Thomas Scott (India) Limited — Q3 FY26 earnings call

Call held 16 Feb 2026

Management summary

Thomas Scott reported a strong Q3 FY26, with significant revenue and profit growth driven by its own brand and contract manufacturing, despite an unforeseen fire incident leading to an inventory write-off. The company's digital-first, data-driven approach and test-and-scale model are contributing to its performance, though rising receivables and increased marketing expenses were noted. Management expects continued growth and margin stability.

Highlights

  • Q3 FY26 Revenue from operations grew 46% YoY to INR66 crores.

  • Q3 FY26 EBITDA increased 41% YoY to INR8 crores, with margins at 11.92%.

  • Q3 FY26 PAT grew 67% YoY to INR5 crores, with margins at 7.54%.

  • Own brand "Thomas Scott" revenue grew 91% YoY to INR27 crores.

  • Contract Manufacturing Business grew 113% YoY to INR5 crores.

Concerns

  • Inventory write-off of INR21.85 crores due to a fire incident, with a net P&L impact of INR0.3122 crores after insurance.

  • Trade receivables climbed to INR71 crores as of H1 FY26, up from INR57 crores in FY25, attributed partly to revenue concentration in month-three and customer returns accounting.

  • Other expenses increased due to higher marketing initiatives during the festive season.

Key financials

2 periods

Q3 FY26

  • Revenue
    ₹66 Cr
    YoY +46%
  • EBITDA
    ₹8 Cr
    YoY +41%
  • EBITDA Margin
    11.9%
  • PAT
    ₹5 Cr
    YoY +67%
  • PAT Margin
    7.5%

9M FY26

  • Revenue
    ₹177 Cr
    YoY +56%
  • EBITDA
    ₹22 Cr
    YoY +75%
  • EBITDA Margin
    12.7%
  • Net Profit
    ₹13 Cr
    YoY +82%
  • PAT Margin
    7.4%

What they filed

Q1 FY27: revenue up 22.1%, net profit up 56.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue41 45 48 54 57 +40%66 +46%78 +63%66 +22%
EBITDA4 6 7 6 8 +97%8 +41%11 +67%9 +40%
Net profit3 3 4 3 5 +67%5 +66%6 +45%5 +57%
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

Share of Revenue (Q3 FY26)
₹66 Cr Total
  • Licensed and Other Brand Segment ₹34 Cr 51.5%
  • Own Brand (Thomas Scott) ₹27 Cr 40.9%
  • Contract Manufacturing Business ₹5 Cr 7.6%

Guidance & targets

Profitability

  • EBITDA Margin Profitability · any point of time · Medium confidence 12% to 15%
    we are targeting EBITDA margins between 12% to 15% at any point of time. So, we will maintain that. Obviously, as we scale, there is potential for these margins to improve.

    — Vedant Bang

Working Capital

  • Long-term Receivable Days Working Capital · long-term · Medium confidence around 60-days
    we believe that long-term receivable days would settle at somewhere around 60-days.

    — Vedant Bang

Revenue

  • Revenue Growth Revenue · ongoing · Low confidence growth trajectory
    we will continue to remain on a growth trajectory that we have been.

    — Vedant Bang

What to watch in Q4 FY26

Insurance claim settlement for Bhiwandi fire

Next quarter
Current Claim process underway, documentation being submitted.
Target Claim settled, payment received.

Why it matters

Final resolution of the financial impact from the fire incident.

generally, once the entire documentation is completed, we do not expect that it should take too much time for the claims to be settled.

Risks & concerns

  • Fire incident at Bhiwandi warehouse

    medium

    Accidental fire on Nov 25, 2025, resulted in loss of INR21.85 crores inventory and fixed assets, with a net P&L impact of INR0.3122 crores after insurance. Estimated 15-20% potential revenue loss.

