Banswara Syntex Ltd (BANSWRAS) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day and welcome to the Q2 and H1 FY27 earnings conference call hosted by Banswara Syntex Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this call is being recorded. I now hand the conference over to Mr. Ravindra Kumar Toshniwal, Vice Chairman from Banswara Syntex Limited. Thank you and over to you, sir.
Ravindra Kumar Toshniwal (Banswara Syntex Limited): Thank you. Good afternoon, everyone. Let me all welcome you to our quarter two and H1 FY27 earnings conference call. Along with me on this call, we have our CFO, Ms. Kavita Gandhi, and SGA, our Investor Relations advisors. Shaleen Toshniwal, our Managing Director, has also joined us. I hope all of you have gone through our investor presentation uploaded on the exchange and on our company website. To begin with, let me briefly touch upon the overall industry environment. During
Ravindra Kumar Toshniwal (Banswara Syntex Limited): to FY '27, the Indian textile sector witnessed a gradual improvement in production levels and domestic order activity. The broader manufacturing environment also rem- remained encouraging and our capacity utilization improved during the quarter, indicating resilience in the underlying demand environment. One of the key trends shaping the industry is the growing shift towards man-made fibers and blended fabrics. With the traditional cost advantage of cotton narrowing, MMF-based products are becoming increasingly competitive. This is encouraging man- manufacturers to focus more on the performance aspects and functional yarns with other value-added products of MMF products. We believe the structural shift represents a significant growth opportunity for the Indian textile manufacturers and especially Banswara Syntex. Globally, synthetic and blended fabrics account for a substantially higher share of clothing consumption, particularly in segments such as sportswear, formal wear, fast fashion, whereas India's penetration in these segments is relatively low. This gap offers considerable headroom for growth in man-made fibers and fabrics and technical textiles over the medium to long-term. At the same time, the industry continues to face some near-term challenges for raw material price volatility due to the geopolitical environment. We have had an increase in the polyester prices because of the West Asia challenges and these key inputs, such as PTA and MEG, have increased in price. The domestic apparel demand grows at a at a more moderate pace, and by improving our product mix, increasing our value addition and maintaining our cost in efficiency, we will be able to provide valuable inputs. Overall, while we remain watchful of our raw material volatility, the near-term margin pressures, we do believe that the long-term opportunity continues to remain strong. Moving to our financial performance for the quarter and for the first half of FY '27, our total income for Q2 stood at ₹358.4 crores, registering a quarter-on-quarter growth of 11.2%. Our EBITDA margin increased by 23.9% quarter-on-quarter to ₹36.5 crores, with the EBITDA margin improving to 10.2% from 9.1% in Q1. Profit after tax increased by 84% quarter-on-quarter to ₹8.1 crores from ₹4.4 crore in the last year's quarter. For H1 FY '27, our total income stood at ₹680.8 crores. This is a growth of about 3.6% year-on-year, compared to 657.1 in H1 FY '26. Our EBITDA increased by 18.9% year-on-year to ₹66 crores from ₹55.5, with the EBITDA margin improving to 9.7% overall from 8.5%. The profit after tax increased significantly by 124.6% year-on-year to 12.5 crores, compared with 5.6 crores in the last half year of FY '26. Despite the challenging macroeconomic environment, we were able to deliver growth and profitability and expand our EBITDA EBITDA margins. This improvement was driven by better realizations and a higher contribution from value-added products. We also witnessed a sequential improvement in operating performance compared with Q1 FY '27. While the power costs, employee costs are putting some pressure on our cost base, we remain focused on enhancing productivity, improving our capacity utilization and the product margins. On the balance sheet front, our net debt stood at ₹515 crores as of 30th September 2026. This has increased by ₹43.28 crores during the first half, primarily due to the working capital requirements, and this is a consequence of the raw material
Ravindra Kumar Toshniwal (Banswara Syntex Limited): is increasing as well. That has been one of the major factors. We continue to focus on balancing our growth investments while we maintain a discipline in our working capital management and our operational efficiency. Looking ahead, we want to reconfirm our FY27 guidance and we want to to assure you all that we remain focused on achieving the stated targets. The second half is typically stronger for our business and we do expect that the demand and our order book position, which is already a very healthy order book both in garments and fabrics, will support this performance. Our priority remains to focus on the efficient execution and improve our operational efficiency in both the fabric and garment businesses with good support from the yarn. With that, let me now take you through each of the divisional performances, starting with the yarn division. The yarn division, our business reported a revenue of 103 crores in quarter two FY27, compared to 112 crore in the corresponding quarter last year. For H1 FY27, revenue stood at 199 crores as against rupees 222 or 222 crores in H1 FY26. This is a drop from last year because the internal consumption increased significantly. Our capacity utilization improved to 84% during this quarter, compared to 81% in quarter two FY26 and 70% in the preceding quarter. We expect that for H1 FY27 compared to the corresponding last year, we our overall