💰 Financial Performance

Revenue Growth by Segment

The company reported a consolidated revenue of INR 785 Cr in Q2 FY26, representing a 15.9% YoY growth compared to INR 677 Cr. For H1 FY26, revenue reached INR 1,587 Cr, up 15.4% YoY. The growth is distributed across four business divisions with EBITDA margins ranging between 8% and 12%. Standalone revenue for FY 2024-25 grew 7.37% to INR 2,843.01 Cr, while consolidated revenue grew 8.71% to INR 2,856.95 Cr, primarily driven by export performance.

Geographic Revenue Split

International markets contributed significantly to growth, with exports fueling an 8.71% increase in consolidated revenue for FY 2024-25. Specific regional percentages beyond the export growth rate were not disclosed in the available documents.

Profitability Margins

Gross margins for Q2 FY26 stood at 40.0%, a contraction of 352 bps YoY from 43.5%. However, Net Profit After Tax (PAT) for Q2 FY26 surged 316.8% YoY to INR 23 Cr, largely aided by a revision in depreciation policy which reduced depreciation expenses by 62.3% YoY to INR 10 Cr. FY 2024-25 consolidated PAT was INR 31.80 Cr, down from INR 40.82 Cr in the previous year due to higher finance and depreciation costs.

EBITDA Margin

EBITDA for Q2 FY26 increased by 32.4% YoY to INR 76 Cr. EBITDA margins expanded by 120 basis points to 9.6% (up from 8.4% in Q2 FY25), driven by improved cost control, operational efficiencies, and better realizations from an improved product mix.

Capital Expenditure

The company is executing a major expansion and modernization of its spinning unit at Sareri, Bhilwara, with a total financial outlay of INR 344 Cr. This project is funded via a term loan of INR 258 Cr and the remainder through internal accruals.

Credit Rating & Borrowing

The company secured a term loan of INR 258 Cr for its spinning expansion. Finance costs for Q2 FY26 rose 19.1% YoY to INR 29 Cr, reflecting the increased debt burden from ongoing capital projects. H1 FY26 finance costs stood at INR 60 Cr, a 24.9% increase YoY.

⚙️ Operational Drivers

Raw Materials

The documents identify the business as textile-focused (Spinning, Denim, etc.), implying raw materials like cotton and synthetic fibers, though specific percentage breakdowns of total costs per material were not disclosed.

Capacity Expansion

The spinning division is undergoing an INR 344 Cr expansion. Current capacity utilization for the latest quarter (Q2 FY26) was reported at 35%, showing a recovery from 25% in Q1 FY26 as new capacities begin to ramp up.

Raw Material Costs

Gross margins declined by 352 bps YoY in Q2 FY26 to 40.0%, suggesting higher raw material or procurement costs relative to sales prices. The company focuses on an integrated model to mitigate these fluctuations.

Manufacturing Efficiency

Capacity utilization improved to 35% in Q2 FY26 from 25% in Q1 FY26. The company aims for higher utilization to drive asset turns and improve the margin profile across its four divisions.

📈 Strategic Growth

Expected Growth Rate

12-15%

Growth Strategy

Growth will be achieved through the completion and ramp-up of the INR 344 Cr spinning unit expansion, which will increase volumes. The company also targets a 200 bps margin improvement (from 10% to 12%) over the next few quarters by optimizing product mix and leveraging operational efficiencies from modernized plants.

Products & Services

The company sells textile products including yarn (from the spinning division), denim, and other integrated textile products.

Brand Portfolio

Sangam (India) Limited; Sangam Ventures Limited (Subsidiary).

New Products/Services

The company is focusing on an 'improved product mix' to drive realizations, though specific new product names were not listed.

Market Expansion

The company is focusing on international markets, which grew by 8.71% in FY25, and is leveraging its integrated model to capture higher market share in key segments.

Strategic Alliances

The company operates a wholly-owned subsidiary, Sangam Ventures Limited, which contributed INR 29.18 Cr to revenue in H1 FY26.

🌍 External Factors

Industry Trends

The textile industry is seeing a shift toward integrated manufacturing models. Sangam is positioning itself by investing INR 344 Cr in modernization and expansion to improve efficiency and product quality.

Competitive Landscape

The company operates in a 'mixed external environment' with healthy demand in key segments, competing with other large-scale integrated textile players.

Competitive Moat

The company's moat is built on its integrated business model and large-scale manufacturing capabilities in Bhilwara. The recent modernization and expansion are intended to maintain cost leadership and operational resilience.

Macro Economic Sensitivity

The company is sensitive to global trade environments and domestic textile policy, as exports are a key growth driver.

Consumer Behavior

Demand remains healthy in key segments, supported by a shift toward higher-quality yarn and improved product mixes.

Geopolitical Risks

Trade barriers or shifts in international textile demand pose risks to the export-led growth strategy.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by SEBI (LODR) Regulations and Indian Accounting Standards (Ind AS). The company recently changed its accounting estimate for the useful life of plant and machinery to 15 years to better reflect economic benefits.

Environmental Compliance

The company has invested in Solar Power Plants, recently extending their estimated useful life to 25 years, reflecting a commitment to renewable energy.

Taxation Policy Impact

The company reported a tax expense of INR 11 Cr for Q2 FY26. It noted that the revision in depreciation policy for books has zero impact on cash flow for tax purposes, as income tax depreciation follows different rules.

Legal Contingencies

The secretarial audit for FY 2024-25 reported compliance with applicable statutory provisions and adherence to good corporate practices; no specific pending litigation values were disclosed.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the successful ramp-up of the new spinning capacity, which currently shows 35% utilization. Failure to reach optimal utilization could lead to under-absorption of the higher finance costs (up 19.1%).

Geographic Concentration Risk

The company has a significant reliance on exports for growth, making it vulnerable to international trade policy shifts.

Technology Obsolescence Risk

The company is mitigating technology risks by investing INR 344 Cr in modernization and expansion of its spinning units.

Credit & Counterparty Risk

Trade receivables increased significantly by INR 148.79 Cr in H1 FY26, suggesting a need for careful monitoring of credit exposure and collection cycles.