Raymond Lifestyle Q1 FY26: Decoding Record Sales Amidst Hidden Challenges

Raymond Lifestyle’s Q1 FY26: A Stylish Step Forward, But Can the Seams Hold Tight?

Raymond Lifestyle Limited has just unveiled its Q1 FY26 performance, and the numbers tell a compelling story. Despite the first quarter typically being a leaner period for the apparel and textile industry, Raymond has stitched together a robust set of results. But as financial analysts, our focus isn’t just on the present; it’s on what these numbers unravel for the future.

The company reported a record Q1 revenue of ₹1,475 crore, marking an impressive 18% year-on-year (YoY) surge. Even more striking was the 36% YoY jump in EBITDA to ₹122 crore, with margins expanding to 8.2%. At first glance, this signals strong operational leverage and effective cost management. However, a deeper dive into the segments reveals a more nuanced picture.

Sales: Tailored for Growth, with a Few Loose Threads

Raymond’s top-line growth is certainly noteworthy, especially for a seasonally weak quarter. Let’s break down the fabric of this growth:

This strong performance primarily stems from its core Branded Textile and Branded Apparel segments, which benefited significantly from domestic demand and strategic initiatives. This aligns well with the broader Indian economic trend favoring domestic-growth themes, particularly within the consumption space.

The Branded Textile segment truly outshone, growing 27% YoY to ₹716 crore, with EBITDA nearly doubling to ₹103 crore. This was largely volume-driven, fueled by a higher number of wedding dates in the quarter – a classic seasonal boost. The improved product mix, including new premium launches, and strong B2B demand, particularly for cotton and linen shirting fabrics, also played a crucial role. Management highlighted that shirting volumes, driven by new designs and a shift towards casualization, grew almost 50% year-on-year, significantly outperforming suiting. This indicates a nimble adaptation to evolving consumer preferences.

The Branded Apparel segment also contributed handsomely, with revenue increasing 22% YoY to ₹370 crore and EBITDA rising by 26%. Growth was broad-based across all brands (Park Avenue, Raymond Ready to Wear performing exceptionally) and channels (EBOs, MBOs, online). Increased marketing spend appears to have paid off in terms of visibility and customer acquisition. The strategic revamp of ColorPlus to target a younger demographic also seems to be gaining traction.

However, not all segments were cut from the same cloth. The Garmenting segment faced significant headwinds, with revenue declining 22% YoY to ₹197 crore and EBITDA turning negative at (₹8 crore). This segment, heavily reliant on exports, was directly impacted by uncertainty surrounding US tariff announcements. This perfectly illustrates the challenge faced by export-linked sectors in the current global climate, as highlighted in the broader economic context. While management views US tariffs as a “negotiation tactic” and is optimistic about the long-term, the immediate impact on order books and profitability is evident.

The High-Value Cotton Shirting segment provided another bright spot, growing 10% YoY to ₹205 crore with EBITDA soaring by 90% to ₹20 crore. This growth was largely propelled by robust B2B demand and improved productivity.

Overall, sales performance looks positive, driven by volume growth and strategic product innovation in the domestic market. The company is actively adapting its product lines and price points to appeal to a wider audience, which is a commendable strategy to sustain growth even amid cautious discretionary spending.

Earnings: Turning the Corner, But Patience is Key

While PBT and Net Profit remained negative for the quarter, the crucial point is the direction of travel: both losses narrowed significantly compared to Q1 FY25. PBT improved from ₹(32) crore to ₹(25) crore, and Net Loss from ₹(23) crore to ₹(20) crore.

The substantial 36% YoY growth in EBITDA and margin expansion to 8.2% underscores effective operational management. This improvement was largely driven by the strong performance of Branded Textiles, which saw its EBITDA margin jump from 9.6% to an impressive 14.3%. High-Value Cotton Shirting also saw strong margin expansion. The Garmenting segment’s negative EBITDA, however, dragged down the overall profitability.

Management explicitly stated that Q1 margins are not indicative of the full year, as fixed costs are relatively constant, and subsequent quarters, especially the festive season, are expected to bring higher revenues and, consequently, stronger operating leverage. This indicates that Raymond Lifestyle is currently in a “fast grower” phase, where top-line growth and EBITDA expansion are prioritized, with profitability expected to follow as scale improves. The focus on reclaiming shelf space in MBOs and expanding the brand’s reach suggests a strong pipeline for future growth.

