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Systematix Research Report
Vardhman Textiles Ltd.’s reported revenue/Ebitda/profit after tax growth of 49%/124%/151% YoY to Rs 26.0 billion/6.2 billion/4.3 billion in Q3 FY22.
Growth was led by a 42% YoY increase in fabric volumes as the end-user market recovered, although yarn volumes declined 5% YoY on a high base.
Gross margin improved 400 basis points YoY to 52.4% due to higher cotton-yarn spread but contracted 350 bps QoQ due to the high base effect as Vardhman Textiles enjoyed low-cost inventory benefits in Q2 FY22.
Operating profit margin expanded 800 bps YoY to 23.8% due to higher gross margins and better cost absorption on improved utilisations. Profit after tax increased 151% YoY to Rs 1.7 billion driven by higher Ebitda, other income and lower interest cost.
The long-term demand outlook remains positive as global retailers seek additional sourcing partners to diversify their supply chains.
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