Financial Performance Highlights

Full Year FY2026 (Audited)

  • GMV: ₹19,666 crores, representing 5% year-on-year growth
  • Revenue: ₹13,110 crores, representing 4% year-on-year growth
  • Gross Margin: 20.6%, improved by 48 basis points year-on-year
  • EBITDA: ₹385 crores versus ₹457 crores in FY2025
  • Other Income: ₹99.7 crores, nearly doubled year-on-year, driven by FX gains and ₹19 crores mark-to-market gains on venture investments
  • Finance Costs: ₹146.5 crores, increased by 16% year-on-year (3% increase on like-to-like basis excluding Knit Gallery)
  • Effective Tax Rate: 13.5% compared to 10.1% in FY2025, reflecting full impact of Pillar 2
  • PAT: ₹178 crores versus ₹241 crores in FY2025
  • Dividend: Proposed payout of ₹3.3 per share, with ₹1.65 per share already paid as interim dividend (42% of FY2026 PAT)

Q4 FY2026 Performance

  • PAT: ₹72 crores, representing 95% quarter-on-quarter growth from ₹37 crores in Q3 FY2026
  • Employee Expenses: Remained largely flat versus previous quarter
  • Other Expenses: Declined by approximately 6% quarter-on-quarter

Operational and Strategic Updates

Order Book Visibility

  • Order book as of early April 2027 stood at ₹5,074 crores, reflecting 11% year-on-year growth
  • North America order book showed particularly strong growth of approximately 30% year-on-year
  • Company secured new sourcing-as-a-service mandate with leading U.S. value retailer with potential to scale beyond ₹475 crores over time

Business Segments Performance

Sourcing Business:

  • Revenue: ₹12,399 crores
  • EBIT: ₹266 crores

Manufacturing Segment:

  • Revenue: ₹1,034 crores, representing 31% year-on-year growth
  • EBIT: ₹57 crores
  • EBIT Margins: 5.5%
  • Performance supported by operational improvements, better factory utilization, and successful integration of Knit Gallery acquisition

Restructuring and Portfolio Optimization

Company undertook several restructuring initiatives during FY2026:

  • Closure of Design ARC branch and Lilly & Sid businesses
  • Consolidation of Design ARC Asia and Design ARC licensing business into Poeticgem vertical
  • Exits from loss-making businesses including Grupo and J-Craft verticals
  • Strategic discussions ongoing with business heads of other identified verticals for optimization

Balance Sheet Strengthening

  • Net Debt: Reduced sharply to ₹105 crores as of March 2026 from ₹374 crores in March 2025
  • Net Working Capital Days: Reduced to 4 days from 17 days one year prior
  • Operating Cash Flow: Generated approximately ₹781 crores during the year
  • Capex: Reduced by more than half compared to FY2025
  • Leverage Ratios: Net debt-to-EBITDA at 0.27, normalized return on capital employed at approximately 25%

Cost Transformation Initiatives

  • Project PULSE (BCG-led cost transformation initiatives) being institutionalized
  • Enterprise-wide digital backbone integrating sourcing, supplier governance, procurement workflows, pricing intelligence and master data management
  • Targeting procurement efficiencies of ₹40-50 crores annually and similar savings in opex

FY2027 Outlook and Guidance

Financial Guidance

  • Revenue Growth: Mid-single-digit growth outlook for current year
  • Gross Margin: Targeting 40-50 basis points improvement
  • EBITDA Margin: Expecting 50-75 basis points improvement
  • New Investments: Planned reduction to ₹80 crores in FY2027 from ₹124 crores in FY2026
  • Expense Management: Growth in employee costs and other expenses expected to be slower than top-line growth

Strategic Focus Areas

  • Deepening presence in U.S. market through new customer additions and scaling existing accounts
  • Building momentum in sourcing-as-a-service engagements in North America, UK and European markets
  • Maintaining disciplined working capital management with target to keep net working capital days at current levels
  • No new investments in new verticals planned for next 12 months
  • Continued rationalization of brand business portfolio

Regional Performance Expectations

  • Americas: Strong growth expected with 30% order book increase
  • UK and Europe: Low single-digit (3-4%) order book growth
  • Asia: 8-9% order book growth

Specific Business Unit Updates

New Lobster Division (Ted Baker Business)

  • FY2026 Revenue: Approximately ₹500 crores (4% growth from ₹480 crores previous year)
  • Gross Margin: Declined by 10% from 30% to 20% due to dried-up agency business
  • PAT: Increased to ₹38 crores from ₹13 crores previous year
  • Current Challenges: Impacted by bankruptcy of retail partners appointed by ABG Group
  • Remediation: Discussions with ABG for financial contribution of $2-2.5 million annually for 12 months, with request for extension to 24 months

Vertical Performance Notes

  • Poeticgem and Simple Approach: Margin erosion due to one-time redundancy costs from BCG initiatives; expected to bounce back
  • Krayons: Impacted by U.S. tariff situation but showing stability with clients like Costco
  • Klieder: May take 1-2 more quarters to return to growth despite lean cost structure

Management Commentary

The operating environment remained challenging throughout FY2026 shaped by cautious consumer sentiment, evolving trade dynamics, geopolitical disruptions, and continued inventory discipline across global retailers. Despite challenges, the company maintained stable growth reflecting customer retention and increasing relevance of scaled, compliant and flexible sourcing platforms.

Structurally, the global sourcing landscape continues to evolve in favor of diversified asset-light and compliant supply chain platforms. Retailers are increasingly consolidating their vendor base and seeking partners who can offer agility, diversification, speed-to-market, compliance and integrated sourcing capabilities across multiple regions.

The company is transitioning from technical cost stabilization to structural efficiency-driven transformation with enterprise-wide digital initiatives being unified into an AI-enabled platform.

Capital Allocation

  • Maintained dividend payout track record with 42% of PAT distributed
  • Sharp reduction in capex reflecting disciplined capital allocation
  • Continued focus on rationalizing loss-making verticals and curtailing investment into new businesses
  • Strengthened governance around capital allocation and cost discipline across organization