GHCL Textiles approves Rs 410 crore spindle expansion for FY29

GHCL Textiles Limited has approved a Rs 410 crore expansion to add 58,368 spinning spindles and 5 megawatts of rooftop solar, targeting Rs 400 crore to Rs 420 crore of annual revenue at a 14% to 15% EBITDA margin, with full-year benefits expected in FY29.

What does GHCL Textiles' Rs 410 crore expansion include?

GHCL Textiles' approved project includes 58,368 additional spinning spindles, 5 megawatts of rooftop solar and margin money for working-capital needs within the Rs 410 crore outlay. Management said on November 5, 2026 that installation and commissioning would take about a year, with project completion targeted by the end of FY28.

Management expects the new capacity to generate Rs 400 crore to Rs 420 crore of annual revenue at an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 14% to 15%. It said the spindles should come online at the beginning of FY29, making FY29 the first year to receive the full operating contribution.

The spindle project will be built on company-owned land. Management said using its existing land should shorten execution compared with acquiring a new site and avoid the different commercial terms that would apply to a greenfield land purchase.

How does the spindle expansion fit GHCL Textiles' capital plan?

GHCL Textiles had invested Rs 675 crore of the Rs 1,035 crore committed under its memorandum of understanding with the Tamil Nadu government by H1 FY27. Management said it was in discussion with the state government over whether the Rs 410 crore spindle project could be included in that commitment, while R.S. Jalan said the company had applied for the change.

The company is also progressing an 11-megawatt ground solar project, estimated by management at about Rs 32 crore, for commissioning by the end of Q3 FY27. That installation would lift GHCL Textiles' total green-energy capacity to 76 megawatts, while management expects solar savings to begin contributing from December 2026.

A knitting expansion is another nearer-term project. Management said the balance machines would be received by the end of Q3 FY27, taking the total to 40 machines, and it expects operating benefits from Q4 FY27 onward alongside product-mix and customer-segmentation work.

GHCL Textiles has also received 56 acres at PM MITRA Park for a processing facility, which management estimated could cost Rs 275 crore to Rs 300 crore. Management expects that vertical-integration project in FY30, citing consultations with the executing agency on common infrastructure, changes in specifications, retendering and revised detailed project reports as reasons for a longer timetable.

What operating performance supports GHCL Textiles' expansion?

GHCL Textiles operated at around 99% capacity utilisation in Q2 FY27, and its Meenakshi unit reached full capacity. Fabric represented 16% of revenue, compared with 11% a year earlier, and management said the contribution had reached about 16.5% during the quarter and could end FY27 in a 16.5% to 17% range.

Q2 FY27 revenue was Rs 446 crore, up 31% year on year, while EBITDA increased 141% to Rs 92 crore. The EBITDA margin rose to 20.6% from 11.2%, reflecting management's cited mix of higher fabric contribution, green-energy use, product optimisation, strategic customer selection, market conditions and some benefit from lower-cost cotton inventory.

For H1 FY27, GHCL Textiles reported revenue of Rs 856 crore, up 40%, EBITDA of Rs 162 crore, up 129%, and adjusted profit after tax of Rs 95 crore, up 223%. Reported profit after tax was Rs 75 crore, up 155%, after accounting for an exceptional inventory loss from a fire at a rented warehouse.

The company repaid about Rs 74 crore of debt during H1 FY27, leaving net debt of Rs 48 crore at September 30, 2026 and net debt-to-equity of 0.03 times. Management cited this balance-sheet position as support for the spindle, solar, knitting and future processing investments.

What could affect GHCL Textiles' margins and expansion timetable?

GHCL Textiles expects Q3 FY27 spinning spreads to be between Rs 160 per kilogram in Q1 FY27 and Rs 173 per kilogram in Q2 FY27 as cotton-cost increases pass through. Domestic cotton prices rose from around Rs 64,000 per candy to Rs 69,000 per candy during Q2 FY27 and subsequently stood around Rs 67,000 per candy, according to management.

Management said Q3 FY27 EBITDA margin should be closer to Q1 FY27's 17%, while Q4 FY27 could move closer to Q2 FY27's 20.6%. It attributed the possible Q4 improvement to seasonal demand, the knitting project and the 11-megawatt solar installation, while cautioning that raw-material volatility could cause near-term margin pressure.

The company reported an exceptional loss of about Rs 27 crore after inventory was lost in an August 2026 fire at a rented Tuticorin warehouse. Manufacturing operations were unaffected, management said the inventory was insured, and police and forensic investigations were expected to conclude by the end of Q3 FY27.

Management expects to recover a large part of the impairment by the end of FY27, subject to the policy deductible and the outcome of the investigation. The potential recovery is distinct from the operating improvement in Q2 FY27, when adjusted profit after tax was Rs 56 crore and reported profit after tax was Rs 36 crore.

Conclusion

GHCL Textiles is using a Rs 410 crore spindle and rooftop-solar project to add capacity after operating at about 99% utilisation in Q2 FY27. The planned Rs 400 crore to Rs 420 crore annual revenue from the project would be material relative to H1 FY27 revenue of Rs 856 crore, while processing, knitting and renewable-energy projects extend its vertical-integration plan.

The next disclosed milestones are the end-Q3 FY27 commissioning of the 11-megawatt ground solar project, the expected operating contribution from 40 knitting machines in Q4 FY27 and the expected conclusion of the Tuticorin warehouse-fire investigation by end-Q3 FY27. Management's discussions with Tamil Nadu on including the spindle investment under the Rs 1,035 crore memorandum and the FY30 PM MITRA processing timetable also remain relevant.