Shiva TexyarnQ1 FY22Textiles & Apparels

Shiva Texyarn

Q1 FY22 Earnings Call Analysis

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Revenue guidance

Category 2

→Non-spinning division revenue expected to grow from Rs.127 Crores (FY2022) to Rs.180-200 Crores in FY2023, driven by robust garmenting orders and increased processing capacity.
→Garmenting division targets Rs.90 Crores, with Rs.75-80 Crores from army orders and Rs.15-20 Crores from other garmenting products.
→Quick dry division projected to grow to Rs.55-60 Crores with new product launches and improved market conditions.
→Coating and wiring division expected to contribute around Rs.20 Crores.
→Spinning revenues uncertain due to volatile cotton prices but expected to maintain a ~60% share of total revenue.
→New product focus includes seamless garments and poly spandex athleisure fabrics, showing high growth potential.
→Additional planned investments of Rs.75 Crores over 18-24 months, mainly funded by Rs.30-35 Crores internal accruals and debt for the balance.
→Expected industry challenges and opportunities from international demand and raw material price fluctuations.

Category 3

→FY2022 reported revenue: Rs.477.07 Crores, 40% YoY growth; EBITDA: Rs.55.09 Crores (11.55% margin); Net profit: Rs.20.41 Crores (4.28% margin); EPS: Rs.15.44.
→For FY2023, non-spinning segment expected to grow to Rs.180-200 Crores from Rs.125 Crores in FY2022, driven by garmenting and quick dry divisions.
→Spinning and non-spinning projected split around 60:40 conservatively.
→EBITDA margins in spinning averaged around 11% in FY2022; margins for army orders and value-added products higher (~25-33%).
→Planned investments of Rs.75-80 Crores over next 18-24 months targeting seamless garments, poly spandex, and cold weather clothing; funding primarily through Rs.30-35 Crores internal accruals plus debt.
→New processing plant expected to reach Rs.3.8 Crores turnover/month from August, contributing ~Rs.30 Crores in 8 months.
→Overall, expecting steady revenue growth with operational efficiencies balanced against raw material volatility, signaling moderate profit and EPS increases ahead.

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Yes

→Shiva Texyarn Limited plans investments worth Rs.75-80 Crores over the next 18-24 months, primarily to expand seamless garments and poly spandex lines and some strategic new product investments.
→Internal accruals are expected to contribute Rs.30-35 Crores towards funding these investments.
→For the remaining funding, the company prefers raising funds through debt instruments.
→The company is not planning to raise funds through the equity market given its current size and growth stage.
→The strategy focuses on debt being a better and more feasible option for raising the required capital than equity issuance at this time.

Yes

→Confirmed garment orders on hand for next 2.5 months (seamless garments & poly spandex).
→Woven raised fabrics for Decathlon have 6 months order visibility.
→Fleece fabrics have approximately 30 days order visibility.
→Military garment confirmed orders worth Rs.12 Crores for current financial year.
→Participated in limited tenders worth Rs.110 Crores for defense products; confident in securing Rs.57 to Rs.70 Crores from these.
→Expect garmenting division business around Rs.90 Crores during the year.
→Quick dry division anticipated to grow to Rs.55-60 Crores.
→New processing plant commissioned with potential Rs.3.8 Crores turnover per month from August, implying Rs.30 Crores for 8 months.
→Coating and wiring divisions expected to contribute around Rs.20 Crores.
→Total projected non-spinning revenue for FY2023 estimated between Rs.180 to Rs.200 Crores.

Yes

→Shiva Texyarn plans to invest approximately Rs. 75-80 Crores over the next 18-24 months.
→Investments will focus mainly on expanding the seamless garments and poly spandex athleisure fabric lines.
→There will be minor expansion investments in the garmenting division driven by increasing orders.
→The company is exploring strategic investments in cold weather clothing products but details are currently confidential.
→Funding: Around Rs. 30-35 Crores expected from internal accruals; the remaining to be raised through debt instruments, not market fundraising.
→The company has already invested Rs. 25 Crores last year in processing, garmenting, and nonwoven divisions.
→Recently acquired 26% stake in L.K. Distributors to access cheaper wind power; plans to increase to 40% stake for captive renewable energy use.

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