Summary
Borana Weaves Limited - Q3 FY 2026 Earnings Call Summary Tuesday, January 27, 2026 11:00 AM IST
Event Participants
Executives 1 Rajkumar Borana (Executive Director and CFO)
Analysts 7 Ajit Sethi, Ankur Gulati, Disha, Gaurav Agarwal, Madhur Rathi, Parth Patel, Raman KV
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹111.36 crores | +42% YoY; Driven by strong order books and healthy sales volumes. |
| EBITDA | ₹27.09 crores | +51% YoY; Reflects healthy operating leverage. |
| EBITDA Margin | 24.32% | +143 bps YoY; Expansion due to lower raw material volatility and operational efficiency. |
| Profit After Tax (PAT) | ₹18.55 crores | +63% YoY; Driven by robust operational performance and disciplined execution. |
| PAT Margin | 16.66% | Improved significantly YoY from 14.5% in the base period. |
| Fabric Production | 6.60 crore metres | Quarterly production contributing to 16.31 crore metres for 9M FY26. |
| Capacity Utilization | 82-83% | Blended rate across 4 units; Management sees potential to reach 90%. |
| Total Debt | ₹60 crores | Comprises ₹35 crores long-term and ₹25 crores short-term/working capital. |
| Cash & Reserves | ₹40-55 crores | Strong liquidity position supporting net debt-free status. |
Geographic & Segment Commentary
- Surat (Manufacturing Hub): The company operates four units in Surat, which management describes as the “Manchester of synthetic fabric.” This location is strategic as it serves as the central hub for mining, polishing, and processing synthetic textiles before global distribution.
- Technical Textiles: Management is expanding into base fabrics for technical applications including tent clothes, jackets, and hospital linens. While not doing the final coating in-house, they are specifically targeting buyers who convert their grey fabric into waterproof and industrial textiles.
- Export vs. Domestic: While the company does not export directly, their buyers distribute to the US, UAE, Middle East, and Africa. Management noted a shift in demand from US bedsheets to UAE-specific fabrics, which the company’s versatile machinery accommodated.
Company-Specific & Strategic Commentary
- Renewable Energy Transition: The company is investing ₹125 crores to meet 70%-80% of power needs via renewables. A 3.54 MW solar project commissions in Feb 2026, followed by a 19.79 MW solar-wind hybrid project in May 2026, expected to save ₹18-20 crores annually.
- Capacity Expansion (Unit 4B): Commissioning 160 high-speed water jet looms (64 already active) for ₹35 crores. This is expected to add 5 crore metres of annual capacity and generate ₹60-70 crores in incremental annual revenue.
- Product Mix & Realization: Average realization improved to ~₹16.90 per square metre in Q3. This was driven by a seasonal shift toward higher GSM (grams per square metre) winter fabrics and an increasing share of value-added products (currently 20-25% of mix).
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Loom Capacity | 2,000 Looms by March 2028 | Roadmap to double capacity from current 1,000 looms; target of 1,500 looms by FY27. |
| Total Capex | ₹350 - ₹400 crores | Estimated spend for doubling capacity including working capital and renewables. |
| Margin Outlook | Positive/Increasing | Gains expected from lower power costs (renewables) and removal of Chinese BIS restrictions. |
| Revenue Growth | Sustainable | Supported by incremental capacity from Unit 4B and 80%+ utilization targets. |
Risks & Constraints
| Risk | Context |
|---|---|
| Raw Material Volatility | While currently stable, any re-imposition of BIS restrictions or anti-dumping duties on Chinese yarn could impact the cost structure. |
| Concentration Risk | All four manufacturing units are located in Surat; however, management views this as a strategic necessity due to the localized nature of the textile value chain. |
| Subsidy Tapering | Power and interest subsidies for older units (Unit 1 & 2) will start expiring between 2026-2027, though renewable energy savings are intended to offset this. |
Q&A Highlights
Margins and Raw Materials
- Question: What is the outlook on raw material pricing given the anti-dumping environment? (Raman KV)
- Answer: In December, the government eased BIS certificate requirements for Chinese imports. This allows access to cheaper raw materials compared to domestic yarn, which should benefit gross margins in Q4 FY26. (Rajkumar Borana)
Capacity and Capex
- Question: What is the cost and revenue potential of the new 160 looms? (Raman KV)
- Answer: The capex is ₹35 crores for Unit 4B, which will add 5 crore metres of capacity and ₹60-75 crores in annual revenue. (Rajkumar Borana)
- Question: How will the ₹350-400 crore expansion be funded? (Vansh Saini)
- Answer: There will be no equity dilution. It will be funded through internal accruals and some debt (currently targeting only ₹40 crores debt for the renewable portion). (Rajkumar Borana)
Renewable Energy
- Question: What is the ROI on the ₹125 crore renewable investment? (Madhur Rathi)
- Answer: We expect ₹20 crores in annual savings, leading to a payback period of approximately 6 years. (Rajkumar Borana)
Utilization and Product Mix
- Question: Why did utilization at Unit 1 drop to 77% compared to 96% previously? (Ankur Gulati)
- Answer: This is due to fabric width changes. When making single-width shirting or bedsheets on 105-inch machines, the “utilization” metric drops even if the machine is running 100% of the time. We expect to reach 80%+ soon. (Rajkumar Borana)
Key Takeaway
Borana Weaves Limited delivered a robust Q3 FY26 performance, characterized by a 42% YoY revenue growth and significant EBITDA margin expansion to 24.32%. The company is successfully executing a high-utilization model (82-83%) while transitioning toward a more sustainable and cost-efficient power structure. Strategically, the firm is moving toward doubling its capacity to 2,000 looms by March 2028 and investing ₹125 crores in renewable energy to offset the upcoming expiry of government power subsidies. With a net-debt free balance sheet and the removal of import hurdles for Chinese raw materials, the company is well-positioned for margin stability. Management remains focused on high-speed water jet loom technology and expanding its presence in the technical textiles base-fabric segment to drive long-term value.
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