RSWM Ltd (RSWM) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good evening and welcome to the RSWM Limited Q2 and H1 FY '27 Earnings Conference Call, hosted by Rick Capital. As a reminder, all participant lines will be in the listen-only mode and you will have the opportunity to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing "*" then "0" on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Richa Singh from Rick Capital for management introduction. Thank you, and over to you.
Richa Singh (Rick Capital): Thank you, Yashashvi. Good evening, everyone. Today from the management we have Mr. Rajiv Gupta, Joint Managing Director, Mr. Manoj Bansal, Chief Transformation and Risk Officer, Mr. Nitin Kalyani, President and CFO, Mr. Surendra Gupta, Chief Compliance Officer and Company Secretary. Before we begin, I would like to remind everyone that today's discussion may contain forward-looking statements. These statements are based on company's current expectations, assumptions regarding future events are subject to various kinds of risks and uncertainty. Actual results may differ materially from those expressed or implied in this statement. We encourage participants to refer to company's filing with stock exchange for detailed discussion for the risk factors. I would now like to hand over call to Mr. Rajiv Gupta for his opening remarks, followed by Mr. Nitin Kalyani for financial performance for the quarter. Thank you, and over to you, sir.
Rajiv Gupta (RSWM Ltd): Good evening, everyone. So I welcome you all to RSWM's Q2 H1 FY '27 earning calls. Today, I'll briefly discuss the economic environment, key developments in Indian textile industry during the quarter and half year ended 30th September and important developments at RSWM. During Q2 FY '27, the textile industry continue to face challenges arising from geopolitical tensions in West Asia, including US, Israel, Iran conflict.
Rajiv Gupta (RSWM Ltd): Fluctuations in energy prices added pressure to transportation and manufacturing costs. At the same time, rising crude prices increase the input cost for synthetic yarn and fabric manufacturing, while ability to pass these increases to the customers remained limited, putting pressure on our margins. Export markets also experienced disturbance in order flow, making order planning and shipment schedules more challenging. For H1 FY27, India's textile and apparel exports recorded moderate growth, supported by cotton and man-made textile products, while apparel exports is experiencing slowdown in demand, reflecting uneven performance across the value chain of textile. These trends highlights the importance of managing export competitiveness, diversifying markets, and responding to changing demand conditions. Going forward, raw material price movements and developments in key export markets will remain important factors influencing the textile industry's performance. The Indian economy remained resilient during quarter two of FY27 despite geopolitical tensions, inflationary pressures, and uncertainty in international markets. These factors continue to influence overall global trade, commodity prices, and business sentiments. In India, economic activity remains supported by strong domestic consumption, manufacturing, and service sectors. The Reserve Bank of India has projected GDP growth of 7.1% for FY27, while domestic economic
Moderator: I'm sorry to interrupt, sir. There's some disturbance and you're sounding distant. Can you come closer to the microphone, please?
Rajiv Gupta (RSWM Ltd): Okay. Okay. During the quarter, RSWM continued its transformation journey, RSWM 2.0, to strategize its response to domestic situations, remain agile, proactive, and sustain performance in spite of challenges. There has been a focus on the following directions to ensure the improved performance in quarter two. A key focus has been on prioritizing profitability over the volume-led expansions that we discussed during the last call also. The company has rationalized products which were not generating adequate returns and its focus on high-value segments continued. The better utilization of existing performance, assets of manufacturing, productivity improvements, tighter working capital management are also the central of this transformation journey. RSWM's diversified portfolio across synthetic, cotton, blended, and melange yarn, denim, and knitted fabric helps its cater different customers' requirements and the different market segments. Investments in automation, digitalization, manufacturing modernizations are aimed to improve the process feasibility as well as the feasibility for operational efficiencies. All these initiatives have helped the company to improve its asset utilization and profitability as reflect in quarter two results, wherein we could register 15% revenue growth in this period, and EBITDA grew at 47% to 115.9 crores, while the PAT increased to 24.5 crores from 6.3 crores in quarter two last year. Now if you look at the future outlook, RSWM's and sustaining this momentum currently, the RSWM 2.0 transformative program, which is built around people, process, planet, and profit, will remain the central of company's activities in this phase of growth. The focus is on improving utilization of existing capacities, particularly in knitting and melange, while expanding the value-added textiles and downstream manufacturing. The new product developments, sustainable and recycled fibers, are differentiated fabric offerings that expect to create more additional opportunities for us. The global supply chain diversification and improving the trade access, largely through FTAs, present a great opportunity for Indian textile manufacturers. However, geopolitical developments, export uncertainties, raw material volatilities, and competition will continue to require a calibrated approach throughout quarter three and four. Our major objective is to build a stronger, more agile,
Rajiv Gupta (RSWM Ltd): a part of strategic growth initiative, RSWM entered into a strategic venture with Spain-based NDS9 to establish LNJ NDS9 Global Private Limited. RSWM holds 74% stake in this company, while NDS holds 26%. This entity will be subsidiary of RSWM and will focus on premium denim and knit garments manufacturing for the international clients. In the phase one, we will be having investment of 208 crores. This partnership combines RSWM's manufacturing capabilities with NDS design expertise and the international market reach, supporting the company's focus on value-added approach, and we'll be having the full textile value chain exposure after this expansion. Now, our focus continues in the coming quarters to improve our capacity utilization and operational excellences across all the manufacturing facilities. We'll continue to work on strengthening our product mix and increase contribution on the value-added offerings. We execute the ongoing expansion project, and the the new project which we are discussing now in this quarter will also be taking shape. LNJ Green Fab, which is already ongoing project, is likely to be commencing the commercial production in the first quarter FY '28. The broader focus remains on consolidating core operations while building the new growth opportunities through forward integration and allied businesses. With this, I would now like to hand over to Mr. Nitin Kalyani, our CFO, to discuss the company's financial performance for quarter two and H1 '27. Over to you, Nitin. Thank you.
