Monte Carlo Fashions Limited — Q3 FY26 earnings call

Call held 29 Jan 2026

Management summary

Monte Carlo Fashions Limited reported a strong Q3 and 9M FY26, with revenue growing 11% and PAT increasing 11% and 17% respectively. The company saw robust performance across categories, including a more than doubling of footwear sales. Strategic initiatives like retail expansion, quick commerce partnerships, and overseas e-commerce are driving growth. Management is confident in achieving the higher end of its 10-15% FY26 growth guidance and projects 15-20% growth for FY27, despite some inventory build-up and higher sales returns.

Highlights

  • Q3 FY26 Revenue grew 11% YoY to INR 608 crores.

  • Q3 FY26 Net Profit increased 11% YoY to INR 107 crores.

  • 9M FY26 PAT increased 17% YoY to INR 107 crores.

  • Footwear sales more than doubled compared to 9M FY25.

  • Company expects to end FY26 at the higher end of its 10-15% growth guidance.

Concerns

  • Employee benefit expense increased by over INR 7 crores, though only INR 30 lakhs attributed to labor law change.

  • Inventory has grown faster than sales recently.

  • Sales return for 9M FY26 is 17% compared to 13% last year.

Key financials

2 periods

Q3

  • Revenue
    ₹608 Cr
    YoY +11%
  • EBITDA
    ₹166 Cr
    YoY +7%
  • EBITDA Margin
    27.2%
  • Net Profit
    ₹107 Cr
    YoY +11%

9M

  • Revenue
    ₹996 Cr
    YoY +11%
  • EBITDA
    ₹201 Cr
    YoY +11%
  • EBITDA Margin
    20.2%
  • PAT
    ₹107 Cr
    YoY +17%

What they filed

Q1 FY27: revenue up 7.2%, net profit down 43.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue220 549 206 139 249 +13%608 +11%280 +36%149 +7%
EBITDA28 154 6 -6 42 +50%166 +8%26 +333%-13 −117%
Net profit8 95 -10 -16 16 +100%107 +13%5 +150%-23 −44%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Cotton Segment
    22.1% 9M Growth
  • Winter Segment
    13.9% 9M Growth
  • Summer Wear
    46% Contribution
  • E-commerce
    12% Share of Total Business
  • Retail Stores
    40% Contribution

Capital allocation

high confidence
  • Capex Capex disclosed 70% debt and 30% equity
    • 35-megawatt PM KUSUM Solar project ₹105 Cr
    So I think the total tender is for around 49 megawatts. We can take an average costing of around INR 3 crores to INR 3.2 crores per megawatt. And looking at the recent increase in prices of the metals like silver and copper, it has impacted the cost of 1 megawatt by around INR 15 lakhs to INR 20 lakhs per se. And -- but otherwise, what was the second part of your question? ... And as far as the funding mix is concerned, it will be around 70-30, 70% will be debt and 30% will be equity -- equity and cost equity.
  • Debt Debt disclosed Cost 7%
    It will be at a very competitive rate, around 7%. ... So right now, we are debt free company. Only debt will come from the solar business only. That's all. That is on the subsidiary, not in the parent company. ... Yes, around INR 100 crores of debt will increase for the solar next year.
  • Liquidity Cash ₹300 Cr
    And as far as ROE is concerned, I think if you have to see the cash adjusted equity, so that is much higher because we have around INR 300 crores of cash, which is lying with us and cash adjusted ROE is around 15%.

Guidance & targets

Revenue

  • Revenue Growth Revenue · FY26 · High confidence higher end of 10% to 15%
    As per earlier growth guidance of 10% to 15%, we are hopeful of ending the year at the higher end of the guidance and remain optimistic about achieving multiyear growth going forward.

    — Sandeep Jain

  • Revenue Growth Revenue · FY27 · High confidence 15% to 20%
    So we're forecasting approximately 15% to 20% growth for the next financial year also because we are lying at a very low end of inventory cycle at our warehouses and also at our retail stores and our channel partners.

