Monte Carlo Fashions Ltd (MONTECARLO) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator (Emkay Global Financial Services Limited): Ladies and gentlemen, good day and welcome to Monte Carlo Fashions Limited Q2 FY '27 Earnings Conference Call hosted by MK Global Financial Services Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sunny Bhadra from MK Global Financial Services Limited. Thank you, and over to you, Mr. Bhadra.
Sunny Bhadra (Emkay Global Financial Services Limited): Yeah. Yeah. Thank you, Zithan. Good morning, everyone. I would like to welcome the management and thank them for this opportunity. We have with us today: Mr. Rishabh Oswal, Executive Director; Mr. Sandeep Jain, Executive Director; Mr. Dinesh Gogna, Director; Mr. R.K. Sharma, Chief Financial Officer; and Mr. Ankur Gauba, Company Secretary. I shall now hand over the call to the management for the opening remarks. Over to you, gentlemen.
Rishabh Oswal (Monte Carlo Fashions Ltd): Good morning, everyone, and thank you for joining us for Monte Carlo Fashions Limited's Quarter 2 and H1 FY '27 earnings call. Before Sandeep ji discusses our performance and priorities, let me spend a few minutes on how we see Monte Carlo today and, importantly, where we are taking the business from here. For us, the opportunity is not about changing what Monte Carlo stands for, it is about making the brand relevant to more consumers across more categories and for a larger part of the year. Over the years, Monte Carlo has built a strong franchise in winter wear, but the business today is already much broader. Cotton apparel, kidswear, home textiles are established parts of our portfolio, and our focus is now to scale these categories meaningfully. That changes the opportunity for Monte Carlo as it gives us the ability to engage with consumers beyond the winter season, expand our presence in markets where our penetration is still relatively low, and get more out of a distribution network and brand that we have built over several decades. This evolution is already beginning to show in our sales mix.
Rishabh Oswal (Monte Carlo Fashions Ltd): Cotton has been our largest reported product category since FY22 and contributed approximately 63% of gross product sales in H1 FY27. This is an important part of Monte Carlo's business today. Winter, nevertheless, remains significant to annual performance, including through jackets with within cotton apparel and blankets and quilts within home textiles. Therefore, we see two areas of opportunity. The first is to grow our established business. Our brand, longstanding retailer relationships, distribution network and sourcing and textile capabilities provide a strong base. We see scope to grow our established categories and improve productivity across existing businesses. The second is to develop newer businesses, markets, and channels selectively. Footwear and our newer brands are still relatively small. West and south remain markets for further expansion alongside digital and modern retail channels. We will build these opportunities with discipline. Our priority is growth supported by consumer demand, profitability, and cash generation. We will judge progress by the quality of the business we build, not expansion alone. As we enter the second half, execution through the festive and winter selling season is the immediate priority. The first half includes inventory build and preparation across our distribution network with quarter 3 particularly important to full-year performance. Our longer-term focus remains on growing the broader portfolio and improving business and productivity. With that, I will now hand over to Sandeep ji to share his perspective on our priorities and discuss our Q2 and H1 FY27 performance.
Sandeep Jain (Monte Carlo Fashions Ltd): Yeah. Thank you, Rishabh. Good morning, everyone. As we grow the business, our responsibility is to balance expansion with the economics of each category and channel. The coming selling season is important, both for sales and for converting the inventory prepared in the first half into collections. This is a context in which we are assessing our performance and decision for the remainder of the year. Let me now take you through our Q2 and H1 performance. For Q2, revenue from operations stood at 262 crore compared with 248 crore as compared to last year, representing a growth of 5.51%. Operating EBITDA was 28.35 crore with an operating EBITDA margin of 10.80%. Profit after tax was 1.17 crore. For H1, revenue from operation stood at 411 crore, compared with 387 crore in H1 26, representing a growth of 6.25%. Operating EBITDA stood at 15.42 crore with a margin of 3.7% and a loss after tax was 22.25 crore. While revenue grew, profitability was slightly lower due to higher material cost, lower other income, and increased employee cost. So, the there are two points that are important while reading the H1 performance. Monte Carlo continue to have a meaningful seasonal cycle. Q3 contributed approximately 48% of financial 26 revenue. The September half includes production, inventory build, and the dispatch activity ahead of the important winter selling period. This year, the later festive season shifted a meaningful part of consumer demand and winter sell-through towards Q3. H1 should, therefore, be read together with the seasonally important second half rather than in isolation. Actual consumer sell-through and collections will determine the outcome. Second, as discussed on our Q1 call, retailer returns were processed earlier in Q1, and we expect the timing effect to reverse over the following two quarters. So, gross dispatches need to be read alongside returns, rebates, and provisions to understand reported net revenue. For Q2, the return ratio was 16.17% compared with 23.18% last year. On H1 basis, returns were 30.70 compared with 29.47 in H1 26. From the portfolio, H1 gross sales increased across cotton, home textiles, kids wear, and footwear. And these are gross category sales before returns and other adjustments, rather than reported net revenue. Cotton sales increased from 326 crore in H1 to 390 crore in H1 financial 27.
Sandeep Jain (Monte Carlo Fashions Ltd): 1,413 from 1,615 while national chain stores decline to 846 from 891. We continue to assess expansion on the basis of store profitability and returns potential other than the actual outlet count alone. So geographically, north remains our largest market. West and south together accounted for approximately 9.7% of Q2 gross sales and remain important medium-term expansion opportunities. At the same time, reported geography should be read carefully because online and certain other sales are not attributed to the individual states in the available classification. Working capital discipline remains a priority. Reported NWC days improved from 176 in FY '25 to 146 in FY '26. The seasonal funding requirement needs to be considered alongside capital expenditure and other investment commitments. For the remainder of FY '27, our priorities are consumer tell-through, productive retail expansion and cash conversion. We continue to maintain our guidance for low double-digit revenue growth, 20% home textile growth and 40 to 45 new EBOs focused on west and south also. So to conclude, the business enters the important second half with a broader portfolio, an established distribution base and multiple avenues for growth. Our approach remains consistent: profitable growth, disciplined inventory, and sensible deployment of capital. With that, we can now open the floor for the questions. Thank you.
Moderator (Emkay Global Financial Services Limited): Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question comes from the line of Yuvraj Kunwar from Antique Global. Please go ahead.
Yuvraj Kunwar (Antique Global): Hi, sir. Good morning. So the first question would be around the RM inflation, sir. How are you seeing, is it affecting your margins if you quantify something, how has been the inflation trend? And in Q3, what has been the trend around inflation?
Sandeep Jain (Monte Carlo Fashions Ltd): I think inflation is definitely, you know, actually increasing the material cost and that is evident in this quarterly performance also. But we are adequately protected as we move in Q3 because that hike has already been taken. But yes, at a macro level, inflation is actually, you know, reducing the discretionary spending. But we are confident as far as long-term outlook of the company is concerned.
Yuvraj Kunwar (Antique Global): Any price hikes you are taking or any number you want to quantify or any qualitative outlook you want to share?
Sandeep Jain (Monte Carlo Fashions Ltd): We have taken a price rise of around 8% to 9% in this winter, and I think that is that will suffice the whatever raw material cost increased we have in winter wear category.
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