Sportking India Limited — Q3 FY26 earnings call

Call held 9 Feb 2026

Management summary

Sportking India reported a robust Q3 FY26 with 6% YoY revenue growth and a 33% YoY increase in PAT, driven by operational efficiency and strong capacity utilization of 96%. The company is actively pursuing a ₹1,000 crore greenfield expansion in Odisha and integrating its garment business through a merger, aiming for significant future growth. Positive impacts from new US and EU trade deals are anticipated, despite ongoing cotton price volatility.

Highlights

  • Q3 FY26 Revenue from operations grew 6% YoY to ₹645.9 crores.

  • Q3 FY26 Operational EBITDA increased 10.8% YoY to ₹65.6 crores, with EBITDA margin expanding 45 bps to 10.2%.

  • Q3 FY26 PAT increased 33% YoY to ₹24.6 crores, with PAT margin expanding 77 bps to 3.8%.

  • 9M FY26 Gross Profit Margin increased 113 bps to 24.7%, driven by stable raw material prices, inventory optimization, and improved purchase management.

  • New US-India and EU-India trade deals are expected to unlock significant demand and provide a competitive advantage, with EU duties for India moving from 9-12% to 0%.

Concerns

  • A fire accident at the Bathinda plant resulted in a loss of ₹32 crores, though the net impact was not material due to insurance recoveries.

  • Cotton prices remain a headwind, though the company expects US cotton to be duty-free soon and CCI is aligning prices with international rates.

Key financials

2 periods

Q3

  • Revenue from Operations
    ₹645.9 Cr
    YoY +6%
  • Gross Profit
    ₹151.1 Cr
    YoY +0.6%
  • Gross Profit Margin
    23.4%
  • Operational EBITDA
    ₹65.6 Cr
    YoY +10.8%
  • EBITDA Margin
    10.2%
  • PAT
    ₹24.6 Cr
    YoY +33%
  • PAT Margin
    3.8%

9M

  • Revenue from Operations
    ₹1,859.1 Cr
  • Gross Profit
    ₹458.5 Cr
    YoY +2.8%
  • Gross Profit Margin
    24.7%
  • EBITDA
    ₹200.5 Cr
    YoY +3.8%
  • EBITDA Margin
    10.8%
  • PAT
    ₹87 Cr
    YoY +11.8%
  • PAT Margin
    4.7%

What they filed

Q1 FY27: revenue up 20.1%, net profit up 123.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue652 610 629 586 627 −4%646 +6%637 +1%704 +20%
EBITDA63 59 74 69 65 +3%66 +12%85 +15%132 +91%
Net profit30 18 35 34 28 −7%25 +39%33 −6%76 +124%
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

Share of Revenue
₹1,618.3 Cr Total
  • Export Revenue (9M) ₹984.6 Cr 60.8%
  • Domestic Revenue (Q3) ₹324.7 Cr 20.1%
  • Export Revenue (Q3) ₹309 Cr 19.1%

Capital allocation

high confidence
  • Capex ₹100 Cr this quarter · ₹1,000 Cr (FY26) planned mixture of term loan and internal accruals
    • Odisha greenfield expansion (1.5 lakh spindles) ₹1,000 Cr
    • 40-megawatt solar capacity plan
    In the first phase of the expansion, 1.5 lakh spindles will be set up in the state of Odisha. This will be an approximately 40% increase over the existing spindle count to 3.79 lakhs. The total outlay would be approximately INR1,000 crores and be funded through a mixture of term loan and internal accruals.
  • Debt Debt disclosed
    It's around INR650 crores.
  • M&A Garment business Merger · Pending regulatory

    to be predominantly garment house in next 5-10 years, leverage and know-how, scale up units, take advantage of opportunities from FTAs

    Add INR 200 crores to top line, 15% to bottom line. Expect to increase turnover by 25-30% in next financial year from INR 200 crores to INR 250-260 crores.

    And regarding the merger, yes, the merger will be completed by the end of this quarter. And our vision is -- definitely, our vision is to be a predominantly garment house -- garment player in the next 5 to 10 years. This is just to give us a leverage and our know-how that we are acquiring these units, and we're going to scale them up as we learn more about the business. And with these increased opportunities, I think we will have to fast track our the plans which we have on merger.

