Ladies and gentlemen, good day and welcome to the Raymond Lifestyle Limited Q2 FY 2026 and H1 FY 2026 earnings conference call hosted by Antique Stock Broking Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhijeet Kundu from Antique Stock Broking Limited. Thank you. Over to you, sir.
Thank you. On behalf of Antique Stock Broking, I would like to welcome all the participants in t he Q2 FY 2026 and H1 FY 2026 conference call of Raymond Lifestyle Limited. Today we have with us from senior management of Raymond Lifestyle Limited Mr. S.L. Pokarna who is President Corporate Commercial, Mr. Amit Agarwal Group CFO Mr. Jatin Khanna. Head of Corporate Development, Mr. Vishal Raigagla, Interim CFO and Mr. Sunny Desa, Head Investor Relations. Without taking further time, I would like to hand over the call to Mr. Amit Agarwal. Over to you, Amit.
Thank you, Abhijeet. Good evening everyone. Thank you for joining us today. Our second quarter fiscal 2026 and first half fiscal 2026 results conference call. On behalf of the entire management team, I would like to take a moment to wish you all a very happy Diwali and a prosperous New Year. May the festival of lights bring you. Wishing your families great health, happiness, and prosperity. I hope everyone had a chance to r eview our financial results and investor presentations, both of which are available on the stock exchanges and our company website. Moving ahead, it is essential to consider the broader macroeconomic landscape that has influenced the performance and strategic decision of the company.
In terms of macroeconomic conditions, second quarter fiscal 2026 unfolded amid global volatility as geopolitical tensions and shifting trade policies continue to challenge exporters. Despite these heavy headwinds, the Indian economy is projected to grow at 6.8% GDP for fiscal 2026 compared to the earlier estimate of 6.5% driven by improved domestic demand and recent policy reforms on account of GST rationalization and income tax reforms. However, uncertainty around U.S. tariff policies and global cost pressures continue to warrant a cautious stance. The company remains focused on operational efficiency and strategic expansion, balancing optimism with prudence as it navigates a complex macroeconomic landscape. On the trade front, thanks to India-U.K. Free Trade Agreement, Indian textile and garment exports are to enjoy zero duty access for virtually all 99% of their products.
This landmark trade deal is expected to fuel substantial long-term growth in the sector. Raymond Lifestyle is well equipped to seize the opportunity. Despite the gradual nature of supply chain realignment, its strong brand equity and proven export capabilities provide a decisive advantage. The recent income tax reductions introduced in Budget 2025 are expected to enhance disposable income and uplift consumer sentiment, creating a favorable environment for the business growth and demand recovery. We view this tax relief as a key catalyst for volume red growth in the coming quarters. In addition to that, the GST rate reduction on select apparel with prices below INR 2,500 is likely to further stimulate demand, particularly with middle tier and value-driven segments.
Early indicators point to a positive shift in consumer behavior with rising footfall across key retail zones. For Raymond Lifestyle, this presents a good opportunity to recalibrate its offering and accelerate volume-led growth across both urban and tier 2 or 3 markets. With global uncertainties and trade barriers still impacting negatively the exports, domestic demand is projected to stay strong. The momentum will be further boosted by supportive government measures like GST and income tax cuts. India is at a unique inflection point ready to strengthen its position through spark policy and resilient markets. Raymond Lifestyle is strategically aligning itself to leverage these changes, ensuring it remains agile and amid global volatility.
Now let me talk to you about t he performance for the second quarter. Raymond Lifestyle reported highest second quarter revenue on the back of strong domestic performance led by volume growth in the branded textile and branded apparel segment amidst international headwinds. It also reported a total income of INR 1,865 crore across the year on year growth of 8% with an EBITDA of INR 259 crore with an EBITDA margin of 13.9% in second quarter of fiscal 2026. The EBITDA growth of 7% year on yearly really underscores our efficiency w e generated more leverage from our operations t hanks to an increase in volume and an improved product mix.
This growth came even after we made the strategic decision to increase our advertisement spends. Also, the growth was partially offset by a softer quarter for our export international operations as the pressure was felt from the recent U.S. tariff actions. As far as first half performance is concerned, the total income stood at INR 3,340 crore in the first half of fiscal 2026 versus INR 2,985 crore in the first half of fiscal 2025. A year-on-year growth of 12%. The EBITDA stood at INR 381 crore in the first half fiscal 2026 versus INR 331 crore in first half fiscal 2025, a year-on-year growth of 15% with a margin of 11.4% compared to 11.1% in the previous year respectively. As far as the segmental performance goes.
In terms of our branded textile segment, the revenue grew by 10% to INR 937 crore in second quarter fiscal 2026 as compared to INR 854 crore in second quarter fiscal 2025 mainly on account of festive season leading to volume growth and strong bookings as compared to the previous year. EBITDA grew by 15% to INR 188 crore in second quarter fiscal 2026 as compared to INR 161 crore in second quarter fiscal 2025 with EBITDA margin reaching up to 20% in second quarter fiscal 2026 versus 18.9% in second quarter fiscal 2025.
In first half fiscal 2026 this segment generated INR 1,615.3 crore in revenue, a 17% year on year growth from INR 1,419 crore in first half fiscal 2025. EBITDA also grew by 35% year on year reaching to INR 290 crore in the first half fiscal 2026 compared to INR 215 crore in the first half 2025.
