Siyaram Silk Mills Limited — Q3 FY26 earnings call

Call held 29 Jan 2026

Management summary

Siyaram Silk Mills reported a moderate Q3 FY26 performance with an 8.9% YoY increase in total income to ₹639 crores. Despite revenue growth, PAT declined by 8.7% YoY to ₹42 crores, primarily due to one-time employee costs and increased advertising spend. The company remains confident in its full-year guidance, having upgraded its revenue growth target to 12-15% and maintaining an approximate 14% EBITDA margin, while continuing to expand its new retail formats, ZECODE and DEVO.

Highlights

  • Total income for Q3 FY26 grew 8.9% YoY to ₹639 crores.

  • EBITDA for Q3 FY26 increased 1.5% YoY to ₹84 crores, with a margin of 13.2%.

  • PAT for Q3 FY26 declined 8.7% YoY to ₹42 crores, with a margin of 6.6%.

  • For 9M FY26, total income reached ₹1,782 crores, up 15.3% YoY.

  • 9M FY26 EBITDA stood at ₹262 crores (14.7% margin) and PAT at ₹134 crores (7.5% margin).

  • Fabric contributed 78% to Q3 revenue, Garment 15%, and Yarn & Others 7%.

  • FY26 revenue growth guidance upgraded to 12-15% (from 10-12%).

  • ZECODE and DEVO retail businesses achieved ₹55 crores in 9M FY26, targeting ₹70-80 crores for full FY26.

Key financials

2 periods

Q3 FY26

  • Total Income
    ₹639 Cr
    YoY +8.9%
  • EBITDA
    ₹84 Cr
    YoY +1.5%
  • EBITDA Margin
    13.2%
  • PAT
    ₹42 Cr
    YoY -8.7%

9M FY26

  • Total Income
    ₹1,782 Cr
    YoY +15.3%
  • EBITDA
    ₹262 Cr
  • PAT
    ₹134 Cr

What they filed

Q1 FY27: revenue up 14.7%, net profit up 120.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue608 570 736 388 706 +16%623 +9%853 +16%445 +15%
EBITDA89 67 112 21 108 +21%68 +1%134 +20%18 −14%
Net profit68 46 72 5 87 +28%42 −9%95 +32%11 +120%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Fabric
    78% Revenue Mix
  • Garment
    15% Revenue Mix
  • Yarn & Others
    7% Revenue Mix

Guidance & targets

Revenue

  • Overall Company Revenue Growth Revenue · FY26 · High confidence 12-15%

    Previously 10-12% → 12-15%

    In any way, we have increased the overall guidance for this year, which is as an exception. From 10% to 12% as an overall growth of the company to between 12% to 15% growth. And by the end of the year, we are confident of remaining within that guidance of 12% to 15% as an overall growth.

    — Gaurav Poddar

  • ZECODE and DEVO Revenue Revenue · FY26 · High confidence ₹70-80 crores
    So our original target for the whole year was around INR70 crores to INR80 crores, and we will I think be able to achieve, we'll be in line with that guidance.

    — Gaurav Poddar

Profitability

  • EBITDA Margin Profitability · FY26 · High confidence 14% approximate
    So the 14% EBITDA guidance is the approximate number without the retail calculation is something that we will stick to.

    — Gaurav Poddar

  • EBITDA Margin Impact from Retail Profitability · FY26 · High confidence 100-150 basis points drop
    The retail business is going to give a loss that is 100, 150 basis points that will reduce from this EBITDA margin.

    — Gaurav Poddar

Store Expansion

  • New Store Openings (ZECODE & DEVO) Store Expansion · FY26 · Medium confidence 35 stores
    We remain focused on achieving our plan of opening about 35 stores during the year.

    — Gaurav Poddar

Marketing Spend

  • Marketing Spend as % of Revenue Marketing Spend · Ongoing years · High confidence 4-5%
    The spends as a percentage of turnover, we have indicated between 4% to 5% of revenue. And this is the kind of number that we are comfortable with and will continue this year as well as in the ongoing years.

    — Gaurav Poddar

Capex

  • Maintenance Capex (Legacy Business) Capex · Every year · High confidence ₹50-70 crores
    It's more of maintenance Capex, which we have indicated in the line of INR50 crores, INR60 crores, maybe INR50 crores, INR70 crores in every year.

    — Gaurav Poddar

  • Retail Business Capex Capex · FY26 · High confidence ₹35-40 crores
    Even the retail business is a more calculated approach where we have indicated, I think, about INR35 crores to INR40 crores that we will spend this year.

    — Gaurav Poddar

Risks & concerns

  • Profitability impact from new retail businesses

    medium

    New retail ventures (ZECODE & DEVO) are currently operating at a loss, expected to reduce EBITDA margin by 100-150 bps for FY26.

    Management acknowledged

  • Initial operational challenges in new retail

    medium

    New retail businesses face initial struggles with sourcing and gross margin challenges, which are expected to be resolved in a year or so.

    Management acknowledged

  • Increased finance cost due to working capital

    low

    Finance cost increased due to extra working capital for inventory build-up for the best quarter (Q4), but management expects it to normalize and is within comfort limits.

    Management downplayed

Areas of evasion (3)

  • Store-level economics for ZECODE/DEVO
  • Specific FY27 retail business revenue guidance
  • Plans for new geographies for ZECODE/DEVO

Q&A highlights

1 direct, 1 evasive
Reasons for PAT decline despite revenue growth Direct
So there are two, three major reasons. One is there is a onetime cost of this employee expense because of the new labour code, and there is some increase in advertising and sales promotion. So this is, both these put together is roughly INR10 crores, INR12 crores extra. And then there is this retail sales that creates a loss of new retail businesses, which is in line with what our expectation is.

Reveals specific cost pressures (new labor code, marketing) and the expected drag from new retail ventures impacting profitability.

Asked by Varun from Bava Investments

Store-level economics for ZECODE and DEVO Evasive
So I think it is still very early in our journey to be sharing these numbers because, I mean, this is just the first year of operations. Hardly a few stores have seen a year or just a little over a year. So we are going to wait a few more quarters before we start releasing these numbers.

Management defers providing granular data on the performance of new retail stores, making it difficult for investors to assess unit economics and profitability of this growth segment.

Asked by Apoorv from Whitestone PMS

Expected revenue trajectory for retail business for FY27 Partial
For the next year, by the next quarter, I think we'll be in a better position to give you a guidance. The key reason for the increase in growth will be, of course, new store openings as well as the main reason will be the better efficiency of the existing stores that we opened.

While management indicates future growth drivers, they defer specific FY27 guidance, suggesting plans are still being firmed up or they are cautious about committing to numbers too early.

Asked by Deepak Patil from Equentis Wealth Advisory

3 min read 7 chapters

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.

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