Raymond Lifestyle Q1 FY27 earnings call

Raymond Lifestyle Limited reported a total income of INR1,560 crores in Q1 FY27, marking a 6% year-on-year growth from INR1,475 crores in Q1 FY26. EBITDA increased by 11% YoY to INR135 crores, resulting in an improved EBITDA margin of 8.6%, a 40 basis point expansion over the previous year. The company maintained a debt-free status with a net cash surplus of INR154 crores in June '26, a significant improvement from a net debt position of INR55 crores in June '25. Net working capital days improved by 15 days, standing at 75 days in Q1 FY27 compared to 90 days in Q1 FY26.

The Garmenting Business segment demonstrated stellar performance, with revenue surging 50% year-on-year to INR296 crores in Q1 FY27, up from INR197 crores in the same quarter last year. This robust growth was primarily attributed to strong order book execution following US-India tariff rationalization and the successful onboarding of new global clients from Europe and UK. The segment achieved an EBITDA of INR22 crores, a substantial improvement from a negative INR8 crores in Q1 FY26, with an EBITDA margin of 7.3%, representing an 1100 basis point jump.

The company navigated a complex macroeconomic environment characterized by geopolitical tensions, with Brent crude at USD100 per barrel, and anticipated Federal Reserve rate hikes contributing to currency volatility^🌐. Domestically, persistent El Nino conditions led to record-breaking heat waves, and inflation remained a concern, with the RBI adjusting its FY27 growth outlook to 6.6% and CPI projections to 5.1%. Raymond Lifestyle mitigated these pressures through strategic initiatives including vendor base diversification, 'Make in India' efforts, freight consolidation, and a company-wide transformation project aimed at cost rationalization.

While overall performance was positive, Branded Textiles revenue saw a slight decline to INR684 crores from INR699 crores in Q1 FY26, primarily due to a base effect from the previous year, leading to scale deleverage and a 13.9% EBITDA margin. Branded Apparel grew 4% YoY to INR349 crores, supported by double-digit growth in LFS and online channels, but its EBITDA margin was impacted to 5.1% by an adverse channel mix. High Value Cotton Shirting revenue was INR195 crores with a 9.7% EBITDA margin, benefiting from a favorable product mix despite high raw material costs.

Raymond Lifestyle's strategic pillars include premiumization, shifting product mix towards high-value wool, poly-wool blends, and pure linen collections. Casualization is a key focus, expanding smart casuals, polos, chinos, knits, and denims with fabric innovations. Geographical diversification is leveraging vertical integration and trade deals (US-India tariff rationalization, UK-EU FTAs) to expand market share in European markets and de-risk export concentration, with new clients from Spain, Italy, Germany, and the UK already contributing to orders.

The company continued its store optimization efforts, having exited 133 underperforming stores and strategically opened 85 new high-yielding locations since June 2025, bringing the active network to 1627 stores. The Ethnix segment is undergoing a business model change, shifting high-value products (>INR50,000) to a Made-to-Measure model and distributing basic products through other channels like The Raymond Shop (TRS) and e-commerce. This store rationalization process is expected to continue for another 2-3 quarters, with net negative store openings for branded EBOs this year, aiming to improve ROCE.

Management aims to at least double the business turnover and grow EBITDA faster than revenue in the next five years, driven by its strategic pillars. The company is also committed to ESG goals, targeting 25% renewable energy usage by 2030, up from 12% currently, which also contributes to cost savings. Improved working capital days (75 days in Q1 FY27 vs 90 days in Q1 FY26) further enhance agility and operational efficiency, supporting the long-term vision.