The EBITDA margin stood at 17.6% in the first half 2026 versus 15.2% in the first half 2025. This performance was predominantly on account of improved product mix and strong volume growth. Now in terms of our new fabric p ortfolio which we have enlarged, our suiting and shirting portfolios are defined by luxury, innovation and versatility. The premium suiting segment features four different lines: Venezo, a super 130s wool rich blend for refined elegance; Royal Soft, a heritage inspired pure wool collection celebrating 100 years of craftsmanship with rich jacketing shades; Super Luxe, an exceptionally fine super 200s wool rich blend for ultimate sophistication; and Drape Code featuring advanced bio- polished super 140s and 120s merino wool for enhanced durability and easy care convenience.
Meanwhile, our shirting collection includes Woolvance. Offering super comfort and breathability in pure wool and wool cotton blends for both formal and casual fittings and Denigma, a d ynamic new line blending premium shirting with c ontemporary design aesthetics through printed and yarn-dyed fabrics to deliver durability and fashion-forward style. Now let me talk about the branded a pparel segment where the revenue grew to INR 491 crore in second quarter for fiscal 2026 as compared to INR 441 crore in the same quarter last year reflecting a growth of 11% year on year basis. The growth was witnessed across all brands key channels such as EBOs, MBOs and online.
The segment reported an EBITDA of INR 25 crore in the second quarter of fiscal 2026 as compared to INR 57 crore in second quarter fiscal 2025 with an EBITDA margin of 5.2% in the second quarter fiscal 2026 versus 13% in second quarter fiscal 2025 on account of increased marketing spend and input cost and lower sales achieved and new stores which were opened in the last 12 months. In the first half of fiscal 2026 this segment generated INR 861 crore in revenues a 16% year on year growth from INR 744 crore in the first half fiscal 2025. EBITDA stood at INR 44 crore in the first half 2026 as compared to INR 72 crore in the first half 2025.
The EBITDA margin stood at 5.1% in the first half fiscal 2026. Our ongoing drive for optimization of our retail network continues in order to ensure our retail footprint is precisely aligned with our long-term growth and profitability objectives. As of September 30, 2025, our store count was 1,663 stores vis-à-vis 1,592 stores in September 30th, 2024, a net increase of 71 stores. We opened 19 stores and 31 l ow performing stores were exited during the quarter. We have exited 66 low performing stores during the first half of fiscal 2020. The recently opened stores are expected to take some more time to reach full maturity. In terms of Ethnix by Raymond, which now operates a robust network of 139 stores across India. During the quarter, we also opened three new stores and closed four low performing stores. Now let me talk about the Garmenting Export segment.
During the quarter, reported revenue stood at INR 269 crore in second quarter fiscal 2026 as compared to INR 260 crore in the same quarter previous year, reflecting a growth of 4% year on year. Despite continued uncertainty on account of U.S. tariff announcements. EBITDA margin for the quarter was 5.3% in second quarter fiscal 2026 versus 9.6% in second quarter fiscal 2025, impacting due to U.S. tariffs and thereby reduced margins on the U.S. business. In the first half fiscal 2026, this segment generated INR 466 crore in revenue from INR 512 crore in the first half fiscal 2025. The EBITDA was at INR 4.7 crore in the first half 2026 compared to INR 34 crore in the first half 2025. The EBITDA margin stood at 1.5% in the first half 2026 versus 6.6% in the first half 2025.
Now let me talk about the h igh-value cotton shirting segment which reported a revenue of INR 212 crore in the second quarter fiscal 2026 as compared to INR 228 crore in the second quarter fiscal 2025, a 7% year-on-year de-growth on account of subdued demand primarily from the export markets. The segment reported an EBITDA of INR 25 crore in the second quarter fiscal 2026 as compared to INR 22 crore in the second quarter 2025, with an EBITDA margin of 12% in second quarter 2026 versus 9.7% in the second quarter FY 2025. This growth was predominantly on account of improved product mix. In the first half FY 2026, this segment generated INR 416 crore in revenue from INR 414 crore in the first half 2025. The EBITDA stood at INR 45 crore in the first half 2026 compared to INR 32 crore in the first half 2025.
The EBITDA margin stood at 10.8% in the first half FY 2026 versus 7.8% in the first half 2025. Now let me talk about the balance s heet side where the company has a net debt of INR 246 crore as of second quarter. As of September 30, 2025, the net working capital stood at 105 days in September 2025 compared to 97 days in September 2024. This sequential increase was planned mainly due t o the inventory buildup in the expanded retail and distribution network for meeting the festive season demand and wedding and also from the export business. We remain committed to optimizing net working c apital for improved financial eligibility. Looking ahead, we continue to be on t rack to mark FY 2026 as the year for recovery phase.
Even as global uncertainties continue to weigh on export performance, domestic demand is seen strong, providing a strong foundation for growth. We remain well positioned to navigate volatility and capitalize on emerging opportunities within the Indian market. We appreciate your continued support and engagement as we navigate the opportunities ahead. Thank you once again for joining us today and we look forward to addressing a ny questions you may have.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sameer Gupta from India Infoline. Please go ahead.
Hi sir, good evening and thanks for taking my question. My question is particularly on the ethnic format. Now store count is at 139. I was just looking up as to, you know, what these numbers were and I just see that you've added around 25 stores in the past one and a half years. This is considerably lower than our initial expectations in this format. In fact, last two quarters we've seen some 20+ store closures. Can you point out the pain points here that are being faced and what are the plans now as to where do you see scaling of this format?