Guidance & targets

Capacity

  • Capacity Utilization Capacity · Q3 FY26 · High confidence 96%
    As of Q3 FY '26, we stand at capacity utilization of 96%, among the highest in the industry.

    — Sandeep Sachdeva

  • Odisha Spindle Count Increase Capacity · High confidence 1.5 lakh spindles
    In the first phase of the expansion, 1.5 lakh spindles will be set up in the state of Odisha. This will be an approximately 40% increase over the existing spindle count to 3.79 lakhs.

    — Munish Avasthi

  • Odisha Project Capacity Utilization Capacity · by end of next financial year · High confidence 96-98%
    And I think it will take us 3 to 4 months to ramp it up and be at 96% to 98% of capacity utilization. We expect that to come by the end of next financial year.

    — Munish Avasthi

Capex

  • Odisha Project Outlay Capex · High confidence ₹1,000 crores
    The total outlay would be approximately INR1,000 crores and be funded through a mixture of term loan and internal accruals.

    — Munish Avasthi

Revenue

  • Additional Turnover from Odisha Project Revenue · by end of next financial year · High confidence ₹1,200-1,300 crores
    So we right now, we are so this is a INR1,000 crores project, which will give us a turnover of about INR1,200 crores to INR1,300 crores, so additional turnover. And so we expect to start commissioning machines -- commissioning by the third quarter of this year. And I think it will take us 3 to 4 months to ramp it up and be at 96% to 98% of capacity utilization. We expect that to come by the end of next financial year.

    — Munish Avasthi

  • Garment Business Turnover Increase Revenue · next financial year · High confidence 25-30%
    Yes, definitely, we are already on the job, and we expect to increase the turnover by at least 25% to 30% in next financial year. From INR200 crores, we wish to go to INR250 crores, INR260 crores.

    — Munish Avasthi

Power Consumption

  • Renewable Power Consumption Share Power Consumption · High confidence 40-45%
    A 40-megawatt solar capacity plan will be starting from 1st March, which will increase our renewable power consumption to 40% to 45% of total consumption, thus making us much more competitive and sustainable.

    — Munish Avasthi

Cost Savings

  • Annual Savings from Solar Power Cost Savings · per year · High confidence ₹16 crores
    So we already have about 15% of -- using -- 15% of our power is through solar. And for 1st March, so our new solar capacities are kicking in, which will give us an additional 25% to 27% of power -- renewable power and which should translate in a saving of around INR16 crores per year from -- starting from 1st March next month.

    — Munish Avasthi

Profitability

  • Gross Margin Improvement Profitability · next 2 quarters · High confidence 10% QoQ
    Yes, we definitely see some improvement quarter-by-quarter in the next 2 quarters. So we expect the margins to go up by at least 10% Q-on-Q this quarter and maybe a further 10% -- 10% to because we have that kind of vision, so we can give this statement. 15% next quarter. We see

    — Munish Avasthi

  • Gross Margin Improvement (further) Profitability · next quarter (after current quarter) · Medium confidence 10-15% QoQ

    — Munish Avasthi

What to watch in Q4 FY26

Formalization of EU-India FTA deal

within 6-8 months
Current Finalized last week
Target Formalized (duties from 9-12% to 0%)

Why it matters

This deal is a game-changer for the Indian textile industry, offering a significant competitive advantage and unlocking new demand.

But all these positive factors coming in lately pale in front of the landmark EU-India FTA deal, which was finalized last week. This deal is a game changer for Indian textile industry, and we believe it is a very positive for the sector for years to come.

Risks & concerns

  • Cotton price volatility and import duties

    medium

    Cotton prices are the only headwind, but management expects US cotton to be duty-free soon and CCI is aligning prices with international rates; duties are needed for long-term clarity.

    Management acknowledged

  • Impact of US tariffs on yarn business

    low

    Previous quarter (September) saw negativity and lower demand due to 50% US tariffs, but conditions have improved since January with new trade deals.

    Management acknowledged

  • Bangladesh's potential loss of LDC status

    low

    Management believes India is well-positioned to capture demand shifts if Bangladesh loses LDC benefits, especially for domestic manufacturers, and does not foresee significant problems.

