Sanathan Textile

Sanathan Textiles delivered robust financial results for Q4 FY25, with revenue from operations at ₹732.18 crores, EBITDA at ₹67.61 crores (9.23% margin), and PAT at ₹43.65 crores (5.96% margin). For the full fiscal year 2025, revenue increased by 1.39% to ₹2,998.61 crores, while EBITDA saw a significant 15.98% rise to ₹262.78 crores, improving margins by 110 basis points. PAT for FY25 grew by 19.87% to ₹160.45 crores, with margins expanding by 82 basis points, reflecting strong operational efficiency and demand.

A major highlight is the new Greenfield facility in Punjab, which is in its final commissioning stage and expected to be operational by the end of Q1 FY26. Phase 1 will achieve a production capacity of 680-700 tons per day, with full ramp-up by the September quarter. This expansion will effectively double the company's polyester filament yarn capacity, adding an estimated ₹1,500-1,800 crores to revenue in FY26, contributing to a total revenue target of ₹4,600-4,800 crores for FY26. Phase 2, adding another 100,000 tons, is slated for FY28.

The company is focused on value-added products, launching S-flex, a cell stretch polyester filament yarn offering four-way stretch without spandex, and Sanathan Dry Cool for moisture management. Demand for technical textile yarns is growing, particularly in coated fabrics and industrial applications. Sanathan plans to double its technical textile yarn capacity from 9,000 tons per annum to 18,000 tons per annum, with revenue impact expected in FY27, aligning with market trends towards functional and sustainable textiles.

Sanathan currently imports 50-55% of its raw materials, with the balance sourced domestically from Indian Oil and Reliance. The upcoming IOCL and GAIL PTA plants are expected to make India self-sufficient in PTA, reducing import dependency significantly. The Punjab facility will benefit from a power agreement of Rs. 5 per unit for the first four years, and operational advantages like 50% savings on heating costs due to solid-state heaters, and lower manpower costs due to automation, enhancing overall cost efficiency.

Management noted robust demand conditions in India, supported by government initiatives like the PLI scheme and a shift towards man-made fibers. Global supply chain realignments and the China +1 strategy are creating new opportunities for India. The UK-India Free Trade Agreement is expected to reduce tariffs by 9%-12.5% on textiles, providing a significant advantage. The company anticipates maintaining its competitive edge in exports, with indirect exports to the US estimated at 30% of total sales, which is expected to grow.

For FY26, the company aims for a consolidated EBITDA margin of 10%-11%, with a long-term target of 12% once the Punjab plant's second phase is complete. Expected annual finance costs for the next year are projected at ₹80-85 crores, primarily due to the Polycot project debt. Additional depreciation of ₹70 crores is anticipated for FY26 due to the Punjab plant. As of March 31, 2025, the net debt stood at ₹1,050 crores, and gross debt at ₹1,084 crores.