Current/ Expected Orderbook/ Pending Orders?

The current order book stands at approximately Rs. 425 crores. Capacity utilization has significantly improved, currently running close to 3,900 machines at around 80% utilization. There is an expectation of increased order inflow due to the China Plus One strategy and customer consolidation. The company is exploring offshore production in Sri Lanka to quickly augment capacity and handle new orders. Expansion plans include adding capacity in the woven garment sector, potentially through acquisitions. Growth guidance includes a proposal of 15-20% revenue growth for FY2024 and FY2025, with a pos

Any current/future new fundraising through debt or equity?

No explicit mention of any new fundraising through debt or equity in the provided pages. The company stated their liquidity position is strong and that they have serviced all debt up to date (Page 4). There is no reported need for growth funding for the retail business, as they are not planning big growth there (Page 7). Working capital utilization has increased due to higher interest rates, but no indication of raising fresh funds (Page 4). The company mentioned plans for expansion via asset-light models, acquisitions, and offshore production, but no specific capital raise mentioned (Pages 5-

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

SP Apparels is expanding capacity in the woven garment sector by looking to add more capacity through potential acquisitions of woven garment factories in India. They have initiated a new project for capacity expansion in Tamil Nadu, India, with work already started for a new factory. Capacity utilization is targeted to increase to 90% by the end of the year with labor mobilization from other states and new projects. Incorporation of a new subsidiary in Sri Lanka is underway for asset-light offshore manufacturing by leasing or contract basis factories; running factory acquisition is plan

Future growth expectations in sales/revenue/volumes?

Revenue growth guidance for FY2024 and FY2025 is projected at 15-20%, with a possibility of an additional 5% if offshore production scales up. Capacity utilization is expected to rise to 90% by the end of the year, supporting volume growth. Machine capacity is planned to increase from around 3,900 to 4,500 by year-end, with potential expansions up to 1,000-2,000 machines offshore in Sri Lanka. New factory acquisitions, offshore production, and expansions in woven garments are key growth strategies. The company is leveraging "China Plus One" strategy, benefiting from customer consolidat

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

Revenue growth guidance: Proposed 15-20% growth for FY2024 and FY2025; potential additional 5% growth if offshore production in Sri Lanka materializes. EBITDA margins: Current EBITDA margin stands at 16.3% (Q1 FY2024); management is hopeful to achieve above 18% in coming quarters, targeting 18-20% EBITDA margin by FY2025. Capacity expansion: Plans to increase machine utilization from around 3,900 to 4,500-4,800 by year-end, supported by labor additions including migrant workers and a new Tamil Nadu project. Offshore production: Introducing offshore manufacturing in Sri Lanka from Q4 FY20

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S P Apparels LtdQ2 FY23Textiles & Apparels

S P Apparels Ltd Q2 FY23 Earnings Call Analysis

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

Price: ₹1,038P/E: 17.3Market Cap: ₹2.0K CrSector: Textiles & Apparels

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Order

N/A

Capex

Yes

1 of 4 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

Category 3

→Revenue growth guidance for FY2024 and FY2025 is projected at 15-20%, with a possibility of an additional 5% if offshore production scales up.
→Capacity utilization is expected to rise to 90% by the end of the year, supporting volume growth.
→Machine capacity is planned to increase from around 3,900 to 4,500 by year-end, with potential expansions up to 1,000-2,000 machines offshore in Sri Lanka.
→New factory acquisitions, offshore production, and expansions in woven garments are key growth strategies.
→The company is leveraging "China Plus One" strategy, benefiting from customer consolidation and diversification away from China.
→Offshore production in Sri Lanka, starting late Q4 FY2024 or Q1 FY2025, will add to capacity and revenue.
→New customer additions in SPUK and expansion in product categories (jersey, woven, kids, ladies, men’s wear) are planned but with cautious timing due to global economic conditions.

Margin guidance

Category 3

→Revenue growth guidance: Proposed 15-20% growth for FY2024 and FY2025; potential additional 5% growth if offshore production in Sri Lanka materializes.
→EBITDA margins: Current EBITDA margin stands at 16.3% (Q1 FY2024); management is hopeful to achieve above 18% in coming quarters, targeting 18-20% EBITDA margin by FY2025.
→Capacity expansion: Plans to increase machine utilization from around 3,900 to 4,500-4,800 by year-end, supported by labor additions including migrant workers and a new Tamil Nadu project.
→Offshore production: Introducing offshore manufacturing in Sri Lanka from Q4 FY2024 or Q1 FY2025 to support capacity and order growth with an asset-light model.
→Retail segment turnaround expected within seven quarters, with Crocodile brand already profitable and supporting others from Q3 FY2024.
→Earnings per share (EPS): Q1 FY2024 EPS was Rs. 5.99; with growth and margin improvements, EPS expected to improve progressively.

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Fundraise plans

→No explicit mention of any new fundraising through debt or equity in the provided pages.
→The company stated their liquidity position is strong and that they have serviced all debt up to date (Page 4).
→There is no reported need for growth funding for the retail business, as they are not planning big growth there (Page 7).
→Working capital utilization has increased due to higher interest rates, but no indication of raising fresh funds (Page 4).
→The company mentioned plans for expansion via asset-light models, acquisitions, and offshore production, but no specific capital raise mentioned (Pages 5-12).
→Bank tie-ups for retail working capital needs are in place, indicating reliance on existing financing rather than fresh equity or debt (Page 7).

Order book

→The current order book stands at approximately Rs. 425 crores.
→Capacity utilization has significantly improved, currently running close to 3,900 machines at around 80% utilization.
→There is an expectation of increased order inflow due to the China Plus One strategy and customer consolidation.
→The company is exploring offshore production in Sri Lanka to quickly augment capacity and handle new orders.
→Expansion plans include adding capacity in the woven garment sector, potentially through acquisitions.
→Growth guidance includes a proposal of 15-20% revenue growth for FY2024 and FY2025, with a possibility of an additional 5% if offshore production scales up.
→Customers' concurrence is awaited for confirming order volumes related to offshore production in Sri Lanka.

Capex plans

Yes

→SP Apparels is expanding capacity in the woven garment sector by looking to add more capacity through potential acquisitions of woven garment factories in India.
→They have initiated a new project for capacity expansion in Tamil Nadu, India, with work already started for a new factory.
→Capacity utilization is targeted to increase to 90% by the end of the year with labor mobilization from other states and new projects.
→Incorporation of a new subsidiary in Sri Lanka is underway for asset-light offshore manufacturing by leasing or contract basis factories; running factory acquisition is planned with customer concurrence and expected to be operational late Q4 FY2024 or Q1 FY2025.
→No fixed capital budget is finalized for Sri Lanka expansion at present; the model is asset-light initially.
→Retail business is not seeking significant growth funding currently and tied up with banks for internal working capital needs.

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