Sportking India Limited

Sportking India delivered a robust Q3 FY26, with revenue from operations growing 6% YoY to ₹645.9 crores. Operational EBITDA saw a 10.8% YoY increase to ₹65.6 crores, and PAT surged 33% YoY to ₹24.6 crores. For the nine months ended December 31, 2025, revenue stood at ₹1,859.1 crores, with gross profit increasing 2.8% YoY to ₹458.5 crores. The 9M gross profit margin expanded by 113 basis points to 24.7%, primarily driven by stable raw material prices and improved purchase management.

The company is undertaking a significant greenfield expansion project in Odisha with a total outlay of ₹1,000 crores. This project will add 1.5 lakh spindles, representing a 40% increase over the existing 3.79 lakh spindles. Management expects this expansion to generate an additional turnover of ₹1,200-1,300 crores annually. Construction has commenced, with ₹100 crores already spent from internal accruals, and commissioning is targeted to start before October, with partial production by December and full utilization (96-98%) within 4-6 months thereafter.

New trade deals with the US and EU are expected to significantly boost demand and competitiveness. The EU-India FTA is particularly impactful, as it will reduce duties for Indian textiles from 9-12% to 0%, while competing LDC countries will see their 0% duties rise to 8% in 2-3 years. This shift is anticipated to create a 'huge remarkable turnaround' for the sector. Additionally, a sharp demand from China for cotton yarns and the long-awaited India-USA deal are contributing to positive market sentiment and increased spreads.

Sportking India's merger, aimed at integrating its garment business, is on track to be completed by the end of Q3 FY26, making it a single entity by April 1, 2026. This merger is strategic to the company's vision of becoming a predominantly garment house within the next 5-10 years. The merged entity is expected to add ₹200 crores to the top line and 15% to the bottom line, with plans to further increase the garment business turnover by 25-30% in the next financial year, from ₹200 crores to ₹250-260 crores.

The company is enhancing its renewable energy footprint with a 40-megawatt solar capacity plan starting March 1. This initiative will increase the share of renewable power in total consumption to 40-45%, up from the current 15%. This is projected to result in annual savings of approximately ₹16 crores. Management noted that this expansion maximizes their solar capacity as per government policy, contributing to both cost efficiency and sustainability.

The textile industry is undergoing significant consolidation globally, with an estimated 5-6 million spindles capacity reduction. Sportking India, with its high capacity utilization of 96%, is benefiting from this trend. Management expressed confidence in margin improvement, expecting gross margins to increase by at least 10% QoQ in the current quarter and potentially a further 10-15% in the subsequent quarter, driven by positive market sentiments and operational efficiencies.