Raymond Lifestyle Limited
Q2 FY26
Call date · October 29, 2025
1 · Management Commentary
Key Positives
- Achieved highest-ever Q2 revenue, led by strong domestic performance and volume growth in branded textile and apparel segments.
- Branded textile segment revenue grew 10% YoY to INR937 crores; EBITDA up 16% YoY with margin improvement.
- Branded apparel revenue up 11% YoY; store network expanded to 1,663 stores (net addition of 71 YoY).
- Positive impact from GST and income tax cuts, with early signs of improved consumer sentiment and footfall.
- Strong bookings and volume-led growth in domestic business; robust product innovation in suiting and shirting portfolios.
Key Negatives
- Export/garmenting segment impacted by US tariff actions; EBITDA margin fell to 5.4% (Q2 FY26) from 9.6% (Q2 FY25).
- High-value cotton shirting revenue declined 7% YoY due to subdued export demand.
- Branded apparel EBITDA margin dropped to 5.2% (from 13% YoY) due to higher marketing spend, input costs, and new store ramp-up.
- Net working capital days increased to 105 (from 97 YoY) due to inventory build-up for festive/wedding season and exports.
Forward Guidance
- Capex plans: Not disclosed.
- New products/segments: Continued focus on premium suiting (Venizo, Royal Soft, Super Luxe, Drape Code), new shirting lines (Woolvance, Denigma), and expansion of Ethnix by Raymond.
- Expected client wins/losses: Export business remains cautious; UK FTA could double UK sales (currently INR150 crores/year) in 2–2.5 years post-enactment.
- Revenue/margin outlook: Domestic growth expected to remain strong; branded apparel margins to recover to early double digits over 2–3 quarters as new stores mature and A&P spend normalizes.
- Other strategic initiatives: Rationalization of underperforming stores, focus on franchisee-led expansion, optimization of retail network, and leveraging TRS/MBO channels for Ethnix.
2 · Q&A Highlights
Q 1 (Ethnix Store Strategy): Why has Ethnix store expansion slowed, and what is the new approach?
A (Management):
• Store rationalization due to underperformance, especially in lower-tier cities; focus shifting to TRS/MBO channels and selective EBO openings in Tier 1/2 cities.
• No cannibalization expected with TRS; expansion to be more cautious and partner-driven.
Q 2 (Brand Aspirational Value & Premiumization): How is Raymond maintaining brand relevance amid changing consumer tastes and premiumization?
A (Management):
• Continuous product innovation (casual, semi-formal, stretch fabrics, pastel shades) and market research; strong feedback loop via TRS and MBOs; focus on premium polywool segment.
Q 3 (Cost Optimization & Margins): What steps are being taken to protect margins amid rising input costs and changing sales channels?
A (Management):
• Ongoing cost optimization, focus on higher capacity utilization at plants, and volume-led operational leverage; confident of maintaining/improving margins as bookings remain strong.
Q 4 (Branded Apparel Margins & Store Maturity): When will branded apparel margins recover, and what scale is needed?
A (Management):
• Margin pressure from increased A&P and new store ramp-up; expect recovery in 2–3 quarters as stores mature.
• Early double-digit margins achievable at INR2,300–2,500 crores annual revenue.
Q 5 (Export/Garmenting Outlook): How are US tariffs and global volatility affecting exports, and what is the client/order outlook?
A (Management):
• US tariffs have led to margin compression and order shifts to other countries; clients are in wait-and-watch mode but may return if tariffs ease.
• UK FTA could double UK sales in 2–2.5 years post-enactment.
Q 6 (Domestic Demand & GST/Tax Cuts): How are GST and income tax cuts impacting demand, especially in Tier 2/3 cities?
A (Management):
• Improved disposable income and positive consumer sentiment driving strong domestic demand and volume growth, especially for weddings/festivals.
Q 7 (Marketing Spend & Store Expansion): What is the trajectory for A&P spend and store additions?
A (Management):
• Branded apparel A&P spend up 30–35% YoY in H1; will increase by 20–25% in H2.
• Store additions to be selective, focusing on profitability and franchisee-led models.
Q 8 (Working Capital & Receivables): Why have working capital days increased, and will this normalize?
A (Management):
• Increase due to inventory build-up for festive/wedding season and more COCO stores; working capital days expected to reduce by March but will remain higher than historical levels due to business model changes.
3 · Other Key Numbers
- Q2 FY26 total income: INR1,865 crores (8% YoY growth)
- Q2 FY26 EBITDA: INR259 crores; EBITDA margin 13.9% (7% YoY growth)
- H1 FY26 total income: INR3,340 crores (12% YoY growth)
- H1 FY26 EBITDA: INR381 crores; EBITDA margin 11.4% (vs 11.1% YoY)
- Branded textile Q2 FY26 revenue: INR937 crores (10% YoY growth); EBITDA INR188 crores (16% YoY); margin 20%
- Branded apparel Q2 FY26 revenue: INR491 crores (11% YoY); EBITDA INR25 crores (vs INR57 crores YoY); margin 5.2%
- Garmenting export Q2 FY26 revenue: INR269 crores (4% YoY); EBITDA margin 5.4% (vs 9.6% YoY)
- High-value cotton shirting Q2 FY26 revenue: INR212 crores (down 7% YoY); EBITDA INR25 crores; margin 11.8%
- Net debt as of 30 Sep 2025: INR246 crores
- Net working capital days: 105 (vs 97 YoY)
- Store count as of 30 Sep 2025: 1,663 (net addition of 71 YoY)
- Ethnix by Raymond store count: 139 (down from 149 YoY)
- UK export sales: INR150 crores (annual run rate)
- Top 3 garmenting clients contribute 40–45% of segment revenue
- Average selling price for Ethnix: Sherwanis INR15,000–85,000; kurta sets INR1,499–15,000
- H1 FY26 Ethnix revenue growth: ~11%
- Branded apparel A&P spend up 30–35% YoY in H1; to rise 20–25% in H2
- International store count (TRS + EBO): ~50
- Receivables: INR1,200 crores as of Sep 2025 (vs INR917 crores Mar 2025)
- Receivable days: 67
- Guidance: Branded apparel to reach INR2,300–2,500 crores annual revenue in 2–2.5 years; UK exports could double in 2–2.5 years post-FTA enactment
All figures as stated in the call; undisclosed numbers marked as such.