Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Vardhman Textiles Ltd (NSE: VTL) Q3 2026 Earnings Call dated Jan. 21, 2026
Corporate Participants:
Neeraj Jain — Joint Managing Director
Analysts:
Aradhana Jain — Analyst
Unidentified Participant
Awanish Chandra — Analyst
Prerna Jhunjhunwala — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Vardman Textiles Q3 FY26 earnings conference call hosted by Batliwala and Karani securities India Private Limited. As a reminder, all participants line will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Ms. Aradna Jain from Batliwala and Karani securities India Private Limited. Thank you. And over to you ma’. Am.
Aradhana Jain — Analyst
Thank you, Iqra. Good evening everyone. On behalf of BNK Securities, I welcome all participants and the management
Operator
Of Vaddupan Textiles. To the call from the management we have Mr. Neeraj Jain, Joint Managing Director, Mrs. Sagarika Veer, Executive Director Mr. Sushil Jhang, Director Raw Materials, Mr. Rajiv Thapar, CFO Mr. Mukesh Bansal, Head of Fabric Marketing and Mr. Varun Malhotra, Head of Finance. Without further ado, I would like to hand over the call to the management for their opening remarks post which we can open the floor for the Q and A session. Thank you and over to you.
Aradhana Jain — Analyst
Good afternoon everyone. Thank you for joining the quarter three analyst calls. Earnings call for Vaidaman Textiles Our overall performance for the quarter remained broadly in line with the corresponding period last year and same similar to year to date basis, the EBITDA margin for the quarter was at about 15% compared to 16% quarter on quarter. On a year to date basis, EBITDA margin was around 15% versus 17% last year. The operating environment during the quarter was marked by cost volatility, demand disruptions and global trade uncertainties.
However, disciplined execution and operational focus helped us maintain overall business stability. At the capacity utilization front, yarn utilization was at around 95% and fabric utilization was at about 89, 90%. The quarter continued. This is regarding cotton. The quarter continued to be impacted by elevated Indian cotton prices during quarter three, cotton traded at about 75, 78 cents per pound rising further to around 79 cents per pound in January 26th. This has been driven primarily by 8% increase in MSP.
This has made Indian cotton structurally more expensive as we compare to global benchmarks. In the current cotton season, CCI has procured approximately 85 lakh days out of total arrivals of 175. This accounts to 50% of arrivals and in the present scenario CCI is absorbing about 75 80% of daily arrivals this has constrained open market availability and supports higher prices. The absence of a transparent selling framework by CCI continues to add uncertainty for mills. The duty free import window from August to 31 December 2020 resulted in higher cotton imports because imported cotton was relatively cheaper.
However, from the 1st of January the 11% import duty has been reinstated. This puts us at a relative disadvantage to competing countries like Bangladesh and Vietnam which continue to enjoy duty free imports. During the quarter, New York futures traded at about 63 to 65 cents per pound translating to a landed cost of about 72 to 75 cents per pound for mills in Vietnam and Indonesia. If we compare this to Indian mills, they are at 75 to 78 cents creating a 3 to 4 cent per pound cost disadvantage even before accounting for quality and contamination differences.
Additionally, this year cotton crop is estimated at 292 lakh days. This is below last year’s 297 lakh bales and significantly lower than domestic consumption of around 322 lakh bales. This implies a supply deficit of nearly 30 lakh bales which will need to be met through imports. The yarn business experienced a mixed environment during the quarter. While the first half of the year was relatively stable, quarter three saw pressure due to tariff related disruptions both in garment exports and home textiles.
There was also excess global capacity and cautious buying behavior. Domestic demand remained soft while exports showed selective improvement largely driven by specific product categories. Indian yarn exports improved in December to around 115 million kgs. If we compare this to an average of 100 million kgs we can see an improvement. This is driven primarily by contamination free yarns. Yarn prices therefore have improved by approximately $0.15 per kg especially over the last 30 days. However, this has not fully offset elevated cotton costs.
As a result, margins remain under pressure despite stable utilization. Our focus continues to be on disciplined capacity utilization, selective price recovery and increasing value added yarns. On the fabric business front, we operated in a challenging external environment during quarter three. Expectations of an early resolution of the tariff war have not materialized and US buyers continue to adopt a cautious and selective sourcing approach. This has increased competitive intensity and elongated decision cycles.
Despite these headwinds, fabric business delivered a resilient performance supported by ongoing new product development, customer diversification and strong operational execution. A key strategic milestone during the period was the commissioning of By Demand Performance Fabrics which is focused on performance wear. We will start building scale from quarter one of next financial year. We’ve already begun servicing select domestic orders and our focus remains on development for international Customers in parallel.
