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    Sportking India Limited

    SPORTKING
    Textiles·12 Nov 2025
    Management Summary

    Sportking India reported a resilient Q2 FY26 with revenue of ₹627.4 crores and strong margin expansion, driven by stable raw material prices and optimized inventory. Export performance remained robust, contributing 53% to revenue. The company is progressing with its Odisha capex and solar power projects, while also improving its debt-to-equity ratio. However, domestic demand remains muted due to tariffs and global uncertainties, impacting overall realization.

    Highlights

    5

    • Revenue from operations for Q2 FY26 stood at ₹627.4 crores.

    • Gross profit for Q2 FY26 increased by 4.8% YoY to ₹151.3 crores, with margin expanding 197 bps to 24.1%.

    • Operational EBITDA for Q2 FY26 increased by 4.5% YoY to ₹65.4 crores, with margin expanding 82 bps to 10.4%.

    • Export contribution grew 11% to ₹334.2 crores in Q2 FY26, representing 53% of revenue, up from 46% in Q2 FY25.

    • Gross debt to equity improved to 0.48 from 0.58 in March '25, and short-term borrowing reduced by ₹50 crores.

    Concerns

    5

    • Domestic demand was muted due to higher U.S. tariffs and global macro uncertainty.

    • Margins were under pressure due to lower cotton yarn spreads and the need to compromise on pricing.

    • A provision of ₹5 crores for an old insurance loss impacted Q2 FY26 profits.

    • Forex fluctuation led to an increase of ₹3 crores in interest cost for Q2 FY26.

    • The cotton crop is estimated to be lower by 2-3% YoY, and overall consumption in India is down 3-4%.

    What Changed2

    vs Q3 FY26

    Guidance items10 → 7 (-3)Risks discussed3 → 7 (+4)

    Key financials

    Single quarter

    06 metrics
    1. 01Revenue from Operations₹627.4 Cr+7.0%QoQ
    2. 02Gross Profit₹151.3 Cr+4.8%YoY
    3. 03Gross Profit Margin24.1%
    4. 04Operational EBITDA₹65.4 Cr+4.5%YoY
    5. 05EBITDA Margin10.4%

    Capital allocation

    3
    high confidence
    CategoryHeadline
    Capex

    ₹1,000 crores

    ₹300-350 crores from internal accruals, rest through debt for Odisha capex.

    Debt

    0.5x EBITDA

    M&A

    Marvel Dyers and Sobhagia Sales

    merger · pending regulatory

    Guidance & targets

    7
    CategoryTargetPriority
    Revenue
    H2 FY26 Revenue
    Same as H1 FY26
    		Medium
    Margin
    H2 FY26 Margins
    Similar or slightly better
    		Medium
    Capex
    Odisha Capex Competitiveness
    4-5% more competitive
    		High
    Capex
    Odisha Capex Commissioning
    September, October of '26
    		High
    Power
    Solar Power Commissioning
    40-megawatt power from 1st March onwards
    		High
    Power
    Power Cost
    Come back to normal level
    		Medium
    M&A
    Integration of Marvel Dyers and Sobhagia Sales
    Formalized by end of this financial year
    		High

    Odisha Capex Ground-breaking

    next 30 to 40 days
    CurrentLand possession, permissions applied
    TargetGround-breaking initiated

    Why it matters

    Indicates progress on a major capacity expansion project that is expected to enhance competitiveness.

    We have got the possession of land, and we have applied for all the requisite permissions and we expect to break ground in the next 30 to 40 days.

    How to verify

    capital_allocation.capex.purposes[description='Odisha plant (new capacity)']

    Risks & concerns

    7
    RiskSeverity

    Muted domestic demand due to US tariffs and global macro situation

    Domestic demand was weak due to higher U.S. tariffs and uncertainty about the global macro situation. — Management acknowledged

    high

    Lower margins due to US tariffs and cotton yarn spreads

    Margins were under pressure, and the company had to compromise on margins due to US tariffs and lower cotton yarn spreads. — Management acknowledged

    high

    Cotton crop lower by 2-3% YoY

    The cotton crop is estimated to be 2-3% lower than last year, potentially impacting raw material availability and prices. — Management acknowledged

    medium

    Overall consumption in India going down by 3-4% and higher imports

    Overall consumption in the country is down by 3-4%, and imports are higher by at least 30% YoY. — Management acknowledged