Yeah, no, thank you. I think it's a very pertinent question. We have rechecked on the store expansion strategy for ethnic. Very clearly we are seeing that some o f the stores which we had to rationalize were not yielding the results and did not have the potential to do so. Now the whole thought process very c learly is that these stores which are there and we are careful in opening such stores which should do well. Second, we are also partnering with our TRSs as well as some of the large MBOs who can help us s upport us in terms of our growth journey of the ethnix. That whole big strategy of expanding a lot many stores, now we are rationalizing because at the end of the day these stores were not giving the profitability or were losing a lot of money.
Plus it was a buildup of the inventory as well. Therefore we are going on a very slightly different approach where the cost is lesser on us and more. It is a distribution which Raymond Group has been very, very successful by using t he TRSs as well as the MBOs.
Okay, so follow up here. One, is there a common thread to those underperforming stores? Is it a very area specific thing or very market specific thing? Any common thread that you can show? Second is that would it imply now that the growth will be more via your TRSs as an MBO store? You will actually merchandise an E thnix portfolio in these stores. It will probably come at the expense of something else. How do you, a little more granular detail on this aspect if you can.
Fundamentally it will not in any m anner cannibalize the other business or which i s being sold into the. Because traditionally what happens, a wedding customer comes to a TRS and a wedding customer comes to a TRS. He buys for three, four functions. He buys maybe for two functions, the suit fabric and for the other two. He can buy very well the ethnic. There is no compromise either on t he suit or on the ethnix front? However, as far as the format of t he store EBOs are concerned, it's not t hat we are not going to open, we will continue to open the store, but we are being a little bit more cautious about how we open.
When I see the thread where it worked, I think some of the markets which we went, I think it was not delivering the result as anticipated and that always happens. In a new business it is b eing felt that you have to be l ittle bit more cautious and careful in o rder to expand this network on our own. Rather try to work with the partners. With whom we have a long-term relationship.
Sorry, just another follow-up here on these specific markets where it moved Tier 2, Tier 3 cities because one of the other competitors also faced this issue and has pivoted to more metro Tier 1 phenomena. Do you see a similar journey in EBOs spanning out for ethnix as well?
Yeah, I think it is a common theme because what happens is whatever we s ay our ethnix is at the price p oint where Tier 1, Tier 2 is very, very becomes an affordable category. In terms of Tier 4 and five, you have slightly lesser affordability and therefore the stores have not been a ble to do so well. Very clearly a similar trend across the country. Plus what is also happening is that in these smaller cities you are seeing a little bit of a boutiques, a small designer in a particular area getting developed who also caters to the needs specifically for that. Therefore, I think it was better to be staying in tier one and two cities. And that actually has been very clearly r eflective in terms of our store deliveries.
Great. Amit, thank you so much for answering these questions so patiently. I'll come back in the queue for any follow ups. Thanks. Thank you.
Thank you. The next question is from the line of Sucrit D. Patil from Eyesight Fint rade Private Limited. Please go ahead.
Good evening to the team. My question is, as customer tastes are c hanging and more people are looking for premium lifestyle products, how is Raymond Lifestyle making sure its brand stays aspirational and still stands out amongst the crowd? Yes, sir.
Yeah, absolutely. I think you see that has been the core of Raymond, a brand which h as been in existence for 100 years and with the turn of the fashions, which in my opinion changes every 10, 15 years, Raymond has been relevant and stayed, especially in, if you talk about t he worsted suitings, we have stayed at the top, a leader, market leader. By virtue of changing trends. The best part for us.
The person you are speaking with has p ut your call on hold. Please stay on the line.
Sorry to interrupt, sir. You have put the line on mute.
Yeah, thanks.
Hello.
Yes, sir, please go ahead.
Yeah, so basically what has happened is that trend change we have been very clearly witnessing, and that has actually helped us to grow the business, and we are seeing it across. Even if you see on the apparel side, the whole introduction of casual range, semi casual, semi formal range, is clearly an evident that we are changing a s per the trend. The likes of the corduroy which we ha ve launched in the ColorPlus and s ome of the Chinos which we have b rought in terms of different fits in t he ColorPlus and Regio Italia. All these and the new product which I talked about in my opening remarks, I think it is all reflective. The whole stretch business which we have launched, I think that reflects clearly that w e are catering to the trend. I have what Mr. Pokharna also.
Said, I would like to add. You are absolutely right. The premisation of the fabrics and garments are taking place in a big way in India. We are seeing this trend. Even like smaller towns like Hajipur in Bihar and all these places, a high amount of high-value fabrics or high-value garments are being sold. We are with the trend. We are continuously doing market research and getting the consumer feel from the market as well as our TRSs are very strong touch points as far as customer feedback is concerned. We are working seriously on it. If you might have visited our stores, you must have seen a lot of personal sets and change in test which is required by Gen Z is being incorporated. We are getting good response. We also are getting good response from EBOs now.
Earlier our space in EBOs was little less. Now the EBO space is growing by about 15%. Also, we are concentrating on our polywool, which is our main strength. We are one of the few largest producers of polywool products in India. We are concentrating on it and gradually growing it. We are on it. Thank you.
