The December quarter results present a mixed picture for Raymond Lifestyle, which was carved out from Raymond Limited in a demerger completed in 2024. Whilst the company managed to post its highest-ever quarterly revenue and improved operating margins, the sharp profit decline stemmed from elevated interest costs and tax expenses. The company's profitability remains fragile, with a PAT margin of just 2.32% in Q3 FY26, down from 4.10% in the previous quarter. Year-on-year, net profit contracted 33.21%, underscoring the challenges facing the apparel and lifestyle sector amid subdued consumer sentiment and competitive pressures.
| Quarter | Revenue (₹ Cr) | QoQ Change | Net Profit (₹ Cr) | QoQ Change | Operating Margin |
|---|---|---|---|---|---|
| Dec'25 | 1,848.72 | +0.89% | 42.86 | -43.00% | 12.82% |
| Sep'25 | 1,832.40 | +28.10% | 75.19 | -479.36% | 12.33% |
| Jun'25 | 1,430.43 | -4.26% | -19.82 | -55.91% | 5.38% |
| Mar'25 | 1,494.15 | -14.82% | -44.95 | -170.05% | 0.91% |
| Dec'24 | 1,754.21 | +2.69% | 64.17 | +52.13% | 10.24% |
| Sep'24 | 1,708.26 | +40.01% | 42.18 | -281.73% | 12.57% |
| Jun'24 | 1,220.12 | — | -23.21 | — | 4.89% |
Financial Performance: Revenue Growth Masks Profitability Concerns
Raymond Lifestyle's Q3 FY26 revenue of ₹1,848.72 crores marked the highest quarterly sales in the company's recent history, representing a modest 0.89% sequential increase and a 5.39% year-on-year expansion. However, this top-line growth failed to translate into bottom-line strength. The company's operating profit before depreciation, interest, and tax (excluding other income) stood at ₹236.94 crores, yielding an operating margin of 12.82%, up 49 basis points quarter-on-quarter. This improvement in operating efficiency is noteworthy, particularly given the challenging retail environment.
The profit decline stemmed primarily from elevated interest costs and a higher tax burden. Interest expenses rose to ₹60.34 crores in Q3 FY26 from ₹59.97 crores in Q2 FY26, whilst the effective tax rate climbed to 30.34% from 26.95% in the previous quarter. Profit before tax stood at ₹61.53 crores in Q3 FY26, down 40.23% sequentially from ₹102.93 crores. The company's PAT margin compressed to 2.32% from 4.10% in Q2 FY26, reflecting the pressure on profitability despite operational improvements.
Employee costs remained relatively stable at ₹238.73 crores in Q3 FY26, up from ₹226.46 crores in the previous quarter. Other income contributed ₹34.09 crores, marginally higher than ₹33.03 crores in Q2 FY26. Depreciation expenses edged up to ₹92.34 crores from ₹91.42 crores. The company's gross profit margin stood at 8.32% in Q3 FY26, down from 10.61% in Q2 FY26, indicating increased cost pressures or competitive pricing dynamics in the apparel segment.
Operational Challenges: Weak Returns Highlight Capital Inefficiency
Raymond Lifestyle's operational performance reveals significant challenges in capital efficiency and profitability. The company's return on equity (ROE) stands at a mere 0.83%, amongst the weakest in its peer group and indicative of poor returns for shareholders. This anaemic ROE reflects the company's struggle to generate meaningful profits from its equity base of ₹9,587.67 crores as of March 2025. The return on capital employed (ROCE) is equally concerning at just 1.33% for the latest period, suggesting that the company is barely generating returns above its cost of capital.
The company's balance sheet shows total shareholder funds of ₹9,587.67 crores as of March 2025, with long-term debt of ₹372.60 crores. The debt-to-equity ratio remains manageable at 0.13, indicating conservative leverage. However, the debt-to-EBITDA ratio of 3.52 times suggests that the company would need more than three years of current EBITDA to pay off its debt, a moderate concern given the volatility in earnings. The EBIT-to-interest coverage ratio of 1.70 times is particularly weak, indicating limited cushion to service debt obligations from operating profits.
