Net profit drops 20.44% despite better operating profit
A 48.50% fall in other income and higher depreciation outweighed a 0.42-point sequential margin recovery.
Filed 07 May 2026, 12:57 IST · Vardhman Textiles Ltd (VTL)
Key takeaways
- Consolidated net profit fell 20.44% YoY even as operating profit rose 2.53%, as other income dropped 48.50% and depreciation rose 18.53%.
- Operating margin improved 0.42 percentage points QoQ to 11.77% because expenses fell 0.77% against a 0.29% revenue decline, but it remained 3.04 percentage points below the 93-peer median.
- The stock fell 2.21% on results day and 4.79% in the next session, versus a 2.34% median absolute post-results move across eight reactions.
Price around the results
Operating profit improved while revenue stayed flat
Consolidated revenue was broadly unchanged, declining 0.42% YoY and 0.29% QoQ, but operating profit rose 2.53% YoY and 3.44% QoQ. Expenses fell faster than revenue in both comparisons, down 0.80% YoY and 0.77% QoQ, allowing operating margin to expand despite the lack of sales growth. The gain did not flow through to net profit because other income and depreciation moved unfavourably.
Lower other income and higher depreciation weakened profit quality
Other income fell 48.50% YoY to Rs 68.32 cr and accounted for 31.54% of profit before tax, making the earnings comparison less dependent on core operations than the operating-profit growth suggests. Depreciation rose 18.53% YoY, while interest was nearly flat YoY at a 1.18% increase. The 12.63% tax rate was 6.22 percentage points below last year and 8.49 percentage points below the prior quarter, which cushioned net profit even as profit before tax fell 26.11% YoY.
Q4 margin recovered, but remained below the first half
Operating margin rose from 11.35% in Q3FY26 to 11.77% in Q4FY26, after declining from 13.65% in Q1FY26 to 13.48% in Q2FY26. The sequential recovery therefore did not restore the first-half margin level. Vardhman Textiles also remained 3.04 percentage points below the 14.81% median operating margin of 93 Consumer Discretionary peers that had reported.
Management pointed to yarn growth and a new project
Management said an open-end project would be started, adding a capacity-related item to the company’s presentation. The presentation reported FY26 yarn production of 277,072 MT, up 4.00% YoY, while processed fabric production was 1,646 lakh metres, down 3.00%. The mix shows stronger yarn production alongside lower processed-fabric output.
The initial market reaction was weaker than usual
The stock fell 2.21% on the results day and was down 4.79% in the next session. The first-day move was close to the eight-reaction median absolute move of 2.34%, while the next-session decline was more pronounced than that historical typical move.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹2,498 cr | ₹2,505 cr | -0.29% | -0.42% |
| Other income | ₹68 cr | ₹74 cr | -7.44% | -48.50% |
| Expenses | ₹2,204 cr | ₹2,221 cr | -0.77% | -0.80% |
| Operating profit | ₹294 cr | ₹284 cr | +3.44% | +2.53% |
| Operating margin (%) | 11.77% | 11.35% | — | — |
| Interest | ₹23 cr | ₹26 cr | -11.52% | +1.18% |
| Depreciation | ₹123 cr | ₹118 cr | +3.64% | +18.53% |
| Profit before tax | ₹217 cr | ₹214 cr | +1.40% | -26.11% |
| Tax | ₹27 cr | ₹45 cr | -39.38% | -50.51% |
| Net profit | ₹189 cr | ₹169 cr | +12.32% | -20.44% |
| EPS (₹) | ₹6.49 | ₹5.85 | +10.94% | -22.28% |
Operating margin of 11.77% compares with a Consumer Discretionary sector median of 14.81% across 93 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -2.21% | -2.19% |
| Next session | -4.79% | — |
| 5 sessions | -0.64% | +2.00% |
| 15 sessions | -5.37% | — |
| 30 sessions | +7.80% | — |
Volume on the results session was 0.93× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Yarn production was 277,072 MT in FY26, up 4% year on year.
- Processed fabric production was 1,646 lakh metres in FY26, down 3% year on year.
Expansion
- The company plans to start an open-end project.
What to watch
- Whether operating margin holds above 11.77% after the Q4 recovery.
- Whether other income remains below its 31.54% share of profit before tax.
- Whether processed-fabric production improves from the FY26 decline of 3.00%.