Sportking India Limited: Spinning a Resilient Growth Narrative in Q2 & H1 FY26

Sportking India Limited, a prominent player in the Indian textile sector, has navigated a challenging global and domestic landscape to deliver a resilient performance in the second quarter and first half of the financial year 2026. Despite headwinds such as muted domestic demand and persistent U.S. tariffs, the company demonstrated strategic agility, focusing on margin expansion, operational efficiency, and long-term capacity building. The management's commentary highlighted a proactive approach to market realities, underpinned by significant investments in greenfield expansion, renewable energy, and strategic mergers.

For Q2 FY26, Sportking reported a revenue from operations of INR 627.4 Crores. The company's gross profit stood at INR 151.3 Crores, marking a 4.8% year-on-year increase. Notably, the gross profit margin expanded by a healthy 197 basis points to 24.1%, a testament to effective cost management and stable raw material prices. EBITDA for the quarter was INR 65.4 Crores, with an EBITDA margin of 10.4%, reflecting an 82 basis points expansion year-on-year. Profit After Tax (PAT) for Q2 FY26 was INR 28.3 Crores. For the first half of FY26, the company achieved a revenue of INR 1,213.2 Crores, with PAT increasing by 5.1% year-on-year to INR 62.4 Crores, and a PAT margin of 5.1%.

Strategic Initiatives and Operational Excellence

Sportking's performance in H1 FY26 was marked by a series of strategic initiatives aimed at bolstering its competitive edge and ensuring sustainable growth. The company announced a significant greenfield capacity addition in Odisha, a move that will see the setup of 1.50 lakh spindles in its first phase. This represents an approximate 40% increase over the existing spindle count of 3.79 lakhs. The total outlay for this project is estimated at INR 1000 Crores, to be funded through a mix of term loans and internal accruals. Management anticipates this expansion will enhance the Odisha unit's competitiveness by 4% to 5% at the EBITDA level and enable better service to the eastern Indian market, diversifying its presence. The project is slated for completion in 12 to 15 months, with commissioning expected by September-October 2026.

In a strong commitment to sustainability and cost efficiency, Sportking is investing in a 40.3 MW solar power plant through a Special Purpose Vehicle (SPV), Evincea Renewable Seven Pvt. Ltd. The company's 26% equity stake in this SPV, amounting to INR 14.10 Crores, is expected to yield 10-12% savings in power costs for its Bathinda and Ludhiana units over a 25-year period. Power supply from this plant is targeted to commence from March 1st onwards. This initiative not only aligns with environmental goals but also provides a significant operational advantage by reducing energy expenses.

Furthermore, Sportking is pursuing strategic mergers with M/s Marvel Dyers and Processor Pvt Ltd and M/s Sobhagia Sales Pvt Ltd. These mergers, which have received in-principle approval, are designed for forward integration into dyeing, printing, finishing of fabrics, and manufacturing and retailing of readymade garments. This amalgamation is expected to add value by expanding Sportking's operations higher up the textile product chain, enhancing its overall product portfolio and profitability. The formalization of these mergers is anticipated by the end of the current financial year.

Navigating Market Dynamics and Future Outlook

The textile industry faced a tough quarter, with muted domestic demand attributed to higher U.S. tariffs and global macro uncertainties. Despite these challenges, Sportking's export demand remained buoyant, contributing 53% to Q2 FY26 revenue, up from 46% in Q2 FY25. The company's capacity utilization stood at an impressive 96%, among the highest in the industry, showcasing robust operational efficiency. Management highlighted positive developments such as the government's removal of import duty on cotton and the lowering of GST on garments, which are expected to stimulate demand in the coming quarters.

Sportking has also demonstrated disciplined capital allocation, reducing its gross debt-to-equity ratio to 0.48 from 0.58 as of March 2025. The company plans to repay approximately INR 140 Crores of long-term debt over the next two years, while funding its Odisha capex with INR 300-350 Crores from internal accruals, balancing growth with financial prudence. The management anticipates similar or slightly better margins in the next six months, with H2 typically being a stronger period for the textile industry due to spring season orders, lower tariffs, and better labor availability.

Conclusion: A Foundation for Sustained Value Creation

Sportking India Limited's Q2 and H1 FY26 performance reflects a company strategically positioning itself for long-term growth amidst a dynamic market. Through disciplined margin management, significant capacity expansion, and a clear focus on sustainable and integrated operations, Sportking is building a robust foundation. The company's proactive approach to market challenges, coupled with supportive government policies and ongoing industry consolidation, paints a picture of a business poised for sustained value creation for its stakeholders in the evolving global textile landscape.