Iris Clothings Q1 FY27: Profits jump 53% as Doreme builds an omnichannel playbook

Iris Clothings Limited, the company behind the kidswear brand Doreme, reported a strong start to FY27 with a sharp improvement in profitability. In Q1 FY27 (quarter ended 30 June 2026), revenue from operations rose to INR 47.24 crore from INR 37.40 crore in Q1 FY26, a year-on-year growth of 26%. EBITDA increased to INR 8.09 crore from INR 5.29 crore, up 53%, and profit after tax grew 53% to INR 4.01 crore.

The quarter was not only about the numbers. Management used the call to highlight a set of operational and strategic moves aimed at building an omnichannel kidswear platform, while still expanding the company’s distributor-led core. These included launching a direct-to-consumer platform, entering quick commerce through BigBasket in four cities, commissioning an in-house embroidery facility equipped with Japanese machinery, and receiving Board approval for a proposed acquisition of a 51% stake in Infinia to enter athleisure.

Q1 FY27 performance: volume-led margin expansion

The company’s consolidated P&L table shows that gross profit increased to INR 21.07 crore from INR 16.01 crore, with gross margin improving to 44.6% from 42.8%. EBITDA margin also improved to 17.1% from 14.1%.

Management attributed margin improvement largely to higher volumes rather than mix. It also noted that raw material prices had risen in the last quarter, implying cost pressure remains a factor even as scale benefits show up.

At the full-year level, FY26 revenue from operations was INR 190.87 crore versus INR 146.27 crore in FY25. However, FY26 EBITDA margin was 15.40% versus 19.3% in FY25, indicating margin volatility across periods even in a growth phase.

Distribution still drives the base, but D2C is being layered on top

Doreme is positioned as a well-established kidswear brand with PAN India presence. The investor deck highlights 220 distributors and presence across 26 states. Management also indicated that a large part of growth continues to come from repeat purchases and expansion of existing categories through distributors who have been with the company for 7 to 10 years.

Regionally, management stated that west India, covering Maharashtra, Gujarat, Rajasthan and Punjab, contributes around 40% of overall revenue. For incremental growth, the company is focusing on expanding distribution in Uttar Pradesh, particularly in smaller towns, and also noted improving traction in the North East, including Assam and Mizoram.

Alongside this, the company is accelerating its direct-to-consumer effort. During Q1 FY27, it launched its D2C platform as part of a broader omnichannel strategy. While the company did not disclose standalone D2C revenue in the transcript, it shared a directional target for online contribution: e-commerce contributed around 5% last year, and management expects it to be around 10% to 11% this year.

The investor presentation also outlines a longer-term D2C strategy, including brand-owned online presence, marketplace execution, and a retail EBO rollout using a cluster model.

Retail rollout and store economics: a rare quantitative disclosure

A key part of the call was the company’s commentary on retail expansion through established brand outlets. Management said it intends to first run 20 to 25 stores under a COCO model to refine store size and assortment, and later consider a franchise model (described as FOCO in the investor deck).

For near-term store expansion, management identified Hyderabad, Bangalore and Chennai as focus cities for the next couple of years, with a cluster approach rather than scattered openings.

Importantly, management disclosed indicative unit economics at the store level. It stated that for a product with INR 100 MRP, rentals are expected to be around 20% to 25%, other store expenses around 10% to 12%, and gross margins around 65%, leaving about 20% to 25% EBITDA at the store level once the store matures. This offers investors a clearer framework to evaluate the profitability of the planned retail engine.

New growth levers: quick commerce, manufacturing upgrades, and athleisure entry

The company’s product portfolio continues to broaden beyond core casual kidswear. The investor deck lists category expansion into innerwear, sportswear, infant accessories, and infant collections. In the call, management said infantwear is already contributing to growth, while sportswear is still developing with new products being added each season. It also noted that travel wear performed well in the last winter season and is expected to grow significantly in the coming winter.

The quarter also marked entry into quick commerce. Management said it started with BigBasket in around four cities, using the newborn gift set range as the initial assortment. Traction was described as good, though it is still early, and the company intends to expand to other platforms. The plan is to keep the assortment focused initially, with gifting, innerwear and basic athleisure as priority categories.

On manufacturing, management highlighted commissioning of an in-house embroidery facility with advanced Japanese machinery, positioning it as an investment that improves differentiation and supports premium and infant wear.

The largest strategic development was the Board’s approval of a proposed acquisition of a 51% stake in Infinia, subject to shareholder and regulatory approvals. Management described this as an entry into athleisure, with expected sourcing and manufacturing synergies due to similar supply chains. It also highlighted customer overlap between parents buying kidswear and the likely target segment for athleisure.

While investment size and final structure were not disclosed, management stated the transaction is planned to be funded through internal accruals. It also shared that Infinia is targeting around INR 40 crore revenue for the year, with margins in the 7% to 8% range, and expressed confidence that consolidated margins can be maintained and improved as synergies kick in.

Capacity expansion roadmap: incremental near-term, greenfield in the pipeline

The investor presentation outlines expansion through brownfield debottlenecking, greenfield capacity, and outsourcing certain categories through OEMs. It states that current capacity utilisation is around 75% and that debottlenecking and annual addition of modern sewing machines are planned.

For greenfield, the deck mentions a planned 200,000 sq. ft. facility in West Bengal with estimated capital outlay of INR 50 crore. In the call, management said it expects to close planning for the new facility in the current financial year and hopes the plant will be operational by the end of next year. It also stated that incremental revenue from the new project is expected to be at least two years away.

Until then, the company expects capacity to grow 20% to 25% through incremental annual capex, and it guided that it expects around 35% overall revenue growth this year.

Takeaways

Iris Clothings delivered a strong Q1 FY27 with 26% revenue growth and 53% growth in both EBITDA and PAT, supported by volume-led margin expansion. The company is now clearly pursuing multiple growth engines: distributor network expansion, a scaled e-commerce contribution target of 10% to 11% for the year, a cluster-based retail rollout with disclosed store-level unit economics, quick commerce pilots, and manufacturing capability upgrades.

At the same time, investors will likely watch three areas closely. First, whether margins remain stable given FY26 margin compression and raw material inflation commentary. Second, how quickly D2C, retail, and quick commerce translate into measurable revenues. Third, how the proposed Infinia acquisition is structured and whether the promised manufacturing and supply chain synergies show up in consolidated performance.

The quarter suggests strategic momentum, but the next few periods will matter for proving that these new channels can scale without diluting the efficiency of the core distributor-led engine.