Working Capital: Prepping for Festivities

Working Capital (NWC) days saw a slight increase to 90 days in June 2025 from 83 days in June 2024. Management clarified that this was primarily due to inventory build-up for the eagerly anticipated festive and wedding season, especially within the Garmenting business. While a rise in inventory can sometimes signal slowing sales or overstocking, in this context, it appears to be a strategic move to prepare for expected higher demand in the coming quarters. It’s crucial for investors to monitor if this inventory translates into sales in H2 FY26. A portion of this increase also stemmed from undelivered garmenting orders due to US tariff uncertainty, which highlights the external pressure on this segment. Management expects NWC to normalize post the festive season, which is a positive sign if achieved.

Capital Expenditure: Building for the Future

Raymond Lifestyle has outlined a CapEx budget of ₹175-200 crore for FY26. A significant portion (55-60%) is allocated for maintenance, ensuring operational efficiency. Crucially, ₹40-45 crore is earmarked for garmenting line expansion in Andhra Pradesh, alongside upgrades to IT tools and ERP systems. This indicates a commitment to modernizing infrastructure and expanding capacity, even in the challenging Garmenting segment. The expansion, while perhaps counter-intuitive given current headwinds, could be a strategic bet on the long-term opportunities arising from initiatives like the India-UK Free Trade Agreement, which offers zero-duty access for Indian textiles to the UK market. The gestation period for new projects like these means we might see the benefits materializing over the next 8-10 months or more, aligning with the expected supply chain realignment from the UK FTA.

Outlook: A Strong Narrative, But Execution is Key

Gautam Hari Singhania, the Executive Chairman, expressed optimism, citing demand recovery and promising forward bookings for the Autumn-Winter ‘26 collection. The company anticipates FY26 to be a strong recovery phase, supported by improving consumer sentiment and urban consumption.

Key strategic imperatives for FY26 include:

• Strong bookings and volume growth in Branded Textiles driven by the early festive season.
• Improving profitability through operating leverage and efficiency enhancements.
• Increased marketing spends for enhanced brand visibility.
• Improving the order book in Garmenting in H2, with a focus on diversifying customer concentration risks.
• Calibrated retail expansion, primarily through the Franchise Owned, Franchise Operated (FOFO) model in marquee locations.

The company’s vision to be a leading fashion and lifestyle entity, coupled with its focus on “China+1” and FTAs for Garmenting, suggests a forward-looking approach. While the challenges in the Garmenting segment are real, the strategic focus on reducing customer concentration and leveraging new trade agreements like the India-UK FTA could be game-changers in the medium term. The successful Garment Exchange Program, attracting new customers and aiding inventory liquidation, also highlights their innovative approach to market dynamics.

Key Takeaways: A Resilient Weave

Raymond Lifestyle Limited has delivered a commendable Q1 FY26, especially given the seasonal weakness and the cautious discretionary spending environment in the broader Indian economy.

• Strong Domestic Core: The Branded Textile and Branded Apparel segments are the current stars, demonstrating impressive top-line growth and margin expansion driven by strategic product initiatives and strong domestic demand, particularly around wedding and festive seasons. This aligns with the “domestic-growth themes” identified as an investment insight for the Indian market.
• Garmenting: A Foreign Headwind, a Future Opportunity? This export-oriented segment is currently the primary drag on profitability due to US tariff uncertainties. However, the India-UK FTA presents a significant long-term opportunity, though its impact will take several quarters to fully materialize. Investors should closely monitor order book improvements and the pace of supply chain realignment.
• Operational Efficiency: The significant EBITDA growth and margin expansion, even with increased marketing spend, point towards strong operational leverage.
• Strategic Preparedness: The inventory build-up for the festive season and CapEx plans for capacity expansion suggest a company gearing up for sustained growth, assuming consumer demand holds up.
• Profitability on the Horizon: While net profit is still negative, the narrowing losses and management’s guidance on full-year margin improvement (especially in Branded Textiles expecting 20% EBITDA) indicate a clear path towards sustainable profitability, classifying Raymond as a fast grower aiming for stalwart status.

Overall, Raymond Lifestyle Limited’s Q1 FY26 results suggest a company adept at navigating market complexities, leveraging its domestic strengths, and strategically positioning itself for future growth, even as it manages global headwinds. The coming quarters will be critical to see if the projected operating leverage and new growth avenues fully translate into bottom-line profitability.

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