Summary
Banswara Syntex Limited - Q3 FY26 Earnings Call Summary Wednesday, February 11, 2026 2:00 PM
Event Participants
Executives 2 Kavita Gandhi (CFO), Ravindrakumar Toshniwal (Vice Chairman)
Analysts 4 Divyasnh Singh (DS Broking), Rahul Rajbhar (Research Analyst), Ravi Shah (VRS Capital), Runit Kapoor (Investire Investments)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Income | ₹343.3 crores | Steady performance in a choppy environment; 9M income at ₹1,000 crores (+4% YoY). |
| EBITDA | ₹42.0 crores | +25% QoQ; Margins improved to 12.2% due to value-added product focus. |
| PAT | ₹13.2 crores | +89% QoQ; Recovery in Q2 and Q3 offset a weak Q1. |
| Gross Margin | >50.0% | Maintained above 50% for 9M FY26 through better cost management and product mix. |
| Net Debt | ₹495.1 crores | Increased from ₹456.2 crores in March 2025 due to ongoing capex and working capital. |
| Yarn Revenue | ₹114.0 crores | Steady QoQ; 81% capacity utilization with higher contribution from value-added yarns. |
| Fabric Revenue | ₹150.0 crores | 9M revenue +5% YoY to ₹416 crores; driven by wool-blended and stretch products. |
| Garment Revenue | ₹73.0 crores | +4% YoY; 9M revenue +11% YoY; 65% capacity utilization. |
| Sales Volume (Yarn) | 48 lakh kg | Consistent execution despite subdued market conditions; 148 lakh kg for 9M. |
| Sales Volume (Fabric) | 59 lakh meters | Focus on premium brands like Simone Federico & Figli; 168 lakh meters for 9M. |
Geographic & Segment Commentary
- Yarn Division: Revenue was steady at ₹114 crores for the quarter with 81% capacity utilization. Management highlighted a disciplined approach to pricing and selective order execution to maintain revenue quality over commodity volumes.
- Fabric Division: Shift towards premium offerings like wool-blended and stretch products continues to support stability. Traction was particularly improved in the U.S. and Far East markets, helping offset softness in other global regions.
- Garment Division: Significant shift towards higher-realization products; jackets and suits now account for 26% of divisional revenue (up from 16% in Q2). Utilization remains lower at 65% due to transitional structural issues at the Surat facility.
Company-Specific & Strategic Commentary
- Vertical Integration: Management emphasized that their “fiber-to-garment” verticality provides a lead-time advantage over competitors like Bangladesh, as the entire package is handled in-house.
- Product Mix Optimization: Core focus on increasing value-added fabric (stretch and wool-blends) from 14-15 lakh meters to 18-20 lakh meters per month within the next 6 months.
- Structural Transition: Ongoing process to move machinery from the Surat SEZ to a Domestic Tariff Area (DTA), which is expected to unlock remaining garmenting capacity in 4-5 months.
- Brand Traction: Flagship premium brands Simone Federico & Figli and SIRO are gaining increased acceptance in international markets.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | 15% - 20% for FY27 | Driven by new customer acquisition and vertical package offerings. |
| EBITDA Margin | 12.5% + | Management aims to maintain or improve upon the Q3 exit margin of 12.2%. |
| Revenue Target | ₹1,800 crores | Long-term target achievable using existing capacities and outsourcing models. |
| Debt Reduction | Post-FY27 | Deleveraging expected to begin after the completion of modernization capex in FY27. |
Risks & Constraints
| Risk | Context |
|---|---|
| Regional Trade Barriers | While Mexico raised tariffs on 100% polyester, Banswara’s exposure is mainly poly-viscose; however, global tariff shifts remain a watchpoint. |
| Capacity Constraints | Garmenting utilization is currently capped at 65% pending regulatory permission to move machines from SEZ to DTA. |
| Geopolitical Competition | New trade agreements between the U.S. and Bangladesh regarding cotton could impact the broader Indian textile landscape, though Banswara’s synthetic focus mitigates this. |
Q&A Highlights
Export Dynamics & Pricing
- Question: What is the current export-domestic mix and pricing power? (Ravi Shah)
- Answer: The mix is stable at 50-50. Pricing power is derived from vertical integration, allowing the company to offer a complete “package” (fiber-to-garment) which reduces lead times compared to non-integrated peers (Ravindrakumar Toshniwal).
Garment Utilization
- Question: Why is garment utilization low at 65%? (Ravi Shah)
- Answer: This is a structural issue. Capacity at the Surat SEZ was shut down to move to DTA; management is awaiting final permissions to restart these machines, which should take 4-5 months (Ravindrakumar Toshniwal).
Capex and Strategy
- Question: Are there plans for greenfield garmenting expansions? (Runit Kapoor)
- Answer: No immediate greenfield garmenting capex. Focus is on reaching ₹450-₹500 crore garment turnover by utilizing existing internal capacity and collaborating with compliant outsourced units (Ravindrakumar Toshniwal).
Debt and Leverage
- Question: When will deleveraging resume given the ₹495 crore debt? (Sakshi Pratap)
- Answer: Debt may rise slightly as modernization projects are completed by the end of FY27. Payback will commence from the following year once 12.5%+ EBITDA margins are sustained (Ravindrakumar Toshniwal).
Key Takeaway
Banswara Syntex delivered a resilient Q3 FY26, characterized by an 89% QoQ jump in PAT and a significant expansion of EBITDA margins to 12.2%. The performance was driven by a strategic pivot toward value-added products, notably in the garmenting segment where high-value jackets and suits now contribute 26% of revenue. Despite global headwinds, the company is leveraging its vertical integration to capture shifting demand from China and Bangladesh toward India. While net debt has risen to ₹495.1 crores due to ongoing modernization, management maintains a positive outlook with 15-20% growth guidance for FY27. The primary short-term watchpoint remains the operationalization of the idle Surat capacity, which is expected to normalize garmenting utilization within the next two quarters. Management remains confident in achieving a ₹1,800 crore turnover milestone without major greenfield investments in the near term.
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