Raymond Lifestyle Q2 Results: Profit Declines 70% YoY to ₹42 Crore

Raymond Lifestyle Q2 Results: Profit Declines 70% YoY to ₹42 Crore

Company Overview

Raymond Lifestyle Limited, originally incorporated as “Ray Universal Trading Private Limited” on October 26, 2018, has evolved through several name changes. It became a public limited company on March 3, 2020, under the name “Ray Universal Trading Limited,” then rebranded as “Raymond Consumer Care Limited” on July 18, 2020. Finally, on May 2, 2024, it received a fresh certificate of incorporation, formally adopting the name “Raymond Lifestyle Limited.”
Raymond Lifestyle is a leading India-based fashion and retail company specializing in textiles, branded suiting and shirting, and ready-to-wear clothing. Known for its extensive men’s fashion brands and retail network, the company has a diverse portfolio that includes formal, casual, and ethnic wear through brands like Raymond, Park Avenue, ColorPlus, Parx, and Ethnix by Raymond. The Composite Scheme of Amalgamation & Arrangement in 2024 further strengthened its position by demerging the Lifestyle Business Undertaking of Raymond Limited into Raymond Lifestyle Limited.
Raymond Lifestyle operates across various business segments, including branded apparel, suiting, shirting, garmenting, and retail initiatives like The Raymond Shop, Raymond Made to Measure, Raymond Home, and Ethnix. With a fabric manufacturing capacity of around 43 million meters, the company produces high-quality fabrics from wool, poly-wool, silk, and other premium blends. The Ethnix by Raymond brand provides a curated collection of ready-made ensembles for festive and special occasions, while Raymond Made to Measure offers customized suits, formal jackets, and shirts. In addition, Raymond Home presents a range of contemporary home linens, including bedsheets, towels, and comforters, meeting modern decor needs.

Industry Outlook

India’s textiles sector is one of the oldest industries in the country, deeply rooted in agriculture for raw materials such as cotton, and it is an integral part of India’s cultural heritage. The sector offers a wide variety of fibers and yarns, from natural fibers like cotton, silk, and wool, to synthetic fibers such as polyester and nylon. The largest component of the industry consists of the decentralized power looms and knitting sector.

India ranks among the top five global exporters of textiles and apparel, contributing 2.3% to the GDP, 13% to industrial production, and 12% to exports. With approximately 45 million workers in the textile industry, including 3.5 million handloom workers, the sector plays a significant role in employment.

The Indian technical textiles market is expected to grow to US$ 23.3 billion by 2027, driven by rising consumer demand. India’s broader textile market, valued at US$ 223 billion in 2021, is projected to reach US$ 350 billion by 2030, fueled by increasing export growth and domestic demand. The Indian government has set ambitious targets, aiming for US$ 250 billion in textile production and US$ 100 billion in exports by 2030. This goal is part of the five-step strategy: “Farms to Fibre to Fabric to Fashion to Foreign export,” aimed at positioning India as a leading global textile brand.

The Indian apparel market, valued at INR 5.5 trillion, is projected to grow at a CAGR of ~18.2% from FY23 to FY27, reaching INR 10.7 trillion by FY27. Within this, men’s wear represents ~41% of the market, valued at ~INR 2.2 trillion in FY23, and is expected to grow at a ~18% CAGR to reach INR 4.3 trillion by FY27. Western wear dominates the men’s apparel segment, holding a ~94% share, while ethnic wear accounts for about 6%. The men’s western wear market is expected to grow at 18% CAGR, reaching INR 4.1 trillion by FY27.

The Indian wedding market is valued at INR 11 trillion, with clothing expenses making up approximately 23% of the total, which estimates the wedding clothing market at INR 2.5 trillion. Of this, men’s clothing represents 30%, valued at INR 750 billion, while women’s and children’s wear accounts for 70%. Raymond, with a strong presence in men’s wear, holds ~5% of the Indian men’s wedding wear market, where wedding wear contributes 35-40% to its business. Raymond Lifestyle Limited (RLL) aims to grow its market share to 6-7% in men’s wedding wear by 2027, with a 15% CAGR.

The ethnic wear market, an important part of the wedding wear segment, is valued at INR 1.6 trillion and is expected to grow at an 18% CAGR from FY24 to FY27. The men’s ethnic wear segment, valued at INR 140 billion in FY23, makes up about 9% of the total ethnic wear market, with organized players holding a 38% share. This share is expected to increase to 45% by FY27, benefiting brands like Raymond.