⚠️ Capital Efficiency Concerns
Raymond Lifestyle's ROE of 0.83% and ROCE of 1.33% are amongst the lowest in the garments and apparel sector, signalling significant inefficiencies in capital deployment. The company's ability to generate returns for shareholders remains severely constrained, with profits barely covering the cost of capital. This weak performance stems from a combination of thin margins, high fixed costs, and intense competition in the lifestyle segment.
The company's asset base comprises fixed assets of ₹7,727.16 crores and current assets of ₹4,437.24 crores as of March 2025. Current liabilities stood at ₹2,954.22 crores, including trade payables of ₹1,323.67 crores. The sales-to-capital-employed ratio of 0.54 times indicates that the company generates less than one rupee of sales for every two rupees of capital employed, reflecting asset-heavy operations typical of retail and manufacturing businesses but below optimal efficiency levels.
Long-Term Headwinds: Declining Profitability Trends
Raymond Lifestyle's long-term financial trajectory paints a concerning picture. The company's five-year sales growth stands at -5.50%, indicating revenue contraction over the period. More alarmingly, the five-year EBIT growth is -78.79%, reflecting a dramatic erosion in operating profitability. This deterioration in fundamentals explains the company's below-average quality grade and weak valuation metrics.
For the full year FY25, Raymond Lifestyle reported net sales of ₹6,176.00 crores, down 5.50% from ₹6,535.00 crores in FY24. Operating profit (PBDIT excluding other income) collapsed to ₹467.00 crores from ₹936.00 crores, with the operating margin halving from 14.30% to 7.60%. Net profit plummeted to just ₹38.00 crores in FY25 from ₹479.00 crores in FY24, resulting in a PAT margin of merely 0.60% compared to 7.30% in the previous year. This dramatic compression in profitability reflects structural challenges in the business, including pricing pressures, cost inflation, and competitive intensity.
Quality Assessment: Below Average
Raymond Lifestyle currently carries a "Below Average" quality grade, reflecting its weak long-term financial performance. The company's negative five-year sales growth, collapsing EBIT margins, and anaemic returns on capital place it in the lower tier of quality stocks. Institutional holdings stand at just 14.88%, suggesting limited confidence from professional investors. The company's average ROCE of 3.94% and average ROE of 0.83% over recent periods underscore persistent challenges in generating adequate returns from the capital base.
Peer Comparison: Underperformance Across Key Metrics
Raymond Lifestyle's positioning within the garments and apparel sector reveals significant underperformance across critical metrics. With a market capitalisation of ₹5,664 crores, the company ranks sixth amongst its peer group. Its ROE of 0.83% trails far behind sector leaders like Garware Technical Fibres (18.07%) and Pearl Global Industries (16.87%), and even lags V2 Retail (8.20%) despite the latter's own challenges.
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity | Div Yield |
|---|---|---|---|---|---|
| Raymond Lifestyle | 69.22 | 0.58 | 0.83% | 0.13 | — |
| Alok Industries | NA (Loss Making) | -0.34 | 0.00% | -1.23 | — |
| V2 Retail | 67.69 | 17.41 | 8.20% | 3.35 | — |
| Pearl Global Industries | 24.20 | 4.95 | 16.87% | 0.10 | 0.43% |
| Garware Technical Fibres | 29.28 | 4.60 | 18.07% | -0.20 | 1.58% |
| Arvind Fashions | NA (Loss Making) | 5.89 | 3.08% | 1.17 | 0.37% |
Raymond Lifestyle trades at a P/E ratio of 69.22 times, significantly higher than peers like Pearl Global Industries (24.20x) and Garware Technical Fibres (29.28x), despite delivering far inferior returns on equity. This valuation premium appears unjustified given the company's operational underperformance. The price-to-book ratio of 0.58 times is amongst the lowest in the peer group, reflecting market scepticism about the company's ability to generate value from its asset base. The company pays no dividend, unlike several peers who maintain modest payouts, further limiting shareholder returns.
Valuation Analysis: Expensive on Earnings, Cheap on Book Value
Raymond Lifestyle presents a paradoxical valuation picture. At a P/E ratio of 69.22 times trailing twelve-month earnings, the stock trades at a significant premium to the industry average P/E of 20 times. This elevated earnings multiple appears difficult to justify given the company's weak profitability trends and declining operating margins. The high P/E reflects the extremely low earnings base rather than genuine growth expectations, making the stock vulnerable to further de-rating if profitability does not improve substantially.
