Siyaram Silk

Siyaram Silk Mills delivered a strong financial performance in Q2 FY26, with total income growing by 18.1% year-on-year to INR 743 crores. Profitability also saw significant improvement, with EBITDA reaching INR 145 crores (19.5% margin) and PAT increasing by 27.2% YoY to INR 87 crores (11.7% margin). For the first half of FY26, total income stood at INR 1,143 crores, a 19.1% increase, with EBITDA at INR 177 crores (15.5% margin) and PAT at INR 92 crores (8% margin). This growth was attributed to improved consumer confidence and the early arrival of the festive season.

The company continued its aggressive retail expansion strategy for its new brands, ZECODE (fast fashion) and DEVO (modern ethnic wear). In Q2 FY26, 7 new ZECODE stores and 2 new DEVO stores were opened, bringing the cumulative count to 23 ZECODE and 12 DEVO stores since their launch. The company aims to open approximately 35 stores in total for the current fiscal year. While the new retail business contributed 'just under INR 30 crores' to H1 FY26 revenue, management is focused on scaling these ventures, particularly the larger format ZECODE stores (5,000-10,000 sq ft) which are showing better results.

Buoyed by the strong performance in the first half, Siyaram Silk Mills revised its full-year FY26 revenue growth guidance upwards from the previous 10-12% to 12-14%. For the legacy business, the EBITDA margin is expected to be around 14% (including other income). However, the new retail business is projected to have a dilutive impact of approximately 150 basis points on the overall EBITDA margin, as the company prioritizes establishing operational efficiencies and scale in these nascent segments.

Siyaram is strategically moving towards an asset-light business model, with approximately 50% of its fabric production and an even higher percentage of its garment business being outsourced. This approach allows the company to focus on branding and marketing while quickly adapting to evolving consumer preferences and market trends. The ZECODE brand, in particular, is entirely outsourced, leveraging the company's 50 years of textile industry knowledge for sourcing and quality control.

The company is actively growing its presence in the men's ethnic wear segment through its DEVO brand, which offers a mid-premium range of products from INR 1,700 to INR 12,000. Management believes Siyaram has a strong 'right to win' in this segment, leveraging its brand recognition and industry expertise. The company also reported gaining market share in its traditional fabric and apparel businesses, benefiting from improving consumer sentiment and the ongoing formalization of the Indian economy.

The Board of Directors approved an interim dividend of INR 4 per share, reflecting confidence in the company's financial health. Other income in Q2 FY26 included a capital subsidy grant of INR 2.61 crores and a significant INR 21.22 crores from the sale of a surplus land and building. The capital expenditure for new retail stores is estimated at INR 1-1.5 crores per store, covering furniture, fixtures, and security deposits, with all initial stores being company-owned and operated under a 9-12 year lease model.