Filatex India Ltd.

Our reasoning

Multi-pronged capex to drive growth and profitability Filatex is undertaking a ~₹690 Cr capex programme focused on expanding PFY capacity, improving product mix, reducing energy costs and automating operations. The ₹235 Cr brownfield PFY expansion will add ~55,000 TPA capacity and is expected to generate ~₹60 Cr annual EBITDA at optimum utilisation. Renewable energy investments are expected to deliver ₹18–20 Cr annual savings, while steam monetisation and automation will provide additional earnings and cost-saving opportunities. Overall, the non-Ecosis capex programme is expected to generate ~₹235–240 Cr annual EBITDA/savings at optimal utilisation.

Ecosis offers a high-margin growth opportunity Filatex has invested ~₹300 Cr in a 26,750 TPA textile-to-textile chemical recycling plant that converts textile waste into polyester comparable to virgin material. With textile waste recycling still underpenetrated globally, the business offers significant growth potential. Management expects minimum EBITDA margins of ~30% and ₹80–90 Cr EBITDA primarily from FY28 as utilisation ramps up, potentially improving the company's consolidated earnings mix.

Potential first-mover advantage in textile recycling Following the stabilisation of its initial facility, Filatex is exploring two additional 1.5 lakh TPA plants over the next 2–3 years, one in India and another overseas. The technology has undergone pilot-scale testing, and products have received approvals from multiple brands. Partnerships and MOUs with companies such as Decathlon and American & Efird provide early commercial validation, while European regulations promoting textile recycling could support future demand.

Operating efficiencies to support margins Filatex is increasing renewable power's share of captive consumption from ~26% to ~55%, targeting annual savings of ₹18–20 Cr. Automation at Dahej and commercialisation of surplus steam will further improve productivity and monetise existing assets. These initiatives can reduce controllable conversion costs and provide some margin protection during periods of weak industry spreads.