    Management acknowledged

  • High trade receivables

    medium

    Trade receivables climbed to INR71 crores as of H1 FY26, attributed to payment cycles with marketplace partners, accounting for customer returns, and revenue concentration in the third month of the quarter.

    Analyst acknowledged

Q&A highlights

6 direct
Inventory levels and slow-moving inventory management Direct
on the inventory management part, I just want to be clear that the SKUs that we report are the number of SKUs that we have launched to-date. Not all of these SKUs are in stock... much of the growth is coming from going deeper in SKUs that have performed much better in the previous period... when we launch a style, we do not launch a lot of inventory in that style; it is just 100-120 units that we launch across four, five, six sizes to just test out.

Clarifies the company's inventory strategy (high-width, low-depth, test-and-scale) and how SKU count is reported, addressing concerns about inventory buildup.

Asked by Rehan Syed

Increase in trade receivables and Bangalore store performance Partial
our general payment cycle online is about 30 to 45 days with the marketplace partners... we show all customer returns as a receivable till such time that the inventory is received backed by us... most of our sales for the past quarters... have been concentrated in the third month of the quarter, largely because the festive or the sale periods are forming again... the stores have been performing well, but again, as I said, it is just six stores at the moment, which is a very low base.

Explains the factors contributing to higher receivables (payment cycles, customer returns accounting, revenue concentration) and provides an update on the nascent retail store performance.

Asked by Rehan Syed

Impact of fire incident on potential revenue Partial
purely based on my judgment, we believe that 15% to 20% additional revenue could have been expected in this particular quarter.

Quantifies the potential revenue loss due to the fire incident, indicating a significant impact on what could have been an even stronger quarter.

Asked by Ankur Gulati

Inventory write-off and P&L impact from fire Direct
we have a valid insurance claim. Our insurance policy completely covers this value in question... there is a write-off in the P&L, which is based on the value of the stock, and there is also an exceptional gain that has been recorded on account of expected insurance claim receipts... the portion that is not covered by insurance, which is amounting to about Rs.31.22 lakhs, which has been communicated to us, that part we have written off.

Clarifies the accounting treatment of the inventory loss, confirming that most of it is covered by insurance, limiting the net P&L impact to INR0.3122 crores.

Asked by Ankush Agrawal

Pricing strategy, target audience, and product movement for Thomas Scott brand Direct
Thomas Scott has been launched as an online-first online-focused brand... there is a high MRP, high discount kind of strategy... our Denims typically have an average selling price of close to actually Rs.1,200, our trousers are close to again Rs.1,200, shirts are between Rs.800 to 1,000... our major demographic actually is the 25-to-40 years segment. And there is also the secondary demographic that we target, which is between 20-to-25 years segment.

Provides crucial insights into the brand's positioning, pricing strategy, and core customer demographics, which are key to understanding its market approach.

Asked by Anil Parekh

Online apparel consumption trends and Thomas Scott's market segment Direct
online apparel... was growing at a very steady rate, right up to COVID, maybe somewhere around 30%-35%... trend is going to continue because of a number of factors... an increase in the aspirational class overall... disposable income increasing... the right space for us to be would be from the mass premium to premium kind of segment online... from Rs.750 right up to Rs.2,000 is the bracket that we are looking at.

Outlines the company's strategic focus on the mass premium to premium segment (INR750-2000) within the growing online apparel market, driven by observed consumer trends.

Asked by Anil Parekh

Product return percentages Direct
our customer returns are quite low. So, we have customer returns of somewhere approximately close to 20%, which is lower than 28% to 30% than most other apparel brands experience... RTO... it is as low as 6% to 9%.

Demonstrates strong product quality and efficient logistics, resulting in lower return rates compared to industry benchmarks, which is a positive operational indicator.

Asked by Anil Parekh

Reliance on base business vs. new trends for growth Direct
we are focused in menswear as a segment where the trends are very long cycle... even today, amongst the bestseller products that we created, say, two or three years back out, maybe just 2% or 3% of those products have actually gone into a de-trend bucket... we are stacking up a lot of bestsellers or rather a lot of high rank products over a period of time. And that is driving a lot of our growth as well.

