Iris Clothings Q1 FY27 earnings call

Iris Clothings Limited reported a strong Q1 FY27, with total income growing 26.2% year-on-year to INR47.2 crores from INR37.4 crores in Q1 FY26. EBITDA saw a significant 50.9% year-on-year increase to INR8 crores, resulting in an EBITDA margin of 17.12%. Net profit also demonstrated robust growth, rising 52.1% year-on-year to INR4 crores compared to INR2.63 crores in the prior year, reflecting disciplined execution and operational excellence.

The quarter was marked by several strategic initiatives aimed at strengthening market position and expanding opportunities. These included the launch of a direct-to-consumer (D2C) platform, expansion into quick commerce, commissioning of a new in-house embroidery facility, and the introduction of a newborn gift set range. A significant milestone was the Board's approval of a 51% stake acquisition in Infinia, pending approvals, to enter the rapidly growing athleisure segment and diversify the apparel business.

The company strengthened its omnichannel strategy by launching a D2C platform to engage directly with consumers and expanded into quick commerce. Initial quick commerce efforts began with BigBasket in four cities, focusing on the newborn gift set range, with plans for further platform expansion. Management noted good initial traction and expects gifting to be a significant part of this segment. E-commerce contribution is targeted to increase from 5% of total revenue in FY26 to 10-11% in FY27.

Iris Clothings commissioned a state-of-the-art in-house embroidery facility equipped with advanced Japanese machinery, enhancing integrated manufacturing capabilities and product differentiation, particularly in premium and infant wear. The product portfolio was further expanded with the launch of a newborn gift set range, available across retail stores, digital platforms, and quick commerce, targeting the high-potential gifting segment and strengthening value-added offerings.

The proposed acquisition of a 51% stake in Infinia marks the company's entry into the athleisure segment. Management highlighted significant manufacturing synergies due to Infinia's similar product range and a shared target market of parents aged 25-45 years. Infinia is targeting INR40 crores in revenue with 7-8% margins for FY27, and management expects consolidated margins to remain similar to current levels, with improvements anticipated as synergies kick in, creating a scalable platform for accelerated growth.

The company's distribution model remains strong, with a significant portion of growth coming from existing distributors. Geographically, the West of India (Maharashtra, Gujarat, Rajasthan, Punjab) contributes about 40% of overall revenue. Uttar Pradesh is identified as a key growth potential for the next year, with investments planned for adding distributors in smaller towns, alongside increasing focus on the Northeastern region, including Assam and Mizoram.

Iris Clothings plans to finalize the planning for a new INR50 crores greenfield facility in West Bengal this financial year, with operations expected by the end of next financial year (FY28). Until then, capacity will grow 20-25% annually through incremental capex, contributing to an expected 35% overall revenue growth this year. For retail, the strategy involves opening 20-25 COCO stores initially in Hyderabad, Bangalore, and Chennai to refine the model, with a target of 100 EBOs in the next couple of years, projecting 20-25% EBITDA at the store level when mature.