Iris Clothings Limited (IRISDOREME) Earnings Call Transcript
July 28, 2026
Earnings Call Speaker Segments
Ladies and gentlemen, good day, and welcome to Iris Clothings Limited Q1 FY '27 Earnings Conference Call. Please note that some of the statements made in today's discussion may be forward-looking in nature and may involve risks and uncertainties. Documents relating to the company's financial performance is available to the stock exchange, trust you have been able to go through them. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Harshvardhan Sarda, Business Head. Thank you, and over to you, sir.
Good morning, everyone. Thank you for joining us today for our Q1 FY '27 earnings call. We are pleased to report another quarter of strong financial and strategic progress. During the quarter, the company delivered a 53% year-on-year growth in net profit, supported by expanding EBITDA margins, reflecting the strength of our business model, disciplined execution and continued focus on operational excellence. Beyond our financial performance, the quarter marked a significant phase in our growth journey, as we executed multiple strategic initiatives aimed at strengthening our market position, expanding our addressable opportunities and building a future-ready apparel platform. We strengthened our omnichannel strategy with the launch of our direct-to-consumer platform, enabling us to engage directly with consumers while complementing our existing distribution network. Building on this momentum, we expanded into quick commerce, making our products more accessible and enhancing convenience for today's digitally connected consumers. On the manufacturing front, we commissioned our state-of-the-art in-house embroidery facility equipped with advanced Japanese machinery. This investment strengthens our integrated manufacturing capabilities, enhances product differentiation, particularly in premium and infant wear and provides greater flexibility to respond to evolving consumer preferences. We also expanded our product portfolio with the launch of our newborn gift set range, a fast emerging category that complements our growing omnichannel presence. Available across retail stores, digital platforms and quick commerce, this initiative allows us to tap into a high potential gifting segment while further strengthening our value-added offerings. Another significant strategic milestone during the quarter was the Board's approval of the proposed acquisition of a 51% stake in Infinia, subject to shareholder and regulatory approvals. This strategic acquisition marks our entry into the rapidly growing athleisure segment and represents an important step towards building a diversified multi-category apparel business. We believe the combined strengths of Iris Clothings and Infinia will create a scalable platform for accelerated growth, wider market reach and long-term value creation. Currently, these initiatives reflect our commitment to investing in innovation, expanding our distribution ecosystem, strengthening manufacturing capabilities and creating multiple growth engines that will drive the company's next phase of growth. Going forward, we remain focused on expanding our distribution network, strengthening our brand equity, scaling our digital and omnichannel capabilities and delivering sustainable profitable growth. I will now hand over the call to Niraj Agarwal, our Chief Financial Officer, who will walk us through the Q1 and FY 2027 financial numbers.
Thank you. Thank you, Harsh. Good morning, everyone. Thank you all for joining us today. I am pleased to share that we have delivered strong performance in Q1 FY '27. Talking about the key financial highlights of Q1 FY '27. Our total income was INR 47.2 crores compared to INR 37.4 crores in Q1 FY '26. EBITDA during the quarter grew by 53% year-on-year and stood at INR 8 crores as against INR 5.3 crores in Q1 FY '26 with an EBITDA margin of 17.12%. Additionally, profit after tax for the quarter witnessed robust growth of 53% year-on-year from INR 2.63 crores in Q1 FY '26 to INR 4 crores in Q1 FY '27. In summary, our focus remains on strengthening operational efficiency and leveraging growth opportunities to create long-term value. With this, we can now open the floor for questions. Thank you.
[Operator Instructions] The first question is from the line of Divyansh from Trinetra Asset Managers.
So my first question was like as our product portfolio is expanding beyond the kidswear and entering into new categories, so can you share that how these new categories are performing in terms of overall revenue? And apart from it, the growth which is coming in this category, is it coming from the repeat order or just initial distributor placement engine then?
So currently, since we have been adding product categories for the last couple of years, I think growth -- these segments that we added, particularly infant wear, has started to perform for us. And that is where a decent part of the growth is coming from. But having said that majority of the growth is still coming from the existing categories that we had, which is the repeat purchases that are happening and expanding distribution of the existing product categories.
Okay. And can you give that this innerwear, sportswear and travel wear how this is contributing to total revenue, all new categories?
