RSWM Ltd Q4 FY26 Earnings Analysis

- Targeting around ₹5,000 Cr revenue by FY 2026-27, implying approximately 10% growth from current ₹4,500 Cr levels. - Growth driven primarily by better capacity utilization in knit, mélange, and denim segments. - Major expansion planned in knit capacity with additional production of 200 tonnes. - Yarn business operates at high 90%+ capacity utilization; focus is on improving utilization in knit and mélange segments. - Stable to improving EBITDA margins expected alongside volume growth. - Favorable outlook supported by new FTAs with EU and UK, expected from early next fiscal year. - Anticipated CAGR growth of 8-10% in exports to Europe due to tariff parity. - Incremental modernization and cost-efficiency projects to support competitive positioning and margins. - No negative revenue growth expected; emphasis on sustainable, profitable volume growth.

- RSWM targets around ₹5,000 Cr revenue by FY 2026-27, implying approx. 10% growth from the current ₹3,400 Cr (Page 17). - Focus on better capacity utilization, especially in knit, mélange, and denim segments (Pages 16-17). - EBITDA margin improvement aimed toward double-digit levels (10-11%) within 6-8 quarters, supported by tariff benefits and efficient cost control (Page 15). - EBITDA margins improved to 7.4% in Q3 FY26, up from 4.8% YoY, reflecting structural improvements expected to sustain (Pages 5-6). - Profit After Tax (PAT) turnaround observed: Q3 FY26 PAT at ₹4 Cr (excluding a one-time ₹10 Cr expense) and nine-month PAT at ₹17 Cr, moving from losses in prior periods (Page 6). - Return on Capital Employed (ROCE) improving, increasing from 3.3% to 5.1%, with aspiration to steadily move back to peak levels (~13%) (Page 16). - Positive impact anticipated from FTAs with EU and UK, with expected CAGR growth of 8-10% from expanded market access (Page 18).

- Knit fabric expansion: ₹92 Cr Capex progressing in phased manner; expected fully operational by H1 FY 2027. - Modernization Capex: Approximately ₹50 Cr spent last year; similar levels expected for next 2-3 years focused on improving power efficiency, digitalization, quality, and productivity with payback in 12-24 months. - Renewable energy investment: ₹60 Cr equity paid for group captive solar power project with Adani; additional ₹22-25 Cr planned for 9.6 MW behind-the-meter solar installation. - LNJ GreenPET project: Total cost ₹427 Cr; funded 70:30 debt to equity/internal accrual; revenue potential ₹475-500 Cr, ramping up over 2-3 years. - Industry 4.0: Investment in digital tools and automation through SaaS partner Green Stitch for sustainability and operational efficiency. - Continuous evaluation and phased replacement of older machinery based on payback and efficiency improvements.

- For the LNJ GreenPET project (cost ₹427 Cr), funding is expected at a 70:30 debt-to-equity ratio: - Approximately ₹300 Cr through debt. - ₹127 Cr through internal accruals or equity infusion. - The company's capital allocation remains selective and disciplined, focusing on projects with clear returns and shorter payback periods. - There is no specific mention of any other immediate debt or equity fundraising. - The company aims to maintain a prudent leverage profile with financial flexibility for demand volatility. - Modernization Capex of about ₹50 Cr annually is planned, funded mainly through cash flow. - No explicit plans for fresh equity fundraise were outlined during the call.

- The company is seeing improved demand visibility following global supply chain realignment and trade agreements. - Order inflows were soft in most of 2025 but expected to recover due to tariff reductions under the India-US interim trade framework and India-EU FTA. - India-EU FTA effective January 2026 will provide zero tariffs, improving competitiveness and expected to boost orders significantly. - Indian textile players expect a CAGR growth of 8%-10% in exports, with import market potential in the EU alone growing from $8 billion to $35-40 billion. - The knit fabric expansion targeted to be operational by H1 FY2027 will help access new orders in fashion-intensive segments like kidswear, women’s wear, and loungewear. - Political and geopolitical improvements are expected to aid better capacity utilization and revenue growth, impacting order book positively. - No explicit numerical data on current or pending order book shared, but outlook is optimistic for order recovery and growth.