Business Segments

Raymond Lifestyle operates through five main segments, each playing a significant role in its market presence and brand portfolio. Here’s an overview of each segment:

• Branded Textile: This segment is the core of Raymond’s traditional business, offering high-quality worsted fabrics primarily used in men’s suiting and shirting. Known for fine craftsmanship and premium quality, Raymond has built a strong brand reputation in India’s textile market. Branded textiles cater to both business-to-business (B2B) and business-to-consumer (B2C) markets, including custom tailoring and branded fabric sales through exclusive retail outlets. Revenue declined to Rs 854 crore in Q2 FY25 from Rs 933 crore in Q2 FY24, due to muted demand and the impact of “Shraadh.” EBITDA margin dropped to 18.9% from 22.2%.

• Branded Apparel: This segment covers ready-to-wear clothing under Raymond’s well-known apparel brands: Raymond, Park Avenue, ColorPlus, and Parx. Each brand within this segment targets a distinct market: Park Avenue focuses on premium formal wear, ColorPlus emphasizes casual wear, and Parx targets youth-oriented casual fashion. Branded Apparel has a wide distribution network through Raymond’s exclusive brand outlets, franchise stores, and online channels, meeting the demands of the modern consumer. Revenue slightly increased to Rs 441 crore in Q2 FY25, up from Rs 437 crore in Q2 FY24, supported by new store additions. EBITDA margin improved to 13.0% from 12.2%, with 52 new stores added, expanding the retail network to 1,592 stores as of September 30, 2024.

• Garmenting: The Garmenting segment caters to both domestic and international markets by manufacturing ready-made garments, with a focus on exports. It leverages Raymond’s expertise in high-quality tailoring, supplying suits, jackets, trousers, and shirts for global brands and private labels. This segment benefits from the “Bangladesh +1” and “China +1” trends, which encourage international companies to source from India, making Raymond a key player in global garment production. Revenue decreased to Rs 260 crore in Q2 FY25 from Rs 286 crore in Q2 FY24 due to logistical delays in shipments. The EBITDA margin stood at 9.6%.

• High Value Cotton Shirting: This segment focuses on producing high-quality cotton shirting fabrics, a premium product in Raymond’s portfolio. Known for quality and durability, these cotton shirting fabrics serve both Raymond’s branded apparel lines and external clients. The segment’s products are popular in both domestic and export markets, supporting Raymond’s reputation for luxury textiles. Revenue rose by 8% to Rs 228 crore in Q2 FY25 from Rs 211 crore in Q2 FY24, fueled by B2B demand for the festive and wedding season. However, EBITDA margin decreased to 9.7% due to higher input costs.

• Others: The “Others” category includes Raymond’s smaller but strategic ventures, such as accessories (ties, belts, and wallets) and Made-to-Measure (MTM) services, which allow customers to personalize garments for an exclusive fit and style. This category also encompasses Raymond’s high-value wool-based and specialty fabrics, catering to niche markets. Together, these additional offerings enhance the brand’s portfolio and provide customers with complete lifestyle solutions.

Key Subsidiaries and Their Information

Here is an overview of Raymond Lifestyle’s key subsidiaries and their primary functions:

• Raymond Luxury Cottons Limited: Focuses on producing premium cotton fabrics, including high-quality cotton shirting and luxury fabrics. Known for its high-thread-count cotton, this subsidiary plays a key role in Raymond’s presence in the luxury fabric market.
• Silver Spark Apparel Limited: Engages in garment manufacturing and is one of the primary exporters of suits, jackets, and trousers. Caters to both domestic and international markets, supplying ready-made garments to global brands and private labels.

• R&A Logistics Inc.: Raymond’s logistics arm, managing supply chain and distribution to ensure smooth operations across international markets. Plays a critical role in optimizing the transportation and delivery of Raymond’s products to various destinations.
• Silverspark Middle East FZE: Focuses on Raymond’s business expansion in the Middle Eastern market, managing regional sales and distribution. Helps to position Raymond as a premium brand in apparel and textiles across the Middle East.
• Silver Spark Apparel Ethiopia PLC: A manufacturing unit based in Ethiopia, supporting Raymond’s global garment production, particularly for export markets. This facility enhances Raymond’s cost-effectiveness and competitiveness in global markets, contributing to the “Africa +1” manufacturing strategy.
• Raymond America Apparel Inc.: Serves as Raymond’s business presence in the US, dealing with apparel imports, distribution, and sales in North America. It strengthens Raymond’s international retail and B2B partnerships within the American market.
• Jaykayorg AG: Based in Switzerland, this subsidiary manages global investments and asset management for the Raymond Group. It plays a strategic role in financial operations and investment growth for Raymond internationally.
• Celebrations Apparel Limited: Specializes in the manufacturing of celebration and formal wear, including high-end and occasion-specific garments. Supports Raymond’s position as a leader in India’s wedding and festive wear market, a significant growth area for the company.