Travel wear has done very well for us in the last winters, and we expect that to grow very significantly this year, winters as well. Along with that, sportswear is something which is still developing. We are adding products to it every season. So sportswear is something which is developing, but majority of the growth is coming from the core casual wear that we currently have -- the core athleisure for kids that we have?
Okay. And the last question is like over the years, the average order size has been increased from the distributors and -- or like the growth is primarily driven from the adding new distributors only or where has been the growth?
So a decent part of the growth has come from increase in distributors' revenue. And of course, we have been adding our footprints to multiple regions by adding distributors. But our distributors who have been with us for the last 7 years, 8 years, 10 years, they have been growing, which is where the majority of the growth is coming from.
And last question, sorry, again. Can you help us understand like some particular reason from where the major growth has been come and from where you expect the growth opportunity over the next year in the India across regions?
So our markets or very significant market is from the west of India, which is Maharashtra, Gujarat, Rajasthan and Punjab, which contributes to around 40% of the overall revenue. But having said that, the next few growth potential pockets that we are looking at, we're looking at Uttar Pradesh as a very significant growth potential for us in the next year-or-so. We are investing in adding distributors in smaller towns in Uttar Pradesh. And along with that, I think the Northeastern part of India, Assam, Mizoram, that part is also doing increasingly well for us.
[Operator Instructions] The next question is from the line of Nish Shah from Stellar AMC.
Congratulations for good set of numbers. My first question is, we have seen little margin improvement in this quarter. So can you please explain how much was driven by higher volumes and how much came from better product mix?
So I think primarily margins have improved from higher volumes. Increase in volumes have led to the increase in margins. Since overall costs have been rising in the last quarter because of rise in raw material prices, so most of the margin is driven from higher volumes currently.
Okay. Understood. And also you mentioned in the opening remarks that you have expanded into quick commerce. So could you please share which platforms you have like appeared?
So currently, we have started with BigBasket in around 4 cities for now, with our newborn gift set range, and we plan to expand to other platforms as well.
Okay. I know it's really too early, but how has been traction so far in quick commerce?
The traction has been good. It's just started. It's been a month overall. So I think traction has been received well, and we expect that to become -- so we'll have a quick commerce assortment very soon, and that will help us expand the overall quick commerce growth. I think gifting as a category, since we launched, will become a bigger part in the entire quick commerce segment.
Understood. And our main focus would be gifting part only in quick commerce, correct?
So gifting will be a big part of the focus. Along with that, our innerwear and basic athleisure wear will be a part of the quick commerce. A wider assortment will be difficult to manage initially on quick commerce. So we will start with very focused categories that we want to -- that we expect to increase very significantly.
Okay. And this category would only be available in quick commerce or also will be leveraging our website and EBOs, which we have currently?
Absolutely. Same product will be available across our platforms. We'll leverage the same product in our distribution, in our stores, in our online D2C channels as well.
Okay. Understood. Also, sir, if you could please explain how much would you be investing in Infinia? Have you decided some ballpark number, like what is it?
We're just in the process of finishing that. So I think we'll have more updates regarding that in the next quarter in terms of what the strategy going forward for Infinia will be.
Okay. And how do you -- are you planning to fund the transaction?
We plan to fund the transaction through our internal accruals currently.
Okay. Sir, also, could you please explain the strategic rationale behind acquiring Infinia? So basically, it is in completely different segment. So are you expecting any other synergies or just the different category addition into our business?
So this has been very strategic because when we look at Infinia, it is in a very similar product range that we manufacture. So there's a lot of manufacturing synergies that we can generate with Infinia. Along with that, if we look at the end customers for our kidswear products, our kidswear products are primarily bought by parents who are from the age of 25 years to 40 years, 45 years. And for Infinia also, the target market is similar. So with the same distribution network with expanding distribution network, we can definitely -- there's a lot of synergies that we see for this brand. And it helps us expand into a much wider apparel category as well.
Understood. Is there any synergy possible in the sourcing and manufacturing part on the distribution network will...
I think there's a lot of synergies in the sourcing and manufacturing part because the supply chain is very, very similar to our product supply chain.
Okay. What was the number for Infinia in FY '26, the revenue margin, profitability?
I'm sorry, I missed -- I think your question was humbled.
I want to know the numbers for Infinia on a standalone basis, the revenue margin and the profitability numbers?
So I think this year, Infinia is targeting somewhere around INR 40 crores in revenue and margins will be in the 7% to 8% range.
