💰 Financial Performance

Revenue Growth by Segment

The Own Brand (Thomas Scott) segment grew 77% YoY to INR 22 Cr in Q2 FY26. Licensed and other brands grew 23% YoY to INR 33 Cr. Total revenue for Q2 FY26 was INR 57 Cr, up 40% YoY, while H1 FY26 revenue reached INR 111 Cr, a 63% YoY increase.

Profitability Margins

PAT margins for Q2 FY26 stood at 8.26%, a significant improvement from the previous year. For H1 FY26, PAT margins improved to 7.4% with a net profit of INR 8 Cr, representing a 95% YoY increase. Profitability is driven by operating leverage and improved price realization.

EBITDA Margin

EBITDA margin for Q2 FY26 was 14.94% (INR 8.5 Cr), up 93% YoY. H1 FY26 EBITDA margin was 13.09% (INR 15 Cr), a 101% YoY increase. The margin expansion is attributed to scale, a digital model, and a shift toward premiumization.

Capital Expenditure

Management stated the business is not CAPEX-driven but OPEX-driven. Specific historical or planned INR values for CAPEX were not disclosed, though continuous operational spending is maintained.

⚙️ Operational Drivers

Raw Materials

Textiles and fabrics represent the primary raw material cost, though specific percentage breakdowns per material were not disclosed.

Capacity Expansion

Current capacity is not specified in units; however, the company is scaling its digital model and B2B contract manufacturing business to meet high double-digit growth targets.

Raw Material Costs

Not disclosed as a specific percentage of revenue, but management noted that rising labor and transportation costs are key operational risks.

Manufacturing Efficiency

Efficiency is driven by scale and a digital-first model; however, specific capacity utilization percentages were not provided.

Logistics & Distribution

Not disclosed as a specific percentage, but high transportation costs are identified as a primary threat to the company's cost structure.

📈 Strategic Growth

Expected Growth Rate

20%+

Growth Strategy

The company aims to achieve high double-digit growth by chasing a premiumization trend, expanding its own brand 'Thomas Scott' (which grew 77% in Q2), and leveraging its digital model. They are also focusing on B2B contract manufacturing and maintaining steady traction in licensed brands through partner platforms.

Products & Services

Apparel and clothing (shirts, trousers, etc.) sold under the Thomas Scott brand, licensed brands, and B2B contract manufacturing services.

Brand Portfolio

Thomas Scott

Market Expansion

The company is focusing on scaling its direct-to-consumer franchise and digital model to reach more customers, though specific new regions were not named.

Strategic Alliances

The company supports licensed brands through key partner platforms, contributing INR 33 Cr in Q2 FY26 revenue.

🌍 External Factors

Industry Trends

The industry is seeing a shift toward premiumization and digital-first D2C models. The textile business remains cyclical on the supply side, requiring large capital expenditures for capacity expansion across the industry.

Competitive Landscape

The company competes in the branded apparel and contract manufacturing space, facing competition from both established licensed brands and other B2B manufacturers.

Competitive Moat

The company's moat is built on its growing direct-to-consumer franchise (Thomas Scott brand) and its digital model which provides operating leverage. This is sustainable as long as the company maintains its 77% growth trajectory in its own-brand segment.

Macro Economic Sensitivity

Highly sensitive to consumer sentiment and GST regulations; a GST rate cut was a primary driver for the strong demand recovery in Q2 FY26.

Consumer Behavior

Shift toward 'price insensitivity' during festive periods and a general trend toward premium branded apparel.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to the Companies Act, 2013 and Ind AS accounting standards. The textile industry is also sensitive to labor laws given its labor-intensive nature.

Taxation Policy Impact

The company is significantly impacted by GST rates; a recent GST rate cut directly boosted consumer uptake and demand recovery in late 2025.

Legal Contingencies

The company reported zero pending litigations as of March 31, 2025. There are no long-term or derivative contracts with material foreseeable losses.

⚠️ Risk Analysis

Key Uncertainties

Rising labor costs and a shortage of skilled labor pose a risk to the labor-intensive production model. High transportation costs could impact margins by increasing the cost of goods sold.

Third Party Dependencies

The company relies on key partner platforms for its licensed brand segment, which accounts for INR 33 Cr (approx. 58%) of Q2 revenue.

Technology Obsolescence Risk

The company is mitigating technology risk by transitioning to a digital model to gain scale and efficiency.

Credit & Counterparty Risk

Trade receivables stood at INR 71.5 Cr as of the reporting period, representing a significant portion of current assets that requires monitoring for collection efficiency.