Sanathan Textiles Q4 FY26: Punjab ramp-up drives revenue surge, but profits feel the weight of new capacity

Sanathan Textiles ended FY26 with a clear split in performance between scale and profitability. On a consolidated basis, the company reported Q4 FY26 revenue from operations of INR 1,169.2 crore, up 59.7% year-on-year, as the Punjab integrated polyester facility moved to full scale by March 2026. EBITDA for the quarter rose to INR 94.4 crore, up 38.1% year-on-year, and margins improved sequentially to 8.1%.

But the same expansion that lifted volumes also compressed consolidated profitability. With the Punjab facility capitalised, depreciation and finance costs began flowing through the P&L. Consolidated PAT for Q4 FY26 came in at INR 21.6 crore, and FY26 PAT fell to INR 77.3 crore versus INR 160.5 crore in FY25.

Standalone numbers, anchored largely by Silvassa operations, remained steadier. Standalone FY26 revenue was INR 3,037.9 crore, EBITDA was INR 277.1 crore (9.1% margin), and PAT rose 10% year-on-year to INR 191.9 crore. Q4 FY26 standalone EBITDA margin expanded to 11.0%.

The quarter in numbers: Consolidated scale-up vs cost absorption

The investor presentation and management commentary attribute the Q4 uptick largely to higher operating leverage from improved production at Punjab, alongside sustained utilisation at Silvassa.

The quarterly bridge shows the central issue clearly. EBITDA recovered on higher volumes, but the step-up in finance cost and depreciation following capitalization continues to cap PAT.

FY26: Strong revenue growth, but a transition-year profit profile

For FY26, consolidated revenue from operations rose 27.1% to INR 3,811.2 crore. EBITDA increased 7.9% to INR 284.3 crore, but the EBITDA margin declined to 7.5% from 8.8% in FY25. Finance costs rose to INR 95.8 crore and depreciation to INR 93.1 crore, both sharply higher year-on-year.

Management framed FY26 as a transition year where commissioning moved into operational ramp-up. The expected financial payoff is positioned as a FY27 and beyond story, as utilisation rises, fixed costs get absorbed, and product mix improves.

Operational roadmap: Punjab, technical textiles, renewable power

Punjab is now the pivotal asset in Sanathan’s growth strategy. The company commissioned Phase I of the integrated polyester facility in August 2025 and stated that it fully scaled up by March 2026. Phase I capacity is 700 TPD (255,500 MTPA). Phase II is planned to add 250 TPD (91,250 MTPA), taking Punjab’s total to 950 TPD (346,750 MTPA) per the presentation.

In the concall, management acknowledged the Punjab ramp-up was about a quarter behind their earlier expectation, with ramp-up that was expected by December finishing in March. They also guided that operational alignment and product realignment should make a visible difference from Q2 FY27.

Alongside Punjab, the company is pushing higher-value segments. The technical textiles expansion at Silvassa is expected to double installed capacity from 9,000 MTPA to 18,000 MTPA. Management stated commissioning by the end of Q1 FY27 and indicated incremental revenue potential of about INR 150 crore.

Energy is another focus area, particularly at Punjab. The company has signed a long-term arrangement with Serentica Renewables to procure about 70% of Punjab’s annual energy via captive wind and solar, with facilities expected to be commissioned in phases over FY27 to FY28. The presentation mentions INR 48 crore equity infusion in phases. Management also stated a payback of about three years for the hybrid power initiative and suggested most of the benefit will be visible next year rather than immediately.

On cotton, the company reiterated a Madhya Pradesh expansion plan. In the concall, management stated it has bought about 50 acres of land in Dhar under the PM MITRA scheme for about INR 26 crore and plans to add 72,000 spindles. They expect possession in the last quarter of calendar year 2026, with production expected roughly 10 to 12 months after getting on ground. They indicated incremental revenue potential of about INR 400 to INR 450 crore from the cotton expansion.

Guidance and what investors should track in FY27

Sanathan offered explicit FY27 guidance. Management stated consolidated revenue of about INR 5,600 to INR 5,700 crore, comprising Silvassa revenue of about INR 3,100 crore and Punjab revenue of about INR 2,600 crore. On profitability, management indicated FY27 consolidated EBITDA of north of INR 500 crore, while also noting it tracks EBITDA per ton, which can make percentage margins appear lower when yarn prices rise.

Investors should watch three operating variables.

First is stabilisation at Punjab. Management expects better fixed cost absorption and margin improvement as the facility runs more like Silvassa. They cited current-quarter utilisation expectations of around 80% to 85% while product and process realignment continues.

Second is raw material volatility. Management highlighted that petrochemical inputs such as PTA and MEG remain sensitive to geopolitical developments and crude prices, and that immediate pass-through can be difficult in high-volatility periods. Cotton is also volatile, with management pointing to rising cotton prices and climate-related risks.

Third is the balance sheet and interest trajectory. Net debt as of March 2026 was stated at about INR 1,325 crore. Management described gross debt as peak and stated expected repayment of about INR 100 to INR 125 crore per year, with no plans for large new debt in the near future. They also disclosed that an ECB in euros is hedged for the full tenure.

Takeaway

FY26 is best understood as a scale-building year. The Punjab Phase I ramp-up materially lifted consolidated volumes and revenue, but the associated depreciation and finance costs compressed consolidated PAT. FY27 will be the first full year where Punjab operates at higher utilisation, and management is positioning it as the year where operating leverage should begin catching up with the expanded asset base.