Okay. So when the acquisition is completed, I feel the margin -- our margins will get lower -- or will get impacted because of the consolidation. Is my understanding correct?
We expect margins to remain at similar levels that we currently have.
Consol basis, 17%, 18%?
Yes.
Okay. And once the synergies and everything we will -- and we successfully -- I mean, when we successfully complete the transactions, do you think the Infinia business will be margin-accretive? Will be possible to increase the margins on that business?
Absolutely. Absolutely. We are very confident that we'll be able to improve margins on the consol basis once the synergies start kicking in, which will happen right away.
Okay. Understood. Just 1 more thing. What key growth drivers do we think that we should watch out for the next 2 to 3 years?
I think the key growth drivers for us will be expansion of our distribution overall. So the general trade distribution expansion will be a decent part of the growth. Apart from that, D2C business, the e-commerce segment, which we are focusing on, along with our retail business, will be a major growth driver for the next 2 to 3 years.
Okay. So D2C business will be growing at a much higher rate than the normal business. Is that what I think or not, I'm wrong?
Yes. Yes, absolutely.
Okay. And on consol level, do you think we will grow at?
We expect to grow at a 30% to 35% growth rate definitely.
Okay. And margins in similar lines, 30%...
Margins in similar lines. Yes, yes, yes. Slight improvements in margin is something that we are expecting.
Are we planning any other inorganic acquisition in short term or medium term?
Not currently. Another very important growth lever that we are trying to tap is trying to leverage the FTA agreements that the government has recently signed up with Europe and the United Kingdom. So we are trying to explore some white label opportunities if we can for our manufacturing setup.
[Operator Instructions] The next question is from the line of Sanjay Ladha from Bastion Research.
Congratulations on a very good set of numbers. Sir, my first question would be how should we see the growth prospect as primarily we were a distributor-led business which we are moving towards D2C or end-to-end from manufacturing to customer and like from store -- opening stores and all of that. So how should we see the strategy and growth prospect for us? How things are changing there, if you can elaborate more on that side?
So I think -- see, the distribution model is very, very strong and intact, and it will keep growing at the pace that it is growing. But we expect that since we have built a very strong brand already in the market currently, so we should capitalize on building that brand by taking it direct to the consumer and give our consumers who actually enjoy our products a much better environment with a wider variety of assortment for them to choose from. So that is the idea of keeping distribution growing at a certain pace and using that as a leverage to expand into the D2C space. So I think that is the overall growth strategy that we are looking at.
Sir, but when we say we are expecting 100 COCO stores going forward, if I'm not wrong, by FY '30, right?
Yes.
So how should we choose that -- what's the plan over there? Any target market, any geographic-specific target market, any strategies that you can share on that front?
Absolutely.
We have done a couple of stores already, so what is the attraction on that side? If you can share unit economics there as well will be really great?
So there are multiple questions inside. I will start off with your first question, which was the geography side. So in terms of strategic geography, we are currently looking at opening stores in Hyderabad, Bangalore, Chennai. These are the 3 cities that we are looking at opening stores for the next couple of years because that is where we see very high growth potential coming in from retail stores. And in terms of strategy, we expect to open stores in a cluster-based model. So we don't want to have a very varied store approach where we open 1 store in Hyderabad, and then go to 1 store in, say, Punjab or Jaipur. We want to have a cluster-based approach. So if you are opening stores in Hyderabad, we want to capture the majority markets of Hyderabad first and then move on to the next one. So that is one strategy that we are planning for retail. Second question, I think, in there was about the overall breakup of the margins. So I think that is fairly simple. If there is a product which is at INR 100 MRP, we expect rentals to be in the 20%, 25% range. Other expenses for the store comes up to around 10% to 12%. So we -- and our overall gross margins is at 65%. So we are left with 20%, 25% EBITDA at the store level when the store matures.
But sir -- and this is primarily COCO stores model. So are you also looking for COFO as well or this 100 stores would be on COCO?
We are just exploring how the COCO -- we have a lot of interest coming in from our distributors and our retailers who are very eager to open franchisee stores for us. But we want to explore first 20, 25 stores on COCO model, get the model right, what should be the ideal size of the store, what should be the ideal assortment at the store and then open it up to multiple franchisees. We are already building the pipeline in terms of franchisee inquiries that we have -- that is currently coming in.
