Karnika Industries Ltd Q2 FY26 – Kidswear Company That Turned Into a ₹700 Cr Baby Fashion Rocket

1. At a Glance

Karnika Industries Ltd, the babywear-to-teenwear specialist from Surat, has been stitching together an empire one romper at a time. From an IPO in October 2023 at just ₹2337 lakh issue size, the company now flaunts a market cap of ₹698 crore — a glow-up that even Shark Tank’s costume designers would applaud. The stock trades at ₹141, down 20% in the last three months (guess even kidswear has mood swings), but still up 140% over one year. For Q2 FY26, revenue stood at ₹69.73 crore, up 6% QoQ and 31% YoY, while net profit touched ₹9.39 crore, up 20% QoQ.

With an ROE of 27%, ROCE of 22.8%, and debt-to-equity at 0.78, Karnika’s balance sheet looks like a disciplined school kid’s homework — neat, slightly borrowed, but impressive enough to get a “very good” from investors. EPS for the quarter is ₹1.89, translating to an annualised EPS of ₹7.56, giving it a P/E of ~18.6x based on trailing Q2 numbers — way below the industry average of 29.8.

And while big brands like Page Industries and Arvind dominate your dad’s wardrobe, Karnika is silently dressing your nephews in ponchos, pyjamas, and pure profitability.

2. Introduction

There are two kinds of companies in India: those that make noise and those that quietly sew their profits into every thread. Karnika Industries Ltd (KIL) belongs firmly to the latter — a 2017-born babywear manufacturer that now commands investor attention the way a toddler commands a toy shop.

From designing to dispatching tiny tees, shorts, and sleep suits, Karnika’s operations are a mix of job-work manufacturing, trading, and outsourcing wizardry. Think of it as the “Zara of Kidswear”, minus the Spanish accents and with more WhatsApp orders.

In FY24 alone, Karnika produced a staggering44 lakh garments, up from 41 lakh in FY23. Its client retention rate exceeds 90%, and top 10 customers account for nearly half the revenues. For a company where repeat customers dominate the sales mix, loyalty isn’t just a buzzword — it’s literally stitched into the business.

Their recentKidcity acquisition(75% stake for ₹3.67 crore) hints at an expansion strategy straight out of a business school playbook — consolidate where you sell and vertically integrate the kidswear ecosystem. With an FY28 combined revenue target of ₹42,500 lakh, Karnika’s management is basically saying, “We’re here to play dress-up with the big boys.”

3. Business Model – WTF Do They Even Do?

At first glance, Karnika sounds like yet another textile trader lost in the cotton fog. But dig deeper and the company’s model is pure operational brilliance (and jugaad).

Theydon’t own massive factories— they leverage job work. This means designs, patterns, and styles are sourced from select suppliers who actually produce the garments. Karnika then steps in like a fashion consultant — overseeingsample design, quality checks, ironing, branding, and packing.

The fun part? The company pushes these designs to customers viasocial media, turning WhatsApp and Instagram into mini e-commerce pipelines. Their recurring customers — mostly retailers and distributors — place orders directly, and the products are shipped either from the supplier or from Karnika’s branded units.

Revenue Split FY24:

• Manufacturing (Job Work): ~82%
• Trading: ~18%

Segment Split FY24:

• Boys Garments: ~55%
• Girls Garments: ~40%
• Others: ~5%

And for the global flex — 8% of revenue came from exports. Not bad for a company that started in 2017.

So basically, Karnika makes kidswear using other people’s machines but their own designs, sells it through digital channels, brands it as “Karnika Cool” or “Karnika Life,” and keeps 22% returns on capital. Efficiency thy name is outsourcing.

4. Financials Overview (Quarterly)

Data Type: Quarterly Results (₹ in Crores)

Annualised EPS (Q2 × 4): ₹7.56 → P/E ≈ 18.6x

Not bad for a ₹141 stock with 20% profit growth QoQ. The