Raymond Lifestyle Ltd Q1 FY27 Earnings Call Summary

Revenue

Margin

Demand

Guidance

Tone

Event Participants

Executives

3 Prasad Ellatch Chathuar, Satyaki Ghosh, Sunny Desa

Analysts

6 Avinash Karumanchi, Chetan, Deepali Kumari, Dev Rishi, Dhiraj Mistry, Yogesh

Financials & KPIs

Metric	Reported	Commentary
Total Income	₹1,560 crores	+6% YoY vs ₹1,475 crores in Q1 FY26; growth led by garmenting (+50%) offset by base effects in textiles and shirting
EBITDA	₹135 crores	+11% YoY; margin expanded 40 bps to 8.6% despite RM inflation, driven by garmenting turnaround
Net Cash Surplus	₹154 crores (June '26)	Swing of ₹209 crores from net debt of ₹55 crores in June '25; debt-free balance sheet sustained
Net Working Capital Days	75 days	Improved 15 days from 90 days in Q1 FY26; continued focus on working capital efficiency
Store Network	1,627 stores across 600 cities	Exited 133 underperforming stores, opened 85 high-yielding locations since June 2025; rationalization ongoing
Gross Margin Impact	-35 bps	Attributed to business mix shift (garmenting growth at lower gross margin than domestic suiting); EBITDA margin still expanded
Depreciation (one-off)	₹11 crores	One-time lease accounting error correction in FY26 Q1 reversed this year; not recurring in subsequent quarters
Loyalty Members	12.4 million	Data-led consumer insight engine driving repeat visits and lower marketing acquisition costs

Segment Performance:

Branded Textiles: Revenue ₹684 crores vs ₹699 crores YoY (-2%), EBITDA ₹95 crores, margin 13.9%. Decline due to base effect from Q4 FY26 IT issues that shifted invoicing into Q1 FY26; scale deleverage impacted margins despite resilient product mix
Branded Apparel: Revenue ₹349 crores, +4% YoY; EBITDA ₹18 crores, margin 5.1%. LFS (up 25%+) and e-commerce (high double-digit) drove growth; margins hit by adverse channel mix, partially offset by lower markdowns and store rationalization
Garmenting: Revenue ₹296 crores vs ₹197 crores, +50% YoY; EBITDA ₹22 crores vs -₹8 crores, margin 7.3% vs -4.1% (1,100 bps improvement). Driven by US-India tariff rationalization, UK/EU FTA tailwinds, and new client onboarding
High Value Cotton Shirting: Revenue ₹194 crores vs ₹205 crores, -5% YoY due to base effect; EBITDA ₹19 crores, margin improved to 9.7% from 9.1% on favorable product mix despite high RM costs
Emerging Business (Ethnix, Raymond Home, Innerwear, Sexual Wellness, Chairman's Collection): Revenue ₹79 crores, +9% YoY; tactical investments continuing for long-term growth

Segment Reclassification: Management carved out emerging businesses into standalone segment, bringing portfolio to five segments: Branded Textiles, Branded Apparel (four core brands), Garmenting, High-Value Shirting, and Emerging Business — for transparency on core vs growth bets

Geographic & Segment Commentary

Garmenting Export Mix: Geographic mix pre-Trump era was US 65%, UK 10%, Europe 5-6%; fell to 55% US during tariff turmoil. Now recovered to 59-60% US, with UK at 12% (up from 10%) and Europe at 7-8% (up from 6%). US orders partially shifted to competitors (Vietnam, Cambodia, Turkey) and will take time to return; Europe FTA announced but takes 6-9 months to come into force, currently seeing inquiries and sample orders
Garmenting Order Book: Plants full through December 2026; booking for Q4 (January onwards) commenced August 1. New clients include Next (UK), El Corte Ingles (Spain), OVS (Italy), Karl Gross (Germany), and T.M. Lewin (UK shirting). UK FTA live from July 15; bulk orders being made in Q2/Q3
Ethnix Business Model Shift: Store closures continuing (18 closed vs 1 opened in Q1). Premium products (sherwanis ₹75,000-1.5 lakh) shifting to made-to-measure model; basic products (kurtas) moving to TRS stores and e-commerce including marketplaces. High-impact flagship stores planned in key wedding-shopping locations (Linking Road, Santa Cruz, Borivali in Mumbai)
Casualization: ColorPlus and Parx growing double-digit; casual mix within Park Avenue and Raymond Ready-to-Wear up 200 bps to 18% from 15-16%. AirShield, FlexTech, TechnoClean fabric innovations supporting casual push
Q1 Seasonal Impact: Adhik Maas (inauspicious month) shifted wedding dates ~25 days later, compressing summer suit/blazer sales; festive season (Onam to Diwali) spans four months with winter weddings favoring Raymond's formal portfolio in H2

