Envoy Textiles financial analysis: denim at 105% utilisation, BDT 10.7bn net debt, 32.5% dividend (Oct 2026)

Investment considerations: a fully used denim plant with a 19% gross margin, but finance costs take 49% of operating profit

Envoy Textiles Limited makes denim fabric at Jamirdia, Bhaluka (Mymensingh). It describes itself as a 100% export-oriented denim mill and the first rope-dyed denim plant in Bangladesh, in commercial operation since March 2008 [1 p.16]. Installed capacity was 52m yards a year with 384 looms, backed by a 25,000-tonne cotton spinning plant (2016) and a 4,200-tonne blended-yarn unit (April 2023) [3 p.67] [3 p.68]. The fiscal year ends on 30 June: FY2026 is July 2025 to June 2026, confirmed by the audited statements [1 p.11].

FY2025 was the best year in the company's history: revenue BDT 18,625m (+30.6%), profit after tax BDT 1,409m and EPS BDT 8.40 [3 p.143]. FY2026 held most of it. Revenue fell to BDT 17,264m, mostly because cotton-yarn exports fell from BDT 2,221m to BDT 1,023m, while fabric sales were almost flat at BDT 16,164m [1 p.35]. Profit after tax was BDT 1,382m and EPS BDT 8.24 [1 p.12], and the board declared a 32.5% cash dividend [15] [12].

Business: 384 looms ran at 106% in FY2025; deemed export to local garment makers is 93% of fabric sales

Envoy took over Edge Denims Limited in 2009 and converted to a public company the same year [1 p.16]. It started in 2008 with 16m yards a year and has more than tripled capacity since [3 p.67]. It makes denim from 4.5 oz to 14.75 oz across recipes, colours and shades, aimed at the upper market segment, and holds a LEED Platinum rating [3 p.67]. The spinning plant in the same compound makes open-end cotton yarn, most of it used in-house; 60-70% of the blended-yarn output is used internally and the rest sold as deemed export [3 p.67].

Capacity stayed at 52m yards and 384 looms through FY2021-FY2025, so volume came from utilisation. Production was 37.1m yards in FY2021, 49.0m in FY2022, 33.3m in FY2023, 38.8m in FY2024 and 54.9m in FY2025 [3 p.68]: utilisation of 71%, 94%, 64%, 75%, 106%. The company explains FY2025 by a surge in international denim demand and says its optimal running capacity exceeds the installed figure [3 p.67] [3 p.74]. In July 2026 the company told the exchanges that capacity had been raised to 60m yards, with about BDT 400m spent on weaving, dyeing, finishing and automation and 40 new looms replacing older ones (about 376 in total), in commercial use since the last quarter of FY2026, according to The Financial Express [9]. We found that report in one allowlisted outlet only; the FY2026 annual report, with the capacity table, is not yet filed.

The sales channel has narrowed. Envoy sells most fabric as deemed export: local export-oriented garment factories buy it, usually against back-to-back letters of credit, for garments shipped to foreign brands. Deemed export rose from 26.6m yards (BDT 4,499m) in FY2021 to 51.4m yards (BDT 15,058m) in FY2025, while direct export to overseas buyers fell from 10.3m to 3.5m yards [3 p.75]. Deemed export was 92.7% of fabric sales in FY2025 against 68.9% in FY2021 [17]. Demand therefore follows Bangladesh's garment export orders. The filings we read do not name the brands or the garment customers, nor give export destinations; this is a gap.

Competitors named by the company are mills in China, India, Pakistan, Cambodia and Vietnam. India and Pakistan benefit from weaker currencies and home-grown cotton, and Pakistan has a GSP facility in the EU market [3 p.68]. The two listed Bangladeshi denim peers with FY2025 annual reports are Shasha Denims (consolidated) and Argon Denims.

On the same fiscal year (to June 2025), Envoy is the largest and most profitable of the three listed denim mills, and the most leveraged. Its revenue of BDT 18,625m compares with BDT 11,287m at Shasha and BDT 5,622m at Argon [7 p.161] [8 p.78]. Envoy's gross margin of 18.9% is about eight to ten points above Shasha (10.9%) and Argon (9.1%), and its ROE of 15.2% compares with 3.8% and 6.9%. Shasha's finance cost took 78% of its operating profit against Envoy's 45%; Argon, with BDT 904m of cash, paid only 29%. Envoy's net debt was 1.16x equity against 0.75x at Shasha and 0.60x at Argon [7 p.160] [8 p.77]. Argon's operating profit includes BDT 112m of export incentive above the operating line, so its margin would fall most when incentives end [8 p.78]. Payout: Envoy 36%, Shasha 32% (5% cash) and Argon 60% (10% cash) [7 p.190] [8 p.7].

