AMBIKCO - Ambika Cotton

📊 NSE: AMBIKCO 🏢 Textiles - Cotton/Blended 📅 Last Updated: 12/13/2025 18:16

💰 Financial Performance

Revenue Growth by Segment

Net Sales decreased by 14.65% (INR 117.46 Cr) in FY 2025 compared to a 1.89% decrease (INR 15.43 Cr) in FY 2024, indicating a significant slowdown in turnover. The decline is primarily driven by a sharp drop in export demand and volatile cotton prices affecting realization.

Geographic Revenue Split

Exports contributed significantly but saw a sharp decline of 16.49% (INR 97.85 Cr) in FY 2025 compared to a marginal 0.79% (INR 4.72 Cr) decline in FY 2024. This indicates a high sensitivity to international textile demand and global trade conditions.

Profitability Margins

Net Profit Margin after Tax improved to 9.61% in FY 2025 from 7.86% in FY 2024. Operating Profit Margin before Tax also rose to 18.98% from 16.47%. This margin expansion despite falling revenues suggests improved operational efficiencies or a shift toward higher-value yarn products.

EBITDA Margin

Operating Profit Margin before Tax stood at 18.98% in FY 2025, a YoY increase of 251 basis points. For the half-year ended September 30, 2025, the operating profit before working capital changes was INR 53.51 Cr, down 6.4% from INR 57.18 Cr in the previous H1 period.

Capital Expenditure

The company invested INR 41.31 Cr in the purchase of fixed assets during H1 FY 2026 (ending Sept 2025), a 175.7% increase from INR 14.98 Cr in H1 FY 2025. This indicates an aggressive push for capacity modernization or expansion despite current revenue headwinds.

Credit Rating & Borrowing

CRISIL reaffirmed 'CRISIL A+/Stable' for long-term and 'CRISIL A1' for short-term facilities as of February 2024. Finance costs for H1 FY 2026 were INR 7.42 Cr, a 21.2% reduction from INR 9.42 Cr in H1 FY 2025, reflecting lower debt utilization or better interest terms.

⚙️ Operational Drivers

Raw Materials

Raw cotton is the primary raw material, accounting for the majority of the company's turnover and production costs. Specific percentage of total cost is not disclosed, but it is identified as the single most critical input cost driver.

Import Sources

Not specifically disclosed in the documents, though the company notes that cotton prices are heavily dependent on the Indian monsoon, suggesting significant domestic sourcing.

Capacity Expansion

Current capacity is not explicitly stated in MT, but the company employs 1,771 staff and workmen. Recent H1 FY 2026 capex of INR 41.31 Cr suggests ongoing capacity enhancement or technological upgrades in the spinning units.

Raw Material Costs

Raw material costs are subject to high volatility due to monsoon dependency. The company does not engage in commodity hedging, making margins highly sensitive to seasonal cotton price fluctuations.

Manufacturing Efficiency

Operating margins improved from 16.47% to 18.98% YoY, indicating high manufacturing efficiency and effective cost control measures in the production of cotton yarn.

📈 Strategic Growth

Expected Growth Rate

19%

Growth Strategy

The company aims to achieve growth by maintaining operating margins above 19% through established market positioning in the premium textile segment and strong operating efficiencies. Growth is supported by internal accruals for capex rather than debt, ensuring a low-risk financial profile.

Products & Services

The company produces high-quality cotton yarn and related textile products sold to both domestic and international garment manufacturers.

Brand Portfolio

Ambika Cotton Mills.

Market Expansion

The company focuses on penetration of new markets and offering new products through constant technological upgradation, though specific target regions are not listed.

🌍 External Factors

Industry Trends

The textile industry is seeing a shift toward high-efficiency manufacturing and sustainable sourcing. Ambika is positioning itself through technological absorption and maintaining a debt-free growth model.

Competitive Landscape

Operates in a fragmented and competitive textile market, competing with both large-scale organized players and smaller unorganized units.

Competitive Moat

The company's moat is built on cost leadership and a superior financial risk profile (TOL/TNW of 0.10x). This is sustainable because it allows the company to survive industry downturns that would bankrupt more leveraged competitors.

Macro Economic Sensitivity

Highly sensitive to agricultural output (monsoon) and global discretionary spending on apparel, which dictates demand for cotton yarn.

Consumer Behavior

Shifts toward sustainable and high-quality cotton fabrics are driving demand for the company's specialized yarn products.

Geopolitical Risks

Trade barriers or global supply chain disruptions could further impact the export segment, which is already under pressure.

⚖️ Regulatory & Governance

Industry Regulations

Subject to textile industry standards and pollution control norms for spinning mills. The company is fully compliant with Corporate Governance requirements as per Regulations 17 to 27 of SEBI LODR.

Environmental Compliance

The company ensures high environmental standards and safety measures through departmental safety committees, though specific ESG costs are not disclosed.

Taxation Policy Impact

The effective tax rate is approximately 27.9%, based on a Net Profit Margin before Tax of 13.33% and after Tax of 9.61% for FY 2025.

Legal Contingencies

BSE and NSE levied fines for non-compliance with Regulation 17(1)(b) and 17(1A) regarding board composition. The company has paid these fines and filed waiver applications. No other major penalties or strictures from SEBI or Stock Exchanges were reported in the last three years.

⚠️ Risk Analysis

Key Uncertainties

Raw material price volatility (Cotton) and export demand fluctuations are the primary uncertainties, with potential to impact margins by 200-300 basis points in a bad crop year.