Any current/future new fundraising through debt or equity?

Post-acquisition, the company's net debt, including packing credits, is expected to rise to Rs. 150-160 crores (from the current Rs. 42 crores net debt). The acquisition investments have been diluted, and all packing credits have been closed. No explicit mention of new equity fundraising was made during the call. Plans to consider engaging with strategic or financial partners in the retail division to strengthen and scale the business, which may imply possible future equity participation. No direct confirmation of new debt or equity fund raises specifically beyond the acquisition-related adjus

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

Adding 1,000 machines in Sri Lanka in the current year to boost capacity. Incremental capacity expansion of 7% to 10% year-on-year in existing factories in India. New factories being set up in Sivakasi, India, to increase capacity. Acquisition of Young Brand adding 1,800 machines capacity focused on innerwear segment. Sri Lanka operation capacity expected to scale up to 2,000 machines in the near future. Continual capacity ramp-up planned to achieve optimum utilization levels of 85%-90% by FY25. Potential engagement with strategic or financial partners to scale the retail business. Overall cap

Future growth expectations in sales/revenue/volumes?

Targeting 7% to 10% volume growth in existing garment business excluding Sri Lanka (P.V. Jeeva, P. Sundararajan). Sri Lanka operation expected to contribute Rs. 100 crores in first year, Rs. 200-300 crores in next years (V. Balaji, P. Sundararajan). Capacity expansion: 1,000 new machines added in Sri Lanka in FY25; total ~5,000 machines currently and increasing (V. Balaji). Acquisition of Young Brand adds 1,800 machines, expanding innerwear segment and cross-selling opportunities (P. Sundararajan, S. Chenduran). S.P. UK division aims to double topline by FY25 (Management outlook). Overall reve

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

Company targets a 7% to 10% volume growth in the core garment business for FY25, excluding Sri Lanka operations. Sri Lanka operation expected to contribute Rs. 100 crores in the first year (starting H2 FY25) and Rs. 200-300 crores in the subsequent year. Young Brand acquisition and capacity expansions (including 1,800 machines from Young Brand and 1,000 machines added in Sri Lanka) will drive additional growth. EBITDA margin guidance remains around 18% for garment division, sustainable in FY25 despite recent quarter challenges. Retail business aims for Rs. 100-110 crores topline in FY2

Current/ Expected Orderbook/ Pending Orders?

Current garment division order book stands at Rs. 389 crores. S.P. UK order book is GBP 2.7 million. Sri Lanka operations have started receiving orders from existing customers due to capacity constraints in India; expected revenue of Rs. 100 crores in the first year and Rs. 200 crores in the second year. Post-acquisition of Young Brand, new customer base and cross-selling opportunities are expected to increase order inflow. Overall, the company anticipates doubling S.P. UK topline by FY25 and significant growth from Sri Lanka operations to support increased order volumes. Customers a

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S P Apparels LtdQ1 FY24Textiles & Apparels

S P Apparels Ltd Q1 FY24 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

N/A

Order

Yes

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 3

→Targeting 7% to 10% volume growth in existing garment business excluding Sri Lanka (P.V. Jeeva, P. Sundararajan).
→Sri Lanka operation expected to contribute Rs. 100 crores in first year, Rs. 200-300 crores in next years (V. Balaji, P. Sundararajan).
→Capacity expansion: 1,000 new machines added in Sri Lanka in FY25; total ~5,000 machines currently and increasing (V. Balaji).
→Acquisition of Young Brand adds 1,800 machines, expanding innerwear segment and cross-selling opportunities (P. Sundararajan, S. Chenduran).
→S.P. UK division aims to double topline by FY25 (Management outlook).
→Overall revenue growth with contributions from garment, innerwear, Sri Lanka operations, and retail business expansion.
→Retail business expected to reach Rs. 100-110 crores in FY25 with positive EBITDA (V. Balaji).

Margin guidance

Category 3

→Company targets a 7% to 10% volume growth in the core garment business for FY25, excluding Sri Lanka operations.
→Sri Lanka operation expected to contribute Rs. 100 crores in the first year (starting H2 FY25) and Rs. 200-300 crores in the subsequent year.
→Young Brand acquisition and capacity expansions (including 1,800 machines from Young Brand and 1,000 machines added in Sri Lanka) will drive additional growth.
→EBITDA margin guidance remains around 18% for garment division, sustainable in FY25 despite recent quarter challenges.
→Retail business aims for Rs. 100-110 crores topline in FY25 and expects positive EBITDA for the full year.
→Overall PAT growth was 13% standalone and 8.6% consolidated in FY24; further growth expected with scaling operations.
→EPS stood at around 41.4 per share standalone in FY24 with growth expected from expanded capacity and new business contributions.

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Fundraise plans

→Post-acquisition, the company's net debt, including packing credits, is expected to rise to Rs. 150-160 crores (from the current Rs. 42 crores net debt).
→The acquisition investments have been diluted, and all packing credits have been closed.
→No explicit mention of new equity fundraising was made during the call.
→Plans to consider engaging with strategic or financial partners in the retail division to strengthen and scale the business, which may imply possible future equity participation.
→No direct confirmation of new debt or equity fund raises specifically beyond the acquisition-related adjustments and ongoing CAPEX was provided.

Order book

Yes

→Current garment division order book stands at Rs. 389 crores.
→S.P. UK order book is GBP 2.7 million.
→Sri Lanka operations have started receiving orders from existing customers due to capacity constraints in India; expected revenue of Rs. 100 crores in the first year and Rs. 200 crores in the second year.
→Post-acquisition of Young Brand, new customer base and cross-selling opportunities are expected to increase order inflow.
→Overall, the company anticipates doubling S.P. UK topline by FY25 and significant growth from Sri Lanka operations to support increased order volumes.
→Customers are consolidating suppliers, benefiting larger, integrated suppliers like S.P. Apparels, supporting steady order inflow.

Capex plans

Yes

→Adding 1,000 machines in Sri Lanka in the current year to boost capacity.
→Incremental capacity expansion of 7% to 10% year-on-year in existing factories in India.
→New factories being set up in Sivakasi, India, to increase capacity.
→Acquisition of Young Brand adding 1,800 machines capacity focused on innerwear segment.
→Sri Lanka operation capacity expected to scale up to 2,000 machines in the near future.
→Continual capacity ramp-up planned to achieve optimum utilization levels of 85%-90% by FY25.
→Potential engagement with strategic or financial partners to scale the retail business.
→Overall capital investments aimed at expanding garmenting, innerwear, and Sri Lanka operations to meet increased demand and capture market growth opportunities.

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