Conversely, the stock trades at just 0.58 times book value, well below the peer group average and suggesting that the market assigns little value to the company's assets. The book value per share stands at ₹1,574.33, implying that investors are acquiring the stock at a substantial discount to net asset value. However, this discount exists for good reason: the company's inability to generate adequate returns on its capital base means that book value overstates true economic worth.
The enterprise value-to-EBITDA ratio of 13.75 times appears moderate for the sector, whilst the EV-to-EBIT ratio of 46.90 times reflects the compression in operating margins. The EV-to-sales ratio of 1.05 times suggests that the market values the company at slightly above one year's revenue, a reasonable multiple for a stable business but potentially generous given the deteriorating profitability trends. The company's overall valuation grade of "Does Not Qualify" reflects these mixed signals and the fundamental weakness in financial performance.
Shareholding Pattern: Promoter Accumulation Continues
Raymond Lifestyle's shareholding pattern reveals steady promoter accumulation over recent quarters, with promoter holding increasing from 54.68% in March 2025 to 58.22% in December 2025. This 3.54 percentage point increase over three quarters signals management confidence in the business's long-term prospects, despite near-term challenges. The sequential increases of 1.07% in Q3 FY26, 1.01% in Q2 FY26, and 1.46% in Q1 FY26 demonstrate consistent buying by the promoter group.
| Quarter | Promoter | QoQ Change | FII | QoQ Change | Mutual Funds | QoQ Change |
|---|---|---|---|---|---|---|
| Dec'25 | 58.22% | +1.07% | 8.70% | -0.28% | 3.68% | -1.21% |
| Sep'25 | 57.15% | +1.01% | 8.98% | +0.20% | 4.89% | -0.52% |
| Jun'25 | 56.14% | +1.46% | 8.78% | -1.73% | 5.41% | -0.01% |
| Mar'25 | 54.68% | — | 10.51% | -1.83% | 5.42% | +0.20% |
| Dec'24 | 54.68% | — | 12.34% | — | 5.22% | — |
In contrast, foreign institutional investors (FIIs) have been reducing exposure, with holdings declining from 12.34% in December 2024 to 8.70% in December 2025. This 3.64 percentage point reduction reflects waning confidence from international investors, likely driven by the company's deteriorating financial performance and weak returns. Mutual fund holdings have similarly declined from 5.42% in March 2025 to 3.68% in December 2025, with a particularly sharp 1.21 percentage point drop in Q3 FY26. The combined institutional holding of 14.88% is relatively low, suggesting limited professional investor interest in the stock.
Stock Performance: Severe Underperformance Across All Timeframes
Raymond Lifestyle's stock performance has been dismal across virtually all timeframes, with the share price plunging 45.42% over the past year whilst the Sensex gained 8.28%, resulting in a negative alpha of 53.70 percentage points. The stock trades at ₹929.65 as of January 27, 2026, down from its 52-week high of ₹1,819.95 reached in early 2025. The current price represents a 48.92% decline from that peak, placing the stock in a sustained downtrend.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Day | +1.94% | +0.08% | +1.86% |
| 1 Week | +4.16% | -0.70% | +4.86% |
| 1 Month | -7.72% | -4.04% | -3.68% |
| 3 Months | -22.99% | -3.75% | -19.24% |
| 6 Months | -15.16% | +0.17% | -15.33% |
| YTD | -11.06% | -4.25% | -6.81% |
| 1 Year | -45.42% | +8.28% | -53.70% |
The stock has underperformed the Garments & Apparels sector by 35.01 percentage points over the past year, with the sector declining 10.41% compared to Raymond Lifestyle's 45.42% fall. This significant underperformance reflects company-specific challenges beyond broader sector headwinds. The stock's beta of 1.35 indicates high volatility, with price movements amplified compared to the broader market. The volatility of 46.41% places Raymond Lifestyle in the "High Risk Low Return" category, an unattractive combination for investors.
Technical indicators paint a mixed picture. The stock trades below all key moving averages—5-day (₹909.47), 20-day (₹971.15), 50-day (₹1,049.55), 100-day (₹1,131.76), and 200-day (₹1,115.79)—indicating a sustained downtrend. However, the overall technical trend recently shifted to "Mildly Bullish" on December 22, 2025, at ₹1,070, suggesting some near-term stabilisation. Weekly MACD remains bearish, whilst monthly indicators show mixed signals. The immediate support lies at the 52-week low of ₹860.05, just 7.5% below current levels, whilst resistance is clustered around the ₹971-₹1,132 zone.
