Revenue
Margin
Demand
Guidance
Tone
Event Participants
Executives
4
Ashok Jalan, Dinesh Jethalya, Gaurav Poddar, Surendra Shetty
Analysts
6
Dixit Doshi, Nakul Doshi, Rajiv Jain, Raj Patel, Ravi Dubey, Yash Sidhani
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Income | ₹466 crores | 16.4% YoY growth from ₹400 crores in Q1 FY26, driven by strong brand portfolio and distribution network |
| EBITDA | ₹40 crores | 22.3% YoY growth from ₹33 crores; margin improved to 8.6% (up 35 bps YoY) |
| PAT | ₹11 crores | 144.4% YoY growth from ₹5 crores; margin expanded to 2.4% (up 115 bps YoY), aided by operating leverage |
| Debt-to-Equity | 0.24 | As of 30th June 2026, comfortably low leverage |
| Other Income | ~₹22 crores | Mostly normal business income (delay payment interest, rent); 20-30% from mark-to-market gains on investments |
| Retail Revenue | ~₹30 crores (Q1) | Expected to nearly double to ₹160 crores in FY27 from ₹80 crores in FY26 |
| Store Count | 49 stores | 30 Zcode + 19 Devo; plan to add ~21 more in FY27 to reach ~70 stores |
| Capex Guidance | ~₹100 crores (FY27) | Includes ₹40-50 crores for retail expansion; funded through internal accruals |
Geographic & Segment Commentary
- Fabrics (71% of revenue): Core business remains stable despite Adhikmas-related moderation in wedding/occasion demand. Input cost inflation persisted, but management leveraged brand strength to pass on price hikes gradually. Confident of achieving 12% revenue growth guidance for FY27.
- Garments (19% of revenue): Part of diversified portfolio; benefit from festive and wedding season demand expected to materialize from Q2 onwards as Diwali shifts later in the year.
- Yarn & Others (10% of revenue): Stable contribution; company maintains agile inventory model to shift production toward in-demand categories.
- Retail – Zcode & Devo: Added 3 Zcode and 2 Devo stores in Q1. Zcode (fast fashion) showing faster traction; some stores (including those under 1 year old) already EBITDA-positive. Devo (ethnic wear) highly seasonal, awaiting festive season assessment. Guided ~150 bps EBITDA dilution from retail.
Company-Specific & Strategic Commentary
- Siyaram 2.0 Transformation: Refocusing on design thinking, contemporary merchandising, and retail-first approach through Zcode and Devo brands. This initiative strengthens direct-to-consumer connect and modernizes the brand image.
- Retail Expansion Discipline: CapEx of ₹100 crores earmarked for FY27, with ₹40-50 crores for retail. Management deliberately pacing expansion to build operational foundation first; franchise model considered only after proven business model and maturity of 100-125 stores.
- Land Development Project: ₹24.6 crores spent on land development routed through P&L as accounting entry (net nil effect). Approvals received, construction to start this quarter with 24-month completion timeline. No revenue booked from this project yet.
- Preference Share Scheme: NCLT approved cumulative non-convertible redeemable preference shares issued as bonus to equity shareholders; scheme effective from 30th July 2026, record date fixed as 22nd August 2026. Taxed as dividend income at redemption.
- Capital Allocation Policy: Company remains asset-light; consistently generates positive free cash flows, funding retail expansion and dividends while still ending year with surplus cash.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | ~12% for FY27 | Reiterated guidance; assumes stable demand through festive and wedding seasons |
| EBITDA Margin | ~14% (excluding 150 bps retail dilution) | Core business margin guidance maintained; retail business expected to dilute consolidated EBITDA by ~150 bps annually |
| Retail Revenue | ₹160 crores for FY27 | Doubles from ₹80 crores in FY26; assumes continued store additions and like-for-like growth |
| Store Expansion | ~70 stores total by FY27 | Includes both Zcode and Devo brands; paced expansion focused on operational efficiency |
| Capex | ~₹100 crores for FY27 | ₹40-50 crores for retail, balance for other growth initiatives; funded via internal accruals |
Risks & Constraints
| Risk | Context |
|---|---|
| Input Cost Inflation | Raw material and chemical prices experienced high volatility over last 1-2 quarters, putting pressure on margins. Management mitigates through gradual price pass-on (not fully correlated), but persistent inflation could erode core EBITDA margins below 14% guidance. |
| Seasonal Demand Shifts | Diwali shifted later by ~3 weeks, altering demand timing. Adhikmas period postponed discretionary purchases in Q1. Q2/Q3 seasonality makes monthly/quarterly assessment unreliable; management relies on annual guidance. |
| Retail Business Maturity | Zcode/Devo stores are still immature (only 18 months old), with small sample size (49 stores). Fast fashion requires high volumes to achieve scale; profitability uncertain until ~100-125 stores operate for over a year. |
