Summary
Siyaram Silk Mills Limited - Q3 FY 2026 Earnings Call Summary Thursday, January 29, 2026, 11:00 AM
Event Participants
Executives 3 Ashok Jalan (Senior President and Director), Gaurav Poddar (President and Executive Director), Surendra Shetty (Chief Financial Officer)
Analysts 6 Apoorv (Whitestone PMS), Deepak Patil (Equentis Wealth Advisory), Dev Gulwani (Care PMS), Pratik Shah (Investing Alpha), Priti Agarwal (SK Associates), Varun Mishra (Bava Investments)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Income | ₹639 crores | +8.9% YoY; Growth driven by festive demand early in the quarter despite mid-quarter caution. |
| Fabric Revenue | ₹498.4 crores | ~78% of mix; Core segment saw 3% value growth but 9% volume growth in 9M FY26. |
| Garments Revenue | ₹95.9 crores | ~15% of mix; Includes contribution from new retail brands ZECODE and DEVO. |
| EBITDA | ₹84 crores | +1.5% YoY; Growth tempered by new labor code costs and retail brand investments. |
| EBITDA Margin | 13.2% | -90 bps YoY; Impacted by higher ad-spends and initial losses from retail expansion. |
| PAT | ₹42 crores | -8.7% YoY; Decline attributed to increased finance costs and one-time employee expenses. |
| PAT Margin | 6.6% | -120 bps YoY; Reflective of higher working capital requirements and retail rollout. |
| Finance Cost | (Not Specified) | Increased YoY; Driven by inventory build-up for the strong Q4 season. |
Geographic & Segment Commentary
- Branded Retail (ZECODE & DEVO): The segment generated ₹55 crores in 9M FY26, tracking toward a full-year target of ₹70-80 crores. Management is shifting focus toward larger format stores (6,000–8,000 sq. ft.) as they provide better consumer experiences and display capabilities. The retail footprint currently stands at 25 ZECODE and 17 DEVO outlets, with a cluster-based focus in South and North India respectively.
- Fabrics: Traditional suiting and shirting remains the primary driver, though its revenue share has slightly moderated from 80%+ to 78% as other segments scale. Performance is heavily seasonal, with volume growth reaching 9% on a 9-month basis despite quarterly volatility.
- Exports: Currently contributing ~9% of revenue, primarily through fabric exports to global garment converters. Management anticipates tailwinds from new Free Trade Agreements (FTAs) and India’s positioning as a manufacturing hub, potentially expanding into direct garment exports (formal trousers) in the future.
Company-Specific & Strategic Commentary
- Retail Expansion Strategy: The company is pursuing a “calculated” expansion, aiming for ~35 total new stores in FY26. Management emphasized operational efficiency over aggressive store counts, focusing on regional clusters to optimize supply chains.
- Marketing & Branding: Ad-spend is maintained at 4-5% of revenue to support both legacy brands and new retail ventures. Digital and regional campaigns are being intensified to drive footfall in new ZECODE and DEVO outlets.
- Cost Pressures: Margin performance was weighed down by a one-time employee expense related to the new labor code (estimated impact with marketing at ₹10-12 crores).
- Product Design: Leveraging the Italian subsidiary CADINI to track European fashion trends and integrate international design forecasts into domestic fast-fashion offerings.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | 12% to 15% (FY26) | Upgraded from previous guidance of 10-12% due to resilient demand. |
| EBITDA Margin | ~14% (FY26) | Baseline guidance; excludes 100-150 bps impact from retail startup losses. |
| Store Openings | ~35 stores (FY26) | Combined target for ZECODE and DEVO; 22 opened YTD with balance expected by March. |
| Maintenance Capex | ₹50 - ₹70 crores | Annual requirement for legacy asset maintenance; retail expansion adds ₹35-40 crores. |
Risks & Constraints
| Risk | Context |
|---|---|
| Discretionary Spending | Management noted customers remained cautious mid-quarter, with demand being largely “occasion-driven” rather than a sustained trend. |
| Retail Gestation | New retail brands are currently EBITDA-dilutive (100-150 bps impact), with sourcing and gross margin challenges typical for early-stage operations. |
| Working Capital | Finance costs have risen due to inventory build-up; management is monitoring inventory levels to optimize cash flow in the “made-to-stock” model. |
Q&A Highlights
Retail Performance & Strategy
- Question: What is the revenue contribution and breakup for ZECODE/DEVO? (Dev Gulwani)
- Answer: 9M FY26 revenue is ₹55 crores, on track for the ₹70-80 crore annual target; specific brand breakups are not yet disclosed as the business is nascent (Gaurav Poddar).
- Question: Why has the store expansion for ZECODE slowed this quarter? (Dev Gulwani)
- Answer: Slower Q3 expansion was intentional to focus lean teams on festive season operations rather than new launches (Gaurav Poddar).
Margins & Financials
- Question: What caused the EBITDA margin decline to 13.2%? (Vriddhi Vora)
- Answer: Primarily three factors: new labor code employee costs, increased advertising/sales promotion, and planned losses from the new retail business (Gaurav Poddar).
- Question: Why did finance costs increase YoY? (Varun Mishra)
- Answer: Higher working capital deployment for inventory preparation ahead of the seasonally strong fourth quarter (Surendra Shetty).
Market Positioning
- Question: How are you competing with established players like Trent whose sales have slowed? (Dev Gulwani)
- Answer: The apparel market is vast and largely unorganized; Siyaram is focusing on internal benchmarks and efficient operating models rather than external comparisons (Gaurav Poddar).
- Question: Are there plans for online or omnichannel formats for the new brands? (Pratik Shah)
- Answer: Focus remains on offline formats to establish a physical foothold first, though online remains a long-term consideration (Gaurav Poddar).
Key Takeaway
Siyaram Silk Mills delivered a resilient Q3 FY26 with revenue growth of 8.9% YoY to ₹639 crores, supported by festive demand, although PAT declined by 8.7% due to one-time labor code costs and retail expansion investments. The company successfully grew its 9-month income by 15.3%, prompting management to upgrade full-year revenue growth guidance to 12-15%. Strategically, the firm is pivoting ZECODE towards larger format stores to enhance consumer experience while maintaining a disciplined 4-5% marketing spend. While the new retail ventures currently dilute margins by 100-150 bps, the core fabric business remains stable with 9% volume growth. Management remains confident in achieving a 14% baseline EBITDA margin for the full year, underpinned by a seasonally strong Q4 and a calibrated approach to capital allocation across its legacy and fast-fashion segments.
Want more insights like this?
Subscribe to get deep dives delivered to your inbox.
More Earnings Summaries
Explore more Q3 FY26 earnings call analyses: