expansion at Silvassa, doubling its installed capacity from 9,000 MTPA to 18,000 MTPA, with commercial production anticipated very shortly. The Punjab polymerization capacity achieved approximately 80% utilization in Q1, producing 700 metric tons per day. Management aims to increase Punjab's utilization to 85-90% in the next quarter and eventually to 95-96% full utilization, with the second phase of Punjab expansion targeting 900 tons per day by Q1 FY28.

The company outlined a clear growth roadmap, including the full ramp-up of Punjab Phase 1 and the upcoming commercial production of expanded technical textiles at Silvassa. A significant greenfield cotton plant is planned in Madhya Pradesh with a capex of INR400 crores to install 72,500 spindles, projected to generate INR350-375 crores in incremental revenue with an asset turn of 0.8-0.85. Additionally, a 32 MW hybrid wind-solar power project is being commissioned in phases to reduce power costs.

Management expressed confidence in the long-term structural drivers for domestic yarn consumption, including the shift towards man-made fibers and India's strengthening position in textile manufacturing. For FY27, the consolidated EBITDA guidance has been refined to INR520-540 crores, up from the previous guidance of >INR500 crores. The company's near-term focus remains on strengthening operational efficiency, improving margins across all three business verticals, and prudent capital allocation amidst a fluid global environment.

For its Punjab facility, Sanathan Textiles sources raw materials from IOCL Panipat. For Silvassa, the sourcing mix includes 50-60% imported PTA and 40% domestic PTA under contract, with 60% on short-term contracts. The company is actively engaging with upcoming domestic producers like GAIL and IOCL to discuss future material sourcing and contractual terms, aiming to reduce dependence on imports as these new facilities come online.