Company-Specific & Strategic Commentary

Premiumization: Shifting product mix toward high-value wool, poly-wool blends, and pure linen across textiles, apparel, and garmenting; management cites K-shaped recovery favoring premium end. Launched Chairman's Collection as new emerging brand
Garment Exchange Program (GEP 2026): "Refresh Your Style With Perfect Tailoring" initiative offering value-added tailoring in exchange for pre-owned garments; drives footfall, supports circular fashion ecosystem, strengthens brand connection
Transformation Project with Kearney: Comprehensive cost review across media buying, product procurement, manpower, and factory productivity; "fresh guard" approach for next 100 years; targeting cost rationalization without compromising quality
Vertical Integration Advantage: 11 factories, fabric-to-garment capability differentiates in export pitches; B2B fabric sales to Indian and global brands using own/partner factories
Geographic Diversification: Deliberate strategy to cap US at 55% of garmenting mix and grow UK, Europe, Japan, Korea; UK FTA live from July 15, Europe FTA pending (6-9 months)
ESG & Renewables: Renewable energy share in factories at 12% (from 8-9% last year), targeting 25% by 2030 ahead of schedule; cost-saving while improving sustainability

Guidance & Outlook

Metric	Guidance / Outlook	Commentary
Price Hikes (Apparel)	5-7% from Q2 FY27	Calibrated increases; volumes monitored to protect capacity utilization across 11 factories
Price Hikes (Fabric)	7-9% from Q2 FY27	Raw material is larger share of fabric COGS; quality-dependent; offsets wool (+100%), cotton/flax (+20%), chemicals (+30%)
Garmenting EBITDA Margin	Endeavor toward double-digit	Currently 7.3%; depends on product mix (suits vs shirts), capacity utilization at full, and no geopolitical disruption
Store Network (FY27)	Net negative EBO openings; rationalization for 2-3 more quarters	3-4 quarters to complete rationalization, then resume EBO expansion; TRS format continuing to add stores
Garmenting Order Book	Fully booked through December; Q4 booking in progress	Visibility strong; order book filled till December as of July 31; January onwards being booked now
FY27 Growth Outlook	"Ahead of budget phasing"; H2 "very, very strong"	Wedding dates returning in winter, festive spread across 4 months; Q1 ahead of internal budget despite headwinds
5-Year Target	Double revenue; EBITDA to grow faster than top line	Business-as-is target excluding M&A; strategic plan being built with Kearney
ROC Target	Mid-teens (endeavor)	Acknowledged as outcome metric, not chased directly; investments in stores/capacity will temporarily pressure ROC
Q2 FY27	"Doing decent" per management	Continuation of consolidation phase with price hikes rolling out

Risks & Constraints

Risk	Context
Geopolitical / Trade Volatility	Brent spiked to $100/barrel on US-Iran conflict collapse, now settling at $80; Fed rate hikes causing currency volatility. Management explicitly noted a single social media announcement can change export dynamics overnight
Raw Material Inflation	Wool prices up ~100% YoY, cotton and flax up ~20%, chemicals up ~30%. Mitigants: vendor diversification, Make-in-India substitutes for Chinese chemicals, consolidated shipping lines, cost-plus export contracts
Domestic Demand Softness	El Nino conditions causing record heat waves and potentially subpar monsoon; RBI cut FY27 growth outlook to 6.6% from 6.9%, CPI revised to 5.1%. Adhik Maas shifted auspicious dates, compressing Q1 wedding-related sales
Store Rationalization Drag	34 EBOs net closed in quarter (9% of network); revenue loss from closures masked underlying growth. Process will continue 2-3 more quarters with partner commitments, notice periods
US Export Concentration Recovery	Some US clients placed orders with Vietnam, Cambodia, Turkey during tariff period; may not return immediately. Order book strong but external shocks unpredictable
Competitive Threats in Shirting	Neighbor countries historically competitive on shirting; UK-India FTA zero-tariff access is key lever to counter this in UK market
Consumer Price Resistance	Price hikes (5-9%) may risk volume rejection; management balancing between capacity utilization needs (11 factories) and passing through costs

Q&A Highlights

Raw Material Costs & Margin Protection

Question: On RM cost pressures in textiles, is gross margin at risk? How will price hikes and inventory efficiency help? (Avinash Karumanchi)
Answer: Gross margin drop of 35 bps is purely business mix (garmenting at lower gross margin than domestic suiting), not underlying deterioration. Management using three-pronged approach: diversified vendor base with competitive trials, Make-in-India substitutes reducing Chinese input exposure, consolidated shipping lines for freight rationalization. Q2 onwards calibrated price increases of 5-7% (apparel) and 7-9% (fabric), "as little as possible but enough to cover margins." (Satyaki Ghosh)