The fabric expansion at Bhutani on our existing cotton blend line has also been commissioned and it is expected to gain momentum from quarter one next year. This enhances our ability to service larger programs, improve responsiveness and support premium fabric categories. We continue to diversify in non US markets to mitigate tariff risk. So we are focusing on countries like eu, uk, Australia, Canada and we are confident that our efforts will bear fruit in time. A quick update on our green initiatives.
We are currently at 9% of total demand. 9% of our total demand is green power and in FY27 we expect we are in. We are in line to increase this to about 49, 50%. We now open the floor to questions.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press and one on the Touchstone telephone. If you wish to remove yourself from the question queue you may press STAR and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
Unidentified Participant
Participants. If you wish to ask a question, you may press star N1.
Operator
The first question is from the line of Avdish Chandra from smifs. Please go ahead.
Awanish Chandra
Thanks for this opportunity and congratulation. Management team on a moderate performance despite a difficult situation. In the opening remark you have already talked about the pressure on the margin and structurally we are having higher cotton price. But sir, my question is if I look at average cotton price in quarter two in India and quarter three there was a quite substantial decline on the average basis between quarter three and quarter two. So I understand the point here. Talked about a structurally thing but was there any inventory loss because of this decline in the cotton price versus quarter two in India?
No, for us, fortunately it was not there because quarter two and we didn’t have much of a cotton available to us and whatever we bought I think we bought at the right prices. So for us there was no inventory loss to that extent.
Neeraj Jain
Okay. And we never had this advantage of declining
Awanish Chandra
Cotton price on an average basis in India in quarter three because on a spot if I look at a spread it looks like margins would be improving. But that didn’t happen in the numbers. No, that’s true because in India we had a different situation. The US tariff, this was applicable from 27th of August. So though our cotton prices to some extent came down but at the same time the advantage could not be realized because the yarn prices or the fabric prices came down because there was relatively lesser demand in India from our customers.
Who were ultimately sending goods to USA in terms of home textiles or the garments. So that advantage could not be realized by the Indian spinners or the Indian fabric producers.
Neeraj Jain
Okay. And sir, this in the opening was talked about
Awanish Chandra
Capacity management in fabric. So what is the current capacity after expansion on a yearly basis our new capacity.
Aradhana Jain
So our earlier capacity used to be about 145 lakh meters per month. And I’m talking about processed capacity and out of this. So now this has increased to 185 lakh m per month and additional 15 lakh meters in the performance s in technical textile.
Awanish Chandra
Okay. And 200
Aradhana Jain
Lakh meters per month.
Awanish Chandra
Okay. On the process side, on the. On the gray basis what the number. Would be
Aradhana Jain
On the gray we haven’t increased any capacity. So whatever process capacity we have we keep some additional for servicing. It’s more than the process capacity.
Awanish Chandra
Okay. So on yearly basis of gray we used to talk about 23002400 lakh meter. That remains every day,
Prerna Jhunjhunwala
No
Awanish Chandra
Change. Okay. Okay. And sir, last thing. A lot of people were expecting that the import duty will be continued but it happened. So any indication from the government whether this impurity exemption will be reinstated? Any talk from the government side? So yes, we have been talking to the government, both the textile ministry as well Agriculture ministry also on so therefore yesterday also we had a. Therefore yesterday also city had a conference with the Ministry of Textile Texas. Then listen to our issues and concerns.
But let’s see what happens.
Neeraj Jain
Okay. Okay, I will come back in the queue. Thank you very much.
Operator
Thank you. Those who wish to ask a question, you may press Star and one. Participants to ask a question you may press star and 1. The next question is from the line of Monish vodka from HDFC Mutual fund. Please go ahead.
Neeraj Jain
Yeah, so thank you for the opportunity. So you said that your cotton inventory at the end of Q2 was minimal. But if I see the half yearly balance sheet disclosure, I mean the inventory is around 3700 crore as on September 25th. And if I compare it to the previous year September 24th it’s 2700 crores. So it was higher than the normal. So what were the key reasons for the same.
Awanish Chandra
It’s not only the. I mean the inventory we were talking about on the cotton basis that is there was there any loss on the cotton. So I said so there was no loss on the raw cotton whatever it was available to us because that inventory was relatively lower 30th of September since our capacity utilizations have increased our overall business levels has improved. So the total inventory includes the finished goods, wlp, everything together.
Neeraj Jain
Okay, so I mean there was no larger than normal cotton inventory as on September end.
Awanish Chandra
No, it was slightly higher because we had, on the 30th of September we had, we had started importing cotton. It was duty free region by that time.
Neeraj Jain
Okay, so okay, those
Awanish Chandra
Inventory could be a little more than the last year. But there was no inventory where the losses would have happened. But the higher cost inventory was relatively worse.
Neeraj Jain
Okay, and so could you share EBITDA margin for yarn and fabric business separately.
Awanish Chandra
As a company? We share the textile. We considered it as a textile division only.
