What is the current order book situation in the spinning segment?

In export markets we are always sold for about 3 months (90-95 days). Domestic will never be more than 45 days. This has been the average for the last 5 years and we are sold for those many days even today.

How is progress in the new synthetic fabric business, and what margins/ROCE do you expect?

Utilization is only 15-20% but we got two big brand approvals and production starts in August. We want to reach 70-80% utilization in 6 months. It is too early to give margins, but my belief is that both margin as a percentage of sales and on capital employed could be better than the existing cotton fabric line.

Will the strong spinning margin trend continue beyond Q2, or will it moderate?

Surely it will moderate as the lower-cost inventory finishes. However, it may not come down to the levels of the last 2-3 years. The conversion margin could be in the range of USD0.85-0.90 per kg of yarn.

What is the expected peak revenue from the garment capacity expansion and when will it be fully operational?

Revenue could be close to about INR300 crores at 100% utilization and it should be fully operational by June '27, about one year from now, considering the time needed to train workers.

Is the Chinese buying of Indian yarn sustainable, and what is driving it?

Chinese domestic cotton prices are above $1/lb, making imported yarn cheaper; using imported yarn also helps avoid Xinjiang cotton contamination risk. China's spinning capacity has fallen from ~116 mn spindles to ~84 mn. Given these factors, Chinese buying looks sustainable.

Vardhman Textile Q1 FY27 Earnings Call — Analysis (NSE: VTL)

Vardhman Textiles Q1FY27 earnings reflect strong spinning profitability boosted by higher yarn spreads and trading gains, while fabric lagged due to US tariff-induced sampling disruption, with management expecting a recovery in the coming months and signaling a structural cotton supply deficit that could support margins longer-term.

3 Aug 2026 · Analysis by Alpha Inflection

The take

Q1FY27 Revenue ₹2,703 Cr ( +13.31% YoY ) . New guidance — Q3FY27 synthetic fabric capacity utili… 70%, 80% capacity utilization .

Results

Revenue ₹2,703 Cr (+13.31% YoY); net profit ₹315 Cr (+49.55% YoY); spinning margins benefited from lower-cost cotton inventory and improved yarn prices, while fabric revenue was broadly flat YoY but below Q4FY26 due to US tariff issues and lower utilization.

Financial highlights

Vardhman Textile Q1 FY27 reported figures
Metric	Value	Change	Basis
Revenue	₹2,703 Cr	+13.31%	yoy · Q1FY27
Net Profit	₹315 Cr	+49.55%	yoy · Q1FY27

Guidance

Spinning conversion margins to moderate from Q2 highs but stay in USD0.85-0.90/kg; fabric utilization to improve as US orders resume and synthetic fabric ramp-up targets 70-80% utilization in 6 months; open-end project completed in ~10 months; garment doubling by June '27; Dhar project not committed until land and power assured.

What management committed to

[Vardhman Textiles] expects far better business from U.S. customers in the next 2-3 months [post Q1FY27] as fabric orders resume after the tariff-induced sampling disruption. — Q2FY27
Cotton prices may not come down in a very big way, rather may increase only, driven by a global supply deficit where production is expected to be lower than consumption for the first time in 3 years. — may not come down in a very big way, rather may increase, next 2, 3 years
The open-end spinning project with capacity of 55-60 tons per day will be available in about 10 months' time [from July 2026]. — 55-60 tons per day, Q4FY27
The land at Dhar (PM MITRA Park) is expected to be available to [Vardhman Textiles] by December [2026]. — Q3FY27
[Vardhman Textiles] will be ready to start the first construction at Dhar, likely a spinning project, as soon as the land is handed over. — as soon as land is handed over
[Vardhman Textiles] targets reaching 70-80% capacity utilization for the synthetic fabric line within the next 6 months [from July 2026]. — 70%, 80% capacity utilization, Q3FY27
[Vardhman Textiles'] garment capacity expansion to 4.5 million pieces will be fully operational by June '27. — 4.5 million pieces, Q1FY28
Out of the total ~₹3,600 Cr capex, only about ₹800-900 Cr will spill over to FY28; the remainder will be completed within FY27. — ₹800-900 Cr spillover to FY28, FY27

Key themes

Spinning recovery and fabric ramp-up amid tight cotton

Operational commentary

Spinning: full capacity utilization; yarn demand strong, especially from China, with Indian yarn exports rising to 110 mn kg/month; trading gains from lower-cost cotton inventory boosted margins; global spindle capacity rationalization (12-13 mn spindles closed in India) supports supply tightness.
Fabric: US tariff disruption caused a missed sampling season, leading to loss of US orders; utilization lower despite adding a new line in March; headwinds from raw material pass-through lag (only 60-70% of yarn cost increases passed on so far); order inflows improving in the last month, expecting better performance in Q2.
Synthetic fabric: new capacity of 15 lakh metres/month started Feb-Mar; utilization only 15-20% but received approvals from two large brands with production starting August; targeting 70-80% utilization within 6 months; management expects margins eventually to exceed those of the cotton fabric segment.
Garments: doubling capacity from 2.2 mn to 4.5 mn pieces underway; expected fully operational by June '27; peak revenue ~₹300 Cr; currently high costs due to sub-scale operations; improved viability and margins expected after expansion.
Capex: ~₹3,600 Cr programme largely completion stage; biomass boilers in Baddi started, another in MP in a month; majority of modernization done; open-end project (55-60 tpd) started construction, completion in ~10 months; ~₹800-900 Cr capex spillover to FY28.
Dhar PM MITRA Park: land expected by December 2026, but no committed capex; construction to start only after government ensures power availability (expected not before June '27); management considering spinning and downstream projects as next phase of growth.
Cotton outlook: tight global supply—acreage declines seen in Brazil (5%), Australia (sharp drop), West Texas drought, China shifting to food crops; El Niño causing irregular rains in India posing quality risks; cotton prices seen stable-to-higher; Indian cotton now at international parity, import window open till Sept.

Analyst Q&A

Q. What is the current order book situation in the spinning segment?
In export markets we are always sold for about 3 months (90-95 days). Domestic will never be more than 45 days. This has been the average for the last 5 years and we are sold for those many days even today.
Q. How is progress in the new synthetic fabric business, and what margins/ROCE do you expect?
Utilization is only 15-20% but we got two big brand approvals and production starts in August. We want to reach 70-80% utilization in 6 months. It is too early to give margins, but my belief is that both margin as a percentage of sales and on capital employed could be better than the existing cotton fabric line.
Q. Will the strong spinning margin trend continue beyond Q2, or will it moderate?
Surely it will moderate as the lower-cost inventory finishes. However, it may not come down to the levels of the last 2-3 years. The conversion margin could be in the range of USD0.85-0.90 per kg of yarn.
Q. What is the expected peak revenue from the garment capacity expansion and when will it be fully operational?
Revenue could be close to about INR300 crores at 100% utilization and it should be fully operational by June '27, about one year from now, considering the time needed to train workers.
Q. Is the Chinese buying of Indian yarn sustainable, and what is driving it?
Chinese domestic cotton prices are above $1/lb, making imported yarn cheaper; using imported yarn also helps avoid Xinjiang cotton contamination risk. China's spinning capacity has fallen from ~116 mn spindles to ~84 mn. Given these factors, Chinese buying looks sustainable.

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