SANATHAN - Sanathan Textile

📊 NSE: SANATHAN 🏢 Textiles - Cotton/Blended 📅 Last Updated: 12/14/2025 12:45

💰 Financial Performance

Revenue Growth by Segment

Standalone operations (Silvassa) grew 3.2% YoY in Q2 FY26 to INR 767.1 Cr; Consolidated revenue grew 10.2% YoY to INR 818 Cr driven by the newly commissioned Punjab plant.

Geographic Revenue Split

Not disclosed in available documents, though operations are concentrated in Silvassa and Punjab.

Profitability Margins

FY25: Gross Margin improved as raw material costs fell faster than sales prices, EBITDA 8.8%, PAT 5.4%. Q2 FY26 Consolidated: EBITDA 7.72%, PAT 2.46% (impacted by startup costs).

EBITDA Margin

8.8% in FY25 (up 110 bps YoY); Q2 FY26 Standalone at 9.28% (up 146 bps YoY).

Capital Expenditure

INR 2,150 Cr total for Punjab facility; INR 1,750 Cr spent prior to FY26, INR 300 Cr in H1 FY26, and INR 75-100 Cr remaining.

Credit Rating & Borrowing

[ICRA]A (Positive) reaffirmed April 2025; finance costs increased 257.5% YoY in Q2 FY26 to INR 18.5 Cr due to new plant debt.

⚙️ Operational Drivers

Capacity Expansion

Punjab facility (SPPL) commissioned August 2025 with a capacity of 700 metric tonnes per day, doubling the group's total capacity.

Raw Material Costs

Total expenses were INR 2,735.83 Cr in FY25 (91.2% of revenue). In Q2 FY26, consolidated expenses were INR 754.8 Cr (92.3% of revenue).

Manufacturing Efficiency

Silvassa plant operating at full capacity; Punjab plant ramping up to 700 MT/day capacity; inventory turnover ratio improved to 5.75 in FY25 from 5.57.

Logistics & Distribution

Not disclosed as a specific % of revenue, but proximity to consumption centers in Punjab is a strategic advantage for distribution.

📈 Strategic Growth

Expected Growth Rate

38-45%

Growth Strategy

Doubling manufacturing capacity through the Punjab facility (SPPL) to 700 MT/day; focusing on high-margin value-added products for sportswear, intimate wear, and technical textiles; achieving better margins through operational discipline and sustainable fuel (rice husk).

Products & Services

Yarn and textile products for sportswear, intimate wear, furnishings, and technical textiles.

Brand Portfolio

Sanathan Textiles.

New Products/Services

Value-added products for technical textiles and sportswear; expected to drive EBITDA margins toward 12% by FY28.

Market Expansion

Expansion into Northern India via the Punjab plant to be closer to consumption centers; targeting revenue of INR 6,000 Cr by FY27.

🌍 External Factors

Industry Trends

Growing demand for sustainable and innovative textiles in sportswear and technical sectors; industry shift toward proximity-based manufacturing to reduce freight costs.

Competitive Moat

Cost leadership through proximity to raw materials and customers; sustainable fuel usage (rice husk); established long-term supplier and customer relationships; diversified product portfolio.

Macro Economic Sensitivity

Indirect exposure to US market demand; sensitivity to raw material price fluctuations (e.g., price drops improved margins in Q2 FY26).

Consumer Behavior

Increasing global buyer expectations for sustainability, performance, and innovation in apparel.

Geopolitical Risks

Indirect impact from US market slowdown affecting customers; trade barriers not specifically mentioned.

⚖️ Regulatory & Governance

Industry Regulations

Compliance with SEBI Listing Regulations and statutory labor requirements; adherence to global buyer expectations on sustainability.

Environmental Compliance

Not disclosed in absolute INR, but company evaluates ESG risks and uses rice husk fuel for sustainable operations.

Taxation Policy Impact

Effective tax rate of 25.8% in FY25 (INR 56 Cr tax on INR 216.45 Cr PBT).

⚠️ Risk Analysis

Key Uncertainties

Ramp-up efficiency of the Punjab plant (700 MT/day); impact of startup costs on short-term profitability (50% QoQ PAT drop in Q2 FY26); debt-equity ratio increase (from 0.30 to 0.60).