/** Sanathan Textiles Q1 FY27 blogpost */

Sanathan Textiles Q1 FY27: Higher prices lift revenue, Punjab commissioning reshapes consolidated profits

Sanathan Textiles reported a quarter where price moves mattered as much as volumes. Q1 FY27 unfolded amid sharp volatility in key petrochemical inputs such as PTA and MEG, driven by geopolitical tensions in West Asia. Cotton prices also climbed for separate reasons, prompting the government to temporarily waive the 11% import duty on raw cotton from June 1, 2026. In that backdrop, downstream buyers delayed purchases in April and May, waiting for stability, before conditions started normalising toward June.

Even with that uncertainty, the company delivered steady operating performance, supported by disciplined procurement and diversification across natural and man-made fibres. On a standalone basis, revenue from operations rose to INR 813.1 crore, EBITDA increased to INR 94.9 crore, and PAT came in at INR 64.9 crore. Consolidated revenue expanded to INR 1,334.7 crore with Punjab’s ramp up, while consolidated EBITDA reached INR 108.0 crore. However, consolidated PAT remained modest at INR 23.8 crore as Punjab moved from construction to operations, bringing depreciation and finance costs into the profit and loss account.

What changed in Q1: steady operations in a volatile input environment

Management described Q1 as a quarter driven less by demand and more by price. Polyester feedstock markets were disrupted and cotton rallied in parallel, creating a double input shock. As buyers deferred purchases, industry utilisation moderated through the first two months of the quarter.

Sanathan highlighted operational continuity as a key differentiator. Management said both Silvassa and Punjab ran without interruption despite supply chain disruption, supported by supplier relationships and disciplined procurement. The company also said that price pass-through happened with a slight delay because customers waited for stability, but that the industry typically adjusts over time and this began to play out toward the end of the quarter.

Financial performance: strong standalone margins, consolidated PAT constrained by new charges

Standalone performance improved sequentially and year on year. Standalone EBITDA margin expanded to 11.7% in Q1 FY27 from 11.0% in Q4 FY26 and 9.3% in Q1 FY26. PAT margin improved to 8.0%.

On a consolidated basis, revenue grew 14.2% quarter on quarter to INR 1,334.7 crore, helped by higher selling prices and Punjab’s ramp up. Consolidated EBITDA margin remained stable at 8.1% sequentially. The more important story was below EBITDA. Management explained that in the June quarter last year, Punjab was still under construction, so interest was capitalised and depreciation was not charged to the profit and loss account. With commissioning complete, depreciation rose to INR 34.7 crore from INR 11.7 crore and finance costs increased to INR 38.6 crore from INR 4.6 crore, compressing consolidated PAT.

Operations and capacity: Punjab stabilisation and the next leg of expansion

Punjab Phase I was fully operationalised and stabilised during the quarter. Management said polymerisation capacity is currently at 700 tonnes per day and Q1 utilisation was around 80%. The company is now focused on improving operational efficiencies, pushing utilisation higher, and increasing the share of value-added products.

In the earnings call, management provided utilisation targets: 85% to 90% in Q2 FY27 and 95% to 96% in the quarter after that for Phase I. Phase II plans remain intact, with management stating that the second phase should be fully commissioned by the first quarter of next year, followed by a phased ramp up that could take about one and a half to two quarters.

The scale up is already visible in consolidated volumes. Management said consolidated sales were about 1 lakh metric tonnes in Q1, with approximately 54,000 tonnes from Silvassa and around 46,000 tonnes from Punjab.

Technical textiles and cotton: capacity doubling at Silvassa and a new greenfield plan

Technical textiles is being positioned as a higher value segment. The company stated that installation of plant and machinery is complete to double technical textiles capacity at Silvassa from 9,000 MTPA to 18,000 MTPA, with commercial production expected shortly. In the Q&A, management said Q1 technical textile revenue was about INR 33 crore and utilisation was around 94% on the existing capacity. Management also indicated that out of the 9,000 TPA addition, it expects about 7,500 tonnes of incremental production this year over last year’s capacity.

On the cotton side, Sanathan reiterated its greenfield cotton spinning project at Dhar, Madhya Pradesh. Management provided key numbers: capex of about INR 400 crore for 72,500 spindles, expected asset turn of 0.8 to 0.85, and incremental revenue expectation of about INR 350 to 375 crore. The documents did not specify commissioning timelines, but the linkage between capex and an asset turn target offers a clearer framework than a purely qualitative expansion narrative.

Input risk management and energy costs: procurement discipline and renewable power

The quarter reinforced the sensitivity of yarn economics to feedstock and cotton prices. Management highlighted volatility in PTA, MEG, fuel, and cotton. It also discussed India’s continued import dependence for PTA, stating that the country still imports about 2 million tonnes per annum, although the company expects domestic supply to improve as additional facilities come online.

Sanathan also pointed to a structural lever in operating costs through renewable energy. Management said it is progressing on a captive arrangement of 32 MW of hybrid wind-solar power, expected to be commissioned in phases and to deliver meaningful reductions in power costs as it comes online.

Takeaways for investors: ramp up, margins, and the accounting shift post commissioning

Q1 FY27 showed improving standalone profitability and a sharp step-up in consolidated scale, with Punjab now contributing meaningfully to volumes and revenue. The biggest interpretive point is that consolidated PAT is now being weighed down by depreciation and finance costs that were previously capitalised while Punjab was under construction. That is an accounting and capital structure transition rather than a sudden operational deterioration.

For the rest of FY27, management’s priorities are clear: higher utilisation and efficiency at Punjab, commissioning and commercialisation of the expanded technical textiles capacity, and maintaining disciplined procurement in a volatile input environment. The company also maintained consolidated EBITDA guidance of about INR 520 crore to INR 540 crore for FY27, making execution and spread stability the key variables to track in the coming quarters.