Rupa & Co

Rupa & Co reported a challenging Q1 FY26, with revenue declining by 12.6% year-on-year to INR184 crores from INR210 crores in Q1 FY25. This decline was attributed to a complex industry environment marked by intense competition and significant pricing pressures. Consequently, EBITDA moderated to INR12 crores, resulting in an EBITDA margin of 6.6%, down from 8.6% in the prior year. Net profit also saw a reduction to INR6 crores, translating to a PAT margin of 3%.

Despite the top-line pressure, the company achieved a gross margin of 37.7% in Q1 FY26, an increase of 140 basis points year-on-year. The Athleisure category demonstrated strong momentum, contributing nearly 15% of total revenue with healthy gross margins of 35% to 40%. The export business also showed positive traction, growing by 10% year-on-year. However, the quarter's profitability was impacted by a high branding and advertising spend of INR21 crores, representing 11.5% of revenues, and under-absorption of administrative expenses due to lower sales.

Management emphasized its commitment to maintaining price discipline to preserve brand equity and long-term profitability, even amidst aggressive price undercutting by competitors. The company is actively enhancing channel efficiency, refining its product mix, and accelerating innovation to meet evolving consumer preferences. Investments in high-potential categories like Athleisure are expected to drive sustainable growth. The company also clarified that the INR21 crores branding spend included celebrity payments and would be rationalized in upcoming quarters to align with the annual target of 6-7% of revenue.

Rupa & Co maintained a robust financial position, reporting a cash positive status with a cash surplus of INR53 crores as of June 30, 2025, a significant increase from INR24 crores in March 2025. Working capital stood at INR763 crores, down from INR811 crores in March 2025, reflecting prudent management. For FY26, the company plans a modest capital expenditure of INR15-20 crores, indicating no major asset additions. An exceptional item^📎 related to the surrender of FCUK and FOTL license brands was also noted.

Looking ahead to Q2 FY26, management expects to regain the volume deficit experienced in Q1 and projects an EBITDA margin in the range of 8% to 9%. They anticipate a 5% to 10% growth in the thermal order book for Q2 and aim to achieve a turnover of INR 80-90 crores from the Modern Trade channel. While pricing pressures are expected to continue weighing on margins in the short term, the company remains focused on cost discipline and operational efficiencies to offset these impacts. No price hikes are anticipated for the next two quarters.