Garmenting Sustainability & Historical Margins

Question: Should garmenting return to FY24 peak of ~10% EBITDA margin in next 2 years? Are export contracts cost-plus? (Avinash Karumanchi)
Answer: Order book fully loaded till December, Q4 booking started. Garmenting contracts are cost-plus, so margins protected unless dramatic events occur in next 2-3 months. Plants at full utilization giving productivity advantage. Double-digit margin achievable if mix holds (suits vs shirts vs trousers); "may not take 2 years" but international business "very, very unpredictable" so no formal guidance. Suit-wearing trend returning in Western markets (poly-wool blends gaining share), but consumption trend yet to convert to orders. (Satyaki Ghosh)

Depreciation Spike

Question: Depreciation up 25% YoY — what's driving it? (Avinash Karumanchi)
Answer: ₹11 crores is a one-time lease accounting correction (error from last year reversed); won't recur in subsequent quarters. (Prasad Ellatch Chathuar)

New Clients & Geographic Mix

Question: Provide color on new global customers and geographic mix now. (Chetan, Systematix)
Answer: Mix recovered from 55% US (tariff trough) to 59-60% US. UK moved 10% to 12%, Europe 6% to 7-8%. New clients processing: Next (UK), El Corte Ingles (Spain), OVS (Italy), Karl Gross (Germany), T.M. Lewin (UK shirting). Europe FTA announced but takes 6-9 months; UK FTA live from July 15, bulk orders materializing in Q2/Q3. US clients who shifted to Vietnam/Cambodia/Turkey will take time to return. (Satyaki Ghosh)

Store Rationalization Timeline & Ethnix Model

Question: Is rationalization close to completion? Ethnix down ~29-30 stores since June 2025 — what's the store addition plan? (Chetan, Systematix)
Answer: Closures not over; requires 2-3 more quarters due to FOFO partner commitments and landlord notice periods. Full-year net EBO additions will be negative. Q1: opened 8 EBOs, closed 24 (net -16); TRS format +6; Ethnix +1/-18 (net -17). Ethnix undergoing model change: premium sherwanis (₹75K-1.5L) moving to made-to-measure (14-21 day delivery), basic kurtas to TRS stores in wedding bazaars and e-commerce/marketplaces (already live on D2C, marketplaces going live this quarter). High-impact flagship stores planned in key wedding districts (Linking Road, Santa Cruz, Borivali). (Satyaki Ghosh)

Casualization & Brand Performance

Question: Brand-wise revenue growth rates? Which brand leads casual mix shift? (Deepali Kumari, Arihant Capital)
Answer: ColorPlus and Parx growing double-digit; casual mix within Park Avenue/Raymond Ready-to-Wear up 200 bps to 18%. E-commerce high double-digit, LFS up 25%+. Overall branded apparel growth of 4% despite 9% EBO closures — underlying momentum stronger. Q1 hit by Adhik Maas (no auspicious celebrations), delaying weddings by ~25 days; winter weddings benefit Raymond's formal portfolio. Festive season (Onam to Diwali) spread across four months, supporting H2 strength. "We are ahead of our budget phasing... Half 2 will be very, very strong." (Satyaki Ghosh)

Retail Recovery & EBO Growth Resumption

Question: When can retail recover? TRS +5-6%, EBOs +3% LFL — what about closed stores? (Deepali Kumari, Arihant Capital)
Answer: 4% growth delivered despite 9% EBO closures shows demand resilience. Rationalization will continue 3-4 quarters; then "press the button" on EBO expansion. Opening 100 stores is easy, opening 100 good stores is the challenge. Margin recovery and sales recovery will come when EBO expansion resumes — it's the main channel. (Satyaki Ghosh)

Raw Material Inflation Quantum & ASP Hikes

Question: What's assumed RM cost inflation and EBITDA guidance? How much ASP hike without hurting volumes? (Deepali Kumari, Arihant Capital)
Answer: Wool +100%, cotton and flax +20%, chemicals +30% YoY — yet gross margins held flat in Q1 without meaningful price increases (honored forward bookings). Q2 calibrated hikes: apparel 5-6%, fabric 7-9%. Volumes critical for factory utilization (11 factories); balance between price and volume rejection. Transformation project (Kearney) finding cost cuts across media buying, product procurement, manpower, factory productivity. (Satyaki Ghosh, Prasad Ellatch Chathuar)