Line items: price per yard up 66% in four years, cotton 40% of revenue, gas BDT 1.1bn a year

Revenue is fabric volume times price, plus yarn. Fabric sold rose from 37.0m to 55.4m yards over FY2021-FY2025 and the average price from BDT 176.51 to BDT 293.16 a yard [3 p.75] [17]. Price rose fastest in FY2022 (+21%) and FY2023 (+31%), then flattened at BDT 280-293. Envoy prices in US dollars (its exports and its back-to-back LC sales are dollar-denominated), so the taka price per yard also reflects the exchange rate; the company does not publish a US-dollar price per yard, so we cannot split the rise between dollar price and the taka.

FY2026 had no volume table yet, but the revenue note shows what moved: fabric BDT 16,164m (-0.5%), cotton yarn BDT 1,023m (-54%), dyed yarn BDT 56m and an exchange gain inside revenue of BDT 21m [1 p.35]. Yarn exports fell from 12.4% to 6.2% of revenue [17], consistent with more yarn going into the bigger fabric line. By quarter, nine-month revenue was BDT 12,913m (-5.5%) and the January-March quarter BDT 4,052m against 4,673m [2 p.3]; the company blamed election and Eid holidays, according to The Business Standard [10].

Cost of goods sold is mostly cotton. In FY2026 materials consumed were BDT 10,296m: cotton BDT 6,866m, purchased yarn BDT 1,843m, dyes and chemicals BDT 1,489m and packaging BDT 98m; wages were BDT 755m and factory overhead BDT 2,847m [1 p.15]. Cotton alone was 39.8% of revenue (FY2025 42.2%) [17]. Raw-cotton imports rose from BDT 3,248m in FY2021 to BDT 7,971m in FY2025 [3 p.76]. The company buys cotton during the harvest and holds stock to smooth price swings [3 p.68], which explains inventory of BDT 4.5-5.9bn. Lower cotton cost lifted FY2026: the gross margin rose to 19.1% even as revenue fell [17]; the company told The Business Standard that cotton costs fell 4.19% in the nine months [10].

Gas is the second cost driver. The gas bill was BDT 1,138m in both FY2025 and FY2026, 6.6% of FY2026 revenue and 42% of operating profit [1 p.37] [17]. In history terms, each 10% change in the FY2026 gas bill equalled BDT 114m, or 7.7% of pre-tax profit [17]. Dyeing, sizing and finishing need gas heat as well as power; the 2025 report cites 'increased gas tariffs' offset by scale and 'the ongoing gas crisis and frequent energy price hikes' as risks [3 p.74] [3 p.68]. Factory salaries rose from BDT 366m to BDT 470m and port demurrage of BDT 48m appeared in FY2026 [1 p.37].

Selling and distribution rose from BDT 154m to BDT 260m in FY2026, with salaries in marketing up to BDT 122m and US office costs of BDT 69m [1 p.35]. Administrative costs were BDT 342m [1 p.12]. Profit from operations was BDT 2,692m, a 15.6% margin [17].

Below operating profit, financial expenses of BDT 1,317m are the biggest line (next section). Other income was BDT 179m in FY2026, almost all of it export incentive (BDT 180m against BDT 55m in FY2025) [1 p.36]; the FY2026 statements moved this incentive out of revenue, which is why FY2025 revenue is restated from BDT 18,625m to BDT 18,566m [1 p.12] [3 p.143]. Tax: the company pays a reduced rate as an export-oriented textile maker; current tax was BDT 155m and a deferred-tax credit of BDT 57m cut the effective rate to 6.6% [1 p.12] [17].

The taka: dollar pricing lifts revenue per yard; dollar cotton lifts cost per yard; net exports of BDT 6bn

The taka's fall against the dollar runs through the accounts in three places. First, revenue: sales are priced in dollars, so the taka value of the same yard rises when the taka weakens; the average price went from BDT 177 (FY2021) to BDT 293 (FY2025) a yard [3 p.75]. Second, costs: cotton, purchased yarn, dyes and spare parts are imported in dollars, so the cost per yard rose from BDT 162 to BDT 242 over the same years [3 p.106]. The company calls its foreign-exchange risk minimal because import payments are set off against export proceeds in the same currency [3 p.68]. Net export earnings after imports were BDT 6,005m in FY2025 [3 p.76], so a weaker taka adds more to revenue than to import costs.

