Broker’s Call: Vardhman Textiles (Buy)
Standalone revenue from operations increased 15.6% year on year to ₹2,793 crore, while EBITDA rose 65.8 per cent to ₹635 crore
Vardhman Textiles reported a strong second quarter of fiscal year 2027 (Q2FY27), driven by increased demand, higher realisations, and favorable operating conditions in its spinning business. Revenue from operations grew 15.6% year-over-year to ₹2,793 crore, while EBITDA surged 65.8% to ₹635 crore. EBITDA margin expanded by 657 basis points to 22.1%, largely due to improved yarn realisations, benefits from lower-cost cotton inventory, operational efficiencies, and renewable energy initiatives.
Profit after tax (PAT) increased 92.3% to ₹364 crore, supported by stronger operating profitability. Revenue and EBITDA expanded 5.5% and 20.3% sequentially, respectively, highlighting consistent growth. For the first half of fiscal year 2027 (H1FY27), revenue and EBITDA grew 14.3% and 49.1% to ₹5,441 crore and ₹1,163 crore, respectively, indicating substantial improvement in operating performance.
Vardhman's robust Q2FY27 performance underscores earnings recovery, fueled by resilient yarn profitability and enhanced operating efficiencies. Future growth is anticipated through higher utilization of recently commissioned capacities, recovery in fabric volumes, ramp-up of performance fabric business, and garmenting expansion.
While near-term fabric margins and sustainability of inventory-led gains are key factors to watch, the company's solid balance sheet offers flexibility for execution. Using a price-to-earnings (P/E) ratio of 11 times the expected earnings for fiscal year 2028 (FY28E), the stock is valued at ₹726, and the analyst maintains a BUY rating.
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