Financial Performance (Q1 FY27 Standalone)

  • Total Income: ₹466 crores, up 16.4% YoY from ₹400 crores in Q1 FY26
  • Revenue Mix: Fabrics 71%, Garments 19%, Yarn & Others 10%
  • EBITDA: ₹40 crores, up 22.3% YoY from ₹33 crores
  • EBITDA Margin: 8.6%
  • Profit After Tax (PAT): ₹11 crores, up 144.4% YoY from ₹5 crores
  • PAT Margin: 2.4%
  • Debt-to-Equity (as of 30th June 2026): 0.24
  • Other Income: ₹22 crores, comprising normal business income (delay payment interest, rent income) and ~30% mark-to-market gains from investments

Retail Business Expansion

  • ZECODE Stores: Added 3 new stores, total count now 30 stores
  • DEVO Stores: Added 2 new stores, total count now 19 stores
  • Retail Revenue (Q1): Approximately ₹30 crores
  • FY27 Retail Target: ~₹160 crores revenue (doubling from FY26)
  • Store Expansion Plan: Target of ~70 total stores across both brands by FY27 end
  • Expansion Funding: Entirely through internal accruals
  • EBITDA Impact: Retail business expected to cause ~150 basis points drop in overall EBITDA margin annually
  • Store Performance: Some ZECODE stores have turned EBITDA positive, including some newer stores

Corporate Action - Preference Share Issue

  • Scheme: Issuance of cumulative non-convertible redeemable preference shares by way of bonus to equity shareholders
  • NCLT Approval: Mumbai bench approved via order dated 21st July 2026
  • Effective Date: Scheme made effective from 30th July 2026
  • Record Date: 22nd August 2026 for determining eligible shareholders
  • Tax Treatment: Redemption amount treated as dividend income for investors; if sold before redemption, treated as capital gains

Operational Highlights

  • Real Estate Project: ₹24.6 crores spent on land development (accounting treatment: moved from inventory to expenses, net effect nil)
  • Project Timeline: Construction expected to start in current quarter, 24-month completion timeline
  • Working Capital: Seasonal inventory build-up for festive/wedding season; retail expansion adding to inventory levels
  • Raw Material Inflation: Persistent input cost pressures; partial price pass-through to customers

Management Guidance

  • FY27 Revenue Growth: ~12% (including retail business)
  • FY27 EBITDA Margin: ~14% (excluding ~150bps retail impact)
  • Capital Expenditure: ~₹100 crores for FY27, with ₹40-50 crores allocated to retail expansion
  • Free Cash Flow: Expected to remain positive after dividends and capex

Market Commentary

  • Demand Environment: Stable overall, with wedding/occasion-led consumption moderation due to Adhik Maas period
  • Consumer Behavior: Value-conscious spending patterns
  • Festive Season Outlook: Positive sentiment despite Diwali being delayed by ~3 weeks
  • Competitive Landscape: Fast fashion market large and growing with multiple players; company confident in unique USP

Business Strategy

  • Retail Focus: Building foundation blocks for ZECODE and DEVO brands
  • Store Format Evolution: Moving to larger format stores (~7,000 sq ft average) showing better results
  • Location Strategy: Cluster-based approach (Karnataka/Bangalore for ZECODE), using AI tools for micro-market analysis
  • Franchise Model: Not currently considered; focusing on company-owned expansion first
  • Operational Model: Asset-light approach providing agility to respond to demand patterns