Sangam India reports strong Q2 FY '26 earnings, robust growth outlook

Sangam India Limited reported a 16% year-on-year revenue growth, reaching INR785 crores for Q2 FY '26, attributed to higher volumes and an improved product mix. The company's EBITDA increased by 32% year-on-year to INR76 crores, with margins expanding by 120 basis points to 9.6%. Net profit for the quarter stood at INR23 crores. The board also approved a revised depreciation policy to align asset useful lives with economic life and industry benchmarks, which contributed to the PAT margins this quarter.

The company anticipates continued revenue growth of 12% to 15% for the full year, with EBITDA margins expected to improve by 1% to 2% in coming quarters. Capacity utilization has risen across divisions, with yarn at over 90% and garments increasing from 25% to 35%. Sangam aims for 90% overall utilization to achieve a turnover of INR4,000 crores. The company also expects annual savings of approximately INR10 crores from a 12-megawatt captive renewable power tie-up in Rajasthan, operational from December.

Regarding debt, Sangam plans to reduce it by about INR350 crores over a three-year period, assuming no new major capital expenditures. The company's management projects a payback period of 5 to 7 years for typical capex in the textile industry, and 3 to 4 years for automation and modernization initiatives. The cost of debt is currently below 7%, around 6.75%.