SILKFLEX Q4 FY26 earnings call

Silkflex Polymers reported robust Q4 FY26 results, with revenue from operations growing 199.8% to INR 39.1 crores. EBITDA surged 224.4% to INR 9 crores, leading to a 180 bps margin expansion to 23.1%. For the full fiscal year 2026, revenue increased 37.7% to INR 110.3 crores, while PAT grew 73.6% to INR 12.2 crores, reflecting strong operational leverage and cost control.

The company achieved a pivotal operational milestone with the commencement of full-scale commercial production at its Vadodara facility. This transition from a trading-led to a manufacturing-driven model is a realization of a long-term vision. The facility, with an installed capacity of 500 metric tons per month, operates on a sustainable boiler-less, zero-carbon, zero-discharge model. This backward integration is expected to improve EBITDA margins by 20-25%.

Silkflex is strategically focused on scaling manufacturing utilization, aiming to increase manufacturing's contribution to 50% of its revenue mix from 24.1% in FY26. The company plans to expand binder sales into non-textile industries like paints, coatings, and industrial applications, opening new revenue streams. The wood coating segment, which grew 85.1% to INR 6.1 crores in FY26, is targeted to double to INR 12-14 crores.

Management expects overall EBITDA margins to expand by 2-3% (200-300 basis points) once the Vadodara facility reaches full capacity utilization, targeted by the end of FY27. While Q4 FY26 manufacturing EBITDA margin was 30%, compared to 12-15% for trading, the current 60% capacity utilization means fixed cost absorption is still improving. The company's proactive inventory strategy helped secure raw materials at favorable blended costs, supporting near-term margin stability.

The company has completed the maximum requirement of its capex for the manufacturing unit and plans to add vessels costing INR 3-5 crores in the future. Despite a highly levered balance sheet with working capital around INR 20 crores, management is confident in funding future growth through strong internal accruals and cash flow. A key focus moving forward is to reduce debt, with a stated plan to achieve 100% reduction.

Silkflex is actively engaged in R&D, with plans to launch new products within 3-4 months, potentially expanding capacity with additional vessels. While relying on Silkflex Malaysia for sourcing and technology, the company is working on technology transfer and in-house manufacturing of additional inks and wood-coating products in India. This strategy aims to reduce import dependency and deepen local capabilities, also helping to mitigate currency risks from the US dollar exchange rate.