Swaraj Suiting LtdQ3 FY24Textiles & Apparels

Swaraj Suiting Ltd

Q3 FY24 Earnings Call Analysis

Management growth scorecard

Revenue

Category 1

Margin

Category 3

Fundraise

Yes

Order

Yes

Capex

Yes

4 of 5 growth signals are positive — a strong management growth story.

Revenue guidance

Category 1

→Revenue guidance for FY25 remains strong at around INR 600 crore, with a target of approximately INR 450 crore sales in H2 FY25.
→Expected revenue contribution in H2 FY25:
→ - Cotton fabric division: ~INR 150 crores
→ - Denim division: ~INR 210-220 crores
→ - Yarn and job work/trading: balance of revenue
→Capacity expansion has more than doubled; total manufacturing capacity now ~40 lakh meters/month (20 lakh cotton fabric + 21 lakh denim fabric).
→Full utilization of existing plant could achieve INR 1000 crore+ revenue in the future.
→Order books are rotational but stable; denim order book around 25-30 lakh meters.
→Export revenues targeted at INR 100-150 crore for the year, with export revenue at 10-15% of total currently.
→Domestic market demand rising, helped by strong brand relations and certifications.
→Yarn division commissioning expected to enhance margins and support growth.

Category 3

→Margins are expected to improve due to doubled capacity and better utilization, especially in denim and cotton fabric divisions.
→Expansion has increased capacity from 15 lakh meters to 40 lakh meters, reducing utility costs significantly and boosting margins.
→Revenue guidance remains strong with a target of INR 600 crores for the year, supported by a stable order book and expanded capacity.
→Cotton fabric division targeting around INR 150 crores revenue in H2 FY25; denim division targeting INR 210-220 crores.
→Export revenue target of INR 100-150 crores for the year, with 10-15% contribution already achieved in H1.
→EBITDA margin improved from 11.1% (H1 FY24) to 15.4% (H1 FY25), indicating strong profitability improvement.
→EPS increased 79.5% YoY to INR 5.26 in H1 FY25 from INR 2.49 in H1 FY24, with further growth expected due to operational efficiencies.

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Yes

→Nasir Khan mentioned plans for a fundraising primarily aimed at expanding into garmenting and yarn manufacturing.
→The fundraising is intended for inorganic growth but is currently subject to market conditions.
→The company has not finalized the total amount or the mode of fundraising.
→The preferred mode discussed is a **preferential allotment** rather than a rights issue.
→Srini M suggested considering a rights issue to enable existing shareholders to participate, but the company is leaning towards preferential issuance.
→No specific timeline or detailed terms for the fundraising were disclosed.

Yes

→Domestic order book is around INR 80-90 crores.
→Export order book is around INR 21 crores, combining cotton and denim fabrics.
→Denim order book has historically remained at 25-30 lakh meters, matching capacity.
→Cotton fabric order book currently at around 15 lakh meters and rapidly increasing.
→Order books are rotational, typically covering 45-50 days, not long-term (7-8 months).
→New orders come in as existing orders are delivered; long-term order visibility is limited.
→Yarn and trading revenues expected around INR 40-50 crores in upcoming H2.
→Overall, order book supports the revenue guidance of INR 600 crore with H2 sales target of ~INR 450 crore.

Yes

→Swaraj Suiting Limited is planning to enter garmenting and expand yarn manufacturing, which is driving the current fundraising through preferential allotment.
→The company has recently doubled its denim capacity from 15 lakh meters to 21 lakh meters per month and expanded grey fabric capacity by 7.5 lakh meters per month.
→The cotton fabric division has commenced operations and is stabilizing.
→The yarn plant commissioning faced a slight delay but is expected to be operational by early December.
→Future CapEx will be focused on backward integration, primarily garmenting and yarn, not on fabric capacity expansion.
→The current year's CapEx is expected to be completed by year-end, with next year targeting revenues of INR 1000 crore plus from the existing plant capacities.
→The utility cost reduction due to the new machinery and in-house yarn plant will improve margins.

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