GHCLTEXTIL - GHCL Textiles

📊 NSE: GHCLTEXTIL 🏢 Textiles - Spinning - Synthetic / Blended 📅 Last Updated: 12/13/2025 22:21

💰 Financial Performance

Revenue Growth by Segment

Total Income for Q2 FY26 reached INR 339 Cr, an 11% YoY increase from INR 307 Cr. The Yarn segment remains the primary driver, contributing 88.6% of revenue in Q2 FY26, while the Fabric segment contributed 11.4%. H1 FY26 total income stood at INR 609 Cr, a 2% YoY growth from INR 595 Cr.

Geographic Revenue Split

In Q2 FY26, Domestic sales accounted for 91.2% (INR 309 Cr) of revenue, while Exports contributed 8.8% (INR 30 Cr). This reflects a shift from Q2 FY25, where exports were significantly higher at 19.5% (INR 60 Cr).

Profitability Margins

EBITDA margin for Q2 FY26 was 11.2%, improving by 170 bps from 9.5% in Q2 FY25. PAT margin for Q2 FY26 was 4.7%, a decrease from 6.7% in Q2 FY25, primarily due to a tax credit in the previous year's quarter which normalized to a tax expense of INR 6 Cr in the current period.

EBITDA Margin

EBITDA Margin stood at 11.2% in Q2 FY26, up 170 bps YoY. Core profitability is driven by a focus on value-added products and operational excellence, with H1 FY26 EBITDA reaching INR 70 Cr, a 21% YoY increase from INR 58 Cr.

Capital Expenditure

The company has planned a capital expenditure of approximately INR 100 Cr for FY26, which is expected to be funded entirely through internal accruals to enhance capacity and efficiency.

Credit Rating & Borrowing

The company maintains a 'Strong' liquidity profile with a 'Stable' outlook from CARE Ratings. Overall gearing is exceptionally low at 0.04x as of March 31, 2025, providing significant headroom for future borrowing if required.

⚙️ Operational Drivers

Raw Materials

Raw cotton is the primary raw material, with specific high-end varieties including Giza, Supima, and Australian cotton. Raw material costs are a significant portion of operating expenses, which were INR 301 Cr in Q2 FY26 (88.8% of total income).

Import Sources

The company imports 20-25% of its raw material requirements, specifically sourcing premium cotton from Egypt (Giza), the USA (Supima), and Australia.

Capacity Expansion

The company has maintained high capacity utilization of over 90% for its installed spinning capacity. Current expansion focus is on vertical integration into woven and knitted fabrics to capture more value per unit.

Raw Material Costs

Raw material costs are highly sensitive to Minimum Support Price (MSP) changes and global demand-supply. The company manages this through a procurement strategy that includes importing 20-25% of requirements and maintaining strategic inventory.

Manufacturing Efficiency

Capacity utilization has consistently exceeded 90%, driven by operational excellence and a focus on high-margin, value-added yarn portfolios.

📈 Strategic Growth

Expected Growth Rate

4.5-5.5%

Growth Strategy

Growth will be achieved through vertical integration into the fabric segment (currently 11.4% of revenue), expanding the value-added yarn portfolio (Giza, Supima, CmiA), and leveraging strategic relationships with major clients like Arvind and Indo Count. The company aims to double revenue over a 5-year horizon.

Products & Services

The company sells specialized yarns (Giza, Supima, Australian, CmiA) and woven and knitted fabrics to garment manufacturers and home textile companies.

Brand Portfolio

GHCL Textiles (Corporate Brand).

New Products/Services

Expansion into Woven and Knitted Fabric segments is expected to drive future revenue diversification and margin expansion.

Market Expansion

The company is focusing on geographical diversification, having increased export revenue share from 6% in FY21 to approximately 13% in FY23, targeting high-value international markets.

Market Share & Ranking

GHCL Textiles is recognized as one of India’s leading yarn manufacturers and exporters following its demerger from GHCL Limited.

Strategic Alliances

Maintains long-term strategic relationships with key industry players such as Arvind Limited, Indo Count Industries, and Shahi Exports.

🌍 External Factors

Industry Trends

The industry is shifting toward sustainable and traceable fibers (like CmiA yarn) and vertical integration. GHCL is positioning itself by expanding into fabrics and high-end specialized yarns.

Competitive Landscape

Competes with other large Indian spinning mills but differentiates through its focus on premium, certified yarn varieties and integrated fabric manufacturing.

Competitive Moat

The moat is built on vertical integration, a premium value-added portfolio (Supima/Giza), and high operational efficiency (90%+ utilization). These are sustainable due to long-term client relationships and captive power advantages.

Macro Economic Sensitivity

Highly sensitive to global trade recovery and GDP growth, as the textile industry CAGR is projected at 4.5-5.5% based on these factors.

Consumer Behavior

Increasing global demand for sustainable textiles and high-quality apparel is driving demand for the company's specialized yarn products.

Geopolitical Risks

Ongoing US tariffs on competing countries create uncertainty but offer India a competitive advantage in the textile sector due to relatively lower tariff barriers.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to government-mandated Minimum Support Prices (MSP) for cotton and international trade regulations/tariffs which impact export competitiveness.

Environmental Compliance

The company is increasing captive green power consumption to meet ESG goals and reduce carbon footprint, though specific INR costs are not disclosed.

Taxation Policy Impact

The company saw a tax expense of INR 6 Cr in Q2 FY26 compared to a tax credit of INR 5 Cr in Q2 FY25, reflecting a return to standard corporate tax rates.

⚠️ Risk Analysis

Key Uncertainties

Raw cotton price volatility remains the primary uncertainty, with the potential to impact margins by several hundred basis points if inventory is not managed effectively.