    — Sandeep Jain

Capacity

  • Cloak & Decker EBOs Capacity · year-end (FY26) · High confidence 25 to 30
    Plans are underway to reach 25 to 30 EBOs of Cloak & Decker by the year-end.

    — Sandeep Jain

  • Overall EBOs Capacity · FY27 · High confidence 40 to 45
    We remain strongly focused on expanding our retail footprint and are firmly committed to open 40 to 45 EBOs across India with a strategic emphasis on the Western and Southern region.

    — Sandeep Jain

Other

  • Solar Project IRR Other · High confidence 18%
    But approximate the project IRR is around 18%. ... IRR is 18%. So exact PAT number is yet to be quantified, but we are anticipating an IRR of 18% as per the latest cost data we have available with us.

    — Rishabh Oswal, Sandeep Jain

Profitability

  • Effective Tax Rate Profitability · full year (FY26) · High confidence 25%
    It will always be 25%, 25.168%. This is our tax bracket is 25%. ... Okay. So on a full year basis, it will be 25%, sir? Yes, yes, yes.

    — Management

What to watch in Q4 FY26

FY26 Revenue Growth Achievement

next quarter (Q4 FY26 results)
Current 11% (9M FY26)
Target higher end of 10% to 15% (~15%)

Why it matters

Verifies if the company meets its stated full-year guidance, indicating overall business momentum.

As per earlier growth guidance of 10% to 15%, we are hopeful of ending the year at the higher end of the guidance and remain optimistic about achieving multiyear growth going forward.

Risks & concerns

  • Inventory buildup faster than sales

    medium

    Inventory has increased, but management attributes this to increased sales and anticipation of a strong upcoming quarter.

    Analyst downplayed

  • Higher sales returns (9M FY26 vs FY25)

    medium

    Sales return for 9M FY26 is 17% compared to 13% last year; however, provisions are made based on a 3-year trend, and management expects lower actual returns in Q4.

    Analyst acknowledged

  • Macroeconomic/geopolitical events impacting consumption

    medium

    Potential risk from recession, macro events, or geopolitical events on consumption, but currently not a concern given current growth forecasts.

    Management acknowledged

Q&A highlights

4 direct
Impact of labour law change on employee benefits Partial
INR 30 lakhs only towards gratuity. ... That is employee benefit, additional increments and all. Not because of labour. This is an annual increase as far as salaries and wages are concerned. But the extra expense, which we have to book was only INR 30 lakhs.

Clarifies the specific impact of a new regulation vs. general salary increases on employee costs, indicating a minor direct impact from the law change.

Asked by Diwakar Rana

Inventory growth vs. sales and ROE target Partial
See, inventory has increased only because sales have increased. And also we are looking forward for a very strong quarter coming forward. That is why also the inventory has gone up. ... And as far as ROE is concerned, I think if you have to see the cash adjusted equity, so that is much higher because we have around INR 300 crores of cash, which is lying with us and cash adjusted ROE is around 15%.

Addresses concerns about working capital efficiency and inventory management, linking inventory growth to anticipated sales and providing a cash-adjusted ROE figure.

Asked by Jigar Nathwani

Rationale and financials of the solar project Direct
This is a purely financial investment decision taken on company's behalf. ... See, we have seen that our return on investment is basically around 9% to 10%. So with this, it will go to 18% in this case.

Explains the strategic intent behind a new, unrelated business venture as a financial investment and its expected returns, clarifying it's not an EPC business.

Asked by Madhur Rathi

Q3 sales growth despite strong winter season Direct
It's not about the faster growth or slower growth. We have given the guidance of 10% to 15%. Accordingly, we have manufactured the merchandise, seeing that this much we can sell. And we are already we have said that we will be going ahead in the top end of this guidance, maybe around 15%, we will end this year.

Addresses analyst's concern about perceived underperformance given favorable weather conditions, stating growth is within planned guidance and based on production.

Asked by Madhur Rathi

Volume vs. value growth discrepancy and EOSS impact Direct
There has been impact of EOSS, but that is already taken into the price. So there is no impact on the margins as far as margins are concerned. But yes, EOSS is increasing every year, and that is why we have to increase our price also. So that is why the margins are not impacted, but there has been a certain reduction in the value and the volume mix is more.