    medium

    High closing stock of 80-85 lakh days

    The company expects a historic high closing stock of 80-85 lakh days, barring the COVID year. — Management acknowledged

    medium

    Uncertainty regarding continuation of import duty relief on cotton

    The industry is lobbying for permanent removal of import duty on cotton, but the outcome is uncertain, with a 50% chance of extension or a US trade deal. — Management acknowledged

    high

    Forex fluctuation impacting interest cost

    Interest cost increased by ₹3 crores due to forex fluctuation, though actual outflow was less than last quarter. — Management acknowledged

    medium

    Q&A highlights

    8

    “So the margins have been under pressure like last year. In last quarterthere was a slight decline of -- in the realized value, the cotton yarn spreads were down by about 1%, INR2 to INR3. And that's why the margins came down, and we had to compromise a little on margins because of the uncertainty regarding the U.S. tariffs and the panel which was set in once they were there.”

    Explains the reason for revenue decline despite volume growth, highlighting external pressures like US tariffs and raw material spreads impacting profitability.

    asked by Madhur Rathi

    3 min read6 chapters

    Detailed Narrative

    01

    Q2 and H1 FY26 Financial Performance Overview

    Sportking India reported Q2 FY26 revenue from operations of ₹627.4 crores. Gross profit for the quarter stood at ₹151.3 crores, marking a 4.8% increase YoY, with the gross profit margin expanding by 197 basis points to 24.1%. Operational EBITDA for Q2 FY26 was ₹65.4 crores, a 4.5% increase YoY, and the EBITDA margin improved by 82 basis points to 10.4%. For the first half of FY26, gross profit was ₹307.4 crores, up 3.9% YoY, with a margin of 25.3%, and PAT for H1 FY26 was ₹62.4 crores, an increase of 5.1% YoY.

    02

    Export Performance and Market Dynamics

    Exports remained a strong contributor, accounting for ₹334.2 crores in Q2 FY26, an 11% growth YoY, and representing 53% of the total revenue, up from 46% in Q2 FY25. For H1 FY26, export contribution increased by 15% YoY to ₹675.4 crores. Despite this, the textile industry faced a tough quarter with muted domestic demand due to higher U.S. tariffs and global macro uncertainty🌐. The company noted that while export demand was buoyant, it came at the cost of lower margins.

    03

    Industry Consolidation and Raw Material Outlook

    Management highlighted significant industry consolidation, with approximately 10 million spindles (about 15% of India's capacity) shutting down in the last 2-2.5 years, primarily smaller, older, and poorly maintained units. This trend is expected to continue, creating space for margin recovery for competitive mills. The cotton situation in India includes a sizeable opening stock, which is pressuring prices, offering relief to spinning mills. However, the cotton crop is estimated to be 2-3% lower than last year.

    04

    Capex Plans and Funding

    The company's Odisha capex, estimated at around ₹1,000 crores, is progressing as per schedule, with land possession secured and permissions applied for. Ground-breaking is expected in the next 30-40 days, with commissioning targeted for September-October 2026. This project is anticipated to make the company 4-5% more competitive at the EBITDA level. Funding for the Odisha capex will involve ₹300-350 crores from internal accruals, with the remainder sourced through debt. Additionally, a 40-megawatt solar capex is on schedule to start generating power from March 1, 2026.

    05

    Impact of Tariffs and Government Policies

    The US tariffs were identified as a significant dampener, hurting market sentiment and making it difficult for smaller players. The industry is actively lobbying the government for a permanent removal of the import duty on cotton, which was temporarily relaxed until December. Management noted a 50% chance of this relief being extended or a US trade deal providing exemptions. The lowering of GST on garments was seen as a positive step expected to boost domestic demand.

    06

    Debt Management and Merger Integration

    Sportking India improved its gross debt to equity ratio to 0.48 from 0.58 in March 2025, with short-term borrowings reduced by ₹50 crores. The company plans to repay ₹70 crores of long-term debt in the next year and ₹140 crores over the next two years from existing debt. The integration of Marvel Dyers and Sobhagia Sales, which had a combined revenue of ₹200 crores last year and an EBITDA level of 15% or more, is expected to be formalized before the end of the current financial year.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.