Sportking India Limited Q3 FY26 Earnings Call Summary

Summary

Sportking India Limited - Q3 FY 2026 Earnings Call Summary Monday, February 09, 2026 04:00 PM

Event Participants

Executives 3 Lovlesh Verma, Munish Avasthi, Sandeep Sachdeva

Analysts 7 Bhavika, Hitaindra Pradhan, Pranay Jhaveri, Pratik Shah, Rajiv Jain, Siya Maheshwari, Udit Gupta

Financials & KPIs

Geographic & Segment Commentary

• Exports: Contributed 48% of Q3 revenue. While US tariffs on Indian apparel caused a temporary lull, demand from China for cotton yarn has seen a sharp uptick since January, and Bangladesh remains a resilient market despite political uncertainties.
• Domestic Market: Revenue grew 29% YoY to ₹324.7 crores. Domestic demand is viewed as a more certain market, and the company is shifting focus toward supplying domestic garment manufacturers to capitalize on upcoming trade deals.
• Garment Segment: Currently a smaller portion of revenue, but targeted as a major growth engine. The company is merging its garment and dyeing units to scale operations, targeting a turnover of ₹250-260 crores in the next fiscal year.

Company-Specific & Strategic Commentary

• Odisha Greenfield Expansion: ₹1,000 crore investment to add 1.5 lakh spindles (40% capacity increase). Site construction has commenced, with commissioning expected to start by Q3 FY27.
• Renewable Energy Transition: 40-megawatt solar plant starting March 1st will increase renewable share to 45%. This is expected to generate annual savings of ₹16 crores.
• Strategic Merger: Consolidation of garmenting and dyeing units into Sportking India will be completed by March 31, 2026. The move aims to transform the company into a predominant garment player over the next decade.
• Trade Deal Readiness: Management is positioning the company to benefit from the landmark EU-India FTA and the India-USA deal, which provide a level playing field against competitors currently enjoying zero-duty status.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Financial Impact of Fire

• Question: What was the bottom-line impact of the Bathinda plant fire? (Rajiv Jain)
• Answer: The net financial impact was limited to ₹1.5 crores after insurance netting. (Munish Avasthi)

Market Spreads

• Question: How have yarn spreads trended recently? (Pranay Jhaveri)
• Answer: Spreads dipped from ₹118 in Q2 to ₹113 in Q3. However, current bookings are at approximately ₹130, reflecting a ₹20/kg recovery. (Munish Avasthi)

Merger Dynamics

• Question: Will the merger impact promoter holding or equity? (Udit Gupta)
• Answer: There is no equity impact; shareholder patterns remain the same. The merger adds ₹200 crores to the top line with 15% PAT margins. (Munish Avasthi)

Export Trade Deals

• Question: How significant is the EU FTA for the company? (Bhavika)
• Answer: It is a game-changer. India currently pays 9-12% duty while competitors pay 0%. The deal will equalize this, and the phasing out of LDC status for other nations will eventually give India an 8% advantage. (Munish Avasthi)

Key Takeaway

Sportking India delivered a resilient Q3 FY26 with a 33% YoY increase in PAT, despite headwinds from US tariffs and a fire incident at its Bathinda plant. The company maintained a peak capacity utilization of 96%, emphasizing the necessity of its ₹1,000 crore Odisha expansion, which will increase spindle capacity by 40% starting late FY27. Strategically, Sportking is pivoting toward higher integration through the merger of its garmenting units and a massive shift to renewable energy, which will save ₹16 crores annually in power costs. Management expressed high optimism regarding the EU-India FTA and US trade deals, viewing them as structural catalysts that will restore India’s competitive edge. With yarn spreads recovering to ₹130/kg and a clear roadmap for garment expansion, the company is well-positioned to capitalize on the ongoing industry consolidation. Sportking remains focused on commissioning the Odisha project by October 2026 to unlock the next leg of revenue growth.