S P Apparels Ltd

- No substantial increase in debt profile is expected despite capacity expansion. - The company is moving towards becoming debt-free, with current long-term debt around INR 4 crores. - Working capital requirements may increase due to new factories and capacities, but will be managed within current approvals. - No specific mention of immediate plans for equity fundraising. - For SP Retail Ventures, the plan is to turn around performance over two more financial years, then bring in private equity or a strategic partner followed by listing by FY26. - Retail division may raise capital separately as part of its listing plan, but not in the near term.

- The company has already invested around INR 30-40 crores in hostel facilities, with an additional ~INR 10 crores planned by the end of the current year. - Further investment in hostel facilities may be required next financial year due to plans for a second shift in 6-7 factories. - Capacity expansion is ongoing, with the ability to increase capacity by 10-15% annually with about INR 50 crores investment. - The company is in negotiations for acquiring a factory near Bangalore or Chennai (FO1), with firm information expected by April 2024. - New factories are being added along with new capacities; working capital requirements may increase but within current approvals. - The company plans strategic investments, including raising capital and listing SP Retail Ventures by FY26 after turning it profitable.

- India is positioned as a preferred garment manufacturing destination due to the China-plus-one strategy and anticipated free trade agreements, attracting global retailers to shift orders to India. - SP Apparels plans to increase capacity utilization to approximately 90% by March 2024, with garment division volumes expected to grow by 15-20% annually. - The company expects the SPUK division to recover and strengthen in FY24, FY25, and FY26, backed by new customer additions and strategic location change. - Incremental growth of about 20% is expected from new and returning customers in garment divisions and SPUK. - Sri Lanka operations are expected to start shipments by March-April 2024, adding to revenue. - Retail division aims to stabilize and eventually list SP Retail Ventures by FY26 after consistent profitability. - The company targets EBITDA margins around 18-20% with increasing order books totaling approximately INR 410 crores with orders booked up to February 2024.

- The garment division expects around 18-20% EBITDA margin annually, maintaining consistent stable margins driven by improved spinning utilization and moderated yarn prices. - Garment division capacity to grow 15-20% year-on-year, with new customers and resumed orders supporting growth, especially from US clients. - SPUK division expects FY24 to be a recovery year, with FY25 and FY26 projected to be stronger due to new orders and customers in UK/Europe. - Retail division aims to turn positive margins consistently over next two years, planning listing by FY26 post stabilization and potential capital raise. - Spinning division margins have improved, reaching break-even and expected to sustain double-digit EBITDA going forward, not pulling down overall profits. - Overall, the company anticipates revenue growth driven by expanding capacities, improved operational efficiencies, and favorable macroeconomic trends (China plus strategy, FTA expectations). - Long-term prospects look strong with India positioned as a preferred sourcing hub, boosting earnings and EPS growth over coming years.

- The current order book stands at INR 410 crores with orders booked until February 2024, showing about 20% year-on-year growth. - There is a backlog of orders extending until February 2024, indicating strong customer trust and robust demand. - New order bookings for the next season (FY24) in the SPUK division are expected to start by end November to early December 2023. - Plans to add 2-3 new customers in SPUK and garment divisions are underway, which could increment garment division capacity and growth by approximately 20%. - Discussions are ongoing in Sri Lanka with 3 potential customers; shipments expected to start by March-April 2024 after factory audits and sample approvals. - Retail division is focusing on stabilizing and expanding, with plans to raise capital and list separately by FY26 after consistent profitability.