At a Glance
Sarla Performance Fibers (SPFL) spun its Q1 FY26 numbers, and the results look like a partially frayed spool – still holding together, but barely. Revenue stayed flat at ₹102 Cr, PAT jumped 34% YoY to ₹22 Cr, but operating margin collapsed to 11% (vs. 22% last year). Stock rallied 5% to ₹120 – because markets love any company that can show profit without breaking a sweat.
Introduction
SPFL is a niche yarn manufacturer with 250+ polyester and nylon product variants. The company thrives on exports, serving textile, apparel, and industrial applications. But behind the glossy threads, there’s a patchwork of low sales growth, rising dependency on other income (₹23 Cr this quarter), and declining operating efficiency. Is this a growth story or just a dividend-yield play? Let’s untangle.
Business Model (WTF Do They Even Do?)
SPFL makes specialized yarns:
- Polyester & Nylon Textured Yarns
- High Tenacity Threads (for heavy-duty industrial use)
- Covered Yarns & Sewing Threads
It’s an export-heavy, value-added yarn player, with certifications like ISO 9001:2015 and Oeko Tex. Think of it as the “boutique tailor” in a world dominated by mass textile mills.
Financials Overview
Q1 FY26 Snapshot
- Revenue: ₹102 Cr (-7.6% YoY)
- EBITDA: ₹11 Cr (margin 11%)
- PAT: ₹22 Cr (+34% YoY)
- EPS: ₹2.68
FY25 Recap
- Revenue: ₹425 Cr
- PAT: ₹62 Cr
- ROE: 13.9% | ROCE: 14.9%
Comment: PAT is rising due to other income and cost control, not strong sales.
Valuation
- P/E Method
- EPS (TTM): ₹8.15
- Industry P/E: ~15
- Fair Value ≈ ₹8.15 × 15 = ₹122
- EV/EBITDA
- EV ≈ ₹1,000 Cr
- EBITDA (TTM): ₹81 Cr
- EV/EBITDA ≈ 12x → ₹100–120
- DCF (Optimistic)
- Limited growth → ₹100–130
🎯 Fair Value Range: ₹100 – ₹130
Stock at ₹120 is fairly priced.
What’s Cooking – News, Triggers, Drama
- Q1 PAT surge due to other income boost.
- Exports steady but no major volume growth.
- Dividend: Healthy yield 2.5%.
- Risk: Flat sales trajectory, margin compression.
Balance Sheet
| (₹ Cr) | Mar 2025 |
|---|---|
| Assets | 753 |
| Liabilities | 189 |
| Net Worth | 564 |
| Borrowings | 181 |
Remarks: Low debt, strong reserves, but inventory buildup lingers.
Cash Flow – Sab Number Game Hai
| (₹ Cr) | Mar 2023 | Mar 2024 | Mar 2025 |
|---|---|---|---|
| Operating | 102 | 31 | 62 |
| Investing | -56 | -56 | -90 |
| Financing | -46 | 24 | 27 |
Remarks: Cash flows stable but capex-heavy.
Ratios – Sexy or Stressy?
| Metric | Value |
|---|---|
| ROE | 13.9% |
| ROCE | 14.9% |
| P/E | 14.7x |
| PAT Margin | 15% |
| D/E | 0.32 |
Remarks: Ratios decent but not exciting.
P&L Breakdown – Show Me the Money
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 387 | 383 | 425 |
| EBITDA | 57 | 59 | 92 |
| PAT | 21 | 33 | 62 |
Remarks: PAT jump is driven by non-operational income.
Peer Comparison
| Company | Revenue (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| KPR Mill | 6,388 | 797 | 50 |
| Vardhman Textile | 9,862 | 852 | 15 |
| Garware Tech | 1,540 | 232 | 39 |
| Sarla Performance | 419 | 68 | 15 |
Remarks: Valuation is in line, but growth lags peers.
Miscellaneous – Shareholding, Promoters
- Promoters: 56.9% (stable)
- FIIs: 0.8%
- DIIs: 0.9%
- Public: 41.4%
Sarcastic Take: Promoters hold steady – maybe they’re waiting for the yarn to finally turn into gold.
EduInvesting Verdict™
Sarla Performance Fibers has its finances neatly stitched, but growth is as slow as a handloom. The company’s reliance on other income and limited revenue expansion keep it from being a breakout stock. Good dividend, clean balance sheet, but no aggressive growth catalysts.
SWOT Quickie:
- Strengths: Export niche, healthy margins, low debt.
- Weaknesses: Slow top-line growth, other income dependency.
- Opportunities: New product lines, technical textiles demand.
- Threats: Global textile slowdown, raw material volatility.
Final Word: Solid fundamentals, but investors expecting multi-bagger returns may end up spinning in circles.
Written by EduInvesting Team | 30 July 2025
SEO Tags: Sarla Performance Fibers, Q1 FY26 Results, Textile Stocks, Polyester Nylon Yarns
