MONTE CARLO FASHIONS LIMITED

Financial Performance - Q4 FY26

  • Revenue from Operations: Stood at approximately INR 280 crores, reflecting a strong year-on-year (YoY) growth of 36%.
  • EBITDA: Stood at INR 26 crores, registering a growth of 353% YoY.
  • EBITDA Margin: Was reported at 9.2%.
  • Profit After Tax (PAT): Reported at INR 5 crores, compared to a loss of INR 10 crores in the same quarter last year (Q4 FY25).
  • PAT Margin: Was 1.78%.

Financial Performance - Full Year FY26

  • Revenue from Operations: Stood at INR 1,276 crores, reflecting a YoY growth of 16%.
  • EBITDA: Stood at approximately INR 227 crores, witnessing a growth of around 22% YoY.
  • EBITDA Margin: Reported at 17.81% (without other income).
  • Profit After Tax (PAT): Reported at INR 112 crores, which increased by 38% YoY.
  • PAT Margin: Was 8.79%.

The company successfully achieved its stated guidance for FY26 of delivering a revenue growth of 16% along with an EBITDA achievement of 20%.

Operational Highlights & Business Updates

  • Brand Performance: The Rock.it brand delivered an impressive 86% growth in gross sales during the year.
  • Home Textiles: The segment maintained its robust growth trajectory, supported by healthy demand across all categories.
  • Footwear: Gross sales surged 149% compared to FY25. The company is looking to double its turnover from this category, focusing on online channels and experimenting with placement in 15 Reliance large format stores and retrofitting 30-35 larger EBOs.
  • Online Sales: Recorded a robust growth of 38% compared to FY25 through the company's own website and external portals.
  • Retail Expansion: The company is firmly committed to opening around 40 to 45 Exclusive Brand Outlets (EBOs) in FY27 with a strategic emphasis on Western and Southern regions. The average store size ranges from 1,000 to 1,500 square feet, with approximately 50 stores being larger (2,000+ sq. ft.).
  • New Stores: During Q4, the retail presence was strengthened with the addition of 2 new Cloak & Decker brand EBOs, taking the total count to 24 stores for that brand. The net store count for the overall business is 497.
  • Quick Commerce: The company has partnered with platforms Blinkit, Swiggy, and Zepto to enable express deliveries within 30 minutes. Products are available in dark stores in Delhi NCR and Bangalore, with final talks ongoing with BigBasket.
  • Digital Transformation: A strategic collaboration with Salesforce is helping streamline operations and elevate customer experience.
  • Trade Shows: The company successfully organized trade shows for order booking for the pre-winter collection in February 2026 and the winter collection in March 2026.
  • Exports: The company has expanded into overseas e-commerce platforms (Joom.com, Stylishop.com) for direct and indirect export. An experimental export of 2,500-3,000 pieces to the Middle East saw 70% sell-through, but repeat orders are expected to be delayed by 2-3 months due to regional uncertainty.
  • Product Mix (FY26): Winter wear contributed 45%, non-winter (summer) contributed 42%, textiles contributed 10.2%, and accessories & footwear contributed 2% to revenue. The kids' portfolio has an annual revenue run rate of INR 110 crores.

Solar Power Project Update

  • Capacity: The company has a Power Purchase Agreement (PPA) signed for 35 MW AC with the Madhya Pradesh government, with an expected overloading to 43-45 MW.
  • PPA Tariff: The agreed rate is INR 2.79 per unit.
  • Status: The company is in the final stages of finalizing commissioning and vendors. The project is expected to be operational and start billing within the next 12 months (within FY27).
  • Financials: The projected capex is approximately INR 140 crores. The project is expected to be 75% debt-funded and 25% equity-funded. The projected Internal Rate of Return (IRR) is 15% to 16% over 25 years. Net operating income is estimated at 90% of the top line, with Operation & Maintenance (O&M) costs around 10%.
  • Modules: The project will use non-DCR modules.

Margins, Discounts & Returns

  • Discounts: The discount percentage for FY26 was 9.44% of overall revenue, down from 10.16% in FY25.
  • Returns: The return percentage for FY26 was 17%, up from 15% in FY25.
  • Inventory: Inventory days improved to 144 in FY26 from 169 in FY25.

Raw Material & Pricing

There has been an increase in raw material prices (cotton, wool). The company has already taken a price hike of around 7% to 8% in its products before the trade shows and states it is "fully covered" regarding the raw material hike. The pass-through of cost inflation is immediate.

Guidance & Outlook for FY27

Management expressed confidence in sustaining growth momentum and delivering performance in line with historical guidance but will provide formal and accurate revenue and profitability guidance during the Q2 FY27 earnings call. This cautious approach is due to monitoring potential headwinds like inflation from rising petrol/diesel prices and geopolitical issues. However, a double-digit revenue growth rate for FY27 is stated to be "definitely on the cards" and "on the table."

  • Store Expansion: The plan is to open 40-45 new EBOs (gross addition) in FY27.
  • Segment Growth: The Home Textile segment is expected to grow its contribution from 12% in FY26 to 13-14% in FY27.

Capital Allocation & Strategy

  • Dividend: The company has announced a dividend of INR 20 per share for FY26 and regularly pays dividends.
  • Future Projects: The company is exploring new projects in the Battery Energy Storage System (BESS) and solar energy space on an Independent Power Producer (IPP) basis, contingent on achieving an IRR of 15-17% or more.
  • Manufacturing Capex: Annual manufacturing capex is in the normal range of INR 10-15 crores, as 85% of production is outsourced.

Q&A Session Key Takeaways

  • Volume Growth: Annual volume growth for FY26 was approximately 12%. Q4 FY26 volume growth was estimated to be around 18-20%.
  • Growth Drivers: Growth is driven by increased penetration of summer categories across regions and loyalty from winter wear customers shifting to summer purchases.
  • Consumer Spending: Management has not seen a major cutdown in consumer spending but expressed concern that further hikes in petrol/diesel prices leading to inflation could potentially deter spending in the future.
  • Profitability Sustainability: The return to profitability in Q4 is attributed to adequate provisioning taken in Q3, lower discounts, and a jump in summer sales, which management believes is sustainable.
  • Quarterly Seasonality: Q1 typically contributes 12-13% of annual revenue, with a significant portion of annual returns from Q3 sales occurring in Q4 and Q1.