Nitin Kalyani (RSWM Ltd): Good evening, everyone. And thank you for joining us today. I will take you to the RSWM Limited financial and operational performance for the quarter and half year ended 30th September 2026, covering our revenue performance, profitability and key operational priorities. Moving to our financial performance for Q2 FY '27, revenue for operations increased by 13.9% sequentially to 1,322 crore from 1161 crore in Q1 FY '27. On a year-on-year basis, revenue grew by 15%. Domestic sales increased by 12.5% quarter-on-quarter and 16.5% year-on-year with while export sales grew by 17.2% quarter-on-quarter and 11.6% year-on-year. This reflects growth in both domestic and export sales during the quarter. During Q2 FY '27, EBITDA increased by 23.2% quarter-on-quarter to 116 crore with the EBITDA margin moderating slightly to 8.7% from 8%, expanding by 66 basis points quarter-on-quarter. On a year-on-year basis, EBITDA grew by 47.1% and the margin improved by 191 basis points. Finance cost remained broadly stable at 31.5 crore. Profit before tax increased to 35 crore from 24 crore in Q1 FY '27, while profit after tax rose to 25 crore from 17 crore in previous quarter. Compared with Q2 FY '26, profit after tax increased from 6 crores to 25 crore. For the first half of FY '27, revenue from operations increased by 7.1% year-on-year to 2,484 crore. Domestic sales grew by 8.2% to 1,753 crore, while export sales increased by 4.5% to 730 crore. Both domestic and export markets contributed to the growth in revenue, with domestic sales recording a higher growth rate during the period. For H1 FY '27, EBITDA grew by 31.4% to 210 crore, while the EBITDA margin expanded by 156 basis points to 8.4%. Profit before tax increased to 59 crore from 20 crore in H1 FY '26, while profit after tax rose to 41 crore from 13 crore. Overall, the half year results remain reflect improved profitability compared with the corresponding period last year. Our EPS has increased to 8.76 from 2.81 in H1 FY '26, reflecting a 3.1x year-over-year growth. Our operational priorities remain focused on
Nitin Kalyani (RSWM Ltd): equipment modernization, cost control, and efficient utilization of resources. During H1 FY '27, power and fuel cost decreased by 16.9 crore, while finance cost reduced by 1.3 crore compared with the corresponding period last year. Return on capital employed improved from 5.1% in FY '26 to 6.5% in H1 FY '27, reflecting an improvement in the reported measure of capital efficiency. Other equity in the balance sheet increased from 1,325 crore in FY '26 to 1,531 crore in H1 FY '27, an increase of 206 crore. This was primarily attributable to an unrealized fair valuation of gain on 181 crore recognized in the other comprehensive income. The gain arose from the fair valuation of the equity investment received pursuant to the composite scheme of arrangement involving HEG Limited, HEG Dehat Limited, Bhilwara Energy Limited, and other listed entity shares which we hold in our balance sheet. During the quarter, the company recognized an one-time exceptional provision of 11.5 crore towards electricity duty on captive solar power generation, following the adverse Rajasthan High Court judgment. The company has challenged the judgment before the honorable Supreme Court by filing an SLP and also 7.42 crore has been deposited under process, under protest, which is pending adjudication. We continue to monitor raw material procurement, inventory levels, and working capital response in, requirements in response to changing input costs and supply chain conditions. Under the RSWM 2.0 transformation strategy, our focus continue to remain on manufacturing efficiency, product mix, operational process, and maintaining the financial discipline. To conclude, we remain focused on operational efficiency, cost management, and disciplined execution in response to the prevailing business environment. We'll continue to more, monitor market conditions and focus on the efficient use of the resources. I would like to thank our shareholders, customers, business partners, lenders, and employees for their continuous support. With this, we now move on to the question-and-answer session. Thank you.
Moderator: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone 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. I repeat, to ask a question, please press star and one on your telephone. We'll take our first question from the line of Avinash Nahata from Parami, Parami Financial Services. Please go ahead.
Avinash Nahata (Parami Financial Services): Hello, am I audible, please?
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