Investment Thesis: Limited Appeal Despite Discount Valuation
Raymond Lifestyle's investment case rests on a few narrow pillars: promoter confidence as evidenced by steady stake increases, a discount valuation on book value, and the potential for operational turnaround in the lifestyle and apparel segments. The company's brand heritage and retail presence provide some competitive moat, whilst the recent demerger structure offers clarity on the focused business model. The Q3 FY26 results showed marginal improvement in operating margins, suggesting cost optimisation efforts may be bearing fruit.
However, these positives are vastly outweighed by structural concerns. The company's ROE of 0.83% and ROCE of 1.33% indicate severe capital inefficiency, with returns barely above zero. The five-year EBIT growth of -78.79% reflects a business in structural decline rather than cyclical downturn. The P/E ratio of 69 times is unjustifiable for a company with such weak profitability and negative growth. Institutional investors have been reducing stakes, signalling professional scepticism about the turnaround prospects. The high volatility and consistent underperformance add to the risk profile.
✓ KEY STRENGTHS
- Promoter stake increased to 58.22%, up 3.54% over three quarters
- Operating margin improved to 12.82% in Q3 FY26 from 12.33% in Q2
- Highest-ever quarterly revenue of ₹1,848.72 crores achieved
- Conservative debt-to-equity ratio of 0.13 provides financial flexibility
- Price-to-book ratio of 0.58x offers discount to net asset value
- Established brand presence in lifestyle and apparel segment
- Recent technical trend shift to "Mildly Bullish" suggests stabilisation
⚠️ KEY CONCERNS
- Net profit collapsed 43.00% QoQ and 33.21% YoY in Q3 FY26
- ROE of 0.83% amongst lowest in sector, indicating poor capital efficiency
- Five-year EBIT growth of -78.79% reflects structural decline
- P/E ratio of 69x unjustifiable given weak profitability trends
- FII and mutual fund holdings declining steadily over past year
- Stock down 45.42% in one year, underperforming sector by 35%
- PAT margin of just 2.32% leaves little room for error
Outlook: What Lies Ahead
Raymond Lifestyle faces a challenging road ahead, with the need to demonstrate sustained improvement in profitability and returns on capital. The company's ability to navigate competitive pressures in the apparel and lifestyle segment, manage costs effectively, and drive revenue growth will determine whether the recent operational improvements can translate into meaningful earnings recovery. The wedding and festive season demand patterns will be critical to monitor in the coming quarters.
POSITIVE CATALYSTS
- Sustained improvement in operating margins above 12%
- Return to double-digit revenue growth on consistent basis
- PAT margins expanding beyond 4-5% range
- Institutional investor stake stabilisation or increase
- Successful product launches or brand extensions
RED FLAGS TO WATCH
- Further sequential profit declines in Q4 FY26
- Operating margins falling below 10% threshold
- Continued institutional investor exodus
- Debt levels rising or interest coverage deteriorating
- Stock breaking below ₹860 support level
"With ROE below 1%, negative five-year EBIT growth, and a P/E ratio of 69 times, Raymond Lifestyle exemplifies a value trap—cheap on book value but expensive on any earnings-based metric, with little evidence of sustainable turnaround."
The Verdict: Exit Opportunity, Not Entry Point
Score: 45/100
For Fresh Investors: Avoid initiation. The combination of weak fundamentals, deteriorating profitability trends, and elevated valuation on earnings creates an unfavourable risk-reward profile. Better opportunities exist in the apparel sector with stronger returns on capital and clearer growth trajectories.
For Existing Holders: Consider reducing positions on any near-term strength. Whilst promoter buying provides some comfort, the structural challenges in generating adequate returns on capital and the sustained institutional selling suggest limited upside potential. The stock's high volatility and consistent underperformance warrant portfolio reallocation.
Fair Value Estimate: ₹750-800 (19-14% downside from current levels), based on normalised earnings and peer P/BV multiples adjusted for inferior ROE profile.
Note- ROCE= (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions.
