RSWM LtdQ1 FY23Textiles & Apparels

RSWM Ltd

Q1 FY23 Earnings Call Analysis

Management growth scorecard

Revenue

Category 4

Margin

Category 3

Fundraise

Order

N/A

Capex

Yes

1 of 4 growth signals are positive — mixed outlook.

Revenue guidance

Category 4

→RSWM anticipates continuous improvement in demand and positive growth throughout FY24, following the encouraging recovery signs in Q4FY23.
→The company completed capacity expansions, such as 30,000 spindles running at full capacity and denim business expansion operational in FY23.
→A major spinning plant expansion with 51,000 spindles is expected to be completed around September-October FY24, which will add to production capacity.
→The knitting plant, facing initial issues, is targeted to run at full capacity (400 metric tons) by H1FY24.
→The company’s strategic plans discussed in the Ignite 2026 leadership program focus on growth and operational excellence.
→Efforts to capitalize on sustainable fashion and zero discharge plants are expected to create new opportunities.
→Improved operational efficiencies and cost management aim to support revenue growth despite market challenges.

Category 3

→Q4FY23 showed encouraging signs of recovery with a 15.3% QoQ growth in total income and a threefold increase in EBITDA compared to Q3FY23, indicating positive momentum.
→Management is optimistic that the positive trend in demand and operational performance will continue throughout FY24.
→Expansion projects are underway, including a 51,000 spindle plant expected to be operational by September/October 2023, likely contributing to capacity and turnover growth.
→The knit business aims to stabilize and produce at full capacity (400 MT) in FY24, which should bolster revenue.
→Sustainability initiatives and the focus on sustainable fashion signal potential new market opportunities.
→While FY23 EBITDA margins were lower at 9% vs. 12.2% in FY22, diligent cost controls and pricing strategies aim to sustain profitability.
→No explicit EPS guidance was provided, but overall tone suggests steady improvement in earnings and operating performance in FY24.

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→No specific mention of any current or future new fundraising through debt or equity in the call.
→Right issue money raised earlier has been utilized for:
→ - Repayment of long-term borrowings, reducing term loan interest.
→ - Long-term working capital.
→ - Margin money for some expansions (not fully for all expansions).
→Capital work in progress of ₹183 Cr. is ongoing with planned capitalization around September-October FY24.
→No fresh fundraising plans disclosed for FY24 or beyond during the call.

→For March FY23, order position for the next financial year looks positive as per the discussion with AM Lodha.
→The company operates approximately on a 60:40 ratio between order-based and commodity-based production.
→Q4 FY23 saw a 15.3% growth in total income QoQ, indicating improving demand.
→Marketing efforts in Q4 helped reduce stock levels and increase sales compared to Q3.
→Knit business is yet to stabilize but targets 400 metric tons production in FY24.
→Demand is expected to continue improving throughout FY24.
→No explicit numeric order book or pending order figures were provided in the call.

Yes

→Expansion underway at Lodha plant for 51,000 spindles with a planned completion around September/October FY24.
→Recent addition of 30,000 spindles at Kharigram plant is fully operational.
→Expansion in denim and knit businesses also underway; knitting plant expected to reach full capacity in H1 FY24.
→Capital work in progress of ₹183 Cr. for FY23 aiming at capacity addition; expected incremental turnover details not specified.
→No new property acquisitions; ₹30 Cr. investment in property is a reclassification of existing Mumbai office as investment property, not new purchase.
→Acquired BG Power (100% subsidiary) to leverage incentives for captive power plant; acquisition amount ₹5 Cr.
→Right issue funds used for repaying long-term borrowings, long-term working capital, and margin money for expansions, not fully covering all expansions.

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1RSWM Ltd

Rev 4Mar 3

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