💰 Financial Performance

Revenue Growth by Segment

Revenue is projected to decline by 10-15% in fiscal 2026, dropping from INR 2,778 Cr in FY25 to approximately INR 2,400-2,500 Cr. In Q1 FY26, the company recorded revenue of INR 657 Cr, a 10% YoY decline. Segment-wise, the Spinning division operated at 99% utilization, while Sheeting and Terry Towel divisions were at 60% and 66% respectively during Q2 FY26.

Geographic Revenue Split

The US market currently accounts for 60-65% of core revenues. The company aims to reduce this US exposure to below 50% over the next two years by expanding into 38 other jurisdictions. India-based brands (Himeya, Atmosphere, Liv) are demonstrating consistent YoY growth.

Profitability Margins

Reported PAT margin improved from 2.7% (INR 76 Cr) in FY24 to 3.9% (INR 113 Cr) in FY25. However, operating margins are expected to decline by 2-3% in FY26 from the 20.4% recorded in FY25 due to tariff impacts and reduced operating leverage.

EBITDA Margin

EBITDA margin stood at 20.4% in FY25 but corrected to 18.4% in Q1 FY26. This contraction of approximately 200 basis points is primarily due to the 50% US tariff hike on Indian textile exports, which forces the company to absorb costs to remain competitive.

Capital Expenditure

The company undertook a sizeable historical capex of INR 1,950 Cr between FY2016 and FY2020 to expand sheeting capacity and install spinning and terry towel units. No major new capex is planned for the immediate term as the focus shifts to deleveraging.

Credit Rating & Borrowing

CRISIL reaffirmed ratings at 'BBB+/Stable/A2'. Interest coverage is expected to decline to 1.5-1.6 times in FY26 from 1.8 times in FY25. The company is raising INR 500 Cr via Non-Convertible Debentures (NCDs) on a private placement basis to refinance existing debt.

⚙️ Operational Drivers

Raw Materials

The primary raw material is cotton, including fine-count cotton yarn. Cotton prices have stabilized recently, which helped maintain a 20.4% EBITDA margin in FY25 before the tariff hikes.

Import Sources

The company imports a significant amount of cotton from the US for its export products. This specific US-sourced cotton is exempted from certain tariffs when re-exported to the US.

Capacity Expansion

Current installed capacity includes 61 million meters per annum (mmpa) for sheeting and 211,584 spindles for spinning. Utilization for Spinning is at 99%, Sheeting at 60%, and Terry Towels at 66%.

Raw Material Costs

Raw material prices are currently stable. However, gross margins are expected to decline in FY26 as the company absorbs the 50% US tariff hike, effectively increasing the landed cost of goods for customers or reducing the net realization for Himatsingka.

Manufacturing Efficiency

Vertical integration from spinning to distribution provides strong operating efficiency. The spinning unit's 99% utilization indicates high efficiency in internal yarn supply for the sheeting and towel divisions.

Logistics & Distribution

The company operates a global distribution network across North America, Europe, and Asia, supporting its 8 global brands and servicing 38 jurisdictions.

📈 Strategic Growth

Expected Growth Rate

10-15%

Growth Strategy

The company is pursuing a 'Non-US' growth strategy to bring US revenue below 50% by expanding in 38 jurisdictions. It is also scaling its domestic India presence through brands like Himeya and Atmosphere. Financial growth will be supported by deleveraging using QIP proceeds (INR 400 Cr raised, INR 267.4 Cr repaid) and refinancing debt through a new INR 500 Cr NCD issue.

Products & Services

Bedsheets, terry towels, bedding products, drapery, upholstery fabrics, and fine-count cotton yarn.

Brand Portfolio

Himeya, Atmosphere, Liv, and 5 other global licensed/owned brands (total 8 global brands).

New Products/Services

Focusing on the luxury segment where demand is more inelastic, which helps protect margins despite inflationary pressures in the US market.

Market Expansion

Targeting non-US jurisdictions and the Indian domestic market to offset the decline in US sales. The India business is currently demonstrating consistent YoY growth.

Market Share & Ranking

Himatsingka is among the top five home textile players in India.

Strategic Alliances

The company maintains access to large global retailers including Costco, Macy’s, and Walmart for distribution.

🌍 External Factors

Industry Trends

Global trade in goods rebounded by 2.4% in 2024. The home textile industry is seeing a shift toward vertical integration and brand-led growth, though it remains highly sensitive to raw material (cotton) price cycles.

Competitive Landscape

Competes with other Indian textile majors and international suppliers from Pakistan and China. Pakistan holds a significant advantage with only a 19% tariff in the US market.

Competitive Moat

The moat is built on vertical integration (spinning to retail), a portfolio of 8 global brands, and long-standing relationships with major US retailers. This integration allows for better quality control and margin retention compared to non-integrated players.

Macro Economic Sensitivity

High sensitivity to US inflation, which reduces discretionary spending on home textiles, and US trade policy (tariffs).

Consumer Behavior

Shift toward luxury and branded home textiles in the Indian domestic market is a key trend the company is capitalizing on through its three domestic brands.

Geopolitical Risks

Trade barriers, specifically the 50% tariff on Indian textile exports to the US, represent a major geopolitical and regulatory risk that directly impacts competitiveness against other Asian nations.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to US import tariffs (currently 50% for Indian textiles) and SEBI regulations regarding insider trading and disclosure (trading windows were closed in late 2025 for board meetings).

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the duration of the high US tariffs. If they remain at 50%, operating income is expected to decline by 10-15% and debt protection metrics will continue to deteriorate.

Geographic Concentration Risk

High concentration in the US (60-65% of revenue).

Third Party Dependencies

High dependency on big-box retailers (Costco, Walmart, Macy's) for market access.

Technology Obsolescence Risk

Not a primary risk, but the company maintains world-class manufacturing facilities with 211,584 spindles to stay competitive.

Credit & Counterparty Risk

Receivables have stretched to 155 days, indicating potential pressure on collections or extended credit terms offered to maintain sales volumes amid high tariffs.