Third, the balance sheet and below-the-line items: revenue carries a realised exchange gain (BDT 24m in FY2025, BDT 21m in FY2026), other income carried an unrealised translation loss of BDT 20m in FY2025 and BDT 2m in FY2026 [1 p.35] [1 p.36], and the loan book includes foreign-currency facilities: an ADB euro term loan, an ADB US-dollar loan and Export Development Fund (EDF) dollar loans from several banks [1 p.32] [1 p.36]. Exchange gains have been small relative to profit, which supports the company's natural-hedge description.

Debt: BDT 10.9bn of loans, interest cover 2.0x, net debt down BDT 712m in two years

Envoy has funded expansion with debt. Interest-bearing debt was BDT 10,859m at June 2026: long-term loans BDT 4,070m plus a current portion of BDT 891m, short-term bank liabilities BDT 5,423m, a zero-coupon bond and preference shares of BDT 424m, and leases [1 p.11]. The auditor's key audit matter cites total loans of BDT 10,384m [1 p.7]. LC acceptances of BDT 547m sit outside this figure [1 p.31]. Lenders include ADB, IDCOL, Dutch-Bangla, Pubali, Southeast, Modhumoti, Mutual Trust, HSBC, Commercial Bank of Ceylon and United Finance [1 p.32].

Financial expenses rose from BDT 725m (FY2022) to BDT 1,375m (FY2025) as policy and lending rates rose and debt grew, then eased to BDT 1,317m in FY2026 [5 p.128] [3 p.143] [1 p.12]. Interest cover (operating profit over financial expenses) was 1.91x, 1.71x, 1.57x, 2.24x and 2.04x over FY2022-FY2026 [17]: in no year did operating profit reach 2.5 times interest. The company's own account is that the higher cost funds expansion [3 p.74]. In history terms, 1 percentage point on FY2026's average debt (about BDT 11.2bn) equals roughly BDT 112m of interest, 7.6% of pre-tax profit [17].

Leverage has improved. Net debt was BDT 11,429m at June 2024 and BDT 10,717m at June 2026; net debt/equity fell from 1.62x (FY2023) to 1.06x [17]. Two cautions. Equity includes a revaluation surplus of BDT 2,990m (land revalued in FY2024), so excluding it net debt is 1.50x equity [17] [3 p.143]; and in FY2026 the company recognised BDT 541m of deferred tax on that surplus through other comprehensive income, cutting total comprehensive income to BDT 841m [1 p.12] [1 p.32]. Classification also moves: the FY2026 statements restate June 2025 long-term loans from BDT 3,014m to BDT 1,576m and short-term liabilities from BDT 6,485m to BDT 7,701m [3 p.142] [1 p.11], and the FY2023 report reclassified BDT 1,184m from short- to long-term [5 p.140].

The zero-coupon bond and preference shares are running off: BDT 1,591m (FY2024), BDT 1,109m (FY2025), BDT 424m (FY2026), of which preference shares BDT 174m [3 p.160] [1 p.31]. The new yarn project adds borrowing: the board approved a BDT 1,791.5m open-end spinning expansion financed 70% by debt, reported by both The Business Standard and The Daily Star [10] [11].

Ratios: ROE 14% and gross margin 19% are at seven-year highs; the cash cycle shortened to 187 days

Growth: revenue doubled from BDT 8,177m (FY2020) to BDT 17,264m (FY2026), with a fall in FY2023 (-10.5%) and FY2026 (-7.3%) [17]. Margins: gross margin ranged from 13.9% to 19.1% and is at the top of that range; net margin went from 1.1% (FY2021) to 8.0% (FY2026) [17]. The swing in net margin is much bigger than in gross margin because finance cost is roughly fixed.

Returns: ROE was 1.5% in FY2021, 5-8% in FY2022-FY2024 and 15.2%/13.9% in FY2025/FY2026 [17]. Operating profit on capital employed (equity plus net debt) was 12.9% in FY2026 against 7.7% in FY2023 [17]. Efficiency: receivable days fell from 152 to 126 and inventory days from 195 (FY2023) to 117, so the cash cycle shortened from 277 to 187 days [17]. These are long cycles: cotton stock and LC-based receivables tie up about half a year of cost.