Explains factors influencing sales mix and pricing strategy, attributing the discrepancy to the increasing impact of End-of-Season Sales (EOSS) and volume mix.

Asked by Kapil Jagasia

Q4 outlook and summer sales growth momentum Direct
So we are seeing a very fourth strong -- very strong quarter, the fourth quarter, which is coming now as compared to last fourth quarter of last financial year. ... And because the retail inventory is very low at our channel partners also and at our warehouse also, the sales will have been much better.

Provides insight into near-term business momentum, indicating a strong Q4 driven by low retail inventory and a successful summer trade show.

Asked by Kapil Jagasia

Q4 margin depression due to inventory return Partial
I'm hopeful that as compared to last financial year, fourth quarter, this quarter, we should have better margin, better revenues and overall growth would be around 15% of this financial year as compared to last financial year.

Addresses concerns about inventory returns and their potential impact on Q4 profitability, with management expressing optimism for better margins.

Asked by Subrata

Increase in inventory days and debtors days Partial
So inventory level will remain the same as the sales will grow, the inventory will also grow. But the debtor days, I think we should be bringing by 5% to 10% in next financial year now. ... So we don't have any intention to reduce inventory days or debtors days. This is our strategic decision basically.

Highlights working capital management and the company's strategic approach to inventory, indicating a planned reduction in debtor days while maintaining inventory levels.

Asked by Jigar Nathwani

2 min read 6 chapters

Detailed narrative

Q3 & 9M FY26 Financial Performance

Monte Carlo Fashions Limited reported a robust Q3 FY26 with revenue reaching INR 608 crores, an 11% year-on-year growth, and net profit increasing by 11% to INR 107 crores. For the first nine months of FY26, revenue from operations stood at INR 996 crores, also up 11%, with profit after tax growing 17% to INR 107 crores. EBITDA for Q3 was INR 166 crores (7% growth) with a margin of 27.24%, while 9M EBITDA was INR 201 crores (11% growth) at a 20.23% margin.

Operational Highlights and Segment Growth

The company experienced a strong rebound in sales across most categories, with footwear sales more than doubling compared to 9M FY25. The cotton segment demonstrated significant growth of 22.13% in 9 months, outpacing the winter segment's 13.9% growth. Online sales continued strong momentum, and the company expanded its retail presence by adding 5 new EBOs for Cloak & Decker, aiming for 25-30 by year-end.

Strategic Initiatives and Digital Transformation

Monte Carlo is enhancing customer convenience through partnerships with quick commerce platforms like BlinkIt, Swiggy, and Zepto for express deliveries within 30 minutes. A strategic collaboration with Salesforce is underway to streamline operations and build long-term brand loyalty through digital transformation. The company has also expanded into overseas e-commerce platforms via zoom.com and styleshop.com to broaden its global presence.

Solar Project Investment

The company is investing in a 35-megawatt PM KUSUM Solar project, which is a purely financial investment with an anticipated Internal Rate of Return (IRR) of 18%. The project cost is estimated at INR 3-3.2 crores per megawatt, with a funding mix of 70% debt and 30% equity. This investment is expected to add approximately INR 100 crores to the company's debt next year, with a competitive cost of debt around 7%.

Future Growth Outlook and Inventory Management

Monte Carlo is confident in achieving the higher end of its 10-15% revenue growth guidance for FY26 and projects a 15-20% growth for FY27, driven by strong sell-through and low retail inventory levels. While inventory has increased due to higher sales, management expects debtor days to reduce by 5-10% in the next financial year. The company also anticipates a better Q4 FY26 margin compared to the previous year due to lower returns.

Sales Return and Employee Cost Dynamics

The company noted that sales returns for 9M FY26 were 17%, higher than the 13% recorded in the previous year, though provisions are made based on a three-year trend, and lower actual returns are expected in Q4. Employee benefit expenses saw an increase of over INR 7 crores, with only INR 30 lakhs attributed to a labor law change (gratuity), while the remaining increase was due to annual increments and other benefits.

This is an AI-generated summary of a publicly available earnings call transcript.
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