Vardhman Textiles Q3 Results Review - Gradual Demand Recovery Visible: Systematix

We expect demand to recover in the coming quarters, albeit at a slower pace, afflicted by high-channel inventory.

<div class="paragraphs"><p>Vardhman Textile Ltd. (Source: Company website)</p></div>
Vardhman Textile Ltd. (Source: Company website)

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. 

Systematix Research Report

Vardhman Textiles Ltd.’s Q3 FY23 revenue dropped 9% YoY to Rs 23.7 billion, 12% below our estimate. We attribute the fall in revenue to 8%/11%/16% YoY lower volumes in yarn, grey fabric and processed fabric, respectively, impacted by weak demand.

Gross margin contracted 1,537 bps YoY to 37% due to the high-cost inventory. Ebitda margin contracted 1,626 bps YoY to 7.5%, and was below our estimate of 15.1%, due to lower gross margin and lower operating leverage, as plants operated at lower utilisation.

Vardhman Textiles' Ebitda fell 71% YoY to Rs 1.8 billion, lower than our estimate of Rs 4.1 billion. Reported profit after tax slumped by 78% to Rs 951 million, below our estimate of Rs 2.3 billion.

We expect demand to recover in the coming quarters, albeit at a slower pace, afflicted by high-channel inventory along with inflationary and recessionary pressures.

We have factored in weak nine months-FY23 performance and have cut our FY23/24E earnings by 32%/28%. We introduce FY25E and roll forward our valuation to FY25E.

Click on the attachment to read the full report:

Systematix Vardhman Textiles - Q3FY23 Results Review.pdf


This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.