/** blogpostTitle: GHCL Textiles Q4 FY26: Margins Improve as Fabric Mix Rises */

GHCL Textiles Q4 FY26: Margins Improve as Fabric Mix Rises

GHCL Textiles closed FY26 with a strong fourth quarter, supported by better spreads, steady utilization, and a gradual shift towards fabric. In Q4 FY26, revenue rose to INR375 crores, up 31% year on year. EBITDA increased to INR52 crores, up 61%, and PAT nearly doubled to INR28 crores. EBITDA margin expanded to about 13.9% and PAT margin to about 7.4%.

For the full year FY26, revenue reached INR1,335 crores, up 14%. EBITDA came in at INR156 crores with a margin of about 11.7%, and PAT was INR70 crores with a margin of about 5.3%. The company also disclosed a one-time gain of INR8.59 crores in Q4 FY26 from the sale of non-strategic land, which supported reported profitability.

FY26 performance: volumes up, fabric share rising

Operationally, utilization remained high. The company reported capacity utilization of 99% in FY26, consistent with prior years. Yarn sales volume increased to 40.1 thousand tonnes in FY26 from 36.2 thousand tonnes in FY25. Fabric volumes rose sharply from a low base, driven by the scaling up of knitted fabric and growth in griege fabric.

The revenue mix also showed a clear direction of travel. Yarn remains the core product, but fabric is becoming more meaningful. In FY26, yarn revenue was INR1,179 crores while fabric revenue was INR157 crores. Fabric contributed 11.7% of total revenue, up from 8.3% in FY25. In Q4 FY26, fabric contribution was even higher at 13.9%.

Geographically, the company remained predominantly domestic. In FY26, domestic revenue was INR1,200 crores and exports were INR135 crores, with exports contributing 10.1% of revenue. In Q4 FY26, exports were 13.7% of revenue, indicating improved quarterly traction even though the full-year export share was lower than FY25.

What changed in Q4: spreads improved and demand stabilised

Management attributed Q4 strength to improved market conditions in both domestic and export-linked demand. On the earnings call, management stated that spreads improved meaningfully from Q3 to Q4 and that the trend continued into Q1 FY27. They quantified the spread increase, noting that Q3 spread was around INR123 per kilo and Q4 spread moved to around INR148 per kilo.

The company highlighted structural tailwinds from trade policy developments such as easing of US tariffs on Indian textiles and the conclusion of the India-EU FTA, alongside other FTAs under negotiation. Management said these developments improved market sentiment and helped unlock inquiries and orders.

At the same time, they remained cautious about external risks. The company highlighted disruption to trade routes and higher logistics costs amid geopolitical tensions. Management also pointed to rising fuel prices affecting the economics of synthetic products and fabric manufacturing.

Cotton prices were another key variable. Management said domestic cotton prices rose from around INR55,000 per candy in December 2025 to around INR62,000 per candy by the time of the call. The company responded by increasing cotton procurement ahead of anticipated price rises, which contributed to higher working capital.

Capital allocation: low leverage, higher working capital, and capex continues

GHCL Textiles ended FY26 with net debt of INR118 crores and a net debt to equity ratio of 0.1x, reflecting a conservative balance sheet. The investor presentation outlined FY26 cash inflows generated of INR128 crores, growth capex of INR52 crores, and a working capital change of INR129 crores. The company also reported closing cash and cash equivalents of INR16 crores.

On the call, management provided additional detail on cotton inventory, stating that the company had approximately 120 days of cotton inventory as on March 31. They indicated that purchases would taper as this inventory is consumed, though some replenishment would continue depending on the next season’s outlook.

Dividend for FY26 was INR0.50 per share. When asked about capital return, management stated that they are not considering a buyback at this stage and prefer to deploy cash into the remaining planned capex, particularly towards fabric and processing.

Strategy and growth roadmap: knitting, solar, and PM MITRA Park

The company’s strategy is anchored around vertical integration. The investor deck laid out priorities including expanding into knitted, weaving, and dyed fabrics, growing specialised yarns, and building green energy capacity. Management reiterated the long-term EBITDA margin aspiration of 15% to 18%.

On execution, the company highlighted several milestones:

• 25,000 spindles commissioned in June 2025 and stabilised at optimal utilization
• Phase 1 of 15 knitting machines commissioned in Q4 FY26
• 65 MW of renewable energy in place, meeting around 72% of energy requirements

For FY27, management guided capex of INR100 to INR120 crores. They stated that the 10 MW on-ground solar project is expected to be commissioned around July to August, with a full-year benefit of about INR6.5 to INR7 crores depending on generation. The 3 MW rooftop solar commissioned during FY26 is expected to yield about INR2 crores benefit on a full-year basis.

Management also announced approval for land allocation at PM MITRA Park in Virudhunagar, Tamil Nadu, and described it as strategic for the next phase of scale and integration. They referenced a 50-acre land parcel and said further details will be shared as plans develop.

In terms of revenue trajectory, management reiterated an anchor of around INR2,000 crores over the medium term. On the call, they indicated an internal aim of achieving the INR2,000 crores revenue objective and the 15% to 18% EBITDA margin range by FY29 to FY30.

Takeaways

FY26 reinforced GHCL Textiles’ ability to operate at high utilization and capture margin improvement when spreads turn favourable. The company is also showing early progress on diversifying towards fabric, with fabric contribution rising to 11.7% of FY26 revenue and 13.9% in Q4.

The next phase depends on execution of the vertical integration roadmap. The commissioning of additional knitting machines, renewable energy expansion, and development at PM MITRA Park are central to management’s stated goals for revenue scale-up and margin expansion. At the same time, working capital swings from cotton procurement and macro risks such as geopolitics and energy prices remain key variables that investors will track closely.