SDREAMS - S D Retail

📊 NSE: SDREAMS 🏢 Textiles - Products 📅 Last Updated: 12/14/2025 12:32

💰 Financial Performance

Revenue Growth by Segment

The company reported a 9.23% YoY revenue growth in H1 FY26, reaching INR 78.30 Cr compared to INR 71.68 Cr in H1 FY25. For the full year FY25, revenue from operations was INR 173.04 Cr, representing a 6.45% increase from INR 162.56 Cr in FY24. The growth is primarily driven by manufacturing and trading of garments.

Geographic Revenue Split

100% of revenue is derived from Domestic Sales within India. The company reports no separate geographical segments as of September 30, 2025.

Profitability Margins

Gross Profit Margin improved significantly to 55.53% in H1 FY26 from 48.82% in H1 FY25. PAT Margin turned positive at 0.17% (INR 0.13 Cr) in H1 FY26 compared to a negative margin of -0.74% (INR -0.53 Cr) in H1 FY25. Full-year FY25 Profit Before Tax stood at INR 10.73 Cr, a 4.9% increase over FY24's INR 10.23 Cr.

EBITDA Margin

EBITDA Margin for H1 FY26 was 2.78%, a decline of 61 basis points from 3.39% in H1 FY25. This decline is attributed to upfront costs for new store openings and increased investments in manpower and marketing. The EBITDA margin in FY24 was approximately 11.7%.

Capital Expenditure

The company raised INR 64.98 Cr through an IPO in September 2024. As of late 2025, INR 24.42 Cr has been deployed, primarily for EBO expansion. FY25 purchase of Property, Plant, and Equipment was INR 3.92 Cr.

Credit Rating & Borrowing

Finance costs were INR 3.18 Cr in FY25, representing 1.8% of total revenue. The company significantly reduced its debt profile by repaying INR 10.61 Cr in short-term borrowings during FY25. Long-term borrowings remained minimal at INR 0.10 Cr.

⚙️ Operational Drivers

Raw Materials

Garment fabrics and textile materials represent the primary input. Cost of materials consumed was INR 89.29 Cr in FY25, accounting for 51.6% of total revenue.

Import Sources

Not disclosed in available documents; however, the company focuses on domestic sales and manufacturing.

Capacity Expansion

The company is aggressively expanding its Exclusive Brand Outlets (EBOs) using IPO proceeds. Management expects 20% to 25% of store contribution to be active by the end of FY26, with substantial margin gains expected in H2 FY27.

Raw Material Costs

Raw material costs were INR 89.29 Cr in FY25, a 2.6% increase from INR 86.99 Cr in FY24. As a percentage of revenue, material costs decreased from 53.5% in FY24 to 51.6% in FY25.

Logistics & Distribution

Other expenses, which include distribution and marketing, rose to INR 58.07 Cr in FY25 from INR 46.95 Cr in FY24, a 23.7% increase.

📈 Strategic Growth

Expected Growth Rate

20-25%

Growth Strategy

Growth will be achieved through a phased expansion of Exclusive Brand Outlets (EBOs), targeting the mid-premium sleepwear segment which is currently underserved by organized players. The company is utilizing INR 64.98 Cr of IPO proceeds to fund this expansion and enhance brand visibility.

Products & Services

Manufacturing and trading of garments, specifically high-quality sleepwear in the mid-premium segment.

Brand Portfolio

S D Retail (SDREAMS).

New Products/Services

Focused push into the sleepwear category to capture market share from unorganized players.

Market Expansion

Strategic expansion of EBOs and presence in Large Format Stores (LFS), Marketplaces, and Multi-Brand Outlets (MBOs).

🌍 External Factors

Industry Trends

The sleepwear industry is evolving from an unorganized market to an organized branded segment. The company is positioning itself in the mid-premium niche to capture this shift.

Competitive Landscape

The market is currently dominated by unorganized players, providing a large headroom for organized growth.

Competitive Moat

Moat is built on an asset-light model and a focused brand strategy in the sleepwear niche. Sustainability depends on the speed of EBO rollout and brand recall in the mid-premium segment.

Macro Economic Sensitivity

Highly sensitive to discretionary consumer spending in the mid-premium retail segment and inflation in textile raw materials.

Consumer Behavior

Shift in consumer preference toward high-quality, branded sleepwear products.

⚖️ Regulatory & Governance

Industry Regulations

Compliant with the Companies Act, 2013 and SEBI LODR. Management confirmed no industry-specific laws are currently applicable to the company's garment operations.

Taxation Policy Impact

The effective tax rate for FY25 was approximately 21.1%, with a total tax expense of INR 2.27 Cr on a PBT of INR 10.73 Cr.

Legal Contingencies

The company reports no pending litigations that would impact its financial position as of March 31, 2025.

⚠️ Risk Analysis

Key Uncertainties

Auditors noted that internal financial control documentation needs to be strengthened to be commensurate with the company's size. Short-term margin pressure (61 bps decline) remains a risk during the aggressive store expansion phase.