Yes. My final question is going ahead in the coming days, what cost planning or internal steps is Raymond taking to protect the margin, especially as input cost and fail channels are keeping on changing? Yes, sir.
Yeah, absolutely. I think, you know, cost rationalization, we have like a mantra at our company. We have demonstrated very clearly in the past that our consistent cost reduction d rive and actually I would not call cost reduction, I would call more cost optimization drive has helped us. In terms of looking, utilizing the plants. If you see my focus has been on the volume, the growth in the volume, we have got five manufacturing facilities. If you run your facilities at a f ull capacity or near full capacity, your c ost of running those operations becomes lesser. That is one clearly an efficiency gain which has been baked into the m argins and that we continue. Our focus is to continue.
Based on the bookings which we have seen for our fabrics business, we are very confident that over the next few quarters, our plants are going to r un at a good capacity utilization level.
I think that's good guidance from your part, and I wish the entire team best of luck for the Q3.
Thank you.
Thank you.
Thank you. The next question is from the line of Chetan from Systematics Group. Please go ahead.
Yeah. Hi. Thank you for the opportunity. I had a few questions. Firstly, can you tell us how the sleepwear and innerwear businesses are performing currently?
Yes, you know, very simple, Chetan, that t he inner wear and sleepwear, as we said, it is absolutely a new category. Sleepwear especially is absolutely a new category which is in the process of a b uildup of a range, buildup of a segment. I think it is going to take a little while while people start accepting in India that sleepwear is something w hich I need to buy, to wear and to. I think that is a category building exercise which is a little long term, mid to long term exercise as far as innerwear is concerned. I think we have recently placed our products across the counter. We all know in the last three to four months there has been a significant challenge on this particular segment, product segment, and obviously we are not away from that.
It is building. Okay. Can I say I am very, very glad that it has reached to the levels which we were expecting? Answer is no. It is also to do with the market scenario. What is being liked by the people, by the dealers, franchisees and such things is the product has come out very, very well, very comfortable.
I would also like to add here what Amitji has said. We were already in innerwear, but we have restricted ourselves to TRSs. We were not going beyond Raymond shops. Now we see the potential in this category and expanding it beyond the TRSs and getting into the real innerwear market in a premium segment. It will take time, but we are hoping that this category should do well.
Great, sir. Secondly, on garmenting, can you tell us like how much is the revenue coming from, say from a top three or top five clients?
Look, you know, it is a t ypically a B2B business, so though we h ave got a customer base of more than 50 to 55 customers but the top three customers would contribute easily 30%, 40% to 45%.
Okay, okay, got it. Lastly, how has October been for the business?
No, October, you see, simple is that, you know, the September, all of us, 22nd till 22nd, everybody was on that whole thing that I need to see t he GST change because the trader, you k now, we sell primary, primary to the billings to our franchisee dealers. They were bit apprehensive. From October onwards you have seen a little pickup with these guys. On the other hand till Diwali the sales has been decent and it is absolutely normal every year. In the last 30 years we have seen that immediately after Diwali there is a lull for few days and then t he wedding demand picks up.
We are very clear that the wedding bookings, what we have seen especially on the fabric side, is strong. Therefore, we envisage this year to be a stronger year compared to the last year.
Okay sir, okay. Thanks a lot.
Thank you. The next question is from the line of Avinash Karumanchi from MOSL. Please go ahead.
Hi sir, good afternoon. Good evening. Again, asking on the earlier participant question, can you just throw a little bit more comment on the demand side? Is it more like because of the GST cut and income tax cuts you are seeing more recovery in the tier 2, tier 3 kind of cities better than metro? How are you seeing that right now?
Okay, I think two things. One, you know, fundamentally the demand is improved. Two, three reasons last year was impacted big time because of the inflation, higher interest rates, people's disposable income and the salary increase or the wage increase was not that commensurate. They were reeling under the old tight liquidity for a household because the EMIs had gone up or their expenditure on the day to day needs were higher. We clearly fall in the discretionary category. Now with both the income tax cut o f that INR 1 lakh crore and the GST, now there is a little bit more money in the hands of the consumer. Now that is something which we are getting the benefit of. Second in this year people are very c learly seeing a good demand in terms of the wedding demand.
I think as you see across, the weddings are in a big buzz and this festival also, if you see the whole, what should I say, shopping buzz on the streets in all the cities, be it a metro city or it is a tier four city, it was as well seen. Based on these, we have seen, and you look at our volume growth and clearly our revenue growth in the domestic business. Our domestic business has done exceedingly well. It is only the international business which had actually not performed as per our expectation whereas the domestic businesses performed in a double digit growth.
If you would have seen, the sentiments across the country are very positive. I mean, people are now willing to spend. When you go for the wedding halls, all wedding halls are fully booked for the period of 15th December to 14th January till May. We are seeing a good season also. You must have observed the Prime Minister is continuously insisting on buy Swadesh i. I think that mantra is gradually moving inside the country's hinterland, and we also feel that some positive sentiments will build up because of that also. All across, we are seeing a good season ahead. That's what I can say.
Okay, okay. Can you hear something regarding the bookings also because our business is mostly into the distribution side? How is the response from the other partners that we are dealing with?
