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Revenue recovers from a low base, but margins weaker across segments

• Raymond Lifestyle’s (RLL) consolidated revenue rose 17% YoY (on a low base) to INR14.3b (+5% beat).
• Revenue increase was mainly driven by improved performance in the Branded Textile & Branded Apparel segment, led by volume growth.
• RLL closed a net of 13 stores in 1QFY26, taking the total retail store network to 1,675.
• The company opened six stores but closed 18 stores in Ethnix to take the store network to 140.
• Gross profit grew 17% YoY (-1% QoQ) to INR6.2b (3% above our est.) as gross margins contracted ~5bp YoY to 43.3% (+150bp QoQ).
• EBITDA grew 29% YoY to INR770m due to improved product mix and operating leverage, but was ~35% lower than our estimate due to losses in garmenting and higher advertisement spends in branded apparel.
• EBITDA margin inched up ~50bp YoY to 5.4% (significantly below our estimate of 8.7%), due to weaker margins across segments despite revenue growth.
• Depreciation and amortization rose 19% YoY (23% above), while finance costs jumped 24% YoY (13% above).
• Other income surged 52% YoY (40% above our estimate).
• Despite higher other income, the company reported a loss of INR198m (vs. our est. PAT of INR200m).

Segmental performance:

• Branded textile: Revenue at INR7.2b (17% beat) grew ~27% YoY, led by robust volume growth, strong bookings, and more wedding dates. EBITDA grew 90% YoY to INR1b (5% beat) as margin expanded 480bp YoY to 14.3% (vs. 9.6% YoY, though ~170bp miss on our estimates) on account of improved product mix and operating leverage.
• Branded apparel: Revenue at INR3.7b (9% beat) grew 22% YoY. The growth was witnessed across all brands and key channels such as EBOs, MBOs, and online. EBITDA came in modestly at INR185m (22% miss) as margin was broadly stable YoY at 5% (200bp miss), likely due to higher marketing spends.
• Garmenting: Revenue at INR1.97b declined 22% YoY (26% miss) due to uncertainty around US tariffs. The segment reported an operating loss of INR77m (vs. ~INR90m profit in 1Q25) on account of scale deleverage.
• High Value Cotton Shirting (HVCS): Revenue at INR2.1b (2% beat) grew ~10% YoY on account of strong demand from B2B customers. EBITDA almost doubled YoY to INR195m, as margins expanded ~400bp YoY to 9.5% (4QFY25 was boosted by certain one-offs) driven by operating leverage and improved product mix.

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