Any current/future capex/capital investment/strategic investment?

RSWM Limited has undertaken a capacity expansion at the Lodha unit, adding 51,072 spindles. The formal inauguration of this expansion took place on 2nd August 2023. The new spindle unit is expected to be operationalized within 1 to 2 months. This capacity expansion was planned years ago and aims to improve production quality and meet growing demand, especially for cotton and cotton-blended yarns. They have also made a strategic acquisition of BG Winds Power Company Limited, adding 20 megawatts of solar power capacity to their existing 29 megawatts of renewable capacity. The company i

Future growth expectations in sales/revenue/volumes?

Market currently facing low demand, low prices, overstocking; expected to continue for 1-2 months. Hopeful demand will improve during upcoming festive season and second half (H2) of FY24, expected to be better than first half (H1). New capacity expansion of 51,072 spindles at Lodha unit to be operationalized within 1-2 months, improving quality and production. Shift towards specialty and blended yarns with higher value, aiming to capture growing demand. Domestic demand expected to gain momentum, especially with festival season and knitting market activities. Strategic focus on polyes

Future growth expectations in earnings/operating earnings/profits/EPS?

Market conditions remain challenging with low demand, low prices, and overstocking impacting the textile industry currently. Management expects some revival in demand in H2 FY24, with better conditions than H1 FY24. The upcoming festival season starting end of August is anticipated to drive demand growth over the next two quarters. Capacity expansion (51,072 spindles at Lodha unit) is underway and expected to be operational in 1-2 months, enhancing product quality and specialty yarn production. Cotton prices have stabilized, which may support margin improvement going forward. Export market re

Current/ Expected Orderbook/ Pending Orders?

The export order book for the furnishing segment remains relatively thin, indicating weak international demand. Indian denim segment's FY24 orders are facing delays across brands due to sluggish sales and high inventory levels. The overall textile market is cautious, with some mills experiencing a decline in backlog of sold orders for dyed yarns, leading to partial production shutdowns. Positive signs include a steady purchase trend from domestic brands in segments like innerwear and loungewear. RSWM has secured an initial sales order of 25 metric tonnes in print fabrics from Antigua, reflecti

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RSWM LtdQ2 FY23Textiles & Apparels

RSWM Ltd Q2 FY23 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹192P/E: 11.8Market Cap: ₹734 CrSector: Textiles & Apparels

Management growth scorecard

Revenue

Category 4

Margin

Category 3

Fundraise

N/A

Order

Capex

Yes

1 of 4 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

Category 4

→Market currently facing low demand, low prices, overstocking; expected to continue for 1-2 months.
→Hopeful demand will improve during upcoming festive season and second half (H2) of FY24, expected to be better than first half (H1).
→New capacity expansion of 51,072 spindles at Lodha unit to be operationalized within 1-2 months, improving quality and production.
→Shift towards specialty and blended yarns with higher value, aiming to capture growing demand.
→Domestic demand expected to gain momentum, especially with festival season and knitting market activities.
→Strategic focus on polyester fabrics and eco-friendly, intelligent fabrics targeting sustainable and functional apparel market.
→Export demand currently subdued; domestic sales constituting about 75% of revenue, expected to balance out with market improvement.
→Overall expectation is cautious optimism with potential volume and revenue growth in H2FY24 as market conditions revive.

Margin guidance

Category 3

→Market conditions remain challenging with low demand, low prices, and overstocking impacting the textile industry currently.
→Management expects some revival in demand in H2 FY24, with better conditions than H1 FY24.
→The upcoming festival season starting end of August is anticipated to drive demand growth over the next two quarters.
→Capacity expansion (51,072 spindles at Lodha unit) is underway and expected to be operational in 1-2 months, enhancing product quality and specialty yarn production.
→Cotton prices have stabilized, which may support margin improvement going forward.
→Export market remains weak, currently forming about 25% of revenue (down from 65%), but domestic demand shows tentative signs of improvement.
→Financial outlook is cautious; Q1 FY24 reported a loss of ₹18 Cr PAT, but management remains optimistic about H2 recovery.
→Strategic focus on specialty and polyester fabrics, sustainable products, and partnerships with brands (e.g., Benetton, Puma) expected to drive future growth.

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Fundraise plans

- There is no explicit mention of any new fundraising through debt or equity in the Q1FY24 earnings call transcript. - The company discussed existing net debt of around ₹1,350 crore (₹750 crore term loans and ₹600-650 crore working capital) with average cost of finance around 6-7% after subvention. - No reference was made to plans for fresh debt or equity raising. - The company is focusing on capacity expansion and operational improvements but did not mention raising new funds through debt or equity. - The acquisition of BG Winds' 20 MW solar capacity was completed earlier and not a fresh fundraising event. In summary, based on the transcript, RSWM Limited has not disclosed any current or planned fundraising activities via debt or equity.

Order book

→The export order book for the furnishing segment remains relatively thin, indicating weak international demand.
→Indian denim segment's FY24 orders are facing delays across brands due to sluggish sales and high inventory levels.
→The overall textile market is cautious, with some mills experiencing a decline in backlog of sold orders for dyed yarns, leading to partial production shutdowns.
→Positive signs include a steady purchase trend from domestic brands in segments like innerwear and loungewear.
→RSWM has secured an initial sales order of 25 metric tonnes in print fabrics from Antigua, reflecting encouraging outcomes.
→Anticipation of an uptick in demand over the next two quarters driven by the festive season starting end of August.
→Improvement in dyed yarn sector expected around September with potential revival following a traditionally lean period in July and August.

Capex plans

Yes

→RSWM Limited has undertaken a capacity expansion at the Lodha unit, adding 51,072 spindles.
→The formal inauguration of this expansion took place on 2nd August 2023.
→The new spindle unit is expected to be operationalized within 1 to 2 months.
→This capacity expansion was planned years ago and aims to improve production quality and meet growing demand, especially for cotton and cotton-blended yarns.
→They have also made a strategic acquisition of BG Winds Power Company Limited, adding 20 megawatts of solar power capacity to their existing 29 megawatts of renewable capacity.
→The company is investing in renewable energy to rationalize power and fuel costs, indicating ongoing and future investments in the renewable segment.

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