VTL - Vardhman Textile

📊 NSE: VTL 🏢 Textiles - Cotton/Blended 📅 Last Updated: 12/14/2025 14:56

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue for FY25 reached INR 9,784.88 Cr, a 2.95% increase from INR 9,504.68 Cr in FY24. The textile segment contributes 82% of revenue, followed by steel at 15% and fibre at 3%. In Q2 FY26, revenue was INR 2,417 Cr, representing a 2% YoY decline from INR 2,455 Cr.

Geographic Revenue Split

Not explicitly disclosed in available documents, though the company notes susceptibility to demand slowdowns in China and benefits from rupee depreciation, indicating a significant export component.

Profitability Margins

Consolidated PAT for FY25 was INR 886.72 Cr, growing 39.27% from INR 636.70 Cr in FY24. PAT margin improved to 9.06% in FY25 from 6.70% in FY24. Q2 FY26 PAT margin stood at 7.7%, a 90 bps decline YoY.

EBITDA Margin

Consolidated EBITDA margin improved to 13.0-13.5% in FY25 from 10.6% in FY24, driven by better cotton-yarn spreads. Q2 FY26 EBITDA margin was 15.5%, down 110 bps from 16.6% in Q2 FY25.

Capital Expenditure

Total planned capex is INR 5,300-5,400 Cr over five fiscals. This includes INR 3,000 Cr for textile expansion (yarn, nylon, polyester fabric) and INR 2,300-2,350 Cr for the steel segment to add 5,00,000 MT capacity by fiscals 2028-30.

Credit Rating & Borrowing

Maintains a strong credit profile with a 'Stable' outlook. Interest coverage ratio is expected at 8.0-10.0 times for FY25, compared to 8.36 times in FY24. Total fund-based limits are INR 1,920 Cr with only 18% average utilization.

⚙️ Operational Drivers

Raw Materials

Cotton represents 50% of the total cost of yarn. Steel production requires sponge iron, manganese, and nickel.

Import Sources

The company imports significant quantities of cotton to manage costs and quality, though specific countries are not listed beyond general international demand/supply links.

Capacity Expansion

Steel capacity currently includes 2,00,000 TPA of billets and 1,80,000 TPA of rolled products, with a planned expansion of 5,00,000 MT in the steel segment. Acrylic fibre capacity is 21,000 TPA.

Raw Material Costs

Raw material management, particularly imported cotton, is a primary driver of margin resilience. Profitability is highly susceptible to cotton price volatility caused by monsoons or pest attacks.

Manufacturing Efficiency

Maintains healthy capacity utilization across textile and steel divisions. Steel segment operating margins improved from 2.4% in 2015 to 10% in 2024 through cost optimization.

📈 Strategic Growth

Expected Growth Rate

8-10%

Growth Strategy

Growth will be driven by a massive INR 5,300-5,400 Cr capex program. This includes expanding the yarn division, installing new nylon and polyester fabric lines, and a major 5,00,000 MT capacity addition in the steel segment to serve the automotive sector.

Products & Services

Cotton yarn, processed fabrics, acrylic fibre, special and alloy steel billets, and steel-rolled products.

Brand Portfolio

Vardhman, Arihant (Arihant Malerkotla unit mentioned).

New Products/Services

New product lines in nylon and polyester fabrics are being installed to diversify the textile portfolio beyond traditional cotton.

Market Expansion

Focusing on increasing market share in the special and alloy steel segment and digitizing existing textile facilities to improve global competitiveness.

Market Share & Ranking

The group holds a strong market position in the textile business but has a relatively smaller, though improving, market position in the steel business.

Strategic Alliances

Vardhman Yarns and Threads Limited (VYTL) is a joint venture, though VTXL has divested most of its stake and is now a minority shareholder.

🌍 External Factors

Industry Trends

The textile industry is shifting toward ESG compliance, with Vardhman positioning itself through high gender diversity (33.8% women workforce) and green energy investments. The steel industry is seeing steady demand from the automotive sector.

Competitive Landscape

Competes in a fragmented textile market and a specialized alloy steel market. Competitive advantage is derived from scale and integrated operations.

Competitive Moat

Moat is built on cost leadership through large-scale procurement, a diversified product portfolio (textiles, fibre, steel), and a robust financial profile with low gearing (0.19x).

Macro Economic Sensitivity

Highly sensitive to global cotton prices and domestic monsoon patterns. Rupee depreciation provides a compensatory advantage for export-related costs.

Consumer Behavior

Shift toward branded textile products over commodities is noted as a positive trend for margins.

Geopolitical Risks

Susceptible to government interventions and demand fluctuations in China, which have historically hit profitability.

⚖️ Regulatory & Governance

Industry Regulations

Complies with SEBI Listing Obligations and Disclosure Requirements (LODR) and the Companies Act 2013. No material orders from regulators impacted the going concern status.

Environmental Compliance

Textile production is noted for high water pollution impact (20% of global clean water pollution). The company is investing in green energy and ESG principles to ensure ease of raising capital.

Taxation Policy Impact

Effective tax rate for FY25 was approximately 24% (Current tax of INR 242.81 Cr on PBT of INR 1,168.24 Cr).

Legal Contingencies

No reportable material weaknesses in internal financial controls. No fraud reported by auditors. Specific values for pending court cases are not disclosed.