Cash conversion: operating cash flow (after interest) was below profit in FY2025 (0.57x) when inventory and receivables grew with volume, and 1.81x profit in FY2026 when they unwound [17]. Free cash flow after capex was BDT 1,374m in FY2026, but only BDT 72m in FY2025 and negative in FY2024 [17]. Payout was 50%-77% in FY2022-FY2023 and 36%-39% in FY2025-FY2026 [17].

Balance sheet: BDT 10.9bn of interest-bearing debt against BDT 142m cash; group sales were BDT 129m in FY2024 and nil since

Assets are mostly plant and working capital: non-current assets BDT 13,210m, inventories BDT 4,468m and receivables BDT 5,975m against cash of only BDT 142m at June 2026 [1 p.11]. The auditor's key audit matters were PPE (capitalisation and useful lives), revenue (including incentive estimates), inventory valuation, loans and receivables [1 p.4] [1 p.5] [1 p.7]. MABS & J Partners gave an unmodified opinion on FY2026; K. M. Hasan & Co. audited FY2025, also unmodified [1 p.3] [1 p.8]. The FY2024 opinion was unqualified with an emphasis of matter [4 p.7]. Provisions include BDT 285.6m against an FDR placed with International Leasing (ILFSL) [3 p.161].

Related parties within the Envoy group: in FY2024 Envoy sold BDT 129.4m of finished fabric against export LCs to group garment makers Pastel Apparels, Manta Apparels, Epoch Garments, Olio Apparels, Armour Garments and Envoy Fashion, leaving BDT 48.5m receivable at June 2024 [4 p.154]. All of it was settled in FY2025 and no new sales to those companies were disclosed; the only related-party item in FY2025 and FY2026 is office rent / utility sharing with Sheltech Engineering, BDT 2.1m and BDT 6.3m a year [3 p.166] [1 p.38]. Group sales were therefore below 1% of FY2024 revenue. Directors' pay is modest: the managing director received BDT 12.0m in FY2026 [1 p.38].

Governance: sponsors own 65%; a court-supervised board in 2023-24; cash dividend up from 15% to 32.5%

Sponsors and directors held 65.18% at June 2025, institutions 26.11%, individuals 8.65% and foreigners 0.06% [3 p.13]; The Daily Star reports 65.41% for sponsors at August 2026 [12]. The chairman is Kutubuddin Ahmed and the managing director Tanvir Ahmed [3 p.166]; FY2026 board nominees include Envotech Aviation, Epic Garments Manufacturing, Sheltech Ceramics and Cosmopolitan Industries [1 p.16].

Governance had a sponsor dispute. A court-appointed chairman sat on the board in FY2023-FY2024, the 2022 AGM was held only on 24-Aug-2023 under an Appellate Division order, and the court later directed an EGM [5 p.140] [4 p.154] [6 p.32] [5 p.41]. Justice (Retd) Moyeenul Islam Chowdhury chaired as court appointee; an EGM on 2-Mar-2024 confirmed Tanvir Ahmed as managing director [5 p.41]. Directors from the Salam family (Sharmin Salam, Shehrin Salam Oishee, Abdus Salam Murshedy) are listed as ex-directors by FY2025 [3 p.166]. One result: the FY2022 and FY2023 dividends were both paid in FY2024 (BDT 502m in cash) [3 p.145].

Dividend record: 15% cash for FY2022 and FY2023, 20% for FY2024, 30% for FY2025 and 32.5% for FY2026, with no stock dividends in recent years [6 p.7] [5 p.7] [4 p.7] [3 p.79] [15]. The FY2026 record date was 26-Oct-2026 and the AGM is on 5-Dec-2026 [15]. At BDT 3.25 a share the payout is 39% of EPS, about BDT 545m in cash [17], against FY2026 free cash flow of BDT 1,374m.

What's next: LDC graduation in 2026, a 60m-yard plant and a doubled rotor-yarn unit

LDC graduation. Bangladesh is scheduled to leave the least-developed-country group in 2026 [13] [14]; in January 2024 the government began cutting cash export incentives in phases (garment rates halved to 0.5% from January 2024), because WTO rules do not allow such subsidies for a developing country, as The Business Standard and The Daily Star both reported [13] [14]. For Envoy the incentive line was BDT 180m in FY2026, 6.7% of operating profit [1 p.36] [17]: its removal moves other income down. The larger effect is through customers: deemed export depends on Bangladeshi garment makers keeping duty-free access, and EU preferences after graduation depend on rules of origin that reward locally made fabric. The company has not quantified either effect in the filings we read.