Good, very good response. Yesterday also we had a small booking of one collection, emerald collection. We are having booking of shirting in Jaipur in coming months. The response is phenomenal and dealers are like earlier we were forcing the dealers to come but now voluntarily they are coming and the deliveries which they wanted to have it in November or December they are asking to prepond the deliveries and taking material from hex stocks also. We are seeing good booking, good season ahead and good trade response.
Okay, okay, got it sir. The second question is regarding the branded apparel space again. The margins in Europe, you can see they're taking a very big hit mainly because we are reinvesting into the A&P sprints or the marketing efforts. How long do we expect this to continue and when could these margins recover?
I, as I said, you know, in the last few calls we have been c onsistently saying that we will. It is a build phase typically for the four b rands which we have and we have not invested or underinvested in t he past few years. We have taken very clear path that we would invest behind the marketing purely discretionary category. So you need to show so therefore we need to get that going. Second thing also the margin has also taken a beating because as we have opened more than 100 odd stores in the last or 200 stores over the l ast two and a half years. Which the anticipation was that it would become good break even over the quickly i n 18-24 months that is going to t ake longer, more like 36-42 months.
Therefore, that impact is also baked into the branded apparel segment because as it keeps on accumulating newer stores, the impact is getting built in terms of m anpower and so on cost. I would expect another two, three quarters it would take this year and the next year is a strong build phase for our branded apparel segment. Then we see good margin as we have told, early double-digit margins w e should be able to see.
Okay. For this early double digit margins, what would be the scale that is required? So currently we are running at INR 400 crore odd on the branded apparel phase quarterly.
Actually, you look, we are in that range of INR 500 crore. If I look at it, because first quarter is typically weak always, and then the third quarter and fourth quarter i s because of all the festival wedding season, it picks up. I think what we are looking a t is once you are in that range of INR 2,400 crore-INR 2,500 crore, INR 2,300 crore-INR 2,500 crore, you should see the margins reaching t o early double digits.
That's it from my side. Thank you.
Thank you. The next question is from the line of Resha Mehta from Green Edge Wealth Services. Please go ahead.
Yeah, thank you for the opportunity. My question again is on the Ethnix portfolio. Could you highlight that what has been the growth rate specifically in the Ethnix portfolio in H1?
Actually, you see H1, e thnix is something which is not really meaningful. It is close to 11%. I think what is relevant is the second half because the whole festival. The wedding season plays out in the second half. We are looking really forward. The first few days of the Diwali thing has looked very well. I think the true testimony would be in the next two quarters how it pans out. We have a good number of wedding days and that is what we want to really see and tell. That whole thing has worked out well in terms of our product offerings stores. We have rationalized some of the stores very clearly as we saw that t he pickup would not be there based on the place where they are located.
What was the size of this portfolio in FY 2025, the Ethnix portfolio?
As I said, we had 149 stores. Now we are at somewhere over 139 stores.
I was asking in terms of revenues.
Last year it was close to INR 100 crore.
Okay, okay. So you know, this 11% growth while, you know, this time, as I understand the wedding dates have, you know, been pretty well spread out throughout the year. If we look at, you know, a women's saree wear retailer in south, you know, they've done almost 35% revenue growth in each one of this year. So why is it that, you know, us, or maybe even, you know, one of the larger men's ethnix wear peers are not seeing that kind of growth in the men's portfolio? Is it because, is it some region specific issue that south has done phenomenally well or is it some gender specific issue that, you know, women's portfolio, women's ethnic wear or wedding wear, saree- oriented portfolio is doing well, but men's ethnic wear is not doing well.
Actually, you look at it, we have done a detailed work on this and we have clearly realized that the winter weddings are such where especially the men. Go out and keep buying the ethnix wear. The larger urban weddings happen in the, what should I say, in the winter side. Rather, the summer weddings are more on the rural side. There people tend to have maybe one or two functions vis- a- vis. In these winter weddings people tend to h ave 3, 4, 5, 6 functions where t he usage of more Ethnix wear comes into the place. That has been always the case and it is across the menswear industry. You know, we have been in this business for a long period of time.
We have seen always that second half the consumer comes in for the want of your festival purchases or the wedding purchases. That's a very classical pattern of consumption.
Do you think this buying pattern is different for men and women?
Yeah, absolutely. I think men, we can say women. It is difficult for me to make a comment.
No, no.
Men's very clearly. We are seeing that trend for last so many years. If you see traditionally our first quarter numbers always has been the seasonally lowest for, I don't know, donkeys of years.
Right. It has got nothing to do with any region specific. Right. Like for you maybe the south men's ethnic wear portfolio did better than the rest of India or something of that sort. No, no divergence in terms of region. As far as demand was.
Not really because I think in the south the m enswear is very different for the wedding. In the north, west, and east typically are these old sherwanis and all t hese things people wear, which generally tend t o happen again because of the weather. It is in the second half of the year.
If you observe it, the differentiation of north, south, east, west is not a big one because all metros and semi-metro towns, which are located all across, are having now a cosmopolitan look across the country. Weddings now, the people who migrated from north to south, they do the weddings in south itself, so they do not come. I do not see there is a major variation that happens during this period during these regions.
Got it, got it. Lastly, what would be the average selling price of, you know, our men's ethnic wear?
Oh, it varies. So sherwanis would start from INR 15,000-17,000, goes up to INR 85,000. A kurta set, a normal kurta set c an start from INR 1,499 going up to INR 15,000. You know this is, and this is a unique art business. Let us be very clear. Nobody would like to see if I am wearing a particular kurta that the same kurta can be worn by somebody else. I think therefore the whole number o f SKUs and pricing, it is very, very different. It's very wide. You cannot really make an average and the products are different. You will have bandi, you will have normal, then your bandhgalas, all sorts of products.
