SHREEKARNI - Shree Karni

📊 NSE: SHREEKARNI 🏢 Textiles - Products 📅 Last Updated: 12/14/2025 13:16

💰 Financial Performance

Revenue Growth by Segment

The company operates in a single segment: Manufacturing of Technical Textile, knitted and coated fabrics. For H1 FY26, standalone revenue from operations reached INR 107.06 Cr. The revenue mix is dominated by the luggage industry at 55-60%, followed by leather goods at 10%, specialized garments at 10%, and the chair/upholstery industry at 5%.

Geographic Revenue Split

Not disclosed in available documents; however, the company supplies inner linings to major global brands in the leather goods sector (10% of revenue).

Profitability Margins

The company is targeting gross margins greater than 30% as it shifts toward high-value products. For H1 FY26, standalone Profit Before Tax (PBT) was INR 8.28 Cr, representing a margin of 7.7% on revenue. Consolidated PBT for the same period was higher at INR 10.30 Cr.

EBITDA Margin

Management noted a 7% to 8% EBITDA margin difference between H1 and H2, suggesting seasonality or ramp-up effects. Core profitability is being driven by a shift toward technical textiles which carry higher entry barriers.

Capital Expenditure

Major capex is reported as completed as of November 2025. Future focus is on increasing the percentage of high-margin business rather than adding significant new physical capacity in the immediate term.

Credit Rating & Borrowing

Finance costs for H1 FY26 stood at INR 1.41 Cr (standalone). Specific credit ratings and interest rate percentages were not disclosed in the provided documents.

⚙️ Operational Drivers

Raw Materials

Specific raw material names like polyester or specialized polymers are not explicitly listed, but 'Cost of materials consumed' represents the largest expense at INR 81.48 Cr, which is 76.1% of standalone revenue.

Capacity Expansion

Current capex is completed. The company is now focused on utilizing this capacity to enter high-value segments like defense and specialized technical textiles, aiming for these to constitute 20-25% of revenue within 3 years.

Raw Material Costs

Raw material costs totaled INR 81.48 Cr in H1 FY26 (76.1% of revenue). The company manages these costs through contract pricing, though management clarified they do not have a standard 30% margin guarantee across all contracts yet.

Manufacturing Efficiency

The company is transitioning from an LLP structure to a more aggressive corporate management style to improve participation and growth metrics.

📈 Strategic Growth

Expected Growth Rate

25%

Growth Strategy

Growth will be achieved by entering high-entry-barrier segments such as defense textiles and specialized technical fabrics. The company aims for these high-margin products to represent 20-25% of total business within three years. Additionally, securing 'approved vendor' status with global giants like Walmart provides a scalable retail channel.

Products & Services

Technical textiles, knitted fabrics, and coated fabrics used specifically for luggage, leather goods inner linings, specialized garments, upholstery, and foot mats.

Brand Portfolio

Shree Karni Fabcom.

New Products/Services

Entry into defense-grade textiles and specialized fabrics for global retail (Walmart), expected to contribute 20-25% of revenue in the medium term.

Market Expansion

Targeting the defense sector and global retail supply chains. Currently supplying to Tier 2 defense contractors while pursuing direct nominations.

Market Share & Ranking

Not disclosed, but management identifies only 2-3 competitors in their specialized high-value target segments.

Strategic Alliances

Approved vendor status with Walmart; currently in discussions with other global retail entities.

🌍 External Factors

Industry Trends

The technical textile industry is shifting toward specialized, high-performance fabrics for defense and specialized apparel. Shree Karni is positioning itself to move away from low-margin commodity textiles toward these high-barrier niches.

Competitive Landscape

Key competitors include specialized firms like Kusumgar (which has ~30% PAT margins). The landscape is characterized by high technical requirements for defense and global retail approval.

Competitive Moat

The moat is built on high entry barriers in specialized technical textiles. Management notes that in certain categories, there are fewer than three active players, providing sustainable pricing power once certifications are obtained.

Macro Economic Sensitivity

Highly sensitive to consumer spending on travel and luxury leather goods, which drives demand for their primary luggage and lining products.

Consumer Behavior

Increasing demand for durable, high-quality technical fabrics in the luggage and specialized garment sectors.

Geopolitical Risks

Potential trade barriers could affect the supply of linings to global brands and the expansion into international retail chains like Walmart.

⚖️ Regulatory & Governance

Industry Regulations

The company must comply with stringent defense certifications and nominations to supply directly to the military sector. It also adheres to Accounting Standards (AS) prescribed under Section 133 of the Companies Act, 2013.

Taxation Policy Impact

The company provided for current tax and deferred tax in H1 FY26, with standalone tax expenses totaling INR 2.30 Cr.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the timeline for obtaining direct defense certifications, which are critical for achieving the targeted 20-25% revenue shift to high-margin products.