capacity utilization is better and expected to continue to remain so. While our capacity utilization improved, the revenue remained lower due to more sales internally. From an operational perspective, domestic yarn sales improved sequentially during the quarter, supported by outsourced processing of certain yarn varieties to meet customer requirements. We also witnessed an increase in internal yarn transfers, as I said, reflecting higher captive consumption and strengthening the synergy across our vertical operations. This vertical integration enables us to utilize our value-added yarn production more effectively to support the requirements of our upstream businesses. The division continues to face some challenges from elevated raw material prices and export freight costs. This has impacted the performance to the extent that it may have improved even more had these challenges not been there. Our expected orders from regular export customers are lower due to the freight challenges. However, our focus remains on improving production output, enhancing the capacity utilization, and aligning our inventory levels with market demand. We're also working towards reducing our slow-moving yarn stocks while maintaining adequate inventory of regularly demanded products to support our sales. These initiatives expect to support our performance in H2. Now moving to our fabric division, the business recorded a revenue of 157 crores in quarter two FY27, compared to 149 crores in quarter two FY26, that's a growth of about 5%. For H1 FY27, revenue increased by 14% to 303 crores from 266 crores in the corresponding last year. The sales volume stood at 58 lakh m during quarter two FY27, compared to 59 lakh m in quarter two FY26. However, the turnover was higher. While H1 FY27 sales volumes grew by 8% to 118 lakh m from 109 lakh m in H1 FY26. Capacity utilization has improved from 82% to 82% from 77 in the corresponding last year, and for H1 FY27, our capacity utilization stood at 81% as compared to 73. So both the utilizations have increas- increased in the quarter-on-quarter as well as half-yearly. During H1 FY27, our
Ravindra Kumar Toshniwal (Banswara Syntex Limited): this is broadly in line with expectations in spite of the challenging business environment and some of the expected increases in the SIMONE brand business did not happen. Despite these challenges, order visibility for quarter three FY '27 remains encouraging, and we are actively working to secure additional orders to strengthen the business performance in H2, for which already the quarter three order book is pretty good. Going forward, our focus will remain on strengthening our customer relationships, improving our order inflows, and ensuring timely execution of our orders. We are focused on improving our production planning and maintaining our commitments to customers, and with increasing order visibility and ongoing capacity debottlenecking that we have achieved, we expect these offer efforts to support our business performance in H2 FY '27. Going to the Garment Division, our revenue for quarter two FY '27 stood at 90 crores, which is up 13% year-on-year and 30% sequentially. For H1 FY '27 revenue was 160 crores, compared with 155 crores in H1 FY '26. Our sales volume also increased 10 lakh pieces in quarter two and 18 lakh pieces in H1, while capacity utilization stood at 78% as compared to 74% last year. So, after even a relatively soft start to the year, we have witnessed a good pickup in business momentum during quarter two, particularly in our export orders. Our customers do face some challenges due to vessel availability and logistical challenges. However, on the product front, our order book remains remains strong, and particularly in jackets, we have a strong order book. We are also seeing increasing demand and increasing interest in India as a destination given the free trade agreements, and looking ahead, the UK and EU free trade agreements have provided us an additional boost to our export business, and we are looking forward to even stronger demand in the going in in the rest of the year. We expect this positive momentum to continue in quarter two and through H2 FY '27. Our focus remains on timely order execution and to convert these opportunities into sustained business growth. With this, I now open the floor for questions. Thank you, everyone.
Moderator: Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mr. Nirbhay from N Square Capital. Please go ahead, sir.
Nirbhay (N Square Capital): Yeah. Good afternoon, sir. Sir, if I look at your presentation I think all three verticals have shown volume decline. So, how are we saying that we have seen pickup in business momentum?
Ravindra Kumar Toshniwal (Banswara Syntex Limited): Yeah, Nirbhay ji. So, this is a good feature, in fact, that we have achieved a top-line growth in spite of volume decrease. Our focus is not on enhancing volume, but to enhance the sale of our value-added products, and we have actually succeeded quite well in this. And this is why, if you look at the results of this quarter, you will see that our gross margin is probably the highest we have ever achieved. So, we look at this as a very positive sign.
Nirbhay (N Square Capital): Yeah, sir, but would it not be because of raw mat impact, which you have mentioned that because you because your working capital has also gone up. Your working capital requirement has gone up substantially. So, if I adjust your total sales for raw mat inflation, I am I am not seeing any meaningful growth.
Ravindra Kumar Toshniwal (Banswara Syntex Limited): The point is, Nirbhay ji, here that the amount of raw material price increase, we have not been able to pass on fully to the customers yet. This is still happening. In yarn and in fabric and in garment, there is always a delay between the price
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