S P Apparels Ltd Q1 FY27 Earnings Analysis

- FY27 consolidated revenue guidance is INR 2,000 crores with EBITDA margin around 14%-15%. - Garmenting division expected to contribute INR 1,800 crores, SPUK about INR 150 crores, and Retail Ventures around INR 80-90 crores in FY27. - FY28 revenue potential estimated at INR 2,500 crores with improved utilization and capacity expansion. - Capacity additions planned post full utilization, targeting 9,000-10,000 machines by FY28 to support growth. - Expect strong recovery and volume growth from US clients starting Q3 FY27 following tariff resolution. - Geographic diversification with target mix by FY27: 30% US, 35% Europe, 35% UK. - New large customers in Europe and UK anticipated, improving order book and volumes. - Positive outlook on order inflow if UK-EU Free Trade Agreement materializes. - Sri Lanka capacity scaling and Young Brand expansion ongoing, supporting volume growth. - Long-term growth driven by expected shift of business from Bangladesh due to loss of duty-free status by 2029.

- FY27 consolidated revenue guidance is INR 2,000 crores with an EBITDA margin around 14%-15%. - Garmenting division expected to deliver 15% EBITDA margin; SPUK projected at 4%-5%, Retail aiming for breakeven or better. - FY28 revenue anticipated to reach INR 2,500 crores with EBITDA margin improving to approximately 15%. - Capacity expansions targeted to increase machine count to ~9,000-10,000 by FY28 to support revenue growth. - Improvement driven by normalization post temporary disruptions, stable order book, and geographic diversification (US, UK, Europe). - Sri Lanka operations scaling up to four factories within 12 months, aiding growth and diversification. - SPUK and Retail Ventures expected to contribute positively to margins and profits. - Company confident of sustainable profit growth with a focus on disciplined margin management, operational efficiency, and cost controls. - Outlook positive on EPS growth aligned with volume ramp-up and margin expansion.

- The company plans to add 200-300 machines in India by the end of FY27, with an estimated cost of INR 200-250 crores. - Expansion projects in Salem (Young Brand Apparel) and Sivakasi (SPAL India) were previously on hold due to US tariff uncertainties but have now resumed. Salem expansion may start commercial production by FY28. - Further capacity additions in FY28 will depend on utilization levels of current assets; no definite plans yet beyond sweating current assets. - The company is ready to add more capacity if utilization improves, targeting up to 9,000-10,000 machines and INR 2,500 crores revenue in the future. - Continued investment in renewable energy is underway, aiming for around 4.5 MW solar capacity by March 2027. - Retail division plans to raise equity to support elevated interest costs and improve profitability.

- No immediate plans for new debt fundraising were indicated in the transcript. - On Retail Ventures, the company is experiencing elevated interest costs affecting profitability. - The management is considering raising equity specifically for Retail Ventures to support growth and achieve profitability. - They are ready to raise equity anytime if there is investor interest, particularly once the Retail division achieves consistent positive quarterly results. - No mention of new debt plans; focus is on internal cash flow and utilization of current capacities. - Capacity expansion plans (machines addition) depend on utilization and growth but are not directly tied to new fundraising at this time.

- Current order book as of May 22, 2026: - SPAL Garmenting Division: INR 380 crores - Young Brand Apparel: INR 142 crores - SPUK: GBP 6.1 million (approx. INR 60-65 crores depending on exchange rate) - Total combined order book: Approximately INR 600 crores - For SPUK in FY27, expected revenue of USD 12-14 million (approx. INR 100-110 crores), including: - Two anchor customers expected to contribute around USD 8 million each (approx. INR 120 crores total) - Management expects normalization of orders post-Q2 FY27, with increased focus on US and European market clients. - Anticipated recovery and order ramp-up from Q3 FY27 onwards following resolution of tariff and labor issues.