1. Opening Hook
While AI is weaving the future, Sutlej Textiles is still busy untangling yarn margins from last decade’s knots. The management called Q2 “steady,” but steady feels like code for “we survived another one.” The textile sector stayed messy—cotton high, tariffs wild, and rain literally stopped production in J&K. Yet, Sutlej’s management insists this quarter is a “foundation” for better days. Sure, if “foundation” means another quarter of explaining why EBITDA looks allergic to double digits. Keep reading—because the next few quarters might actually decide if this loom spins gold or just more excuses.
2. At a Glance
- Revenue down 6% YoY:Blame yarn mood swings, not management magic.
- Gross Margin up 350 bps:Because math can still look good when profit doesn’t.
- EBITDA ₹17.5 Cr (2.7% margin):That’s not margin; that’s marginless optimism.
- Loss ₹18 Cr:Fabric was fine; finances got torn.
- Capacity utilization 86%:Technically “optimal,” practically “not sold enough yarn.”
- Debt-equity 0.97x:Just shy of being called “leveraged discipline.”
3. Management’s Key Commentary
“Spinning capacity utilization stood at 86% against 91% last year.”(Translation: We’re running fine—except where rain, tariffs, and market logic disagreed.)
“Gross margin improved by 350 bps YoY.”(Translation: When revenue shrinks, percentages still look prettier. 😏)
“Home textiles segment showed a strong turnaround.”(Translation: The only part of the house that isn’t leaking cash right now.)
“We’re focused on cost optimization and sustainable products.”(Translation: Someone discovered the buzzword generator works.)
“Our PET recycling project has started seeing traction.”(Translation: After five years and ₹200 crore, the machine finally spins… slowly.)
“Competitors moved up the value chain; we’re starting that journey now.”(Translation: We missed the bus but booked a sleeper ticket for next one.)
“Power and fuel costs are 12.2%; renewable energy will save 2%.”(Translation: We’ll fix margins with sunlight—literally.) 🌞
“We’ll replace 33% of our portfolio with value-added yarns.”(Translation: Finally trying to make stuff customers actually want.)
4. Numbers Decoded
| Metric | Q2FY26 | Q2FY25 | YoY Change | Comment |
|---|---|---|---|---|
| Revenue (₹ Cr) | 642 | 682 | -6% | Sales dyed a bit dull |
| EBITDA (₹ Cr) | 17.5 | 25.4 | -31% | Costs refused to blend |
| EBITDA Margin (%) | 2.7 | 3.7 | -100 bps | Threadbare performance |
| PAT (₹ Cr) | -18 | -6 | NA | Losses stitched deeper |
| Capacity Utilization (%) | 86 | 91 | -500 bps | Yarn fatigue sets in |
| Debt-Equity (x) | 0.97 | 0.96 | Flat | Not much untwisted here |
Comment:Numbers suggest the company’s spinning faster than it’s earning. The only thing growing faster than fibers are the footnotes explaining why.
5. Analyst Questions
Q:Why are margins so low for years?A:We’re now “upskilling” our yarn. (Translation: We just noticed margins matter.)
Q:PET project ROI?A:It’s improving. (Translation: It’s not.)
Q:86% capacity—why not 90+%?A:We shut 15,000 spindles “deliberately.” (Translation: Demand did that for us.)
Q:Cost optimization?A:Rationalizing manpower, automating, solar power. (Translation: Everyone’s working harder to save smaller margins.)
Q:Raw material cost?A:55% of revenue. Ideal is 50–53%. (Translation: Still spinning too much cost into every kg.)
6. Guidance & Outlook
Management “expects steady progress,” which in Sutlej language means “we hope the losses stop spinning.” Demand for man-made fibers and home textiles looks strong—provided the U.S. tariff tantrum calms down. Domestic polyester-viscose should remain stable, but export volatility will keep
