Summary
Thomas Scott (India) Limited - Q3 FY2026 Earnings Call Summary Monday, February 16, 2026 12:00 P.M. IST
Event Participants
Executives 1 Vedant Bang (Managing Director)
Analysts 5 Anil Parekh (Individual Investor), Ankur Gulati (Genuity Capital), Ankush Agrawal (Surge Capital), Divya Jain (Sapphire Capital), Rehan Syed (Trinetra Asset Managers)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹66 crores | +46% YoY; Highest-ever quarterly performance despite fire disruption. |
| EBITDA | ₹8 crores | +41% YoY; Growth driven by operating leverage and digital model scale. |
| EBITDA Margin | 11.92% | -42 bps YoY; Impacted by increased festive marketing and fire-related inefficiencies. |
| Profit After Tax (PAT) | ₹5 crores | +67% YoY; Reflects disciplined execution and lower effective tax impact. |
| PAT Margin | 7.54% | +95 bps YoY; Strong bottom-line expansion despite operational setbacks. |
| Inventory | ₹77 crores | Significant increase to support 31,216 cumulative SKUs and winter-wear stocking. |
| Trade Receivables | ₹71 crores | Higher due to revenue concentration in month-three and accounting of customer returns. |
| Thomas Scott Brand Revenue | ₹27 crores | +91% YoY; Strong direct-to-consumer traction and sharper assortment. |
| Licensed & Other Brands | ₹34 crores | +18% YoY; Sustained momentum across key marketplace partner platforms. |
| Contract Manufacturing | ₹5 crores | +113% YoY; Supported by improved capacity utilization at Solapur/Bangalore units. |
Geographic & Segment Commentary
- E-commerce & Digital-First Retail: This segment remains the primary growth engine, utilizing “Thread AI” and “Catalog AI” for real-time demand forecasting. Management utilizes a high-width, low-depth strategy, launching 100-120 units per style to test market viability before scaling.
- Own Brand (Thomas Scott): Positioned in the mass-premium to premium space (₹750-₹2,000 price bracket), focusing on the 25-40 age demographic. The brand saw 91% YoY growth this quarter, benefiting from “premiumization” trends among repeat online shoppers.
- Offline Retail: Currently a minor contributor with 6 stores operational in Bangalore. Management remains focused on online depth for now, with a formal performance review of the offline strategy scheduled for March 2026.
Company-Specific & Strategic Commentary
- Fire Incident & Recovery: An accidental fire at the Bhiwandi warehouse on Nov 25, 2025, resulted in an inventory write-off of ₹21.85 crores. Management noted the loss is fully insured, and supply chains were restored quickly to minimize customer disruption.
- Technology Integration: Deployment of proprietary AI tools (Thread/Catalog AI) has enabled a “built-for-demand” model. This allows the company to manage 22,000+ active SKUs with minimal inventory risk by identifying micro-market trends.
- Premiumization Strategy: Shifted focus toward the premium segment (ASP of ₹800-₹1,200 for shirts/denims) to capture higher disposable income and brand loyalty among young professionals.
- Inventory Management: Utilizes a “test-and-scale” model where only successful small-batch launches receive deep inventory backing, keeping overall liquidation needs very low.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | Sustainable Growth Trajectory | Management expects similar YoY growth rates to continue, driven by SKU depth and new category bets. |
| EBITDA Margin | 12% to 15% | Target range for the medium term; potential for expansion as scale provides better operating leverage. |
| Receivable Days | ~60 Days | Long-term target following the transition of contracts from the parent company and normalization of B2C cycles. |
| Q4 FY26 Outlook | Upbeat/Positive | Driven by festive demand (Eid, Gudi Padwa) and continued momentum in the winter wear segment. |
Risks & Constraints
| Risk | Context |
|---|---|
| Asset/Inventory Risk | The recent ₹21.85 Cr fire loss highlights concentration risk in fulfillment centers, though insurance mitigates the financial impact. |
| Working Capital Pressure | Receivables (₹71 Cr) and Inventory (₹77 Cr) are high; management attributes this to sales concentration in the final month of the quarter. |
| Channel Concentration | Heavy reliance on marketplace partners (Myntra, etc.) for distribution makes the company sensitive to platform policy changes or algorithm shifts. |
Q&A Highlights
Inventory Write-off & Insurance
- Question: Where is the ₹22 crore inventory loss reflected in the P&L? (Ankush Agrawal)
- Answer: The carrying value was written off, but an equal exceptional gain was recorded based on expected insurance receipts. The net P&L impact this quarter was only ₹31.22 lakhs for non-covered items (Vedant Bang).
Revenue Loss from Fire
- Question: Can you quantify the revenue lost due to the warehouse fire? (Ankur Gulati)
- Answer: While difficult to pinpoint exactly due to the team’s recovery efforts, management estimates an additional 15% to 20% revenue (approx. ₹10-15 Cr) could have been achieved without the incident (Vedant Bang).
Receivables Analysis
- Question: Why are receivables so high (100+ days) for a B2C-heavy business? (Ankush Agrawal)
- Answer: Three factors: 1) Sales concentration in the third month of the quarter, 2) Accounting for customer returns as receivables until received, and 3) Ongoing transition of contracts from Bang Overseas to Thomas Scott (Vedant Bang).
Product Strategy
- Question: How do you compete with brands like Levi’s given your high listed MRPs? (Anil Parekh)
- Answer: The high MRP is a tactical “high discount” strategy to enter specific marketplace browsing pages. Actual selling prices (denims ~₹1,200) are competitive for the premium quality offered (Vedant Bang).
Key Takeaway
Thomas Scott (India) Limited delivered a resilient Q3 FY2026, reporting record quarterly revenue of ₹66 crores (+46% YoY) and a 67% increase in PAT to ₹5 crores. This performance was achieved despite a major fire at the Bhiwandi warehouse, which resulted in a ₹21.85 crore inventory write-off (largely covered by insurance) and an estimated 15-20% hit to potential revenue. The company’s strategic shift toward a digital-first, “test-and-scale” AI-driven model is yielding results, with the flagship Thomas Scott brand growing 91% YoY. While working capital remains elevated with inventory at ₹77 crores and receivables at ₹71 crores due to festive sales concentration, management target a normalization of receivable days to 60. Moving forward, the company remains focused on the premium menswear segment (₹750-₹2,000) and expects to maintain EBITDA margins in the 12-15% range as it scales its 31,000+ SKU portfolio.
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