Indo Count Industries Limited
Q1 FY26
Call date · August 13, 2025
1 · Management Commentary
Key Positives
- Relaunch of the iconic Wamsutta brand in the USA as a direct-to-consumer offering, expanding into multiple soft home categories.
- Reclassification of business into core (bed linen) and new businesses (utility bedding and USA brands) for greater transparency.
- New businesses contributed ~13% of Q1 FY26 revenue, up from 7% in FY25 and 2% in FY23.
- Branded business across all categories contributed ~20% of overall revenue in Q1 FY26 vs. 16% in FY25.
- Non-U.S. business now contributes ~30% of core business revenue; presence in over 50 countries.
- Margin expansion of 372 bps QoQ due to cost controls and efficiency measures.
- Domestic brands Boutique Living and Layers expanded to over 2,000 MBOs pan-India; strong feedback from recent trade event.
- Continued progress in sustainable cotton cultivation via high-density planting system (HDPS), boosting yields.
Key Negatives
- U.S. tariff volatility (tariffs rising from 10% to 25% and now 50%) impacting demand, volumes, and pricing.
- Core bed linen segment faces headwinds from lower volume offtake, unfavorable product mix, and pricing pressures.
- EBITDA margin declined YoY (12.26% vs. 16.17% in Q1 FY25) due to incubation costs and adverse mix.
- PAT declined to INR38 crores from INR78 crores YoY, impacted by lower operating performance and higher depreciation/finance costs.
- Margins and sales volumes expected to remain under pressure until U.S. tariff environment stabilizes.
Forward Guidance
- Capex: Regular maintenance capex of INR50–75 crores per year; INR65 crores planned for FY26. North Carolina plant and Bhilad ZLD project progressing, with some spillover possible into next year.
- New products/segments: Expansion of Wamsutta and other USA brands into towels, pillows, blankets, rugs, window treatments, etc., via vendor partnerships.
- Expected client wins/losses: Ongoing customer dialogues in the U.S. amid tariff uncertainty; optimistic about maintaining/growing market share.
- Revenue/margin outlook: Commitment to 2x growth guidance; margins to remain under pressure near-term but targeted at 16–18% once new businesses stabilize.
- Strategic initiatives: Geographic expansion, leveraging FTAs (notably with U.K. and potential EU deal), premiumization, and strengthening domestic presence.
2 · Q&A Highlights
Q 1 (Tariff Impact & U.S. Market): How are U.S. retailers responding to tariff hikes, and what is the expected impact on Indo Count’s market share and margins?
A (Management):
• Business continues as usual for now; no immediate market share loss observed.
• Tariff impact is visible in gross margins and across the P&L, handled case-by-case.
• Too early to predict long-term effects; ongoing customer dialogues.
Q 2 (Non-U.S. & Geographic Diversification): What is the outlook for non-U.S. business and targeted geographies?
A (Management):
• Non-U.S. business is ~30% of core revenue; presence in 50+ countries.
• FTAs with U.K. (12% duty elimination) and potential EU deal expected to boost competitiveness and market share.
• Growth in Australia, Japan, Middle East, and other FTA markets anticipated.
Q 3 (USA Brands & New Business): What is the strategy for expanding USA brands and utility bedding, and what are the margin expectations?
A (Management):
• USA brands to offer a full range of soft home products, mostly via vendor partners; Wamsutta bed linen made in-house.
• Utility bedding business in the U.S. operating at ~50% capacity; third plant in North Carolina to be operational by September-end.
• Targeting $175 million revenue in utility bedding over 3 years; segment expected to deliver higher margins than core business (16–18% once stabilized).
Q 4 (Domestic Business): What is the potential and strategy for Indian brands Boutique Living and Layers?
A (Management):
• Domestic business currently ~2.25% of revenue; strong growth potential.
• Focused on products designed for the Indian market, expanding reach via MBOs, large-format stores, and online channels.
• Gradual, sustainable, and profitable expansion planned.
Q 5 (Capex & Projects): What are the capex plans and status of ongoing projects?
A (Management):
• Maintenance capex of INR50–75 crores/year; INR65 crores for FY26.
• North Carolina plant and Bhilad ZLD project progressing; some spillover into next year possible.
• No major new projects planned beyond current pipeline.
Q 6 (Margins & Cost Controls): Are cost control measures sustainable, and when will margins normalize?
A (Management):
• Margin expansion QoQ due to cost controls and efficiency; some measures are variable with volume.
• Incubation costs for new businesses to persist till year-end; margins expected to normalize to 16–18% as scale improves.
Q 7 (U.S. Utility Bedding & Tariff Shield): Does U.S. manufacturing shield from tariffs, and what is the business model?
A (Management):
• U.S. plants manufacture pillows and quilts; raw materials imported globally.
• Tariff impact on raw materials managed via sourcing and price adjustments with retailers.
• Business is EBITDA positive at current utilization; expected to absorb fixed costs as scale increases.
Q 8 (Cotton Yield Initiative): Details on high-density planting system (HDPS) and its scalability?
A (Management):
• HDPS increases planting density from 11,000 to 29,500 plants/acre, boosting yields from 450 kg/ha to 1,250 kg/ha.
• Over 12,000 hectares adopted; further details on irrigated/rainfed applicability to be provided later.
3 · Other Key Numbers
- Sales volume for Q1 FY26: 23.6 million meters (vs. 25.3 million meters in Q1 FY25; down ~7% YoY, down ~8% QoQ)
- Total income for Q1 FY26: INR967 crores (vs. INR950 crores in Q1 FY25; up 2% YoY, down 6% QoQ)
- EBITDA for Q1 FY26: INR119 crores (vs. INR154 crores in Q1 FY25; down 23% YoY)
- EBITDA margin: 12.26% (vs. 16.17% in Q1 FY25; up from 8.55% in Q4 FY25)
- PAT for Q1 FY26: INR38 crores (vs. INR78 crores in Q1 FY25)
- EPS for Q1 FY26: INR1.91
- Debt reduction in Q1 FY26: ~INR60 crores
- Revenue from new businesses (utility bedding & USA brands): INR130 crores in Q1 FY26 (vs. INR125 crores in Q4 FY25)
- Capacity utilization in U.S. utility bedding business: ~50%
- Branded business contribution: ~20% of overall revenue in Q1 FY26 (vs. 16% in FY25)
- Non-U.S. business contribution: ~30% of core business revenue
- Domestic business contribution: ~2.25% of total revenue
- U.S. share of core business revenue: ~70%; U.K.: ~10%; Rest of World: ~20%
- Targeted utility bedding revenue: $175 million over 3 years
- Capex for FY26: INR65 crores (maintenance); INR200+ crores for North Carolina/ZLD projects (INR70+ crores spent in Q1)
- HDPS cotton yields: 29,500 plants/acre (vs. 11,000); 1,250 kg/ha (vs. 450 kg/ha)
- Presence in 50+ countries; domestic brands in 2,000+ MBOs pan-India
If any number was referenced but not disclosed, it is marked as Not disclosed.