Understood. All right, thank you.
T hank you.
Thank you. The next question is from the line of Henil Bagadia from Equicorp. Please go ahead.
Thank you for the opportunity, sir. I just had two, three quick questions. The branded on the commenting side. Sorry. How do you see the current situation? I mean there are a lot of commenters actually working on, I mean, changing the cotton count and actually reentering the entire fabric and also talking with the customers because I mean this is one of the best seasons for sales in actually the U.S. and Europe. How are things moving for us in terms of inquiry in case there is further reduction in duties, and if you could also explain what is the response from your customers and or even the order side?
Two things. One, I think this change in cotton count and all is mostly what we u nderstand is possible typically in the home furnishing kind of scenario in a suits and jackets, in a shirt or a t rouser, people are less sort of effort. Accepting these kind of changes in the p roduct mix because it is not that India is the only country which is supplying. It is the global world which is there to supply. Unfortunately, because of the way it has come, it is we who are in a difficult spot. There are other countries who enjoy still a decent tariff compared to India. To that extent, I think in our product segment nobody would buy by compromising the product. As far as the numbers are concerned, I think a lot of people are on a wait and watch game.
I think they are not really going out and placing the orders. However, considering there is a difference between a woven fabric and a knitted fabric. Because in a woven fabric you take your lead t imes are much longer and therefore what happens is for the summer sale, some of the people have already started to shift their order books to some other countries which should have come to us. I think that is something which we have seen. However, there is also very clearly these customers have been working with us for l ast 15 odd years. They are saying as soon as there is a favorable regime come, we will be able to immediately give back some of the quantities back to you. I think it is a clearly wait and watch game for all of us and even for the customers.
Because it is very difficult for even a customer who has been buying, let's say 50,000 jackets, to suddenly change from here to any other country to get the fabric. We are in a very unique situation. We have an integrated supply chain right from the fabric to the stitched garments shipped to their stores, which creates a lot of trouble. If you shift it from one place to another place, maybe you will get garmenting somewhere, but you may not get the integrated fabrics. Therefore, they also have a challenge. Considering 50%, I do not think so anybody would be in a position to pay. That is why you see in our business the margins have been also impacted as some sharing had to be d one in the second quarter for some of the orders.
Also, what are the kind of markups? Because if I see the low value garments, usually the markups are 4x or 5x. That is why I got to understand is some customers actually take it. Because if, for example, if somebody is shipping a $2-$3 apparel from Bangladesh to the U.S. and if there is a 50% thing, it is just a dollar for them. Whereas if they are marking and they are selling, the shelf sell price is about, say, $10, $11. I do not think one dollar is a very big thing. It is about 10%-12%, 15%. Is that a similar situation for us or do we have to see the situation a different way?
No, it is the same situation. I think what happens is, let us also understand, and I am sure you guys are tracking also the U.S. retailers. None of the U.S. retailers are in that position, though the markup looks very good, and we witness it in our, because we run a domestic business, and if I look at the product which we buy for our apparel business, there also the markup is very attractive. However, the kind of store cost, commission to the retailer, the whole advertisement spend, all the upkeep. Plus, also understand there is always, every business in apparel has to send an end of season sale, discounted sale. All that put together actually does not deliver ever 4x or 5x. It comes down to 2.5x to 3x, and then you have a big retailing cost.
Therefore, it is not that easy to say the 4x or 5x will start delivering even if you pay a dollar. I can tell you in one of our other businesses that for a $0.10 difference between India, sorry, $0.22 difference, the customer has said for the time being I will move this product from here to Bangladesh. If they are that, they have full teams, you would be surprised. These people are sitting with 500 people in India, 300 people in Bangladesh and all. Their whole job day to day as merchandisers is to watch out for every last cent.
Okay, so lastly on a branded textile side, so last year, I think so, after H2, I think so, there were a couple of news in the market due to which, I mean the actual consumption and the offtake actually reduced and the channel inventory also actually fell down because no new orders were coming. Based on the actual busy wedding season that's actually coming in November. If not alluding to the numbers, how are you seeing the response on your actual, on the actual orders and off take on the branded textile side?
As you can see, the revenue grew by 17% in the first half. That reflects very clearly that the branded textile is doing well. We have seen a stronger booking. The customer offtake is there. The inventory correction has also happened and we clearly see plus what Mr. Pokharna alluded to, that some of the space in the MBO which were being taken b y some of the imported fabrics. Because of our unique fabric opportunity and t he new collections which we have launched, we have been able to get back more into MBO and gain back some of the market share.
Okay, thanks a lot sir.
Thank you.
Thank you. The next question is from the line of Hitaindra Pradhan from Maximal Capital. Please go ahead.
Hello sir, I hope I am audible.
Yes.
So, are you in the govermenting segment. You alluded to the lead time being higher for the women fabric versus the knitted fabric and all. Supposing that, you know, the duty situation changes, when can we see a turnaround? Will it be usually that orders and the inquiries and everything comes two weeks to two quarters prior? Right. What is the situation here? If you can, you know, give more color on that.