Capacity. The 60m-yard denim capacity reported by The Financial Express (in use from Q4 FY2026) moves volume and revenue up if orders fill it [9]. The open-end yarn project, reported by both The Business Standard and The Daily Star, doubles rotor spinning from 25 to 50 tonnes a day for BDT 1,791.5m plus BDT 80.9m of adjacent land, financed 70:30 debt to equity [10] [11]. The Business Standard alone reports that the plant needs 40-42 tonnes of open-end yarn a day and buys 16-17 tonnes outside, and that the equity part is to come from share issuance [10]. If built, purchased yarn (BDT 1,843m in FY2026 [1 p.15]) falls and depreciation and finance cost rise. No completion date has been given [11].

Risks: orders, rates and gas decide profit because half of operating profit goes to lenders

The biggest single sensitivity in the accounts is volume against a fixed cost base: with gas, depreciation and interest together about BDT 3.1bn a year [1 p.37] [1 p.12], a fall in utilisation like FY2023's cuts profit much faster than revenue (FY2023: revenue -10.5%, profit -35%) [17]. The second is rates: finance cost equals half of operating profit.

Key questions: utilisation of the new capacity, interest cover and life after LDC incentives

FAQ

When does Envoy Textiles' fiscal year end?

On 30 June. FY2026 ran from July 2025 to June 2026 [1 p.11].

What was Envoy Textiles' EPS for FY2026?

BDT 8.24, against BDT 8.40 for FY2025; profit after tax was BDT 1,382m [1 p.12].

What dividend did Envoy Textiles declare for FY2026?

32.5% cash (BDT 3.25 a share), record date 26-Oct-2026, AGM 5-Dec-2026 [15].

How much debt does Envoy Textiles have?

Loans of BDT 10,384m plus BDT 424m of bond and preference shares at 30-Jun-2026; cash was BDT 142m [1 p.7] [1 p.11].

What is Envoy's denim capacity?

52m yards a year on 384 looms in FY2025 [3 p.68]; the company told the exchanges it rose to 60m yards, according to The Financial Express [9].

Which results does this note use?

Annual reports FY2022-FY2025, audited FY2026 statements (the FY2026 annual report is not yet filed) and the Q3 FY2026 statements.

Sources

1. Envoy Textiles Limited audited financial statements, year to 30-Jun-2026 (FY2026) · link · accessed 2026-10-31
2. Envoy Textiles Limited unaudited statements, nine months to 31-Mar-2026 · link · accessed 2026-10-31
3. Envoy Textiles Limited Annual Report 2025 (year to 30-Jun-2025) · link · accessed 2026-10-31
4. Envoy Textiles Limited Annual Report 2024 (year to 30-Jun-2024) · link · accessed 2026-10-31
5. Envoy Textiles Limited Annual Report 2023 (year to 30-Jun-2023) · link · accessed 2026-10-31
6. Envoy Textiles Limited Annual Report 2022 (year to 30-Jun-2022) · link · accessed 2026-10-31
7. Shasha Denims PLC Annual Report 2025 (consolidated, year to 30-Jun-2025) · link · accessed 2026-10-31
8. Argon Denims Limited Annual Report 2024-25 (year to 30-Jun-2025) · link · accessed 2026-10-31
9. The Financial Express, 'Envoy Textiles boosts denim fabric capacity to 60m yards' (15-Jul-2026) · link · accessed 2026-10-31
10. The Business Standard, 'Envoy Textiles to invest Tk179cr to double yarn output capacity' (27-Apr-2026) · link · accessed 2026-10-31
11. The Daily Star, 'Envoy Textiles to invest Tk 187cr for expansion, land purchase' (27-Apr-2026) · link · accessed 2026-10-31
12. The Daily Star, 'Envoy Textiles recommends 32.50% cash dividend despite lower profit' (28-Sep-2026) · link · accessed 2026-10-31
13. The Business Standard, 'Govt rolls back export incentives as LDC graduation nears' (30-Jan-2024) · link · accessed 2026-10-31
14. The Daily Star, 'Bangladesh lowers cash incentive for exporters to prepare for post-LDC era' (31-Jan-2024) · link · accessed 2026-10-31
15. DSE announcements via AnalystBro events feed (dividend, record date, AGM, quarterly EPS) · link · accessed 2026-10-31
16. AnalystBro price data (TradingView feed): DSE:ENVOYTEX daily and weekly bars to 29-Oct-2026 · link · accessed 2026-10-31
17. AnalystBro model for this report (workbook tabs below) · link · accessed 2026-10-31