• Raymond (Europe) Limited: Raymond’s European subsidiary, managing sales and distribution across Europe, including both branded apparel and textiles. Helps to expand Raymond’s footprint in European markets, targeting high-fashion and luxury fabric segments.
• Ray Global Consumer Products Limited: Focuses on consumer products outside of apparel, including personal care, grooming, and lifestyle products. Expands Raymond’s brand into non-apparel consumer goods, reinforcing its image as a comprehensive lifestyle brand.

Each of these subsidiaries contributes to Raymond’s growth and market expansion, allowing it to operate across diverse geographies and product segments effectively.

Q2 FY25 Highlights

• In Q2 FY25, Raymond Lifestyle’s total income was ₹1,735 crore, marking a 6% YoY decline from ₹1,849 crore in Q2 FY24 but showing growth from ₹1,250 crore in Q1 FY25. For H1 FY25, total income dropped 7% YoY to ₹2,985 crore from ₹3,203 crore in H1 FY24.
• Operating expenses (Opex) in Q2 FY25 were ₹1,494 crore, slightly down from ₹1,543 crore in Q2 FY24, and rose from ₹1,160 crore in Q1 FY25. H1 FY25 Opex totaled ₹2,654 crore, compared to ₹2,718 crore in H1 FY24.
• EBITDA was ₹242 crore in Q2 FY25, down 21% YoY from ₹306 crore in Q2 FY24 but up from ₹89 crore in Q1 FY25. For H1 FY25, EBITDA was ₹331 crore, a 32% YoY decline from ₹486 crore. The EBITDA margin in Q2 FY25 was 13.9%, down from 16.6% YoY but a notable improvement from 7.1% in Q1 FY25.
• Profit Before Tax (PBT) dropped 45% YoY to ₹112 crore in Q2 FY25 from ₹203 crore in Q2 FY24, but this was a recovery from a ₹32 crore loss in Q1 FY25. PBT margin in Q2 FY25 was 6.5%, down from 11.0% YoY, but improved from -2.5% in Q1 FY25. H1 FY25 PBT was ₹80 crore, down 70% YoY from ₹264 crore.
• Net Profit in Q2 FY25 reached ₹102 crore, a recovery from a ₹23 crore loss in Q1 FY25. However, after exceptional items, Q2 FY25 net profit stood at ₹42 crore, down from ₹139 crore in Q2 FY24. For H1 FY25, net profit after exceptional items was ₹19 crore, compared to ₹188 crore in H1 FY24, reflecting the impact of lower revenue and margin challenges over the period.
• Raymond Lifestyle has demonstrated resilience in a challenging retail environment. The company’s focus on retail expansion, new product launches, and strategic marketing positions it to capitalize on the upcoming festive demand in India.
• The operating highlights include the opening of 52 new stores, signaling a strong expansion of market presence. Customer acquisition efforts are ongoing, focusing on attracting and retaining a growing customer base. Additionally, the brand has expanded its product offerings with the introduction of a new sleepwear line, broadening its appeal and catering to customer demand for diverse products.
• The economy and market updates indicate subdued consumer demand, with discretionary spending impacted primarily by inflation. Geopolitical tensions and persistently high inflation remain significant risks in international markets. Additionally, there was a lower offtake in September due to the ‘Shraadh’ period and ongoing muted consumer demand. Meanwhile, the Bangladesh +1 strategy is showing promise, as it has started receiving enquiries in the garmenting business.

Financial Summary

SWOT Analysis

Strengths:

1. Established Brand Recognition
2. Broad Product Range
3. Extensive Retail Presence
4. Integrated Production Processes

Weaknesses:

1. Heavy Reliance on Indian Market
2. Premium Price Positioning
3. Limited Global Market Share

Opportunities:

1. Rising Demand for Premium Lifestyle Products
2. Growth in Casual Wear and Accessories
3. Potential for International Expansion
4. Emphasis on Digital Transformation

Threats:

1. Economic Slowdown and Inflation
2. Highly Competitive Industry Landscape
3. Geopolitical Challenges and Supply Chain Risks
4. Rapidly Changing Fashion Trends