Neeraj Jain
Okay. And sir, now this EU FTA is in final stages. I mean so six months back no one was expecting that it will happen so soon. So is there any rethought about getting into garmenting now?
Awanish Chandra
Yeah, so of course there are thoughts going on what should be done on the garmenting division and earlier this time was whether we really want to continue with the business or not. But I think there’s one instance which is changed that we are likely to enhance the capacity of government division. We intend to make it to be double from the current capacity but again that will be very, very minuscule looking at the total company size. So once we are in a position to do this, I think it’s only beyond that we look at whether we should really expand it in a big way or not.
But the earliest stance is surely changed today where we are enhancing the capacity, we are doubling the capacity, at least whatever we have today.
Neeraj Jain
And sir, I mean if I see your pre Covid margins, you know, I mean it used to, at a aggregate level it used to be around 18, 19% and as you have rightly said multiple times that Indian cotton used to be cheaper as compared to NY future, but and now it has become expensive. So I mean, so what is the way out here for the industry to, you know, improve margins? I’m talking about spinning side or it will continue like this for a. In the medium term.
Awanish Chandra
No, it looks like in today’s situation the improvement may not happen in a bigger way. But of course we are also looking at the, you know, the, the repercussions of these are already seen in the country. The last two, three years we have seen almost 10, 13 million spindles have been closed permanently. There’s no expansion happening. So ultimately the demand supply will take care of it. And eventually if another 5,7 million spindles get stopped into the country, I think then the demand would start improving and then again the margins will start improving.
2 In any case, unless our raw materials are available to us at the international parity, I don’t think on a basic commodity anyone can really make money. Raw materials are expensive. So that different government will have to do sooner or later. Third party is your cost initiatives and the product mix of the customer mix which is in our control. There’s a lot of work going on both in the yarn and the fabric division to that extent. And I’m sure that has given us these kind of results also. And we are still working very aggressively on these ideas.
Fortunately the EU FTA will happen, so there’ll be more opportunities for the Indian governmenters to do better over there. So I think we have some pockets which are available, which are controllable and we are working trying to look at what best could be done out of that.
Neeraj Jain
Okay. Okay, so last question. How much cotton did we import in Q3?
Awanish Chandra
Yeah, we have imported lots of cotton.
Neeraj Jain
Okay.
Awanish Chandra
Quantity I think, let’s not share that.
Neeraj Jain
Okay. Okay. Thank you sir.
Operator
Thank you. The next question is from the line of from Ilara Securities. Please go ahead.
Prerna Jhunjhunwala
Thank you. So just wanted to get some clarity on how tariffs has impacted your quarter this quarter and in terms of revenue, ebitda, if you could share something for both yarn and fabric businesses and how you’re dealing with the pressure coming in from customers in the current scenario.
Aradhana Jain
Yes. So tariff has definitely had a negative impact on our business. First let’s talk about the overall picture. So when it comes to our customers, especially in the U.S. The sentiment is, the sentiment is poor and you know, most of our customers, they are not willing to take long bets. So some are delaying the decision making cycles, some are recalibrating prices, some are recalibrating supply chains. And of course now with the current geopolitical risks which have been added, they definitely make the situation worse.
So that’s on the macro front now it will be very difficult for us to share exactly how much the impact it has had on ebitda. But on case to case basis, we have supported some of our customers and because we’ve had to, we’ve prioritized securing long term relationships with them. It has a marginal impact, not a big impact. But if you compare in fabric, if you compare last year this quarter we had 100% capacity utilization and this year we are at 10% capacity utilization less. So you can see the impact on volumes from that.
Prerna Jhunjhunwala
Okay. And how has been the domestic market in both yarn and fabric businesses for us? Apart from the U.S. I mean, leaving aside U.S. Business,
Aradhana Jain
The domestic market has been stable, some pockets are doing well, some large format retailers have had some inventory optimization that they have conducted. But overall domestic has remained stable. And as for yarn, domestic prices have remained soft. So we’ve seen export market improve more. On the yarn front, domestic has remained a bit saw.
Prerna Jhunjhunwala
Okay. And in exports where are we seeing some green shoots? Because anyways US is not that positive. So which markets are seeing some traction which is helping you say that exports is doing better. You’re talking about yarn, both the markets, yarn and fabric. Fabric. You mentioned that exports is doing much better than. No, it has been solved. No,
Aradhana Jain
No, that was for yarn.
Awanish Chandra
So on the yarn side I think it’s the Indian garmented where the concern is more. But when it comes to Bangladesh, Vietnam or Sri Lanka or China, they were doing pretty. They’ve been pretty good. In fact last one month there’s been a lot of demand from China for the yarn again because of maybe some concerns on the Bangladesh etc. Etc. And we are finding the yarn prices have started improving since last one month and they’re. There’s at least a improvement of 10 to 15 US cents per kg of yarn thanks to the fresh demand from China.
