Textile giant Mafatlal Industries rides high on institutional contracts in Q2FY25

In a remarkable financial performance, Mafatlal Industries Limited, a renowned legacy player in India’s textile sector, reported a record-breaking surge in revenue for the second quarter of fiscal year 2025, highlighting the company’s shift towards high-volume institutional contracts. The textile behemoth, listed on the Bombay Stock Exchange under the ticker 500264, announced a 222.6% year-on-year growth in operational revenue, reaching INR 995.5 crore for the quarter ending September 30, 2024.

The spike in revenue, attributed largely to substantial government and institutional orders, underpins Mafatlal Industries’ strategic redirection toward supplying consumable durable goods. Notably, institutional contracts contributed nearly 67% of the total revenue, marking a significant transformation for the firm from a traditional textile supplier to a major contractor for government projects. Experts familiar with Mafatlal’s financial structure noted that this pivot reflects the company’s commitment to diversifying revenue streams and reducing reliance on core textile sales alone.

The company’s total income rose to INR 1,009.3 crore in Q2FY25, up from INR 329.3 crore in the same period the previous year, signaling a 206.5% year-on-year growth. For the half-year ending September 2024, Mafatlal Industries registered an income of INR 1,467 crore, a 56.5% increase from the previous year’s performance. In contrast to revenue growth, however, the net profit fell slightly by 4.6% to INR 20 crore, reflecting increased costs in operational scaling and strategic initiatives.

Riding the Institutional Order Wave

Mafatlal’s financial success this quarter heavily relied on the execution of several large-scale institutional orders, which included supplying consumable goods to approximately 750,000 beneficiaries across 358 districts in Maharashtra, fulfilling uniform fabric orders across multiple states, and supplying Dhoti, Saree, and Lungi to 15.7 lakh beneficiaries in Jharkhand. The company’s order book now boasts contracts worth around INR 1,200 crore, primarily from government bodies in Maharashtra, Jharkhand, and Tripura.

In his remarks, Mafatlal Industries CEO M. B. Raghunath emphasized the company’s evolving business model. He underscored the firm’s newly launched subsidiary, Pieflowtech Solutions Private Limited, a digital infrastructure initiative aimed at capturing government contracts in education and rural infrastructure. Raghunath suggested that Mafatlal’s agility in this space would further strengthen its role as a trusted partner for state governments in delivering high-impact, essential goods.

Expert View: Financial Analysts Weigh In

Financial analysts following Mafatlal Industries see a promising, albeit cautious, outlook for the company’s expansion into digital infrastructure and government tenders. While revenue has seen record growth, some analysts noted that profit margins will be key in determining long-term sustainability as Mafatlal navigates high operational costs tied to its broader scale and supply chain modifications.

“Mafatlal’s transition to an institutional contract-heavy business model could pay dividends, especially given India’s focus on rural and educational upliftment,” observed a textile industry analyst. However, they cautioned that this shift could expose Mafatlal to market risks associated with government spending patterns and regulatory changes.

Future Prospects and Market Position

Looking forward, Mafatlal Industries appears well-positioned to leverage its extensive history and expertise to expand further into the institutional and digital infrastructure sectors. The order book, heavily skewed towards state projects, is projected to offer a steady revenue stream as the company taps into demand from both urban and rural sectors.