Monte Carlo FY26: A stronger year, with summer categories and new adjacencies stepping up

Monte Carlo Fashions Limited ended FY26 with a visible improvement in earnings after a volatile prior year. Consolidated revenue from operations rose to INR 1,275.9 crore, up 15.9 percent year on year. Operating EBITDA increased to INR 227.2 crore, with margin at 17.81 percent excluding other income, and profit after tax climbed to INR 112.1 crore, up 38.1 percent.

Q4 FY26 also showed a sharp turnaround. Revenue from operations was INR 280.3 crore versus INR 205.9 crore in Q4 FY25. Operating EBITDA margin expanded to 9.2 percent from 2.77 percent, and PAT turned positive at INR 5.0 crore compared with a loss in the same quarter last year.

The company’s message across the investor presentation and earnings call was consistent. Monte Carlo is no longer positioning itself only as a winterwear-led brand. It is pushing for a broader, all-season product basket, building digital and omni-channel distribution, and scaling newer categories such as Rock.it, footwear, and home textiles.

FY26 financial performance: margins improved, but returns remain a key swing factor

FY26 performance improved meaningfully versus FY25, both at the EBITDA and PAT levels. Operating EBITDA rose 21.8 percent to INR 227.2 crore, and PAT margin expanded to 8.79 percent from 7.38 percent.

In the earnings call, management attributed Q4 profitability to three factors. First, discounts were lower. For FY26, management disclosed discount percentage at 9.44 percent compared with 10.16 percent in the prior year. Second, it said adequate provisioning was taken in Q3, which supported Q4 reported profitability. Third, it highlighted better contribution from summer sales.

At the same time, the disclosures also underline how material sales returns and related provisions are for the company. The annual revenue bridge in the investor presentation shows sales returns (actual) of INR 305.9 crore in FY26 and a closing provision for sales return and undelivered sales of INR 180.7 crore. Management also discussed seasonality, noting that winter returns typically flow into Q1, reducing reported revenue in that quarter.

Portfolio mix: cotton leads, while home textiles and footwear show momentum

FY26 product mix reflects a portfolio that is increasingly tilted toward non-winter categories. Cotton contributed 55.1 percent of sales mix, while woolen contributed 27.7 percent. Home textiles accounted for 10.2 percent, kids 5.9 percent, and footwear 1.1 percent. Footwear sales were disclosed at INR 19.6 crore in FY26.

Within cotton, the company shared a segment bifurcation for FY26. T-shirt and shirt categories were the largest at 36.7 percent of cotton sales. Jackets and coats and suits were 18.8 percent, other garments 18.4 percent, denim and trousers 9.8 percent, Cloak and Decker and thermals 8.3 percent, and Rock.it 8.0 percent.

The company also highlighted growth in newer categories. In the earnings call and presentation, management said Rock.it gross sales grew 86 percent during FY26. It also stated footwear gross sales surged 149 percent compared with FY25. Home textiles were called out as continuing to show strong momentum.

Online has become a bigger driver in the narrative as well. Management said online net sales grew 38 percent versus FY25. The investor presentation also disclosed that total sales through the company’s own website were INR 49.6 crore in FY26.

Distribution and channel strategy: EBO expansion continues, with sharper pruning of weak stores

Monte Carlo continues to lean on its distribution network as a core advantage. The company disclosed 497 EBOs at the end of FY26, split into 156 COCO and 341 FOFO. It also reported 1,615 MBOs and distributors, and 1,469 points across national chain stores and shop-in-shop formats. The EBO footprint expanded from 356 in FY23 to 497 in FY26.

Management reiterated a plan to open 40 to 45 new EBOs annually, with focus on Western and Southern India. In the earnings call, it clarified that the lower net store addition in FY26 was due to a long pending correction, where around 14 to 15 unprofitable stores were closed. Management said gross additions were around its earlier stated target, and indicated that in FY27 gross and net store additions should be closer because major closures were already executed.

The company is also pushing omnichannel availability. The investor presentation noted presence across major e-commerce platforms. It also disclosed partnerships with quick commerce players Blinkit, Swiggy and Zepto for deliveries within 30 minutes. On the call, management added that quick commerce started with dark stores in Delhi NCR and is also available in some Swiggy dark stores in Bangalore.

New adjacency: solar IPP project adds a separate growth lever, with IRR-linked commentary

One of the most notable strategic updates from the earnings call was the renewable energy project. Management said it has around 40 MW of PPA signed with the Madhya Pradesh government and expects the solar project to become operational within the next 12 months. It also said billing would start in this financial year.

Management provided specific estimates. It expects annual revenue of around INR 15 to 16 crore depending on generation, and stated that net operating income is around 90 percent of top line, with O and M cost around 10 percent. Capex is expected around INR 130 to 140 crore, and the project is planned to be leveraged up to 75 percent debt and 25 percent equity. It described a projected IRR of 15 to 16 percent over 25 years.

This is a meaningful step beyond core apparel. While it diversifies earnings, it also introduces project execution and financing considerations that are different from the apparel business.

Takeaways

FY26 was a stronger year for Monte Carlo, driven by a rebound in profitability and continued growth in non-winter categories. Cotton remains the largest contributor, while home textiles, Rock.it, footwear, and online channels were repeatedly highlighted as growth engines.

At the same time, the disclosures make it clear that sales returns and seasonality remain important variables that can swing quarterly numbers. On forward commentary, management indicated double-digit growth is expected in FY27 but said detailed guidance would be shared in the Q2 FY27 concall due to uncertainty. The planned EBO expansion and the solar IPP project will be two key execution areas to track as the company attempts to build a broader, more balanced earnings profile.