Prerna Jhunjhunwala
That’s interesting. So do we see profitability improve going forward given that there was a decent period for us to import cotton and the prices were lower. So near term looks somewhat stable than in the past.
Awanish Chandra
So I mean I can talk of the industry average only. So whosoever has the imported cotton, maybe there could be some gain coming to them in maybe next two, three, four months, whatever cotton stocks you have. But unfortunately the Indian cotton prices are again very high in this period. CI has been buying most of the cotton and they are virtually today the monopolistic stockist as of now. And the new sale policy which they have decided before yesterday, they have come up with a price range of 56,900 rupees for Shankar and they converted into US cents, it’s almost 80 US cents per pound.
And with the New York future of 64, 65 cents, the Brazilian is available at 72, 73 cents to most part of the world. So we are again higher by about 8 cents per pound. So to that extent I think on the, on the incremental basis I don’t see the margins improving unless the yarn prices increases further. But if I look at from the, from the New York future error, the region cotton available to Vietnam today, that margin would be as on today they would be touching almost 90 times to $1 conversion margin today, which used to be, I Mean which is seen after a long time But India since our carbon is almost 78 cents per pound expenses so I convert it into per kilogram basis we still have a disadvantage about 20 US cents per pound to that extent.
So our margin will be in the range about 7080 US cents whereas for the other countries it would be touching almost close to $1 today.
Prerna Jhunjhunwala
That’s a big difference.
Awanish Chandra
Yeah.
Prerna Jhunjhunwala
Are you seeing further capacity closures in the industry in the yarn business? Yeah.
Awanish Chandra
It will continue to happen till the time we can. Lots of capacity in India is very old and their costs are also high because they are not modernized. So when we are talking of 77, 75 times we are talking of a good efficient list but all these capacities which is relatively in the semi organized sector or with a higher cost non automatic technologies available to them their cost will be surely higher than this. For them to survive in these circumstances is going to be. It continues to be very very difficult.
So I think personally if you ask me there could be a possibility another 2, 3, 4 when 11, 11 and a half million spindles are already closed figure reaching to 15 million spenders in next one year unless the the prices. Unless the dominant prices are corrected. It can happen.
Prerna Jhunjhunwala
Okay.
Awanish Chandra
It will be unfortunate but it can happen.
Prerna Jhunjhunwala
Yeah. Makes sense. So sir, few questions on cape text your you mentioned about garment capacity to double by when do you expect it to double and yeah
Awanish Chandra
We’ve been working on it. I think it’s a small capacity 6,000 7,000 shares and whenever we start the project will take us about eight months or so to complete that but it’s not really a major capex. So the major capex was in the spinning business on modernization and one of our small expansions at midranges but the bigger expenditure expenditure capital expenditure was planned on the fabric side that’s going on as per schedule only both all the expenditures whatever was planned last year that’s that’s almost online
Prerna Jhunjhunwala
That will get Commission. In by Q4 by the end of this quarter. Okay. That how do we expect it to get utilized over a period of time because given the current geopolitical situations that are there especially for the new business, the synthetic fiber business. Just wanted to know the efforts that you’ve taken to sell it when it gets operationalized
Aradhana Jain
So in next financial year for the performance where we are targeting capacity utilization upwards of around 60% for the full year.
Prerna Jhunjhunwala
Okay. And any tie ups and all being done to
Aradhana Jain
Ensure this number gets achieved. So we want to maintain a healthy balance between domestic and export especially given geopolitical dynamics. So we like to have a strong domestic base and also, well, diversified export base. So current focus is on development. So. So some developments are coming from our existing customers and because they also have this product portfolio and a lot of new customers which are, you know, focused on sports and outerwear, they are also being added. No, no tie, no long term tie up.
But we’ve had partnerships with these customers over the years, so, you know, you can expect strong collaboration with those customers.
Prerna Jhunjhunwala
That’s fantastic. Satika. Thank you.
Operator
Thank you. The participants who wish to ask question, you may press star and one. Those who wish to ask a question, you may press star and one. As there are no further questions, I would now like to hand the conference over to the management for closing comments.
Aradhana Jain
So to conclude, the operating environment remains demanding with persisting cost pressures, trade disruptions and evolving global sourcing patterns. However, actions taken over the past few years have strengthened the foundation of our business. So we continue to focus on controllable levers like portfolio premiumization, operational efficiency, cost discipline, customer centric approach, strategic investments in fabric capacity, performance, textiles and yarn modernization position us well for the next phase of growth.
While near term visibility remains limited, we hope and pray that global trade conditions will stabilize our integrated capabilities. Diversified customer base should create meaningful differentiation. Thank you so much for your faith in our organization and have a good day.
Operator
On behalf of Bartleywala and Karani securities India Private Limited. That concludes this conference. Thank you for joining us and you may now disconnect your lines.