VTM Q4 FY26 earnings call.
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Revenue
₹372 Cr
verification pending
Revenue YoY
8%
reported change
EBITDA
Pending
latest reported figure
Source
bse pending
record provenance
Actual signal trajectory
Where this quarter sits.
Quarter read
What the record says.
VTM Ltd reported Q4 FY26 with 8% revenue growth reaching ₹372 crore, but PAT collapsed 75% YoY to ₹11 crore as EBITDA margin compressed to 7.43% from ~19% in FY25. The steep decline was primarily driven by ₹20 crore tariff discounts given to US customers (18% discount on goods), ₹8 crore chargebacks, and ₹2.3 crore mark-to-market forex loss on PCFC loans. Raw material costs also surged 15% due to elevated cotton futures. The CFO guided for 10-11% EBITDA margin as realistic sustainable target for FY27, down from prior 19% peak. Order backlog stands at $6.5 million as of late May. Management targets 12-14% revenue growth in FY27 with capex now complete and new looms coming online. The company is aggressively diversifying into UK, Europe, Japan, and Australia markets—customer onboarding typically takes ~1 year with fruits expected in 2-3 quarters. Risk remains elevated US tariff exposure and ongoing price sensitivity negotiations with major customer Queens. Normalized PBT without one-time items would have been ₹32 crore.
Colored figures show movement against the previous available record.
Guidance to track
- Management targets ₹420 crore revenue based on completed capex now coming online with new looms in Q1-Q2, combined with expected 12% topline growth.
- CFO explicitly stated current year achieved 7.43% and the company is targeting 10-11% as realistic sustainable margin, acknowledging 19% FY25 was a one-off in pre-tariff regime.
- New customer development for UK, Europe, Japan, Australia markets is in full swing. Process typically takes approximately 1 year and management expects these efforts to bear fruit within 2-3 quarters.
- Management acknowledged 500-600 crore is achievable with right product mix, full outsourcing utilization, and better price realization—though conservative near-term target is ₹420 crore.
Risks flagged
- Although US tariff settled at 10%, VTM still extends 18% discount to Queens customer to maintain wallet share. This discount is embedded in current pricing and negotiations to reduce it are ongoing. Present discount rate remains 18% versus 10% actual tariff.
- Inventory increased sharply from ₹92 crore to ₹150 crore despite modest 10-12% growth guidance. The company carries inventory for Queens customers while absorbing discounts on its books. Stock turnover of 122 days has not improved materially.
- Cotton futures jumped to 78 cents from 69-70 cents due to geopolitical conditions/war, causing 15% increase in gray fabric and cotton yarn costs. This input cost pressure persists alongside the tariff-related margin compression.
- Analyst questioned whether ₹500-600 crore revenue is achievable on current asset base given management's conservative ₹420 crore guidance. Capex of ₹25 crore completed but only now coming into full operation. Questions remain on whether current asset turn understates true revenue potential.
Key quotes
- The 19% margin is not a sustainable margin. It's a one-off margin and 10 to 12% is a realistic sustainable margin going ahead.
- We shared some burden with them and now that is continuing as is without any change but we are trying to bring it down. Present rate is 10%... our discount still remains at 18%.
- We have also hired a good industrial engineering consultant and we are also revamping some of our lines. The point that you made on the stock turnovers will be addressed with better lean principles in place.
- We are being little conservative on that front but we are definitely not understating here. There is good potential for a run rate of 500 to 600 crore.
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