Summary Raymond Lifestyle Limited - Q3 FY26 Earnings Call Summary Tuesday, January 27, 2026, 17:00 IST
Event Participants
Executives 6 Amit Agarwal, E C Prasad, Rakesh Tiwary, Rakesh Tiwary, S L Pokharna, Satyaki Ghosh, Sunny Desa
Analysts 5 Aditya Bansal, Avinash Karumanchi, Chetan, Deepali Kumari, Hitaindra Pradhan, Madhavendra, Portugal Das, Sucrit D Patil
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Income | ₹1,883 crores | +Highest quarterly revenue; driven by festive/wedding demand and volume growth in core textiles. |
| EBITDA | ₹271 crores | +23% YoY; margin expanded to 14.4% from 12.3% due to product mix and operating leverage. |
| Branded Textiles Margin | 21% | Resilient performance despite a 25% increase in global wool prices; supported by full capacity utilization. |
| Net Debt | ₹15 crores | Significant deleveraging; net cash position stands at ₹155 crores. |
| 9M FY26 Revenue | ₹5,223 crores | +9% YoY; reflects steady growth in domestic markets despite global headwinds. |
| 9M FY26 EBITDA | ₹652 crores | +18% YoY; margin improved 90 bps to 12.5% vs 11.6% in the prior year. |
| ASP (Textiles) | +₹26 per meter | Increase reflects growing contribution of premium and technical fabrics (Techno-series). |
| Exceptional Item | ₹57 crores | One-time non-cash charge related to the implementation of the new labor code (gratuity/leave catch-up). |
Geographic & Segment Commentary
- Branded Textiles: Delivered the strongest quarterly results to date, exceeding industry average growth. Focus remains on the “Techno-series” (stretch, wrinkle-resistant) and super-premium collections like Regio Italia to drive ASP.
- Branded Apparel: Recorded double-digit growth (over 12%) in the domestic market, outperforming peers. Management is focusing on casualization (now 15-17% of mix) and the “Ethnix” brand, which saw high single-digit growth.
- Garmenting (Exports): Faced headwinds due to a 25% US tariff on certain categories, causing margin compression. Management is mitigating this by reducing US exposure (from 50% to 35%) and pivoting toward UK, Europe, and Japan.
- Retail Reach: Operates ~1,500-1,600 points of sale including ~1,000 The Raymond Shops (TRS). Expansion is focused on Tier 2 and Tier 3 markets using an asset-light franchise model.
Company-Specific & Strategic Commentary
- Premiumization & Innovation: Launched Spectra and Royal Soft (100 shades) and expanded exotic wool collections to capture price-inelastic wedding demand.
- Digital & Omni-channel: Online sales are targeted to reach 10% of total revenue this year; implementing auto-replenishment and real-time demand tracking systems.
- Retail Rationalization: Closed non-performing stores to protect returns; expects another 6 months of rationalization before accelerating disciplined store openings.
- ESG Commitment: Target of 15% reduction in Scope 1 & 2 emissions and 25% renewable energy mix by 2030; 100% independent directors currently on the board.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue (Garmenting) | 50% incremental potential | Current capacity in India (Indupur) and Ethiopia can support 50% higher revenue as markets stabilize. |
| Store Expansion | 18-month horizon | Meaningful expansion to resume after 6 months of rationalization; focused on profitable Tier 2/3 locations. |
| Ethnix Business | 2-year maturity | Management views Ethnix as a 4-year journey; expects significant scaling and profitability in the next 24 months. |
| Working Capital | Reduction by March 2026 | Seasonal inventory for festivals to unwind; receivables expected to normalize by fiscal year-end. |
Risks & Constraints
| Risk | Context |
|---|---|
| Geopolitical & Tariffs | 25% US tariffs and uncertainty regarding the India-UK FTA implementation impact export margins and volumes. |
| Raw Material Volatility | Australian wool prices rose ~30% in four months; combined with an appreciating AUD, this pressures gross margins. |
| Demand Casualization | Structural shift toward casual wear requires Raymond to balance its heritage formal-wear identity with new trendy, slim-fit offerings. |
| Execution Risk | New labor code implementation and store rationalization may cause short-term fluctuations in reported profitability. |
Q&A Highlights
Domestic Consumption
- Question: What is driving the gap between primary and secondary sales? (Avinash Karumanchi)
- Answer: Direct tax relief (₹1 lakh crore) and GST benefits have boosted consumer spending power. Secondary inventory levels have actually come down due to strong festive/wedding sell-through (Amit Agarwal).
Garmenting & US Tariffs
- Question: How are you mitigating the 25% punitive tariff in the US? (Deepali Kumari)
- Answer: We are shifting toward UK/Europe/Japan (currently 35-40% of export mix). We are also accepting smaller domestic orders (5k-10k pieces) to maintain capacity utilization despite lower margins (Amit Agarwal).
Store Strategy
- Question: Why has EBO expansion remained stagnant? (Chetan)
- Answer: We opened 400 stores in 3 years and are now rationalizing those that aren’t profitable. We leverage 1,000 TRS stores and 1,700 MBOs, so reach is not a constraint; profitability is the current priority (Amit Agarwal).
Casualization Trend
- Question: How is a heritage brand adapting to casualization? (Hitaindra Pradhan)
- Answer: Pre-COVID, casual was <5% of our mix; it is now 15-17%. We are expanding the “Parks” brand for affordability and updating “Color Plus” with trendier, slimmer fits (Amit Agarwal, S L Pokharna).
Key Takeaway Raymond Lifestyle Limited delivered its highest-ever quarterly revenue of ₹1,883 crores in Q3 FY26, supported by a 23% YoY increase in EBITDA. Performance was anchored by the branded textile segment’s 21% margin and resilient domestic apparel growth of 12%, which offset headwinds in the garmenting export business. Strategically, the company is pivoting toward premiumization through technical fabrics and the “Ethnix” vertical while aggressively rationalizing its retail footprint to ensure long-term store profitability. Despite a 25% spike in wool costs and US tariff challenges, Raymond maintained a near net-debt-free balance sheet with ₹155 crores in net cash. Management remains focused on capturing the robust Indian wedding season and Tier 2/3 market consumption while guiding for a normalization of working capital by year-end. The company is well-positioned to leverage its 100-year brand equity to transition from a formal-wear leader to a diversified lifestyle player.
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