Filatex India Limited Q3 FY26 Earnings Call Summary

Summary

Filatex India Limited - Q3 FY26 Earnings Call Summary Monday, February 09, 2026, 4:00 PM IST

Event Participants

Executives 3 Ashok Chauhan (Chief Visionary Officer), Madhu Sudhan Bhageria (Chairman and Managing Director), Nitin Agarwal (Chief Financial Officer)

Analysts 5 Aryan Bhatia (Inved Research), Niraj Mansingka (White Pine Investment Management), Siddharth Bassi (Individual Investor), Surya Nayak (Sunidhi Securities), Swayam (Pinpointx Capital)

Financials & KPIs

Geographic & Segment Commentary

• Domestic Polyester: Demand for polyester yarn remained stable. However, margins in Q4 FY26 are expected to face pressure due to the lifting of Bureau of Indian Standards (BIS) restrictions on November 12-13, 2025, which led to an influx of low-priced Chinese yarn imports.
• International Trade: The EU Free Trade Agreement (FTA) and revised US tariff structures (US tariffs at 18% vs China’s 34%) are expected to enhance export competitiveness. Management views these as medium-term structural tailwinds that will stabilize domestic pricing.

Company-Specific & Strategic Commentary

• Strategic Investment Program: Executing a ₹690 crore capex plan focused on capacity expansion (55,000 TPA), sustainability, and automation. Most projects are on track for September 2026 completion, excluding minor renewable energy delays.
• Textile-to-Textile Recycling: The “Ecosis” recycling initiative (27,000 TPA) is scheduled for production by end-September 2026. Management noted the technology is proprietary and capital-efficient, with offtake MOUs already in place with brands like Decathlon.
• Export Competitiveness: The EU FTA provides access to a $371 billion market with zero tariffs, neutralizing the LDC advantage previously held by Bangladesh and Vietnam (expiring 2027).
• Operational Resilience: Despite a small fire in October 2025 impacting ~1.5% of production, the company maintained near-full capacity utilization across its facilities.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Trade & Tariffs

• Question: How does the US tariff structure impact competitiveness against China? (Niraj Mansingka)
• Answer: China faces 34% tariffs while India faces 18%. This 16% gap is structural and allows India to compete in the $300 billion US market where it previously faced a high-cost disadvantage (Madhu Sudhan Bhageria).

Recycling Technology & Market

• Question: What is the key trigger for expanding the recycling business? (Surya Nayak)
• Answer: Success in achieving steady-state production and customer acceptance over a 3-6 month period post-startup. The next stage would be a 5x-7x capacity scale-up (Madhu Sudhan Bhageria).
• Question: Is there competition in textile-to-textile recycling? (Vatsal Jain)
• Answer: Only 5-6 companies globally are active. Filatex claims one of the lowest capex-per-ton models and expects to be one of the first to market by late 2026 (Madhu Sudhan Bhageria).

Margin Pressures

• Question: Will Q4 FY26 margins be as strong as Q3? (Surya Nayak)
• Answer: No, margins will be slightly lower due to the lifting of BIS norms and the resulting influx of Chinese FDY, though US/EU trade benefits may mitigate this in later quarters (Madhu Sudhan Bhageria).

Key Takeaway

Filatex India delivered a stable Q3 FY26 with EBITDA growing 24.16% YoY to ₹93.58 crores, despite a marginal dip in revenue to ₹1,050 crores. The company has essentially turned debt-free on a net basis while funding a ₹690 crore strategic capex program. Strategic focus shifted heavily toward circularity, with a 27,000 TPA textile-to-textile recycling plant slated for September 2026, targeting high-margin demand driven by European EPR mandates. While the withdrawal of BIS norms on Chinese imports poses short-term margin pressure on FDY (down 6-7%), the management remains bullish on medium-term export tailwinds from the EU FTA and favorable US tariff differentials. Looking ahead, the company plans to leverage its proprietary recycling technology for a massive ₹1,500 crore future expansion once the initial phase stabilizes. Forward growth remains contingent on the timely commissioning of new capacities and the enforcement of international trade treaties.