Explains the stability of menswear trends and the company's strategy of leveraging long-cycle bestsellers while continuously introducing new SKUs, ensuring sustained growth.

Asked by Ankush Agrawal

3 min read 7 chapters

Detailed narrative

Strong Q3 FY26 Performance Driven by Digital-First Strategy

Thomas Scott reported robust Q3 FY26 results, with revenue from operations growing 46% year-on-year to INR66 crores. EBITDA increased 41% YoY to INR8 crores, achieving a margin of 11.92%, while PAT rose 67% YoY to INR5 crores, with a margin of 7.54%. This performance reflects the company's digital-first, data-driven fashion approach, integrating technology and analytics to deliver trend-led products efficiently. The nine-month period also saw strong growth, with revenue at INR177 crores (+56% YoY) and net profit at INR13 crores (+82% YoY).

Own Brand and Contract Manufacturing Lead Segment Growth

The company's own brand, "Thomas Scott," was a significant growth driver, recording revenues of INR27 crores, a 91% year-on-year increase, attributed to its direct-to-consumer franchise and sharper assortment planning. The Contract Manufacturing Business also demonstrated strong growth, contributing INR5 crores with a 113% year-on-year increase, supported by improved capacity utilization. The licensed and other brand segment maintained steady momentum, reporting INR34 crores, up 18% year-on-year.

Inventory Management and Test-and-Scale Model

Thomas Scott employs a "high-width, low-depth" and "test-and-scale" inventory strategy to manage its extensive SKU count, which reached 31,216 in 9M FY26. When launching a new style, the company initially releases only 100-120 units across sizes to test market performance. This approach minimizes inventory risk and ensures high responsiveness to consumer preferences, allowing the company to scale up only for well-performing products and clear most inventory within 180-240 days.

Impact of Bhiwandi Warehouse Fire Incident

An accidental fire on November 25, 2025, at one of the company's Bhiwandi warehouses resulted in the loss of inventory and fixed assets with a carrying value of approximately INR21.85 crores. Management confirmed that the affected inventory was adequately insured, and the estimated losses are fully covered, with the insurance claim process underway. The net impact on the P&L from uninsured losses was limited to INR0.3122 crores. Despite the incident, the company swiftly restored supply chain operations, though management estimates a potential 15-20% additional revenue could have been achieved without the disruption.

Receivables Management and Online Payment Cycles

Trade receivables increased to INR71 crores as of H1 FY26, up from INR57 crores in FY25, which an analyst noted was high for a B2C-focused business. Management attributed this to several factors, including a 30-45 day payment cycle with marketplace partners, accounting for customer returns as receivables until inventory is physically received, and revenue concentration in the third month of each quarter due to festive sales. The company expects long-term receivable days to normalize around 60 days as more contracts transition to pure B2C models.

Strategic Focus on Mass Premium to Premium Online Segment

Thomas Scott is strategically positioned in the mass premium to premium online fashion segment, targeting consumers who value style and quality at accessible prices, with an average selling price range of INR750 to INR2,000. The company's primary demographic is 25-40 years, with a secondary focus on 20-25 years. This strategy aligns with observed market trends of increasing online purchasing confidence, aspirational consumer behavior, and rising disposable incomes, which are driving premiumization in the online apparel market, expected to grow 25-35%.

Lower Product Return Rates Reflect Quality and Efficiency

The company reported significantly lower product return rates compared to industry benchmarks, with customer returns at approximately 20%, below the industry average of 28-30%. Returns to Origin (RTO) for Cash on Delivery (COD) orders were also low at 6-9%, compared to the industry's 10-20%. This efficiency is attributed to the superior quality of Thomas Scott products and the company's operational speed and localized inventory management, which minimizes instances of non-acceptance and enhances customer satisfaction.

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

More Textiles earnings calls