Vardhman Textiles Q1 FY27 Earnings Call Transcript Released

Vardhman Textiles Limited has released the transcript of its Q1 FY27 earnings conference call, which was held on July 31, 2026. The call featured management including Mr. Neeraj Jain (Managing Director), Mr. Sushil Jhamb (Director, Raw Materials), Mr. Rajeev Thapar (CFO), and Mr. Varun Malhotra (Head of Finance), with Ms. Aradhana Jain from 360 ONE Capital Markets moderating.

During the call, management discussed an improvement in Q1 FY27 numbers, attributing gains in the spinning business to better yarn sizes and favorable raw material pricing, leading to partial trading gains. The fabric business showed comparable performance to the previous year, with expectations of improvement driven by a rebound in U.S. orders after a period affected by tariffs. The company noted full utilization and good margins in the spinning segment.

Management provided insights into the global cotton market, highlighting stabilized international prices and concerns about potential crop reductions in India due to varied rainfall patterns, as well as reductions in Brazil, Australia, USA, and China. They anticipate that cotton prices may not decrease significantly and could potentially increase due to rising global consumption and reduced supply. The impact of geopolitical events, such as the U.S.-Iran conflict, on crude and subsequently polyester and acrylic prices was also discussed, potentially increasing demand for cotton fibers.

The company is also focusing on its new synthetic fabric business, with sampling underway and initial approvals from major brands. They aim for 70-80% capacity utilization within six months and believe this segment has the potential for better margins and ROCE compared to existing fabric lines. The company is evaluating opportunities for duty-free imported cotton to manage inventory costs, especially with potential increases in India's Minimum Support Price (MSP) for the upcoming season.

Regarding future plans, Vardhman Textiles is working on an open-end project with a capacity of 55-60 tons per day, expected to be operational in approximately 10 months. The development of a new site at Dhar is also progressing, with land expected by December 2026, followed by construction. The company anticipates significant capex over the next 3-5 years for this new site, aiming for top-line growth. Management also discussed the expansion of their garment capacity to 4.5 million units, targeting operational completion by June 2027, which is expected to generate substantial revenue and improve margins.

Key discussions also included the resilience of Indian exports due to Free Trade Agreements (FTAs) with the UK and EU, and the trend towards shorter ordering cycles, innovation, recycling, and ESG compliance from customers. The company expects its yarn demand and prices to remain visible for at least the next 3-4 months, with potential for margins to remain in the range of 13-14%, moderating from current highs but not returning to previous lows.