Detailed Narrative
Q3 FY26 Financial Performance and 9M Overview
Siyaram Silk reported a total income of ₹639 crores for Q3 FY26, marking an 8.9% year-on-year growth from ₹586 crores in Q3 FY25. EBITDA for the quarter stood at ₹84 crores, a 1.5% increase from ₹83 crores in the prior year, with an EBITDA margin of 13.2%. However, PAT for Q3 FY26 declined by 8.7% to ₹42 crores, resulting in a PAT margin of 6.6%. For the nine-month period of FY26, total income reached ₹1,782 crores, reflecting a 15.3% YoY growth, with EBITDA at ₹262 crores (14.7% margin) and PAT at ₹134 crores (7.5% margin).
Retail Business Expansion and Performance (ZECODE & DEVO)
The company continued its measured expansion of the ZECODE and DEVO retail networks, adding two ZECODE and five DEVO outlets in Q3 FY26, bringing the total to 25 and 17 stores respectively. For the nine months of FY26, these new retail formats generated approximately ₹55 crores in revenue, with a full-year target of ₹70-80 crores. Management aims to open around 35 stores in total for FY26, focusing on efficient operating models rather than just numbers, and will provide FY27 expansion plans next quarter.
Revenue Mix and Business Segment Dynamics
In Q3 FY26, the revenue mix saw Fabric contributing 78%, Garment 15%, and Yarn & Others 7%. Management noted that the fabric business's percentage contribution has gradually decreased from over 80% to 75-78% as other segments like Indigo (5-6% of Yarn & Others) and new retail grow. The company expects the new retail business to become a more meaningful part of the turnover as the number of stores increases.
Profitability and Margin Outlook
The decline in Q3 PAT was attributed to a one-time📎 employee expense due to the new labor code (approximately ₹10-12 crores extra), increased advertising and sales promotion, and initial losses from the new retail businesses. Management reiterated its FY26 guidance of maintaining an approximate 14% EBITDA level, with the retail business expected to cause a 100-150 basis points drop from this margin. They expect finance costs, which increased due to working capital for Q4 inventory, to normalize by year-end.
Capital Allocation and Capex Plans
Siyaram Silk maintains a disciplined approach to capital allocation. The legacy business operates on an asset-light model, requiring maintenance Capex of approximately ₹50-70 crores annually. For the new retail business, the company plans to spend ₹35-40 crores in FY26, reflecting a calibrated approach to expansion. These investments are supported by sufficient cash flow, and the company remains confident in the inflow of funds.
Export Opportunities and FTA Impact
Management highlighted India's growing position as a manufacturing hub, supported by government initiatives and new Free Trade Agreements (FTAs). Exports currently contribute about 9-10% of the company's turnover, primarily semi-finished fabrics to garment converters. While not a direct exporter to brands, Siyaram expects to benefit indirectly from FTAs as they encourage brands to source more from India. The company is also exploring expanding its garment infrastructure to supply formal trousers directly.
In-house Design and R&D Capabilities
Siyaram leverages its in-house design and R&D capabilities, which include multiple designers and sampling infrastructure, to differentiate its fast fashion offerings. The company subscribes to international forecasts and trends, and its Italian brand CADINI provides exposure to European fashion. This synergy within the business ensures that products are fashion-forward and trendy, which management considers a key USP given its fabric business background.