Sanathan Textiles, a leading player in India's textile sector, is poised for a significant expansion as it prepares to commission a new Greenfield facility in Punjab in 2025. This strategic move is expected to more than double its polyester production capacity, paving the way for robust revenue growth and improved operational efficiency.

Expected Revenue Growth in FY25 and FY26

According to Sammir D Dattani, Executive Director at Sanathan Textiles, the company's revenue in FY25 is projected to reach ₹3,000 crore, with an additional boost expected in FY26 as the new plant reaches higher productivity. Approximately three-quarters of the plant’s production will contribute to revenue in the following year, potentially pushing it between ₹4,500 crore and ₹4,800 crore.

This sharp rise in revenue will be primarily driven by the new annual polyester yarn capacity of 2.5 lakh tonnes added in the Punjab plant's first phase. During its first year, the plant is expected to operate at 70–80% capacity, contributing around ₹1,500 to ₹1,800 crore in revenue.

Improved Profitability from Operational Efficiency

Sanathan Textiles reported a revenue of ₹732 crore in Q4FY25, with a profit after tax of ₹16 crore and operating margin of 9.33%. The company anticipates improved margins going forward, largely due to lower operational expenditure (OPEX) at the new facility and closer proximity to clients in Northern India.

Being geographically closer to its long-time customers provides logistical advantages, positioning Sanathan as a preferred supplier and reducing delivery costs. These savings are expected to positively impact EBITDA margins, which the company is targeting to reach double-digit figures in FY26.

Export Potential Strengthened by Trade Agreements

On the export front, Sanathan Textiles is set to benefit from several favourable developments. These include:

• Free Trade Agreement (FTA) with the United Kingdom, which improves competitiveness in that market.

• Tariff benefits in the US, making Indian textiles more attractive and affordable.

These international advantages are expected to provide a strong boost to export volumes and diversify the company’s revenue streams further in FY26.

Debt Position and Capital Management

Despite growth in revenue and capacity, Sanathan Textiles does not expect a reduction in debt in FY26. The debt levels are expected to remain stable, between ₹1,100 crore to ₹1,200 crore. However, scheduled repayments beyond FY26 will gradually help reduce this burden.

This approach signals a strategic balancing act—investing in growth while managing financial obligations prudently.

Stock Market Performance and Current Valuation

As of 11:41 am on the NSE, Sanathan Textiles' stock is trading at ₹452.95. Over the last year, it has gained 16%, reflecting investor confidence in its long-term plans. The company currently enjoys a market capitalisation of ₹3,823 crore, which is expected to grow as capacity and profitability improve.

Key Takeaways and Market Outlook

• Production Boost: With 2.5 lakh tonnes of additional capacity, the Punjab facility will double Sanathan's polyester yarn production, positioning the company to meet rising domestic and export demand.

• Improved Margins: The reduction in OPEX, coupled with logistical benefits of being closer to clients, is expected to significantly lift profitability.

• Strong Export Outlook: Trade benefits and global demand for Indian textiles create favourable conditions for sustained export growth.

• Balanced Financial Strategy: While debt levels remain steady in FY26, future repayments are lined up to reduce liabilities.

Sanathan Textiles’ strategy reflects a forward-looking approach that prioritises scalable production, cost efficiency, and market expansion. As India’s textile sector regains momentum post-pandemic, the company’s Punjab facility is poised to serve as a cornerstone for its next growth phase.

This development not only strengthens the company’s foothold in the domestic market but also positions it as a competitive player on the global textile stage.

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