Transcript of Earning Call
SPORTKING · price
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Sportking India reported resilient Q4 FY26 performance with stable revenue and improved profitability driven by better yarn realization and robust cotton yarn demand. The company highlighted China as a major demand driver with India's share in China exports rising from 7-8% to 25-30%. Cotton spreads have reached 3-year highs of around $1, and management expects margin expansion for the next 2-3 quarters with good cotton coverage. A greenfield expansion of INR 1,000 crores (150,000 spindles) is on track for Q3 FY27 commercial operations. The company also announced acquiring majority stakes in Marvel Dyers and Sobhagia Sales Private Limited to strengthen downstream capabilities. A 40 MW solar plant will commence by end of May, saving INR 14-15 crores annually. EU and UK FTAs are expected to be effective by end of FY27. Top line growth of 7-10% is expected in the next 3 quarters from higher prices, as volume will remain flat at 95-96% utilization until new capacity comes online.
The company is well-positioned to benefit from improved demand and margins in the near term, while the INR 1,000 crore expansion and strategic acquisitions provide long-term growth visibility. However, investors should note that near-term volume growth will be limited until the new capacity becomes operational in Q3 FY27.