SILKFLEX Q3 FY26 earnings call

Silkflex Polymers (India) Limited reported a robust Q3 FY26, with revenue growing 5.38% year-on-year to ₹33.54 crores. Profitability saw a significant boost, with EBITDA increasing by 130.78% year-on-year to ₹7.11 crores, leading to an EBITDA margin expansion of 1150 basis points to 21.2% from 9.7% in Q3 FY25. Net profit after tax also grew by 117.4% to ₹4.06 crores, with PAT margin improving by 620 basis points to 12.1%. For the nine months ended FY26, revenue stood at ₹71.14 crores, a 6.2% growth, while EBITDA grew 52.8% to ₹12.74 crores, with margins at 17.91%.

A significant milestone was achieved with the commercial production starting at the first manufacturing facility in Vadodara, Gujarat, in November-December 2025. This 72,000 sq ft plant, spread over 10 acres, has an installed capacity of 500 tons per month for flagship products like Silkbond 35 Binder & Silkflex Glue. This marks a strategic transition from being primarily a distributor for the Silkflex brand to a manufacturing company, enhancing domestic capabilities and reducing import reliance. The facility utilized approximately 60% of its capacity in its first two months of operation.

The new manufacturing facility is expected to significantly improve profitability. While the current EBITDA margin for manufacturing is around 25%, management anticipates it will reach approximately 50% in the coming time. This improvement is driven by backward integration, eco-efficient manufacturing processes (boiler-less, zero carbon footprint), advanced automation, and consistent product quality. The in-house production is projected to improve the overall EBITDA margin by 20% to 25%.

The total capital expenditure for the manufacturing plant was ₹50 crores. This was funded through a bank loan of ₹30 crores, ₹10 crores from the IPO proceeds for land acquisition, and the remaining from internal accruals and unsecured loans from promoters. The company's long-term loan is ₹30 crores with a 7-year tenure and a moratorium period until June 2026, while working capital stands at ₹20 crores. The cost of short-term borrowings is 8.5%.

Silkflex aims to achieve full capacity utilization of 500 tons per month by the next financial year, which is expected to generate ₹70-80 crores in turnover from manufacturing alone. The company projects that manufacturing will contribute 50% of its total revenue within the next 1-2 years. Growth drivers include the expanding Indian textile and apparel industry (15-20% growth in textile ink market) and the paints and coating market (20-30% growth in wood coating market), particularly with increasing demand for sustainable, water-based solutions. New expansions for domestic binders and inks are planned within the next six months.

The company is well-positioned to benefit from India's growing textile exports, supported by potential India-EU Free Trade Agreement and India-US trade deals, and the 'China Plus One' strategy. Silkflex's products are backed by global certifications like ZDHC Level 3, OEKO-TEX, and Eco Passport, and the company is a recommended ink supplier for Puma and a nominated vendor for H&M. This validates its product quality, consistency, and sustainability standards, meeting stringent international requirements.