Rupa & Company Navigates Competitive Waters with Strategic Agility in Q2 FY26

Rupa & Company Limited, a prominent player in India's innerwear and apparel market, recently announced its financial results for the second quarter and first half of fiscal year 2026. The company demonstrated strategic agility in a highly competitive environment, focusing on volume growth and market penetration despite facing margin pressures. For Q2 FY26, Rupa reported a revenue from operations of INR 320.2 crores, marking an 8% year-on-year growth. This top-line expansion was primarily fueled by a robust 14% volume growth, indicating strong consumer demand, particularly in the economy and mid-premium segments. However, profitability metrics saw a decline, with EBITDA standing at INR 22.4 crores, a 21.4% decrease year-on-year, and Profit After Tax (PAT) at INR 14.5 crores, also down by 21.4%. The EBITDA margin for the quarter was 7.0%, while the PAT margin was 4.5%.

For the first half of FY26, the company's revenue from operations was INR 504.1 crores, a marginal decline of 0.7% compared to H1 FY25. H1 FY26 EBITDA stood at INR 34.6 crores, a 25.8% decrease year-on-year, with a margin of 6.9%. PAT for the half-year was INR 20.0 crores, a 31.1% decline, resulting in a PAT margin of 4.0%. The management attributed the margin compression to an aggressive pricing strategy adopted to remain competitive and drive sales volumes, alongside a higher contribution from economy products. Additionally, increased advertising and administrative expenses contributed to the pressure on profitability. Despite these challenges, the company's operating cash flow for the half-year was INR 23 crores, and it maintained a healthy net cash surplus of INR 18 crores as of September 30, 2025, underscoring its disciplined focus on liquidity preservation.

Strategic Initiatives and Market Focus

Rupa & Company is actively pursuing several strategic initiatives to drive future growth and improve its product mix. A key focus is on strengthening high-margin businesses, particularly the premium and mid-premium segments. This includes enhancing brands like Macroman M-Series and Macrowoman W-Series with superior fabrics and designs, and launching exclusive collections such as the M-signature gold series in collaboration with designer Rohit Bal. The Softline brand is also being bolstered with a wide range of premium leggings, lingerie, and outerwear, emphasizing innovation and comfort. The thermal wear segment, under brands like Torrido and Thermocot, is also a priority, offering advanced, warm-fit products.

The company is also committed to rapid expansion in high-potential geographical areas within India, including West Bengal, Maharashtra, Gujarat, and the Southern states. This involves building a comprehensive ecosystem of marketing, retail, and distribution networks. Furthermore, Rupa is significantly investing in and expanding its modern trade and e-commerce presence. Plans include increasing brand footprints, improving order serviceability, developing robust tech-driven warehouse infrastructure, and launching its D2C business through online brand stores and global platforms like Amazon.com. The company aims to double its store count in regional and value large format stores, with a major focus on Southern India, and targets at least 20% growth in modern trade and e-commerce channels.

Exports remain a strong growth driver, with a 28% year-on-year growth in H1 FY26, contributing 4% to total revenues. Rupa is actively exploring new emerging markets such as the Middle East, Bangladesh, Africa, and Russia, by appointing new distributors and building experienced teams to deepen market penetration. The company is targeting at least 20% growth in its export business. These initiatives collectively aim to diversify revenue streams, enhance market presence, and improve overall profitability by optimizing the product and channel mix.

Outlook and Management Commentary

Looking ahead, Rupa & Company's management, led by Mr. Vikash Agarwal, Whole-Time Director, expressed confidence in sustaining growth momentum. The focus will remain on driving volume-led growth in the near term while actively working to restore margin balance through mix optimization and operational efficiency. The company has set a guideline of 10% revenue growth by the year-end and expects routine CAPEX of INR 12-15 crores for FY25-26. Annual ad spend is projected to remain around 7.5% of revenue, and working capital days are expected to reduce to 210-215 days by the end of the year.

Despite the competitive intensity in the innerwear industry, Rupa & Company's diversified brand portfolio, deep-rooted market presence, and strategic initiatives position it well for long-term value creation. The company's commitment to responsible manufacturing, as evidenced by its Rank 1 in CSR Category at ICC Corporate Governance & Sustainability Vision Awards 2024, further strengthens its foundation. The management's proactive approach to market challenges and clear strategic direction underscore its commitment to sustained growth and building long-term value for all stakeholders.