💰 Financial Performance

Revenue Growth by Segment

Total standalone income for H1 FY26 was INR 1,255 Cr, representing a decline of 7.4% YoY from INR 1,354 Cr. Q2 FY26 income stood at INR 645 Cr, which is a 5.7% increase QoQ but a 6.5% decline YoY. Segment-specific growth percentages were not disclosed in the provided documents.

Geographic Revenue Split

The company has a significant export presence, with foreign exchange earnings of INR 891.45 Cr in FY 2024-25, though this was a 12.18% decrease from INR 1,015.11 Cr in FY 2023-24. Specific regional percentage splits were not disclosed.

Profitability Margins

Profitability is currently under pressure; the standalone PAT margin for H1 FY26 was -4.1%, worsening by 192 bps from -2.2% in H1 FY25. Q2 FY26 PAT margin was -3.5%, an improvement of 139 bps QoQ but a decline of 67 bps YoY.

EBITDA Margin

Standalone EBITDA margin for H1 FY26 was 1.3%, a significant contraction of 178 bps from 3.0% in H1 FY25. Q2 FY26 EBITDA margin showed a recovery to 2.3%, up 205 bps QoQ, driven by stabilization despite a 5 bps YoY dip.

Capital Expenditure

The company is implementing a PET project aimed at increasing margins through recycled materials; however, specific historical or planned expenditure values in INR Cr were not disclosed in the available documents.

Credit Rating & Borrowing

Interest costs for H1 FY26 were INR 33 Cr, an increase of 4.8% YoY from INR 32 Cr, reflecting the impact of a high interest rate environment. Specific credit ratings and percentage borrowing costs were not disclosed.

⚙️ Operational Drivers

Raw Materials

Key raw materials include textile fibers for the yarn business and PET (polyethylene terephthalate) for the recycled PET project. Cost of Goods Sold (COGS) for H1 FY26 was INR 700 Cr, representing 55.7% of total income.

Capacity Expansion

The company is focusing on a PET project to enhance operational efficiency and margins, but current installed capacity in MT and specific expansion timelines were not disclosed.

Raw Material Costs

Raw material costs (COGS) for H1 FY26 were INR 700 Cr, down 9.0% YoY from INR 768 Cr, tracking the decline in total income. COGS as a percentage of revenue stood at 55.7% for H1 FY26.

Manufacturing Efficiency

The company is focusing on operational efficiency and the PET project to improve low EBITDA margins in the yarn business, which have historically lagged behind industry peers.

📈 Strategic Growth

Expected Growth Rate

Not disclosed

Growth Strategy

The company aims to achieve growth by focusing on value-added offerings, deepening customer engagement across diverse geographies, and improving operational efficiency. Management expects future performance to build on the stable foundation of Q2 FY26, provided market volatility subsides.

Products & Services

The company primarily sells various types of yarn and value-added textile products.

New Products/Services

The company is focusing on value-added offerings and recycled products via the PET project to improve realizations, though specific revenue contribution percentages were not disclosed.

Market Expansion

The company is actively taking steps to develop new export markets and concentrate on products with higher per-unit realization to counter domestic slowdowns.

🌍 External Factors

Industry Trends

The textile industry is currently facing a challenging environment characterized by volatile raw material prices and shifting global demand. Sutlej is positioning itself by shifting toward value-added products and sustainable manufacturing (PET project).

Competitive Landscape

The company operates in a competitive yarn market where its EBITDA margins have historically been lower than industry peers, prompting a strategic shift toward operational efficiency.

Competitive Moat

The company's moat is built on a legacy of ethical governance, a 'trusteeship' philosophy, and a diverse board. Sustainability is being reinforced through the adoption of best disclosure practices and a focus on long-term stakeholder value.

Macro Economic Sensitivity

The business is highly sensitive to global inflation and interest rates; high rates in major economies have slowed growth and impacted the company's financial performance in FY 2024-25.

Geopolitical Risks

Geopolitical tensions including the Russia-Ukraine conflict, Israel-Hamas crisis, and Red Sea disruptions are cited as major external risks impacting global demand and supply chains.

⚖️ Regulatory & Governance

Industry Regulations

The company complies with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and follows a Code of Business Conduct and Code for Prevention of Insider Trading.

Taxation Policy Impact

The company recorded a standalone tax credit of INR 21 Cr in H1 FY26, compared to a credit of INR 16 Cr in H1 FY25, due to the reported losses.

⚠️ Risk Analysis

Key Uncertainties

Key uncertainties include the duration of geopolitical conflicts and the volatility of the global textile market, which management cited as reasons for not providing specific growth guidance.

Geographic Concentration Risk

Exports accounted for a significant portion of revenue (INR 891.45 Cr in FY25), making the company vulnerable to international trade barriers and global economic slowdowns.

Technology Obsolescence Risk

The company is addressing technology and efficiency risks through the implementation of the PET project and continuous adoption of best governance practices.