Okay. And sir, my last question would be since we have a licensing agreement with Disney, do we plan to have any other licensing agreement? Are we in talks to other agreements or other sort of things? Or it would be -- now it would be more of -- so one is the licensing agreement and the other one would be the fresh one, which we are looking forward going forward?
So licensing agreement is something that will keep evolving as the business evolves because licensing is a lot about trends as well. If a certain character is doing very well in the media space, it would make sense for us to license with those people and launch a collection based on that. But our primary focus still as a brand remains on driving merchandise from our design houses rather than doing a lot of designs with licensing.
Okay. Okay. And sir, just last one would be since the licensing agreement that you already told that you are not looking for or probably the business -- as business evolves, it will evolve further going forward. But how much royalty or fees we are paying to this licensing agreement as a percentage of sales or how it would be defined?
So our percentage of sales of our licensed goods is less than around 5% of our total sales. On that, the royalty that we pay is around 12% to our licensees. So it is not very significant in terms of the numbers. And that also what we are paying is we drive margins extra on those products from the customers.
Okay. Sir, if you can share the total revenue how much would be the licensing brand revenue?
Licensing brand revenue last year was around INR 5 crores.
Only INR 5 crore. And in that we are paying 12%?
Exactly.
Okay. That's only small for us.
But that 12% again, we are -- our prices for those products is higher than our regular product. So we build that into the margin.
The next question is from the line of Deepali Kumari from Arihant Capital Markets Limited.
Sir, I have just 2 quick questions. If you have planned INR 50 crores greenfield facility in West Bengal, so can you provide a more specific timeline for when construction will begin and when the first phase of this new capacity will be commercially operational?
So we plan to close planning of the entire -- of the new facility in this financial year. And hopefully, in the next financial year, the plant will be operational by the end of next year.
Okay. You are also planning like from INR 300 crores to INR 500 crores incremental revenue from this new facility, right, so how does the company plan to bridge the gap [Technical Difficulty] to greenfield?
Sorry to interrupt Ms. Deepali, your voice is not audible.
Okay. So I'm just asking if you are targeting INR 300 crores to INR 500 crores of incremental revenue from this new facility over 2 years. So means, how does the company plan to bridge the gap to this much higher run rate before the greenfield site?
Deepali, I didn't get your question correctly. Can you please come again? I think the voice is cracking somewhere.
Sorry. I'm just asking like how will -- this whole quarter 1 you already done like INR 47 crores of revenue and you like previously targeted INR 300 crores to INR 500 crores of incremental revenue from new facility. So like how do you plan to bridge the gap to this much higher run rate before the greenfield site is fully operational?
So before the greenfield site is operational, we plan to grow our capacity at 20%, 25% with incremental CapEx every year that we are doing. So we expect this year to be around 35% overall growth in terms of revenue. And next year end when the project is operational, that is when the incremental revenue will start coming in. So we expect incremental revenue from the new project to be at least 2 years away from now.
Okay. And can you please give us the breakup of 300 EBO like for upcoming 5 years, like how -- means, how many EBOs you will add per year so you can go to 300 EBOs?
So the Deepali, EBOs strategy is something that we are still working out on, as I just previously answered. We have built a strategy on how are we going to scale to the first 100 EBOs in the next couple of years. And then when -- if we want to open up COFO, once those first 25, 30 stores are up and running, that is when we'll start defining how do we get to bigger -- multiple EBOs from there in terms of geography and in terms of growth.
Okay. Your D2C performance, like what is the actual revenue in the D2C segment? And if you can also tell me about your like direct channel contribution?
So our D2C performance has been doing well. E-commerce overall has been providing. So last year, we did around 5% overall from our e-commerce business, and we expect that to be around 10% to 11% in this year from our overall e-commerce business.
[Technical Difficulty] overall e-commerce is still 10%. Out of that, 7% is from like other platform, right?
Sorry, Ms. Deepali, your voice is not audible. Please join the queue for the follow-up questions. [Operator Instructions] The next question is from the line of [ Harshit Kabra ] from individual investor. As the participant is not responding, we will disconnect the line. Ladies and gentlemen, that was the last question. I would now like to hand over the conference over to the management for the closing comments.
Thank you once again for your interest in us and for being a part of our journey. We look forward to sharing our successes with you in the next earnings call. In case you have any queries post this call or anything remains unanswered, you may please connect to our IR team. Thank you so much. Have a great day.
On behalf of Iris Clothings Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
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