This article first appeared on GuruFocus .
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Total Income:Increased 4.1% year-on-year to INR 322.4 crores in Q1 FY27.
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EBITDA:Stood at INR 29.5 crores during the quarter.
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Profit Before Depreciation and Tax:Came in at INR 19.6 crores.
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Profit After Tax:Recorded at INR 4.4 crores, compared to a loss of INR 1.4 crores in Q1 FY26.
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Yarn Division Revenue:INR 96 crores in Q1 FY27, down from INR 110 crores in the corresponding quarter last year.
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Yarn Sales Volume:Stood at 36 lakh kgs, with capacity utilization at 70%.
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Fabric Division Revenue:INR 147 crores, representing a 25% year-on-year growth.
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Fabric Sales Volume:Increased 18% year-on-year to 59 lakh meters, with capacity utilization improving to 80%.
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Garment Division Revenue:INR 69 crores in Q1 FY27, compared to INR 75 crores in the corresponding quarter last year.
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Garment Sales Volume:Stood at 8 lakh pieces, with capacity utilization at 69%.
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Release Date: August 03, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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The India-UK Free Trade Agreement, effective July 15, 2026, eliminates import duties on Indian textiles and apparel, enhancing Banswara Syntex Ltd ( BOM:503722 )'s competitiveness and export growth prospects, particularly in the UK market.
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The fabric division delivered a strong performance with a 25% year-on-year revenue growth to INR 147 crores, driven by an 18% increase in sales volume and improved capacity utilization of 80%.
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The company's strategic focus on value-added products, such as bi-stretch and wool-blend fabrics, is improving realizations and contributing to higher profitability.
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The order book for the garment division is robust, fully booked through November and December, providing strong revenue visibility and confidence for the coming quarters.
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The company is planning significant investments of approximately INR 140 crores to expand fabric and garment capacities by 20-25% in FY27-28, signaling confidence in future demand growth.
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The company successfully returned to profitability with a profit after tax of INR 4.4 crores in Q1 FY27, compared to a loss of INR 1.4 crores in the same quarter last year.
Negative Points
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The yarn division experienced a revenue decline to INR 96 crores from INR 110 crores year-on-year, impacted by a temporary labor shortage during the quarter, which reduced production and sales volumes.
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The garment division faced temporary export logistic constraints due to the West Asia crisis, leading to delayed customer pickups and deferment of certain dispatches, impacting Q1 revenue.
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The company's overall EBITDA margin for Q1 FY27 was 9%, below its full-year target of 12%, due to lower capacity utilization in yarn and delayed dispatches in garments.
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The first quarter is seasonally the weakest for the company, with sequential drops in garment revenue (down 28%) and yarn volume (down 21%) compared to Q4 FY26.
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The company's revenue growth has been relatively muted over the past decade, with FY27 guidance of INR 1,450-1,500 crores only slightly above historical levels, despite significant capital expenditure.
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The Surat facility remains non-operational, with the company expecting to complete the denotification process and restart operations only by April 2027, delaying potential growth contributions.
Q & A Highlights
Q: What gives the management confidence in maintaining the FY27 revenue guidance of INR 1,450-1,500 crores despite a modest 4% YoY growth in Q1, and how much growth is expected in the second half? A: Ravindrakumar Toshniwal (Executive Vice Chairman) explained that the top-line was impacted by temporary labor shortages in the spinning business and delayed garment dispatches due to the West Asia crisis. These issues are already being resolved, with deferred shipments expected to be executed in Q2. The order book for garments is nearly full through December, and the fabric order book is strong through November. This visibility supports the confidence in achieving the full-year guidance, with improvements expected across Q2, Q3, and Q4.
Q: Can you provide the segment-wise EBITDA margin guidance and the Q1 performance against those targets? A: Ravindrakumar Toshniwal (Executive Vice Chairman) stated that the company is targeting an overall EBITDA margin of 12% for FY27. Segment-wise, the fabric business is expected to deliver 12-14% EBITDA, while the garment and yarn divisions are expected to be in the 8-10% range. In Q1, the fabric business met its target, but yarn and garment missed theirs due to lower capacity utilization and delayed dispatches, respectively. The company expects to recover and average 12% by the end of the fiscal year.
