Q1 2027 RSWM Ltd Earnings Call Transcript
Key Points
- RSWM Ltd (BOM:500350) reported a 16.1% year-on-year increase in EBITDA, with margins improving to 8% from 6.9% in the same quarter last year.
- Gross profit margin expanded to 39.8% from 37.4% sequentially, driven by favorable product realization, better inventory management, and efficient raw material utilization.
- Domestic demand remained healthy, with domestic revenue increasing to INR 825 crore from INR 774 crore in Q4 FY26, reflecting strong order execution.
- The company is making significant progress on its LNJ Greenpat bottle-to-bottle recycling project, with a 50,000 metric ton per year capacity expected to generate INR 500 crore in revenue and 15% EBITDA margins.
- Renewable energy usage has improved from mid-20s to mid-40s, with the current quarter reaching around 60% of power consumption from renewable sources, leading to cost savings.
- The company is actively exploring forward integration into garmenting, with a new joint venture for a denim garment unit, which is expected to create new growth opportunities.
- Capacity utilization remained high across segments, with synthetic yarn at 96%, cotton yarn at 98%, and denim in the 90s, indicating strong operational performance.
- Export revenue declined sequentially, with demand from certain export markets, including parts of the Middle East, remaining subdued during the quarter.
- The fabric business faced significant challenges, with subdued demand in knitted fabric and cost pressures from higher fiber, gas, freight, labor, and chemical prices, leading to low margins.
- Elevated crude oil prices and geopolitical uncertainties, including the West Asia conflict, caused supply chain disruptions and volatility in energy costs, impacting input costs for synthetic yarn.
- The company experienced volatility in raw material prices, with polyester fiber prices rising up to 30%, leading to customer uncertainty and reduced stocking levels.
- Finance costs increased to INR 31 crore from INR 30 crore in the preceding quarter, primarily due to higher working capital requirements.
- The PET recycling project is expected to take time to scale, with utilization projected at 75% in the first year and full potential only by the third year, requiring significant trials and certifications.
- The garmenting joint venture is still in early stages, with stake percentage and other details under discussion, and the company has not yet secured customer tie-ups for the new PET business.
Ladies and gentlemen, good evening and welcome to the RSW Unlimited Q1 FY27 Earnings Conference Call hosted by Rig Capital. (Operator Instructions)
I now hand the conference over to Ms. Richa Singh. Thank you and over to you ma'am.
Good evening and welcome everyone to RSWM Limited Q1 FY27 earnings conference call. Today from the management, we have Mr. Rajiv Gupta, Joint Managing Director, Mr. Manoj Bansal, Chief Transformation and Risk Officer, Mr. Nitin Tuliary, President and CFO, Mr. Surendra Gupta, Chief Compliance Officer and Company Secretary, Mr. Rakesh Jain, Senior General Manager, Corporate Finance. Before we proceed with this call today, I would like to take an opportunity for the reminder of disclaimer related to this conference call. Todayâs discussion may be forward-looking in nature based on managementâs current belief and expectation. It must be viewed in conjunction with the risk and risk that our business faces and the cost that may cause a future result. Performance and achievement would
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