Redtape Q4 FY26 Results (NSE: REDTAPE)
Signal: Margin expansion
The read
Redtape’s Q4FY26 saw a sharp reversal from the Q4FY25 revenue decline (-0.2% YoY) into strong 33.6% growth, with OPM rebounding 700bps to 16% as gross margin improved and operating leverage kicked in. Employee costs grew only 5.8% YoY and other expenses grew 15% vs revenue +33.6%, proving fixed-cost absorption. The balance sheet remains healthy with net debt/equity of ~0.37x and operating cash flow recovery to ₹174 Cr from near zero. Key concern: receivables days jumped to 31 from 20 a year ago, suggesting stretched credit terms or channel stuffing risk. The full-year FY26 revenue growth decelerated to 19.7% from 33.5% in FY25, but PAT grew 46.2% on margin expansion.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹675.51 Cr | 33.6% | -14.0% |
| EBIT | ₹91.37 Cr | 86.9% | |
| Net profit | ₹0.7 Cr | 68.0% | |
| EPS | ₹1.26 | 68.0% | |
| EBIT margin | 16% |
P&L walk
Revenue surged 33.6% YoY on a weak Q4FY25 base; gross margin expanded ~440bps as input cost % of revenue fell; operating leverage kicked in with employee cost and other expenses growing slower than revenue, driving OPM up 700bps; PAT growth (68%) mirrored operating profit growth, with no material distortion from other income or tax.
Segments
No segment break-up disclosed – single operating segment of retail/trading of apparel and footwear.
Key positives
- Revenue growth of 33.6% YoY in Q4FY26 vs -0.2% in Q4FY25, a strong recovery.
- Operating margin expanded 700bps YoY to 16% – 4th quarter in last 5 with expanding/stable OPM.
- PAT grew 68% YoY, tracking operating profit – no one-off distortions.
- Full-year PAT grew 46.2% to ₹246 Cr, well ahead of revenue growth of 19.7% – margin story intact.
- Operating cash flow improved from near zero to ₹174 Cr, signaling healthier collections.
Key concerns
- Receivable days doubled to 31 days from 20 days in FY25 – potential collection risk or aggressive channel push.
- Revenue declined 14% QoQ sequentially – seasonality apparent but still marks a sharp sequential drop.
- Q3FY26 PAT (₹105 Cr) was much higher than Q4FY26 (₹70 Cr), reflecting Q3 seasonal peak; Q4 typically weak.
Research and educational content only. Not investment advice.