The quarter ended December ?5 has brought good news for the textile industry. After witnessing a contraction in profit in the previous quarter, textile majors have recorded an expansion in both operating and net margins. This has been accompanied by both topline and bottomline growths. A major reason for margin expansion has been the decline in raw material prices, particularly cotton prices.
An ETIG analysis of financial results of some companies like Mahavir Spinning, Indo Rama Synthetics, Aditya Birla Nuvo, Rajasthan Spinning, Arvind Mills, Abhishek Industries, Alok Industries, Raymond, Bombay Dyeing and Century Textiles reveals that the combined net sales grew by 12% in the quarter ended December ?5 compared to corresponding quarter the previous year. The combined PBDIT margin grew to 16.9% from 15.6% and PAT margins have grown by a whopping 650 basis points over the same period to 12.3%.
Mahavir Spinning Mills reported 54% increase in net sales to Rs 518 crore in the quarter ended December ?5. Raw material cost as a percentage of net sales decreased significantly to 40.7% from 53%. Operating profit recorded 31% growth to Rs 95.8 crore.
Aditya Birla Nuvo? net sales increased by 20% to Rs 594 crore as against Rs 494 crore in the corresponding quarter. The revenue from garments increased by 31%. Raw material as a percentage of net sales rose from 53% to 54%. Raymond? net sales rose by 15% to Rs 345 crore. The main contributors of this growth were textile and denim segment. The operating margin grew to 17% from 12.7% over the period. PAT grew by 32% to Rs 33 crore.
Bombay Dyeing? net sales grew by 5% to Rs 269 crore. Revenue from textiles division dropped by 5% to Rs 101.6 crore and its recorded a loss of Rs 2.4 crore. The company was rescued by the real estate division, which generated profit before interest and tax of Rs 35.2 crore.
Century Textile? net sales increased to Rs 639 crore, but revenue from textile division fell by 4% to Rs 207 crore in the quarter ended December ?5. Operating margins were flat during the period. PAT during the quarter declined by 8% to Rs 30.3 crore.
The performance of textile companies in the quarter ended December ?5 may be harbinger of good tidings in the future. Capital expenditure in the industry is taking place at a fast pace to tap the post quota markets of Europe and US.
Indo Rama Synthetics recorded a 13% decline in net sales to Rs 398.5 crore. The operating profit margins crashed by 550 basis points to 4.5%. PBT decreased by 79% to Rs 7 crore and net profit dived by 78% to Rs 5 crore over the same period. Arvind Mills also had a lacklustre performance in this quarter.
Abhishek Industries?net sales rose 37% to Rs 187 crore as against Rs 136 crore in previous quarter. Operating profit margin increased by 100 bps to 20.3% and PAT trebled to Rs 14 crore.
