Q1 2027 Sutlej Textiles and Industries Ltd Earnings Call Transcript
Key Points
- Return to profitability at both standalone and consolidated levels with no exceptional items, marking a clean operational quarter.
- EBITDA surged nine-fold year-on-year to INR47.2 crore, with margins expanding for the fifth consecutive quarter to 6.7%.
- All three business clusters and six manufacturing units delivered positive EBITDA, indicating a broad-based and durable recovery.
- Gross margin improved by 370 basis points year-on-year, driven by better product mix and disciplined procurement.
- Strategic focus on value-added products, including Sutlej Green Fiber and technical textiles, is gaining traction with structural demand from regulated markets.
- Employee costs remain high at 16.6% of revenue, with management acknowledging they are above desired levels and a key area for improvement.
- Finance costs increased to INR18.3 crore due to working capital needs for revenue growth and higher raw material prices, with absolute interest outflows expected to rise to INR75 crore this year.
- Value-added yarn portfolio is still only 10-15% of the mix, well below the 30-35% target, indicating a long journey ahead.
- Raw material price volatility persists, with cotton prices expected to remain neutral to bullish, posing a risk to margins.
- Management refrained from providing clear guidance for Q2 and Q3, citing geopolitical uncertainties and global demand concerns.
Ladies and gentlemen, good day and welcome to the Q1 and FY27 earnings conference call for Sutlej Textiles and Industries Limited. The management will be sharing the key operating and financial highlights for the quarter ended June 30, 2026, followed by a question-and-answer session. Please note that some of the statements made in today's discussion may be forward-looking in nature and may involve risks and uncertainties. Documents relating to the company's financial performance are available on the stock exchanges and the company's website.
Rush, you have been able to go through the same. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on a touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sachin Karwa, Chief Financial Officer.
Thank you and over to you, sir.
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