Active Clothing Co Ltd Q4 FY2025 Concall Summary

Key Takeaways

• Revenue surged 81% YoY in Q4: Total income growth was driven by a deeper design studio aligning with global brands, not by price or product mix changes.
• Margins compressed on late-quarter orders: EBITDA margin fell to 8.14% in Q4 as orders arrived late, forcing the company to accept higher input costs to meet delivery commitments.
• Levi's export partnership is the marquee win: Active is now in direct contact with Levi's global team in San Francisco, who are studying the design studio and placing orders, marking a step-change in export credibility.
• The design-to-share model is the core engine: Management claims the model is "endless" and can scale 10x in 5 years because current volumes are fractions of the addressable market.
• What to watch next quarter: Whether the Levi's export orders materialize at scale, margin recovery as order flow normalizes, and progress on the dyeing plant approvals.

The Design Studio as Competitive Moat

• Design recognition driving client acquisition: Top global companies established for over 100 years are using Active's designs to market their own products globally, validating the studio's output.
• Virtual design center and AI tools: These are translating into both topline and bottomline growth, helping the company meet evolving industry trends across international and domestic markets.
• Trend prediction engine: The design studio and R&D center continuously explore new brands, trends, silhouettes and looks, using global trend forecasting websites and exhibitions to predict seasonal demand well in advance.
• Predictive analytics already operational: The company uses a big data bank, AI tools and Power BI to forecast what kind of orders, raw materials, sizes and quantities to expect in a particular month, based on historical data analysis.
• Summer 27 designing already underway: The studio has begun work on collections two years out, signaling a structured, forward-looking design calendar.

Mehra: "It is endless ma'am. We keep on increasing our manufacturing capacities and the business is there. We can do even a 10x in 5 years if we wish to grow at that level because right now whatever the volumes we are doing in this business, these are the fractions and fractions of the market size."

Levi's & Export Expansion

• Levi's partnership is now direct and global: Active has moved beyond domestic supply into a direct export relationship, with Levi's global team in San Francisco studying the design studio and placing orders.
• Levi's endorsement as a signal: Levi's has acclaimed Active as one of the very good design studios and hopes to place good orders this season, a reference that can unlock other global brand conversations.
• Export footprint spans 30+ countries: The company is actively growing its geographic reach, with recent tours to America and China and upcoming trips to America and Canada, shifting from a national to an international player.
• New sportswear and athleisure discussions: Active is in the process of tying up with Agilitas (entered India), Lotto (relaunching in India in 2026), and Elitesports in the USA (meeting next week), while the athleisure/leisure wear category was successfully delivered in FY25.
• Geopolitical risk is diversified: The company grows with well-established global brands, some with 100+ year histories, and sticks to national brands across different geographies so nothing is concentrated in one territory.

Mehra: "Levi's now we have partnered with them for their export growth also. So we are in direct contract with their global team at San Francisco who are studying our design studio and placing orders on us."

Margin Dynamics & Input Costs

• Q4 margin compressed by order timing: Orders came quite late in the quarter, so the company had no time to negotiate with raw material suppliers because the intent was to supply the orders, pushing input costs higher.
• Raw material prices are currently stable: The company books raw materials the same day it books an order, well in advance, insulating itself from spot price volatility under normal conditions.
• ERP system automates sourcing: Raw material demand is generated automatically when orders come in, replacing the old manual buying and sourcing process and improving procurement discipline.
• Sustainability as a client acquisition lever: Half of power and energy capacity is produced in-house, and being an approved facility for sustainable products (organic, recycled, RWS) helps in building a global client base.

Mehra: "Orders came late, so we had no time to probably. So the intent was to supply the orders. So we couldn't probably negotiate much with the raw material suppliers."

Capacity, Backward Integration & Quality

• Building expansion near completion: New machinery will be installed, including utilization of additional capacity alongside present capacities, supporting the growth trajectory.
• Dyeing plant planned to reduce lead times: The primary objective is to become more agile, supply earlier and hold less inventory; cost benefits would come in the times to come. The process requires all state and central government approvals plus additional land and building acquisition, making it a longer process.
• Anchor client capacity is pre-allocated: Capacities are already allocated to anchor clients as a percentage of business; as business grows with them, the company adds capacities to service them better and remain a preferred partner.
• Quality governance is being scaled: The company is employing more people governing quality standards, with every department being fully equipped with quality teams and monitoring conducted day and night.
• No strategic partnership or JV sought: Management stated the company wants to grow with itself only and is not looking for any strategic tie-ups.

Mehra: "No, the first the main implication would be the lead times, we would be more agile, we'll be able to supply earlier, we'll be able to hold our inventory lesser. So that would be the prime."

Financial Health & Receivables

• PAT grew 74% YoY for FY25: PAT margins stood at 2.84% for the full year and 2.37% for Q4, reflecting operating leverage flowing through despite Q4 input cost pressure.
• EBITDA grew 34% YoY for FY25: Full-year EBITDA margin was 9.59%, while Q4 margin dipped to 8.14% on the late-order dynamic.
• Receivables and inventory under control: Stock levels are declining and receivables are being realized within six months, indicating working capital discipline.
• CAPEX is continuous: Management described CAPEX as a continuous activity given the company's growth trajectory, continuing into the current fiscal.

Guidance & Commitments

Key Metrics