Summary
Sumeet Industries Limited - Q3 FY 2026 Earnings Call Summary Friday, February 13, 2026 11:00 A.M.
Event Participants
Executives 2 Pratik R. Jaju (Managing Director), Rohan Modh (Executive Director)
Analysts 4 Anushri Nayar (Individual Investor), Dandhaj D (Individual Investor), Raj Shah (Star Insurance), Suman Gupta (Oakland Capital)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Income | ₹267.74 crores | Steady performance in Q3; 9M FY26 consolidated income at ₹786.83 crores. |
| EBITDA | ₹16.66 crores | Represents a 6.22% margin for the quarter; 9M FY26 EBITDA at ₹46.09 crores (5.86% margin). |
| Profit After Tax (PAT) | ₹9.04 crores | Q3 EPS at ₹0.18; Profit from continuous operations surged +205% YoY compared to FY25. |
| Exceptional Items | ₹170 crores | Non-cash gain in FY25 related to waiver of liabilities following the NCLT takeover by Eagle Group. |
| Net Margin | 3.5% | Management targeting an improvement to 5% through product diversification and cost control. |
| Capacity Utilization | >95% | Operating at near-maximum levels; expansion plans underway to increase base by 30-40%. |
Geographic & Segment Commentary
- Domestic Market: Primary revenue driver located in Surat; seeing strong demand due to Trade Deals and FDI. Management noted that while they are a B2B company, domestic demand is indirectly bolstered by customers’ increased export opportunities.
- Export Markets: Currently focusing on “deemed exports” via local agents. Strategic focus is shifting toward direct exports of polyester texturized yarn to Asian (Malaysia, Vietnam) and African markets.
- Value-Added Products: Increasing focus on specialty and premium yarn segments to enhance realizations. The company is upgrading machinery and has established a dedicated research and marketing team to support this shift.
Company-Specific & Strategic Commentary
- Eagle Group Takeover: Since the 2024 acquisition, the new promoters have focused on operational discipline, planning efficiencies, and aligning the company with a long-term textile-focused growth vision.
- Capacity Expansion: Planning to increase production capacity by 30-40% through additional machinery and automation. This is necessary as current utilization is already at 95%.
- Energy Efficiency: Installed a 14 MW solar power plant to reduce costs. Management plans to increase renewable usage to 50% of total consumption, targeting a 25% reduction in overall power costs.
- Capital Allocation: Announced a Rights Issue of approximately ₹200 crores. Proceeds are intended for a balance of debt strengthening, working capital, and capacity expansion.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Net Profit Margin | 5.0% (Medium-term) | Targeted increase from current 3.5% via value-added product mix and cost optimization. |
| Capacity Headroom | +30% to 40% | Anticipated volume growth following the installation of new machinery and upgrades. |
| Power Cost Reduction | -25% | Driven by the expansion of solar and renewable energy installations. |
| Export Growth | +10% to 20% | Expected industry-wide rise due to favorable trade deals with the EU and US. |
Risks & Constraints
| Risk | Context |
|---|---|
| Interest Cost | Identified as a major cost factor; management is mitigating this by building reserves and negotiating better credit terms with suppliers. |
| Concentration Risk | Historically focused only on the Indian market; currently attempting to diversify into direct exports to mitigate domestic cycle dependency. |
| Execution Risk | Significant expansion and machinery upgrades (30-40% capacity) are planned concurrently with a ₹200cr fundraising exercise. |
Q&A Highlights
Margin Sustainability
- Question: How does the management view current margin sustainability and divergence from topline? (Dandhaj D)
- Answer: Current margins are sustainable; the goal is to move net margins from 3.5% to 5% by shifting toward value-added products and improving operational efficiencies (Pratik R. Jaju).
Exceptional Profits
- Question: What was the nature of the ₹170 crore exceptional profit in FY25? (Dandhaj D)
- Answer: This was a non-operational, non-cash gain resulting from the waiver of previous liabilities by banks during the NCLT takeover process (Pratik R. Jaju).
Export Strategy
- Question: Which markets and products are being targeted for export expansion? (Anushri Nayar)
- Answer: Focus is on polyester texturized yarn for Malaysia, Vietnam, and Africa. Management expects a 10-20% boost in demand indirectly through customers benefiting from EU/US trade deals (Pratik R. Jaju).
Fundraising & Rights Issue
- Question: What are the objectives and timeline for the recently announced fundraise? (Suman Gupta)
- Answer: A ₹200 crore rights issue is planned for completion within three months. Specific object clauses will be revealed in the upcoming Draft Letter of Offer (DLO), covering growth and financial strengthening (Pratik R. Jaju).
Key Takeaway
Sumeet Industries delivered a resilient Q3 FY26 with a consolidated income of ₹267.74 crores and a significant 205% YoY increase in profit from continuous operations. Following its acquisition by the Eagle Group, the company has stabilized operations, reaching a high capacity utilization of over 95%. Strategically, the firm is pivoting toward value-added yarns and direct exports to Asia and Africa while aggressively tackling power costs through a 14 MW solar installation. To fund its next leg of growth—a planned 30-40% capacity expansion—the company has initiated a ₹200 crore rights issue. While current net margins sit at 3.5%, management remains focused on achieving a 5% target through machinery upgrades and premium product positioning. Investors should monitor the successful deployment of rights issue proceeds and the timely execution of capacity additions to sustain momentum.
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