Yeah, so you're right. Normally it is a two quarter, but some of the customers, as I said b ecause of our relationship and because we r un a large domestic business, fabrics is something which we have the availability. We are in a position to expedite those orders. Broadly speaking you are absolutely right. It is a two quarter game. Before two quarters things do not change much, we will be able to expedite some of the shipments. Can I get back to the. The absolute normalcy answer is no. It will take some time to get back to the normal cycle.
I'm assuming that you are exporting more to the U.S. markets than the European markets.
We are voting to because U.S. has one big attractiveness that the size of the order, that means the number of pieces the U.S. customers buy are much larger because, because the brands are just sheer, very large. Whereas in Europe every country has their own brands and you know, the population between us and let's say take Germany, Germany has got only 80 million people vis a vis U.S. has got 330 million. Plus you have so many small countries with 32 million, 34 million population compared to a 300+ million . Therefore some of the brands which exist and the retailers exist in the U.S. are much larger retailers. That gives us a larger order book, bulk volume which helps us in terms of producing, cost of production lower. Therefore we tend to do a larger business with the U.S.
Got it. Most of our exports are which category, like will be like on the premium side or on the, you know, discounted value side? Because there was some commentary that, you know, the Walmart and all, all of them are doing kind of better than, you know, the high street retailers in the U.S.
You know, with our product range, you know, the woolen fabrics, it is not just possible to come to a category of a $50 or a $100 suit. We are very clear in a, what should I say, mass premium, premium segment, like we supply to top guys where they sell for a $2,000 suit. That category, if you see the duty and everything, it becomes very, very large. At the end of the day that is also an advantage that such kind of people will not mind a little bit paying more. Therefore I think once the duty becomes in the range of this punitive of 25% goes away, I think we have a much better chance to come back strongly.
Yes, understood sir. The last one on the branded apparel, while I understand sir, you know, the margin reduction, I understand because of the new stores and all, you still grew like almost 5%, you know, on your like net store basis your year- over- year. Right. You added almost, you know, 70 stores adjusting for the closes and all.
Yeah.
Sir, like you know the 11% increase in revenue. Can you just explain, you know, what is the, like, you know, older stores or, you know, mature store revenue growth in this quarter? Like, were they in the mid single digit range or were they higher this quarter?
No. So mid- single digit is absolutely right. Like to like store is in the mid- single digit revenue growth we are seeing. I think what is important is that the whole revenue in the branded apparel segment, it is only 25% which is contributed by the EBOs which we are talking about. Rest is contributed by the MBOs, by our TRS channel and online channel. That is where you are not really g oing out and increasing the stores. Our whole focus is especially going out on the MBOs and the TRSs. Now look at it in the large LFS as well as the LFS channel. In a large LFS channel you first had maybe one brand or two brands. Now our focus is in the same LFS, same location. How do we add all the four brands?
I think you get optimization of cost and the brand visibility improves, which helps us to increase the sales and catering to all segments of society.
Got it. The final answer, like, what percentage of a portfolio within the branded apparel segment will have positive tailwind from the GST cut?
I think what has happened is, look, a lot for us is, so in the end of season sale you will get a lot of products coming below INR 2,500. In a normal scenario you will not have the products, significantly large number of products, in the INR 2,500, what you call 5% category. Therefore, it is different. You cannot say exactly what is the category is above INR 2,500 or below INR 2,500. There will be a lot of products in INR 3,000, INR 3,400. If you take a 25%-30% discount, you immediately come to INR 2,500, which comes i n the 5% category. That testimony is to be seen now when we are going to have t he end of season sale somewhere in December, January.
Got it, sir. Thank you, sir.
Thank you. The next question is from the line of Maitri from Sapphire Capital. Please go ahead.
Yeah, hello, I'm audible?
Yes, please.
Yes. Firstly on the marketing spend in the branded apparel, what sort of spends we had in the first half and how are we planning on going about for the second half and also for the next year?
Okay. So I would not call out exact number, but I would tell you only this much that in the branded apparel segment, our increase in the spend compared to last year to this year in t he first half has been more like 30%-35% more. In the second half what we have spent in the first half we are going to further increase by a least 20%-25% more in the second half of the year.
Second half will be 20% more than the first half that we are expecting.
Yes.
Okay.
Because you know the market, everything is there at this point of time. You need to display your product, talk to your customers, visual merchants, online communication to the people. When you are about to make a decision on purchase that time, the product advertisement should be made available to you. Therefore it tends to be second half more heavy on the sales, promotion and advertisement.
Yeah, makes sense. Also we are reaching close to INR 500 crore of top line quarterly. You also guided for about INR 2,300 crore-INR 2,500 crore sort of yearly run rate. When do you expect this run rate to be achieved, any sort of guidance on that?
I think I don't want to get into that guidance, but I would really say it will take another two years to get there in that kind of a time frame. Two to two and a half years.
Any sort of more additional on stores that you're planning? We added quite a bit stores. Are we planning on adding any more stores in the second half of this year?
We will be very selective. How do we add the stores? I would not say that we will just go out and add the stores. I would be very careful in adding the stores because we have a decent number of stores. Our focus would be that the existing stores become much more profitable and start delivering the revenue what is envisaged. We will obviously not miss out an opportunity. If there is a marquee mall which has come up or we had the desire to open a store, the store was not available. Suddenly there is a vacancy and we can get that store w e will definitely open that store. I think we are being more, what should I say, watching out and with clearly a path to grow the stores but also looking at effectively that it should start making sense.
