Sportking India FY26: Margins Improve, Capacity Expansion Takes Center Stage

Sportking India closed FY26 with a steady revenue line but a clear improvement in profitability. For Q4 FY26, revenue from operations stood at Rs 636.8 crore, EBITDA at Rs 85.4 crore and PAT at Rs 32.8 crore. EBITDA margin improved to 13.4 percent, while PAT margin was 5.1 percent. For the full year, revenue from operations was Rs 2,495.9 crore, EBITDA was Rs 286.0 crore and PAT was Rs 119.7 crore.

The quarter’s message was consistent across the investor presentation and the earnings call. Volumes are largely capped because the company is already operating at best-in-class utilisation, but higher spreads and better realisations are supporting margin expansion. Management also highlighted that demand has improved across geographies after a prolonged weak phase, with cotton yarn spreads at multi-year highs.

FY26 performance: Stable revenue, stronger operating profit

FY26 revenue declined marginally compared to FY25, but profitability improved. Gross profit for FY26 was Rs 629.3 crore and EBITDA rose to Rs 286.0 crore, translating to an 11.5 percent margin. In Q4, EBITDA expanded sharply versus Q3, reflecting the benefit of better spreads during the quarter.

The geographic revenue mix remained balanced. The presentation indicates FY26 exports were Rs 1,295 crore, domestic revenue Rs 1,143 crore and others Rs 58 crore. This keeps exports at about 52 percent of revenue, with domestic at 46 percent.

A notable factor in Q4 was the swing in other income, which was negative in Q4 FY26. Management also acknowledged a forex-related mark-to-market impact at quarter-end because the dollar closed at elevated levels on March 31.

Operations: High utilisation leaves little room for volume growth

Operationally, the company continues to run at high efficiency. The presentation shows capacity utilisation at 95 to 96 percent across FY26 quarters. Yarn production for Q4 FY26 was 20.5 thousand MT and yarn sales were 21.1 thousand MT.

This high utilisation is a double-edged sword. It validates operational strength, but it also limits near-term volume growth until new capacity comes online. Management explicitly said that in the next two to three quarters, volume growth is unlikely because the company is already operating at optimum levels.

In the call, management suggested topline growth in the near term will be driven primarily by higher yarn prices rather than higher volumes. They indicated that yarn prices moved up materially, and that because the company maintains a longer sales book, the benefit comes with a lag. Management indicated topline could rise by 7 to 10 percent over the next three quarters largely due to higher pricing.

Strategy: A large greenfield capex and early steps into forward integration

Odisha greenfield expansion: 1.5 lakh spindles

The most important strategic update is the greenfield project in Odisha. The first phase involves setting up 1.50 lakh spindles, which the company described as a roughly 40 percent increase over the existing spindle base of 3.79 lakh. Total outlay is estimated at around Rs 1,000 crore, funded through a mix of term loans and internal accruals.

The project is positioned as both a growth enabler and a geographic diversification move. Management believes the Odisha location will help serve the eastern Indian market more effectively. The company also pointed to existing high utilisation as the key reason for capacity addition.

Timeline clarity was stronger in the earnings call. Management said land acquisition is complete, machinery advances have been released and construction activity is progressing. They expect commercial operations to commence in Q3 FY27. They also provided a ramp-up view, suggesting that near-full utilisation of 97 to 98 percent could be achieved around six months after commissioning, with production building up in phases.

Proposed acquisitions: Marvel Dyers and Sobhagia Sales

Sportking’s board has also approved steps toward forward integration. The company announced the acquisition of a majority stake in Marvel Dyers and Processors Private Limited and acquisition of manufacturing facilities of Sobhagia Sales Private Limited on a slump sale basis, along with land and building on lease.

Marvel Dyers is engaged in dyeing, printing and finishing of fabrics. Sobhagia Sales is engaged in manufacturing and retailing of readymade garments. The company positioned the transaction as a foundation for forward integration across yarn, fabrics, and garments, with the goal of higher value addition.

Management, however, tempered expectations on near-term impact. They stated that these businesses are small relative to Sportking’s scale. In the call, management indicated Sportking could be at around Rs 2,700 to Rs 2,800 crore revenue in the coming year, while these two acquisitions may contribute around Rs 200 crore of topline. They also said definitive scaling plans would be shared after integration, likely after 6 to 9 months.

Solar power initiative: 40.3 MW for Bathinda and Ludhiana

A parallel initiative is focused on cost stability. Sportking invested Rs 14.10 crore for a 26 percent stake in an SPV, Evincea Renewable Seven, which will commission a 40.3 MW solar plant. The power will be supplied to the Bathinda and Ludhiana units for 25 years.

The presentation expects power supply to commence by end-May 2026 and indicates potential long-term power cost savings of 12 to 15 percent. Management quantified the annual savings at around Rs 14 to Rs 15 crore.

What management focused on: spreads, demand and policy issues

Management’s tone through the call was optimistic but anchored in near-term visibility. They cited a roughly 90-day sales book and cotton coverage for a few months as reasons for confidence on spreads for the next two to three quarters. They also acknowledged that China can be a volatile buyer, but noted that Sportking increased exports to China to around 10 to 12 percent in the latest quarter while Bangladesh remains the largest export destination.

On sector risks, management discussed cotton policy as a key issue. They highlighted how Cotton Corporation of India procurement can affect prices during the harvest period. They also noted that old machinery struggles to compete in a lower-margin environment, implying the industry is moving through consolidation.

Closing takeaways

Sportking’s FY26 shows a company operating at high utilisation, using pricing and spread improvement to expand margins while preparing for the next growth phase. The Odisha capex is the central driver of future volume expansion, and the solar project is intended to lower power costs with a clear near-term start date. The proposed acquisitions signal intent to move downstream, though management described them as early-stage building blocks rather than immediate margin enhancers.

The next year will largely be judged on two deliverables: execution and ramp-up of the Odisha greenfield project, and the translation of currently favourable spreads into sustained profitability.