Raymond Lifestyle Limited — Q4 FY25 earnings call

Raymond Lifestyle Limited reported a challenging Q4 FY25, with revenue declining by 9% year-on-year to ₹1,580 crores from ₹1,728 crores in Q4 FY24. This subdued performance was primarily attributed to weaker consumer demand and the significant impact of a ransomware attack that disrupted operations for 25-26 days. The attack led to temporary system outages and supply chain delays, affecting sales and overall profitability during the quarter.

For the full fiscal year 2025, the company recorded a total net income (revenue) of ₹6,360 crores and an EBITDA of ₹651 crores, resulting in an EBITDA margin of 10.2%. The annual performance was influenced by persistent weak consumer spending, prolonged heatwaves, general elections, fewer wedding dates, and inflationary pressures. Management noted India's GDP growth at 6.5% for FY25 but highlighted elevated CPI and lower CAPEX impacting discretionary spending.

The Branded Textile segment saw a 21% revenue decline to ₹727 crores in Q4 FY25, with EBITDA margin contracting sharply to 7% from 21.8% in Q4 FY24, largely due to demand weakness and the ransomware attack. Branded Apparel revenue decreased 4.4% to ₹391 crores, and its EBITDA margin fell to 0.4% from 13.5%. The Garmenting segment's revenue was stable at ₹248 crores, with an improved EBITDA loss of 2.9% compared to 12% in Q4 FY24. High Value Cotton Shirting revenue declined 13.14% to ₹185 crores, but its EBITDA margin surged to 33.1% due to a one-time^📎 subsidy of ₹53 crores.

The ransomware attack in Q4 FY25 caused approximately 25-26 days of operational disruption, leading to an estimated sales loss of ₹500 crores, of which 50% (₹250 crores) was recovered within the quarter. The remaining balance is expected to be recovered over the next six to eight months. The profitability impact was quantified at roughly ₹70-80 crores on EBITDA, which management believes would have been better without this incident. The IT team, with cyber security experts, successfully restored normalcy.

The Ethnix by Raymond brand has now surpassed ₹100 crores in FY25 sales and operates over 150 stores, with 34 net additions during the year and only 10 closures. The company aims to expand the Ethnix store network to 300 stores over the next 36 months. A strategic shift is underway to transition towards a more franchisee-led store model, moving away from company-led stores, as the business model is now fully established and accepted in the market.

Management expressed optimism for FY26, anticipating it to be a year of recovery and a return to a growth trajectory. Early signs include a 12-13% growth in textile and apparel bookings for FY26 compared to last year. The company targets a revenue growth of 10-15% (or slightly higher) for FY26. Steady-state EBITDA margins are expected to be in the range of 20-22% for Branded Textile and 14-15% for the overall lifestyle business, driven by improving consumer demand and restocking.

The Garmenting segment is poised to benefit significantly from the Free Trade Agreement (FTA) between the UK and India. Currently, 20-22% of the garmenting business is with the UK, and management expects this to grow by 30-40% over the next two years as supply chains realign. The company is also expanding its capacity and client base, having added over 20 new clients in FY25 across the US, UK, and Europe, aiming to become one of the largest suit makers worldwide.

Raymond Lifestyle Limited maintained a net debt-free position with net cash of ₹90 crores as of March 31, 2025. The company demonstrated improved working capital management, with net working capital days reducing to 87 days (amounting to ₹1,473 crores) in March 2025, down from 89 days (₹1,553 crores) in December 2024. This improvement was primarily driven by a reduction in trade receivables and inventory, reflecting a continued focus on optimizing working capital.