VTM Reports 76% Drop in Q2 Net Profit Despite 35% Revenue Growth

VTM Limited , a prominent player in the textile industry, has released its financial results for the second quarter, revealing a mixed performance with significant revenue growth but a sharp decline in profitability.

Financial Highlights

Particulars (in million rupees)	Q2 FY2025-26	Q2 FY2024-25	YoY Change
Revenue	989.70	731.70	+35.3%
EBITDA	50.00	133.60	-62.6%
EBITDA Margin	5.56%	18.26%	-1270 bps
Net Profit	23.20	97.70	-76.3%

VTM Limited reported a substantial increase in revenue, which grew by 35.3% year-over-year to 989.70 million rupees in Q2 FY2025-26, up from 731.70 million rupees in the same period last year. This robust top-line growth demonstrates the company's strong market presence and ability to expand its sales despite challenging market conditions.

However, the company's profitability metrics showed a significant decline. The Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) fell by 62.6% to 50.00 million rupees, compared to 133.60 million rupees in the corresponding quarter of the previous year. Consequently, the EBITDA margin contracted sharply from 18.26% to 5.56%, indicating increased pressure on the company's operational efficiency.

The net profit for the quarter stood at 23.20 million rupees, marking a steep 76.3% decrease from the 97.70 million rupees reported in Q2 FY2024-25. This substantial reduction in bottom-line performance suggests that VTM faced significant challenges in maintaining its profit margins during the quarter.

Analysis and Outlook

The contrasting trends of revenue growth and profit decline point to potential cost pressures or changes in the product mix that may have affected VTM's profitability. The company may need to focus on cost optimization and operational efficiency to improve its margins in the coming quarters.

VTM's ability to grow its revenue significantly in the current economic environment is a positive sign, indicating strong demand for its products. However, the sharp decline in profitability raises questions about the sustainability of this growth model and may require management attention to balance top-line expansion with bottom-line performance.

Investors and stakeholders will likely look for guidance from VTM's management on strategies to improve profitability while maintaining revenue growth in the upcoming quarters.

The company's performance in the second half of the fiscal year will be crucial in determining whether it can reverse the trend of declining profits and leverage its strong revenue growth to deliver improved financial results.

Corporate Governance Updates

In addition to the financial results, VTM Limited has announced several key corporate governance matters:

The Board has recommended the continuation of Mr. RM Somasundaram as a Non-Executive Director beyond the age of 75, subject to shareholder approval.
Mr. Ganesh Ananthakrishnan and Mr. L. Sevugan have been proposed for re-appointment as Independent Directors for a second term of five years, starting from March 25, 2026.
The company is seeking shareholder approval to enter into a contract with Colour Yarns Private Limited, a related party, for the purchase and sale of goods and materials, with a proposed transaction limit of 100 crore rupees over approximately 3 years and 5 months.

These governance decisions reflect VTM's commitment to maintaining a balanced and experienced board while ensuring transparency in related party transactions. The upcoming postal ballot will allow shareholders to vote on these important matters, reinforcing the company's adherence to good corporate governance practices.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
-5.00%	-13.37%	+18.28%	-19.08%	+52.78%	+845.50%

VTM Limited , a prominent player in the textile industry, has released its financial results for the first quarter, showcasing a mixed performance with strong revenue growth but a decline in profitability.

Revenue Growth

The company reported a significant increase in revenue, which rose to ₹720.00 crore in the quarter, up from ₹591.00 crore in the same period last year. This represents a robust year-over-year growth of 22%, indicating strong demand for VTM's products.

Profit Decline

Despite the impressive revenue growth, VTM experienced a decrease in net profit. The company's bottom line fell to ₹46.00 crore, compared to ₹52.00 crore in the corresponding quarter of the previous year, marking an 11.5% decline.

EBITDA Performance

Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) saw a marginal increase, rising to ₹84.00 crore from ₹83.00 crore year-over-year. However, the EBITDA margin compressed to 11.71% from 13.98% in the previous year, suggesting some pressure on operational efficiency.

Financial Overview

Metric	Q1 Current Year	Q1 Previous Year	Change
Revenue	₹720.00 crore	₹591.00 crore	+22%
Net Profit	₹46.00 crore	₹52.00 crore	-11.5%
EBITDA	₹84.00 crore	₹83.00 crore	+1.2%
EBITDA Margin	11.71%	13.98%	-227 bps

Corporate Governance Update

In a separate development, VTM Limited has announced plans to update its corporate governance structure. The company's Board of Directors has approved the adoption of a new set of Articles of Association, aligning with Table F of Schedule I to the Companies Act, 2013. This move is subject to shareholder approval via postal ballot, with results expected to be declared by September 12, 2025.

Additionally, the Board has recommended the appointment of Mr. S. Ramalingam as the Secretarial Auditor for a term of five consecutive years, starting from the financial year 2025-26. This appointment is also subject to shareholder approval.

These corporate governance initiatives demonstrate VTM's commitment to maintaining high standards of compliance and transparency in its operations.

As VTM navigates through a period of strong revenue growth and profitability challenges, investors and stakeholders will be keenly watching how the company balances its growth strategies with operational efficiency in the coming quarters.