💰 Financial Performance

Revenue Growth by Segment

The company operates in a single segment, Textiles. Revenue for FY24 was INR 266.7 Cr, representing a decline of 5.86% from INR 283.3 Cr in FY23. For FY25, revenue is projected to grow by 3-5% to reach INR 270-280 Cr, with H1 FY25 already achieving INR 126 Cr.

Geographic Revenue Split

Not specifically disclosed in available documents, though the company is a Government of India recognized Export House, indicating a significant portion of revenue likely comes from international markets.

Profitability Margins

PAT margin stood at 2.15% in FY24, a slight improvement from 2.05% in FY23. Operating margins improved significantly to 10.65% in H1 FY25 compared to 9.5% in FY24, driven by the shift toward value-added printed fabrics.

EBITDA Margin

Operating margins are expected to stabilize at 10-11% in the near term, up from historical levels of 8-9%, due to the commencement of the printed fabric unit in March 2024 which offers higher realizations.

Capital Expenditure

The company recently completed a capex phase for installing machinery for printed fabrics, which became operational in March 2024. Specific INR value for the capex was not disclosed, but it was funded through debt and internal accruals.

Credit Rating & Borrowing

Ratings were upgraded in December 2024 to CRISIL BBB/Stable and CRISIL A3+. Borrowing costs are expected to decrease following the prepayment of INR 15 Cr in debt using rights issue proceeds.

⚙️ Operational Drivers

Raw Materials

Cotton yarn and fabric are the primary raw materials, accounting for the bulk of the cost of goods sold. Specific percentage of total cost is not disclosed, but volatility in these prices directly impacts the 8-11% operating margin.

Import Sources

Primarily sourced from domestic markets in India, specifically the Punjab region (Ludhiana), which is a major textile hub.

Capacity Expansion

Current capacity is centered at the Ludhiana unit. Recent expansion involved adding a printed fabric line (operational March 2024) to increase the share of value-added products.

Raw Material Costs

Raw material costs are highly volatile due to cotton price fluctuations. The company manages this by passing on price increases to customers with a one-quarter lag, maintaining margins between 8-11%.

Manufacturing Efficiency

Bank limit utilization averaged 84% through October 2024, indicating high capacity utilization and a need for efficient working capital management.

📈 Strategic Growth

Expected Growth Rate

3-5%

Growth Strategy

Growth will be achieved through the increased sale of value-added printed fabrics, which carry higher margins than standard knitted garments. Additionally, the company strengthened its balance sheet via a INR 48 Cr rights issue in August 2024, reducing debt by INR 15 Cr to lower interest costs and improve the interest coverage ratio to ~3x.

Products & Services

High-fashion knitted garments, cotton yarn, grey fabric, denim fabric, and printed fabrics.

Brand Portfolio

Bhandari Hosiery Exports Limited (BHEL).

New Products/Services

Printed fabrics, launched in March 2024, are expected to contribute to a 1-2% increase in overall operating margins.

Market Expansion

The company is focusing on increasing its market share in the high-fashion knitted garment segment by utilizing its new printing capabilities.

🌍 External Factors

Industry Trends

The textile industry is shifting toward value-added and processed fabrics. BHEL is positioning itself by moving from basic knitting to printed and high-fashion garments to capture higher realizations.

Competitive Landscape

Operates in a highly fragmented and competitive textile market in Ludhiana, competing with both organized and unorganized players.

Competitive Moat

The company's moat is built on the Bhandari group's 80-year history (established 1942) and the promoters' 30-year experience, providing deep-rooted supplier networks and customer trust that are difficult for new entrants to replicate.

Macro Economic Sensitivity

Highly sensitive to agricultural output (cotton) and inflation. Cotton price volatility can impact operating margins by 200-300 basis points.

Consumer Behavior

Increasing demand for high-fashion and printed knitted wear is driving the company's shift in product mix.

Geopolitical Risks

Trade barriers or changes in export incentives for the textile industry could impact the competitiveness of their knitted garments in international markets.

⚖️ Regulatory & Governance

Industry Regulations

Subject to textile industry pollution norms and Government of India export house regulations. Compliance with SEBI Listing Obligations is maintained for its BSE/NSE listings.

Environmental Compliance

The company is amfori BSCI certified, indicating compliance with social and environmental standards required for global exports.

Taxation Policy Impact

Not specifically disclosed; however, the company is subject to standard Indian corporate tax rates and export-related fiscal incentives.

⚠️ Risk Analysis

Key Uncertainties

Volatility in raw cotton prices and the ability to maintain high capacity utilization (currently ~84-90%) are the primary business risks.

Geographic Concentration Risk

Manufacturing is concentrated in a single location in Ludhiana, Punjab, making it vulnerable to regional operational disruptions.

Third Party Dependencies

High dependency on cotton farmers and yarn suppliers; any disruption in the domestic cotton supply chain would halt production.

Technology Obsolescence Risk

The textile industry requires periodic upgrades to knitting and printing technology; the company recently addressed this with its 2024 capex.

Credit & Counterparty Risk

Moderate risk; the company maintains a current ratio of 1.48x and has improved its financial profile through equity infusion, reducing counterparty default risk.