Export Order Book Geography

Question: Can exports sustain at Q1 levels for FY27/FY28? What's the geographic split of order book? (Deepali Kumari, Arihant Capital)
Answer: Order book filled till December, now booking Q4. Orders across Europe, US, Japan, Korea, Asia. FY28 planning is challenging due to geopolitical unpredictability ("one Truth Social announcement changes everything"). If US-India relationship and Middle East situation hold, full-year delivery looks good. (Satyaki Ghosh)

5-Year Revenue & Margin Levers

Question: What's the 3-5 year revenue guidance per segment? What levers drive mid-to-high teen EBITDA margins? (Dhiraj Mistry, Jefferies)
Answer: Strategic plan being built with Kearney India. Directional target: at least double turnover in 5 years, EBITDA growing faster than top line — business-as-is, excluding M&A. Levers: premiumization (K-shaped recovery favors top end), casualization (knits, denims, polos), geographical expansion (UK/EU/Japan/Korea to reduce US dependence), internal cost rationalization (transformation project), governance/ESG (renewables saving cost while building brand). Working capital also a lever — 90 days to 75 days already released cash. (Satyaki Ghosh)

India-UK/EU FTA Benefits

Question: What incremental order book from India-UK and India-EU FTAs? (Dhiraj Mistry, Jefferies)
Answer: Target to cap US at 55% of exports while running factories full — rest of world must grow faster. New capacity/lines will be added for international demand. India B2B garmenting also growing — producing for "so-called competitors" as one of best factories in country for shirts, trousers, suits. (Satyaki Ghosh)

ROC Target

Question: What ROC target and sustainable utilization? (Dhiraj Mistry, Jefferies)
Answer: ROC is an output metric, not chased directly. Store openings and factory capacity expansion will challenge ROC in near term. Mid-teens ROC is the right level for manufacturing-driven business — "endeavor, but not the target I'm chasing." (Satyaki Ghosh)

Garmenting Demand Visibility

Question: Is demand improving across UK/US? What's visibility for coming quarters? (Dev Rishi, Individual Investor)
Answer: Three Karnataka factories + new Andhra factory + Ethiopia plant — no capacity till December, booking January onwards going well. Personally met CEOs of Tommy Hilfiger, Calvin Klein, Brooks Brothers, Charles Tyrwhitt (UK), Tailor Brands, Men's Wearhouse — "everybody is bullish... offtake at premium end not an issue." Consumer sentiment okay in India too. (Satyaki Ghosh)

Store Productivity & Premiumization

Question: Will store productivity/profitability improve from existing network? Is premiumization sustainable for revenue and margins? (Dev Rishi, Individual Investor)
Answer: Yes on both counts. Store closures remove drag; premiumization should drive both ASP and margin. "If you get ASP growth via premiumization and you don't get margin growth, that may not be worth it." (Satyaki Ghosh)

Australia/NZ FTA & Wool Costs

Question: Does Australia/NZ trade agreement reduce wool raw material costs? (Yogesh, Individual Investor)
Answer: Wool from Australia to India already at zero duty — FTA is welcome but has no incremental impact on costs, positively or negatively. (Satyaki Ghosh)

Vertical Integration Cross-Selling

Question: Does garmenting tailwind benefit fabric business? Do other garmenting players source from Raymond? (Yogesh, Individual Investor)
Answer: Vertical integration is a key sales differentiator with premium brands — "fabric from my mill, my designer, my garment factory, my own brand understanding." Yes, B2B fabric business operates in three modes: Raymond fabric made by others, Raymond fabric made in Raymond factories, or others' fabric made in Raymond factories for third parties. Integrated solutions strengthen pitches in India and abroad. (Satyaki Ghosh)

Key Takeaway

Raymond Lifestyle delivered a mixed Q1 FY27 with total income of ₹1,560 crores (+6% YoY) and EBITDA of ₹135 crores (+11% YoY, 8.6% margin), guided by a stellar garmenting turnaround (₹296 crores, +50% YoY; EBITDA swing from -₹8 crores to +₹22 crores) on US-India tariff rationalization and UK/EU FTA tailwinds, while branded textiles and shirting faced base effects. The company remains net cash positive at ₹154 crores with working capital days improved to 75. Management designated FY27 as a "year of consolidation," with continued EBO rationalization for 2-3 more quarters (net -34 EBOs in Q1) and Ethnix transitioning to a made-to-measure plus multi-channel model. Price hikes of 5-7% (apparel) and 7-9% (fabric) roll out from Q2 to offset wool (+100%), cotton/flax (+20%), and chemical (+30%) cost inflation, with a Kearney-led transformation project targeting structural cost cuts. Garmenting order books are full through December with 5-year targets of doubling revenue and growing EBITDA faster, though management flagged geopolitical unpredictability and the upcoming festive-season demand surge (weddings shifted to winter) as key swing factors for H2 delivery.