Q: What is the current export contribution for the fabric and garment divisions separately, and what is the expected growth from the UK market following the India-UK FTA? A: Shaleen Toshniwal (Managing Director) clarified that the garment division is approximately 60% export and 40% domestic, while the fabric division is roughly 50/50. Regarding the UK, Ravindrakumar Toshniwal noted that fabric exports to the UK are around INR 70-80 crores annually. Shaleen Toshniwal added that garment exports to the UK are currently INR 20-25 crores but are expected to double to INR 50 crores next year due to the FTA benefits and a strong inquiry pipeline.
Q: The garment division saw a sharp sequential decline in Q1. Is the delayed shipment a timing issue, or has real demand been lost? A: Shaleen Toshniwal (Managing Director) confirmed that the Q1 weakness is seasonal and temporary. The autumn-winter export window is typically soft, and domestic festive shipments pick up later. The delayed dispatches due to logistics constraints are a timing issue, not lost demand. He highlighted that the order book is fully booked through November and December, and the company expects to achieve around INR 100 crores in quarterly garment sales for the remaining three quarters of FY27.
Q: After investing heavily in the last few years, the company's revenue and profitability are still below previous peaks. What is fundamentally different this time versus the last decade? A: Ravindrakumar Toshniwal (Executive Vice Chairman) acknowledged the past challenges, including the dissolution of a JV a decade ago that led to a loss of sales. He emphasized that the company has rebuilt itself with a better product mix and is now well-positioned to capitalize on the shift of Chinese manufacturing to India. Shaleen Toshniwal added that the company has strategically shifted from 80% domestic reliance to 60% export, which offers better earnings potential. The management is confident that the next 10 years will be significantly different from the past 10, driven by FTAs and stronger customer relationships.
Q: What is the status of the Surat facility, and when will it become operational? A: Shaleen Toshniwal (Managing Director) reported that the company has received all approvals from GIDC for denotification. The next steps involve obtaining a no-due certificate from customs and completing the debonding process with SEZ authorities. These are expected to be completed within the next 3-5 months. The facility is expected to be available for DTA use by November or December, with operations starting around April 2027. The company plans to invest fresh capital to modernize the plant, which could add an additional INR 200 crores in revenue with an investment of about INR 50 crores.
Q: What is the planned capital expenditure for FY27, and how much is allocated for expansion versus maintenance? A: Ravindrakumar Toshniwal (Executive Vice Chairman) stated that the company plans to invest around INR 140 crores this year, which has already been sanctioned. The investments will be directed towards the fabric and garment divisions and common infrastructure. He indicated that the company is looking at a 20-25% expansion in garment and a 20% expansion in fabric for FY27-28. The yarn business is expected to remain stable or grow marginally.
Q: How are sourcing trends evolving in Europe and the U.S. beyond the UK, and what is the growth outlook? A: Shaleen Toshniwal (Managing Director) expressed strong optimism for EU growth, citing anchor customers like Mango and Celio, which contribute close to INR 100 crores in revenue. The company has also onboarded CNA and started trial orders. He expects the EU FTA to be operationalized by end of December or early January, which would further boost prospects. Ravindrakumar Toshniwal added that the fabric division is also seeing growth opportunities in women's wear and specialized shirting, benefiting from the UK FTA.
Q: What is the current jacket production run rate, and what is the expectation for FY27? A: Shaleen Toshniwal (Managing Director) stated that the company has averaged about 600,000 jackets annually, roughly 50,000 per month. For FY27, the company expects to close between 800,000 and 900,000 jackets, averaging about 75,000 per month. Q1 was relatively soft at 135,000 jackets, but the run rate from here onwards is upwards of 75,000 per month, with bookings confirmed through December.
Q: How will the shift towards exports impact the garment division's margins? A: Shaleen Toshniwal (Managing Director) explained that the domestic market is currently challenging, with companies potentially losing money on orders. In contrast, exports offer the opportunity to earn 10-12% EBITDA. The company is targeting to move from a low 3-
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
