Siyaram Silk

Siyaram Silk Mills Limited reported a total income of ₹400 crores for Q1 FY26, marking a 21% year-on-year growth from ₹331 crores in Q1 FY25. Despite this revenue increase, EBITDA saw a slight dip to ₹33 crores from ₹34 crores in the prior year, resulting in an EBITDA margin of 8%. Profit After Tax (PAT) significantly decreased to ₹5 crores compared to ₹12 crores in Q1 FY25, partly influenced by a reduction in government grants from ₹13 crores in Q1 FY25 to ₹1 crore in Q1 FY26.

The company is actively expanding its direct-to-consumer brands, ZECODE (fast fashion) and DEVO (ethnic wear). In Q1 FY26, 4 new ZECODE stores and 3 new DEVO stores were opened, bringing the total to 16 ZECODE and 10 DEVO stores since inception. The target for FY26 is to open approximately 35 stores across both brands, with a regional focus on Karnataka/Bangalore for ZECODE and North India (Delhi, NCR, UP, Punjab) for DEVO. These new retail businesses currently contribute about 3% to the overall turnover.

Siyaram Silk is transitioning from a fabric manufacturer to a key player in modern fashion retail. Management noted that Q1 FY26 demand in the Fashion and Apparel segment was largely flat due to the early onset of monsoon. However, they remain optimistic about a gradual recovery, anticipating strong demand during the upcoming festive season and expecting the next 6 months to be better than the previous year. The long-term outlook for the textile industry remains positive, driven by rising disposable incomes and expanding retail infrastructure.

In Q1 FY26, the revenue mix comprised Fabrics at 76%, Garment at 13%, and Others at 11%. The Fabrics segment experienced approximately 20% volume growth, while the Garment segment saw about 18% volume growth. Management indicated that aggressive promotions and schemes contributed to this volume growth, which also impacted the bottom line. The new retail businesses, ZECODE and DEVO, are still in an early stage but are expected to increase the percentage contribution of Apparel to total revenue as they expand.

The total operational square footage for the new retail segment is approximately 1.25 lakh square feet as of June end. Management stated it is too early to provide specific metrics like sales per square foot or inventory turn, as no store has completed 12 months of operation. Initial assumptions suggest an EBITDA breakeven period of 15 to 18 months per store. The company is focusing on larger store formats (6,000 to 10,000 square feet) for ZECODE, as these have shown better operational performance and consumer experience. Omnichannel and e-commerce initiatives for these new brands are not yet a current focus, with physical distribution being the priority.

The company plans to fund the expansion of its new retail business through internally generated free cash flow, believing it to be sufficient. Regarding the preferential issue, management confirmed receiving approvals from stock exchanges and SEBI. The next step involves filing an application with NCLT, and they are hopeful of completing the process within the current financial year (FY26).