Detailed Narrative
Q2 & H1 FY26 Performance Highlights
Sanathan Textile reported a strong Q2 FY26, with consolidated revenue increasing by 10.24% YoY to Rs. 818 crores, primarily driven by higher sales volumes from the newly commissioned Punjab facility. Standalone EBITDA grew 22.41% to Rs. 71 crores, and PAT surged 45.71% to Rs. 51 crores. For H1 FY26, consolidated revenue rose 2.63% to Rs. 1,563 crores, though consolidated EBITDA saw a slight decline of 2.92% to Rs. 133 crores due to approximately Rs. 11 crores in one-time📎 startup costs associated with the Punjab plant commissioning.
Punjab Facility Ramp-up and Capacity Expansion
The new Punjab facility, commissioned on August 27, 2025, is currently operating at 350 tonnes per day. Management expects to ramp up to 460-470 tonnes per day by mid-November, 600 tonnes per day by December end, and achieve its Phase 1 target of 700 tonnes per day by January 2026. Full utilization of this 700 tpd capacity is targeted from the last quarter of FY26. This expansion has significantly increased the company's total installed capacity from 2,23,000 to 4,79,000 metric tonnes per annum.
New Greenfield Cotton Division in Madhya Pradesh
Sanathan Textile is planning a new greenfield manufacturing facility for its cotton division in Madhya Pradesh, with a projected CAPEX of Rs. 420-445 crores. The company has secured 50 acres of land in a PM MITRA Park, benefiting from subsidized land and power at Rs. 4.50 per unit, along with other subsidiary incentives. Spending for this project is expected to commence from April 2026, with commissioning targeted for Q1 FY28, aiming to generate Rs. 450-500 crores in revenue by FY28.
Financial Outlook and Debt Management
The company maintains its FY26 revenue guidance of Rs. 4,100-4,300 crores with a double-digit EBITDA margin. Looking ahead, FY27 revenue is targeted at Rs. 5,800-6,000 crores with an 11% EBITDA margin, further increasing to Rs. 7,300-7,400 crores and a 12% EBITDA margin by FY28. The current debt-to-equity ratio stands at a healthy 0.76x. Management expects strong operating cash flows, projecting close to Rs. 400 crores post financial obligations for the next half-year, which will inform future debt-equity decisions for upcoming projects.
Market Dynamics and Policy Impact
The recent GST reduction on man-made fiber and yarns from 12% to 5%, along with a revised 5% slab for ready-made garments, is expected to drive consumption and stimulate demand. While the company operates under an inverted duty structure (18% input GST vs 5% output), management expects government facilitation for early refund disbursements. Concerns regarding anti-dumping duties on MEG were downplayed, as the company believes it will not pass and would not significantly impact raw material costs.
Operational Efficiency and Customer Strategy
Silvassa operations continue to perform at optimal efficiency. The Punjab facility is expected to enhance operational efficiency and margin due to its location advantage and state-of-the-art machinery. Average realizations per tonne in Q2 FY26 were approximately Rs. 110.75 for polyester, Rs. 380-390 for cotton, and Rs. 114 for technical textiles. To mitigate risks from potential US/EU demand slowdowns or tariffs, the company has successfully pivoted its customer base towards more local clients, ensuring consistent material placement and maintaining gross margins.