Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- PDS Ltd (BOM:538730, Financial) reported a strong start to FY25 with a 24% top-line growth.
- Gross merchandise value increased by 28% year-over-year, reaching approximately INR3,898 crores.
- Order book stands at INR4,813 crores, a 24% increase compared to the same period last year.
- Manufacturing operations achieved a 54% growth over the same period last year.
- Sales from new segments in Q1 were approximately INR93 crores, a fourfold increase from the same quarter last year.
Negative Points
- Employee costs and other expenses increased due to new business verticals and inclusion of businesses like Ted Baker and Gerry Weber.
- Interest costs increased sequentially despite a reduction in net debt.
- Retail operations of Ted Baker have been under turbulence, affecting overall performance.
- Investments in new verticals are expected to continue for two more quarters, impacting short-term profitability.
- The company faces challenges in optimizing its factory network and achieving cost synergies.
Q & A Highlights
Q: Can you give us a break-up of the health care and the social in this quarter?
A: The sourcing as a service revenue booked in Q1 was approximately INR31 crores, reflecting a 49% growth compared to the same period last year.
Q: Can you provide details on Ted Baker's performance?
A: Ted Baker achieved $12.3 million (approximately INR100 crores) in revenue, marking a 240% growth over the same period last year. However, this is lower than the previous run rate of INR150 crores due to seasonality and some turbulence in retail operations.
Q: Why has the interest cost increased sequentially despite a reduction in debt?
A: The increase in interest cost is due to higher factoring facility usage, which grew by about $8 million to $9 million in Q1 over the sequential quarter of March.
Q: What is the outlook for investments in new verticals?
A: The investment in new verticals peaked in Q1 and is expected to taper off from Q3 onwards. The current quarter's investment of INR28 crores should not be considered a run rate.
Q: Has the debt related to Ted Baker's working capital been factored in this quarter?
A: No, it hasn't been factored in yet. The integration with SAP has been completed, and the banking limits should be operational by the second fortnight of August.
Q: Can you explain the significant expenditure in the other comprehensive income section?
A: This refers to the translation of the foreign currency balance sheet, especially related to Bangladesh, where the currency has depreciated significantly.
Q: How is the China Plus One strategy impacting your sourcing?
A: India is becoming a more important sourcing destination due to the decoupling from China. However, challenges remain in scaling manufacturing and raw material base. PDS is leveraging its network to capitalize on this shift.
Q: What is the progress and outlook for Gerry Weber?
A: Gerry Weber clocked USD22 million (approximately INR182 crores) in Q1, with an annualized outlook of INR700 crores. The account is shaping up well and is expected to continue its growth trajectory.
Q: Can you break out the new vertical integration operating cost of INR48 crores in Q1 FY25?
A: The breakdown includes design-led sourcing (INR7 crores), brand management (INR18.5 crores), manufacturing (INR2.5 crores), new market expansion (INR11 crores), new product categories (INR3.5 crores), and design services and sustainability (INR5 crores).
Q: Are you on track to meet your profit guidance for FY25?
A: Yes, we remain well poised to meet our profit guidance for the entire year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
