S. P. Apparels Limited

S.P. Apparels achieved a consolidated revenue of INR 1,407 crores in FY25, marking a 27.5% year-on-year growth. Consolidated EBITDA stood at INR 200 crores, growing 14.9% YoY, with a margin of 14.9%. The Garment division, including Young Brand Apparel, was a primary growth driver, with adjusted revenue increasing by 39.4% YoY to INR 1,308 crores. The company's strategy focuses on geographical expansion into Sri Lanka and acquiring customer-approved factories to quickly scale production.

The company significantly improved its Garment division capacity utilization to 85% in FY25, up from 76% in FY24. Current machine capacity is 4,950 in India, with plans to reach 6,000 by March 2026. In Sri Lanka, the target is to add 1,750-2,000 machines by March 2026, contributing to a total of approximately 7,500 machines by end of FY26. This expansion is largely asset-light, focusing on leasing facilities and utilizing existing machines, with minimal major capex planned for the near future beyond INR 60 crores for FY26.

FY25 marked the first full year of consolidation for Young Brand Apparel, which is projected to grow from INR 325 crores in FY25 to INR 350 crores in FY26, with a maximum potential of INR 400-420 crores. Sri Lanka operations, which commenced in January 2025, have already shipped INR 5 crores and are expected to generate INR 200 crores in FY26, targeting INR 400 crores by FY27. The strategy involves acquiring operational factories in Sri Lanka to leverage skilled workforces and production flexibility.

SPUK (UK operations) is undergoing restructuring and is expected to become profitable in FY26, with a revenue target of GBP 9.5-10 million for the year, growing to GBP 12-14 million by FY27. The retail division, SP Retail Ventures, continues to incur losses (INR 23.3 crores in Q4 FY25 vs INR 25.4 crores in Q4 FY24) but is exploring equity fundraising by Q2 to achieve profitability. The company is also planning a demerger and separate listing for the retail segment within three years.

Management guides for a consolidated revenue of INR 1,600-1,800 crores for FY26 and a top line of INR 2,000 crores by FY27. The target for consolidated EBITDA margin is 18%. Consolidated net debt stood at INR 335 crores, primarily due to the Young Brand acquisition and Sri Lanka factory investments. The company aims to stabilize net debt at this level by March 2026 and then reduce it post-expansion cycle, targeting around INR 200 crores for a INR 2,000 crores top line.

The U.K.-India Free Trade Agreement is expected to provide a 10% duty advantage, positioning India as a favorable sourcing destination amid geopolitical uncertainties in Bangladesh. This is anticipated to bring more business and orders. While the company acknowledges the dynamic nature of the industry and potential impacts from tariffs, it believes India's competitive position and long-standing customer relationships will mitigate risks. Challenges include difficulties in implementing night shifts due to manpower and safety concerns.