| Working Capital Buildup | Inventory and receivables rise in Q2 ahead of festive season; retail expansion adds inventory to balance sheet. Management confident of maintaining March-to-March day counts similar to last year. |
| Preference Share Tax Impact | Redemption treated as dividend income, fully taxable in investor hands. Listing before redemption would classify as capital gains, creating potential tax confusion for shareholders. |
Q&A Highlights
Retail Business Performance & Profitability
- Question: How is Zcode performing on profitability, and how do you view competition? (Yash Sidhani)
- Answer: Stores are only 18 months old; expected to achieve profitability in 1.5-2 years. Some stores, including those under 1 year old, have turned EBITDA positive. Fast fashion market is large and growing faster than overall apparel, with each player using different strategies. Company's unique USP gives confidence. (Gaurav Poddar)
- Question: What is the EBITDA loss from retail and are older stores consistently positive? (Dixit Doshi)
- Answer: Guided 150 bps annual EBITDA dilution, expected to be well within budget. Zcode is less seasonal than Devo; about 10-12 stores have matured and some are consistently EBITDA-positive. Store-to-store growth seen in Q1, but sample size too small for granular disclosure. (Gaurav Poddar)
Retail Expansion & Capital Allocation
- Question: When will you disclose Zcode/Devo numbers? (Yash Sidhani)
- Answer: Need at least 100-125 stores running for over a year to make meaningful conclusions. Internal analysis continues; will share numbers once scale achieved. (Gaurav Poddar)
- Question: What thresholds guide capital allocation and possible franchise model? (Nakul Doshi)
- Answer: Core business generates positive cash flows beyond CapEx and shareholder payouts. Retail expansion driven by long-term business model, not speed. Franchise model is an option later once stores prove returns for potential franchisees. (Gaurav Poddar)
- Question: What factors determine store location, and have they evolved? (Rajiv Jain)
- Answer: Initially used cluster approach (Karnataka/Bangalore for Zcode). Store selection based on existing footfall, mall opportunities, and AI tools for micro-market analysis. Evolved from 4,000 sq ft to ~7,000 sq ft formats, yielding better results and consumer experience. (Gaurav Poddar)
Margins & Input Costs
- Question: How will raw material cost trends impact margins through FY27? (Ravi Dubey)
- Answer: Global volatility affected raw materials and chemicals. Company balances old/new raw material procurement; some price pass-on done in Q1 with more possible if costs stay high. Confident of maintaining 14% EBITDA guidance excluding retail dilution. (Gaurav Poddar)
Working Capital & Seasonality
- Question: How are trade receivables and inventory levels trending? (Yash Sidhani)
- Answer: Q2 is inventory-building season ahead of festive and wedding periods, so current numbers are not indicative. March-to-March working capital days are similar to last year; retail business adds inventory on balance sheet. (Gaurav Poddar)
Land Development & Preference Shares
- Question: How is ₹24.6 crores land development cost accounted for? (Unidentified, NB Alpha)
- Answer: Development charges routed through P&L per accounting standard; moved from inventory to expenses with no net effect on EBITDA or profit. Construction starts this quarter, project completes in 24 months. (Gaurav Poddar, Surendra Shetty)
- Question: How will preference shares be taxed for investors? (Dixit Doshi)
- Answer: Redemption amount treated as dividend income, fully taxable. If sold before redemption after listing, it would be treated as capital gains. (Surendra Shetty)
Key Takeaway
Siyaram Silk Mills delivered strong Q1 FY27 performance with total income of ₹466 crores (+16.4% YoY), EBITDA of ₹40 crores (+22.3% YoY), and PAT of ₹11 crores (+144.4% YoY), aided by operating leverage. The company is executing its Siyaram 2.0 transformation through Zcode and Devo retail brands, which generated ~₹30 crores revenue in Q1 and are expected to nearly double to ₹160 crores in FY27, even as consolidated EBITDA absorbs ~150 bps dilution from retail investments. Management reiterated FY27 guidance of ~12% revenue growth and ~14% core EBITDA margin, supported by positive distributor sentiment ahead of festive and wedding seasons, despite a later Diwali and persistent input cost inflation. With 49 stores currently and a target of ~70 by year-end, capital allocation remains disciplined at ~₹100 crores CapEx, funded through internal accruals. Key watchpoints include retail store maturity (100-125 stores needed for scale assessment), raw material price volatility, and the upcoming preference share issuance with record date of 22nd August 2026.