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Indo Count Industries Ltd

| Q4 FY26 Earnings Conference Call

BULLISH SENTIMENT

Report Source

⬤8th Jun 26

Summary : Indo Count Industries is poised for accelerated growth in FY27, targeting record revenues and improved margins, driven by new business expansion and normalized market conditions, despite raw material price volatility.

Management Perspective positive : Management consistently expressed confidence in achieving FY27 targets, accelerating growth, and doubling revenues by 2028, despite acknowledging past challenges and current raw material headwinds. They highlighted strategic investments and market share protection as key successes.

Concall Report Analysis & Insights

Business Overview

  1. Achieved Gold Trophy for highest bed sheet exports for the sixth consecutive year.
  2. FY26 revenue remained stable compared to FY25 despite tough macroeconomic conditions.
  3. Focused on protecting market share, expanding utility bedding, and scaling non-U.S. revenues.
  4. New U.S. greenfield facility for utility bedding commenced operations, doubling pillow capacity.
  5. Expanded product portfolio with new brands like Wamsutta and Tommy Hilfiger.

Future Growth Prospects

  1. Targeting record consolidated revenues of INR5,500 crores in FY27, a 30% growth.
  2. New business segment expected to nearly double from FY26 levels to INR1,500 crores.
  3. Anticipate non-U.S. revenues to grow by 20% in FY27 due to new FTAs.
  4. Aiming to double revenues by 2028 over the FY25 base, reaching INR8,000 crores run rate.
  5. Expect EBITDA margin of 13% in FY27 driven by demand, tariffs, and diversification.

Management Insights

  1. "We believe the company is now entering its next phase of accelerated growth."
  2. "FY27 will be a defining year for the company, not only in terms of stronger profitability, but also with meaningful improvement in volumes and margins."
  3. "We are on track to deliver a record year in FY27."
  4. "We have proactively invested across capacity expansion, brand building and distribution, creating a strong platform for the company's next phase of growth."
  5. "We are confident that these initiatives will support further margin expansion as volumes normalize and demand conditions strengthen."

Signs of Skepticism

  1. Analyst questioned the sustainability of 13% EBITDA margins compared to historical 15-16%.
  2. Analyst sought more clarity on the ambitious 2x revenue target by 2028, questioning its achievability.
  3. Analyst asked for detailed breakdown of new business revenue contribution and growth drivers.
  4. Analyst questioned if Q1 FY27 would be better than Q4 FY26 given tariff reduction, which management declined to comment on.

Risk Factors

  1. U.S. tariff situation caused subdued core business revenues and volatility in FY26.
  2. Raw material price increases (cotton, gas, energy) could impact margins.
  3. Higher interest and depreciation due to new U.S. manufacturing facilities.
  4. Potential for U.S. slowdown due to inflation, though not observed yet.
  5. Volatility in home textile business historically, despite diversification efforts.

Good To Know

  1. S&P Global ESG score increased to 78 from 45, placing the company in the top 3 percentile.
  2. Planned capex outlay of INR250 crores over 12-18 months, funded by internal accruals and debt.
  3. Net debt reduced by INR200 crores to INR760 crores as of March 31, 2026.
  4. Board recommended a final dividend of INR1.50 per equity share for FY26.
  5. Working capital days remained stable at 121 days.

Key Drivers

  1. New business segments accelerating growth
  2. U.S. facility ramp-up, increased capacity
  3. Tariff normalization, improved demand
  4. Strong customer relationships, market share

Key Analyst Discussions

Competitive Environment

  1. Discussion on the impact of U.S. tariff normalization on market competitiveness.
  2. Inquiries about how the company competes with 50% tariff vs. 20% for others.
  3. Questions on the benefits of waived import duty on cotton for Indian companies.
  4. Management highlighted building multiple pillars (India manufacturing, utility bedding, brands) for stability.

Market Trends & Consumer Behavior

  1. Questions about potential U.S. slowdown due to inflation and fuel price increases.
  2. Inquiries about whether end customers are restocking or if sales are at normalized levels.
  3. Discussion on the normalization of product mix after a period of down-trading.
  4. Management noted increased retail prices accepted by consumers in the U.S.

Financial Highlights

  1. Questions on margin outlook for FY27, considering lower tariffs and higher cotton prices.
  2. Inquiries about EBITDA breakeven for new utility business plants and greenfield facility.
  3. Discussion on the sustainability of increased realizations in Q4 FY26.
  4. Questions regarding incremental working capital requirements and interest impact.
  5. Clarification on tax rate assumptions for future periods.

Product Composition

  1. Questions about the split of new business revenue between utility bedding and brands.
  2. Inquiries about the performance and ramp-up of the Wamsutta brand.
  3. Clarification on the product categories manufactured in U.S. facilities (pillows, quilts).
  4. Details on the four core brands contributing to the new brand business segment.

Strategic Considerations

  1. Questions on the confidence behind the guided volume growth for FY27.
  2. Inquiries about the long-term target of doubling revenue by 2028.
  3. Discussion on asset utilization levels for U.S. manufacturing facilities.
  4. Questions about the strategy for scaling up new businesses over 2-3 years.