S. P. Apparels Limited — Investor Meet, 18-02-2025: Analysts/Institutional Investor Meet/Con. Call Updates

1. **Financial Performance:** S.P. Apparels reported standalone revenue of INR 233 crore for the quarter, reflecting a year-over-year growth of 3.6%. Adjusted EBITDA reached INR 38.8 crore, yielding an EBITDA margin of 16.6%. Consolidated revenue surged to INR 362.2 crore, marking a substantial year-over-year increase of 40.9%. The consolidated PAT stood at INR 24.8 crore, with an EPS of INR 9.9. The Garment division continues to demonstrate strong performance, achieving INR 319 crore compared to INR 225 crore in the same quarter last year.

2. **Future Outlook and Growth Drivers:** Management remains optimistic about emerging opportunities in the Indian textile sector, bolstered by favorable government policies and shifting global market dynamics, particularly the China Plus One strategy. Expansion into Sri Lanka and enhancements in capacity through potential acquisitions in Tamil Nadu are key focus areas for growth.

3. **Order Book and Operational Updates:** The current order book stands at INR 474 crore, with robust demand reported from customers. Operations in Sri Lanka are gaining traction, with audits completed and orders commencing.

4. **Analyst Q&A Insights (Detailed):**

- *Revenue and Profitability:* Analysts questioned the impact of forex on realization rates and were informed that changes in yarn prices significantly influence margins.

- *Market Position and Competitive Landscape:* Management highlighted ongoing geopolitical factors that may incentivize customers to shift production from Bangladesh to India.

- *Operational Challenges or Risks:* Concerns regarding labor inefficiencies at new facilities were acknowledged, along with strategies to mitigate these through robust training programs.

- *Capex and Capital Allocation:* Future Capex is projected at INR 70-80 crore for FY26, including enhancements in Sri Lanka.

- *Strategic Priorities and Long-Term Vision:* Analysts were informed about targeted revenue growth from the Garment division at approximately 15-20% over the next couple of years.

5. **Market or Regulatory Updates:** The recent union budget underscores government commitment to bolstering the textile sector, with initiatives aimed at increasing cotton production and enhancing domestic manufacturing capabilities.

6. **Strategic Focus Areas:** The management's emphasis on expanding production capacity, particularly through Sri Lankan operations and acquiring additional factories, signals a strong commitment to maintaining market competitiveness and responding effectively to customer demand.

7. **Investor Insight:** The robust performance, a strong order book, and proactive measures to expand capacity suggest that S.P. Apparels is positioned well for growth. The anticipated increase in revenues, combined with improving margins, indicates a likely upward trend for investors, aligning with a bullish stance on the stock.