Monte Carlo Fashions Q2 Net Profit Collapses 93% on Cost Pressure

Monte Carlo Fashions posted a 92.8% year-on-year drop in standalone net profit for Q2FY27, falling to Rs 1.17 crore (US $0.12 million) from Rs 16.26 crore (US $1.72 million) a year earlier. Revenue moved in the opposite direction, up 5.5% at Rs 262.4 crore (US $27.67 million) against Rs 248.7 crore (US $26.24 million) in Q2FY26.

The Ludhiana-based knitwear maker's cost structure drove the divergence. EBITDA declined 31.7% to Rs 28.35 crore (US $2.99 million) from Rs 41.53 crore (US $4.38 million). EBITDA margin contracted to 10.8% from 16.7%.

Where did the margin go?

Gross margin fell 589 basis points to 49.4% from 54.4%. The company attributed the profitability decline to two factors:

• Higher material costs
• Higher employee costs
• A festive-season shift that pushed winter product sell-through into the third quarter

That seasonal timing point matters for vendors and buyers alike. Winter stock that would normally convert to sales in Q2 now sits in the channel awaiting Q3 sell-through, compressing current-quarter margins while revenue still grew single digits.

What does the half-year show?

The first half of FY27 deepens the picture. Revenue grew 6.3% year on year to Rs 411.4 crore (US $43.40 million). Operating EBITDA declined 56.8% to Rs 15.4 crore (US $1.62 million).

Monte Carlo reported a net loss of Rs 22.3 crore (US $2.35 million) for the half year. The comparable period last year delivered a marginal profit. The company said lower other income also contributed to the earnings pressure.

For sourcing and supply-chain watchers, the numbers signal input-cost inflation biting faster than pricing power offsets it. A 589-basis-point gross margin decline on rising revenue means Monte Carlo absorbed cost increases rather than passing them through, while employee costs added a second layer of pressure.

The festive calendar shift adds a timing variable. If Q3 winter sell-through lands as expected, part of the H1 loss could reverse in the second half, and the company will be banking on that seasonal recovery to restore margin trajectory.