    Analyst downplayed

Q&A highlights

8 direct
Financial impact of fire incident Direct
Yes, the financial impact is around INR1.5 crores.

Clarifies the specific financial hit from the fire accident, which was previously stated as 'not material' after insurance.

Asked by Rajiv Jain

Tariff impact on yarn business and current pricing environment Direct
So actually, prices are increasing now after a long time because overall demand has come from all the countries and within India. So there is no pressure on pricing right now. Rather prices have been going up since last 45 days. There's been an increase of almost INR20 to INR25 in the cotton yarn prices.

Indicates a positive shift in market dynamics with increasing yarn prices, alleviating previous concerns about price reduction pressure.

Asked by Rajiv Jain

Impact of US/EU trade deals and vision for proposed mergers Direct
And with EU, of course, there is a substantial change in the duties because right now, most of our competing countries are paying 0% duty. And we were paying 12% -- 9% to 12% right now. And once this deal is formalized in the next 6 to 8 months, we are going to come back to 0% we are going to be also at 0%.

Highlights the significant competitive advantage India will gain from the EU FTA, transforming a duty disadvantage into parity, and reiterates the strategic importance of the merger for garment business expansion.

Asked by Bhavika

Impact of Bangladesh's LDC status change on Sportking's business Direct
So see, Bangladesh will continue to supply to Europe till the brands don't have an option. So the new option which is coming up is India. So we expect whenever the Bangladesh demand goes down, whenever this happens, we expect the Indian demand to go up much faster and which is more, of course, domestic demand supplying to our domestic manufacturers is much more certain market. So I don't think so we're going to be -- it's going to be any problem as such.

Addresses a potential risk by explaining that India is well-positioned to absorb demand shifts if Bangladesh loses its LDC benefits, particularly for domestic manufacturers.

Asked by Bhavika

Gross margin trend over next few quarters Direct
Yes, we definitely see some improvement quarter-by-quarter in the next 2 quarters. So we expect the margins to go up by at least 10% Q-on-Q this quarter and maybe a further 10% -- 10% to because we have that kind of vision, so we can give this statement. 15% next quarter. We see

Provides specific quantitative guidance on expected margin improvement in the near term, indicating management's confidence in operational efficiencies and market conditions.

Asked by Siya Maheshwari

Spreads in Q3 vs Q2 and current (Jan) Direct
So overall spreads vis-a-vis Q3 has come actually are down by INR1 in sorry, Q3, the spreads were down by almost INR3, INR4 as compared to Q2, and overall spreads were also down. But we have seen currently, the spreads are up. Right now, I think the spreads, which were at cotton yarn spreads, which were at about INR112, are now around INR130 or so.

Offers granular detail on cotton yarn spreads, showing a recovery from Q3 levels and providing insight into current profitability trends.

Asked by Pranay Jhaveri

Revenue potential and ramp-up timeline for Odisha capex Direct
So we right now, we are so this is a INR1,000 crores project, which will give us a turnover of about INR1,200 crores to INR1,300 crores, so additional turnover. And so we expect to start commissioning machines -- commissioning by the third quarter of this year. And I think it will take us 3 to 4 months to ramp it up and be at 96% to 98% of capacity utilization. We expect that to come by the end of next financial year.

Quantifies the significant revenue potential of the Odisha expansion and provides a clear timeline for commissioning and achieving optimal utilization.

Asked by Bhavika

Debt for Odisha plant and commissioning timeline Direct
It's around INR650 crores. ... Yes. We've already spent about INR100 crores from our internal accruals and the construction is going on at full speed, and we hope to be in start commissioning from -- before October actually. ... Yes. The partial production will kick in by December, but in spinning, it takes -- because you can't do it all at once, so the project of such size takes at least 4 to 6 months to fully commission.

Provides details on the debt component of the large capex, initial internal accrual spend, and a more precise timeline for partial and full commissioning, which is crucial for revenue ramp-up.

Asked by Udit Gupta

3 min read 6 chapters

Detailed narrative

Strong Q3 FY26 Performance and 9M Growth

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.

Strategic Greenfield Expansion in Odisha

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.

Impact of New Trade Deals and Market Dynamics

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.

Merger for Garment Business Integration

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.

Renewable Energy Initiatives and Cost Savings

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.

Industry Consolidation and Margin Outlook

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.

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