Vardhman Textiles (502986) Q2 24/25 earnings summary

Executive summary

• The period was challenging due to declining international cotton prices and high domestic raw material costs, especially cotton, which constitutes about 60% of total costs.

• Reported consolidated revenue from operations of ₹2,502.42 crore for Q2 FY25, up from ₹2,397.46 crore in Q2 FY24, and ₹4,811.01 crore for H1 FY25, up from ₹4,715.76 crore in H1 FY24.

• Consolidated profit after tax for Q2 FY25 stood at ₹197.29 crore, compared to ₹136.11 crore in Q2 FY24; H1 FY25 profit after tax was ₹437.07 crore, up from ₹272.71 crore in H1 FY24.

• Fabric segment performed strongly, with full capacity utilization and improved margins, offsetting weakness in spinning.

• Expansion and modernization plans are on track, with significant CapEx underway.

Financial highlights

• Consolidated EBITDA for H1 FY25 improved, with profit before tax at ₹602.56 crore versus ₹359.35 crore in H1 FY24.

• Blended EBITDA margins are at 13%-14%, significantly lower than historical levels of 20%.

• Net cash on the balance sheet is approximately INR 2,300 crore, with debt at about INR 1,000 crore.

• Cash generated from operations (consolidated) for H1 FY25 was ₹2,213.17 crore, up from ₹579.29 crore in H1 FY24.

• Earnings per share (EPS) for H1 FY25 was ₹15.30, up from ₹9.52 in H1 FY24.

Outlook and guidance

• Margins are expected to remain under pressure unless raw material costs decrease or government policy changes.

• Next two months are critical for cotton procurement strategy and will determine profitability for upcoming quarters.

• CapEx of INR 2,500 crore is progressing as planned, with completion expected by the end of next financial year.

• The company recognized the impact of the Finance Act No. 2 of 2024, which amended capital gains tax rates and withdrew indexation benefits, affecting deferred tax liabilities in Q2 FY25.