Mostly it will be moving towards franchisee run and manage stores.
Okay. On the branded fabric side, we saw 20% growth. Can we expect this similar run rate going forward for this year and next year? Especially with the festive season coming in and also the wedding. You said we had a quite a good amount of booking happening.
Yes, I think I would not call out exact number. It would be inappropriate to say that. Is a specific guidance. I think very clearly we have seen good booking f or the winter season. As well as for the ensuing summer season, we have seen good bookings. More in the range of 8%-10% b ookings, different product mix and product. I think we are very clearly reflective and what you have seen, we will continue to push the growth in these segments. It is not just. What is important is to see it is a volume led growth and a market penetration growth. As I mentioned earlier that some of the MBOs which were keeping some of t he imported fabrics and such things, where? We have gone and brought certain quality of fabrics which could replace them easily a t an attractive price point.
We help to get our products into their shelves. Once your product is into the shelf, it stays there and you continue to do a replenishment and then slowly, slowly you build upon that. I think that has been a big journey.
Thank you for the explanation. On the garmenting side, this is the last question. We mentioned in the last call on the U.K. FTA. What sort of exports are we doing to the U.K. currency and how do we expect that to scale up?
We are doing close to INR 150 crore of sales to the U.K. I think it has a very good potential to double itself in the next two to two and a half years. The reason why I am saying vacation c arefully two to two and a half y ears, you know, it is still not enacted by the Parliament and till such time it gets enacted it is only a sort of good agreement to have. Second, once it gets enacted, and I think the other gentleman who asked a question that people start take two quarters in order to put together a proper collection. Let's say in the next three to four months it gets enacted, then you will take two quarters to get the collection samples and everything approved.
I think most likely you would see in 2026-2027, maybe in the second half of the year or the following year, the full benefit or t he really the benefit coming for the U.K. FTA.
Also, the INR 150 crore is yearly rounded, correct? Is that correct?
Yes, yes.
Yeah, that is it from my side. Thank you. All the best.
Thank you.
Thank you. The next question is from the line of Ujjwal Lal, an individual investor. Please go ahead.
Hello sir, thank you for the opportunity. I think we were also looking to target international retail for growth, especially in GCC countries. How is the plan moving on that front?
We have certain stores in the format of TRSs as well as in the branded EBOs. As I said, these are stores catering to the Indian diaspora and we are selectively opening those stores through the franchisee route and we are not opening our own company store because it would be difficult to manage their company-owned store. We are opening the franchisee glitz store wherever we think appropriate. I think if I look, if I r ecall correct, 50-odd stores we have a round 50 stores internationally we have of t he TRSs and EBOs put together.
Okay. There has been significant increase in receivables from INR 900 crores to INR 1,200 crores YoY. Why, and one thing we also guided at the time of demerger that we want to target 60 days on net working capital. What is leading to this, and will this improve going forward in H2?
I'll tell you first of all it is 31st of March. INR 917 crore goes to INR 1,200 crore. If you look at it, it is always the buildup always happens by S eptember as of dealer franchisees the w holesalers build up the network for meeting t he demand in the festive season. Therefore the second and the third quarter is truly the buildup happens. First in first quarter you build up the inventory. Second quarter and third quarter you build up the receivable. In the fourth quarter you get all the collection from the customers so that it comes always the third what you call 31st March of is always o ne of the lowest numbers in terms of the working capital. Y ou look, I think what has happened is 60 days. I do not think so.
Our receivable is currently in the range of 67 days.
I was talking about the net working capital days which is at currently I think 105. Something like that.
Yeah, so 105. I'll tell you it will come down by 31st of March. Two things have happened in the past. We did not have so many of our own stores and when you have so many of our own stores the inventory w hich is sitting on those stores. Clearly on your balance sheet which is not going to sell because these are COCO stores, Company Owned and Company Operated. Inventory is on your balance sheet. Otherwise people would have bought. Typically a retail store will carry eight, nine months. It will not have less than 89 months of inventory based on the turnover of the sales.
Second thing, what is also happening is that in the export businesses you are going out and changing certain terms because the customers want that way the terms are b eing changed, which used to be an FOB is going to becoming, what is this called, LDP duty paid delivered into those countries. That is also making an increase i n the receivable segment. These are the two big reasons. We believe that, I think 60-odd days was one we did in 2022-2023 and after that I think it is more like 80-85 days is a norm for this business because of the larger working c apital requirement, especially the inventory in the business.
Okay, and if we exclude the increased marketing spends in branded apparel, how much better would have been the margins? If we like, how much would have been that impact of increased advertising spends on the EBITDA margins?
I will tell you that we did not say only the increased marketing spend. We also said the impact of t he increased number of stores, which is more than 100. The cost of that stores running of that stores has also impacted the margin. The difference between the two, I think 50% is 50, 55% is on a dvertisement and spend and the other 50% is on account of the new stores w hich has been opened.
Okay, thank you very much. All the best for the second half .
Thank you.
Thank you. Is there no further questions from the participants? I now hand the conference over to Mr. Amit Agarwal for closing comments. Thank you. Over to you, sir.
Thank you very much and look forward to talking to you in the next quarter. Really appreciate your interest in Raymond Lifestyle.
Thank you, sir. On behalf of Raymond Lifestyle Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.