Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue from operations grew by 17.3% year-on-year.
- EBITDA increased by 18.3% year-on-year, with a stable margin of 7.8%.
- Opened 10 new stores in Q1 FY25, bringing the total store count to 170.
- Strong performance in the North cluster with an EBITDA margin of 2.6%.
- Plans to open around 25 new stores in the upcoming financial year, anticipating robust double-digit growth in revenue.
Negative Points
- Working capital saw a jump in March due to increased inventory anticipation.
- Same-store sales growth (SSSG) for Q1 FY25 stood at 8.6%, down from 13.6% in Q1 FY24.
- Hyderabad cluster showed only a 4.5% growth due to a high base and no new store openings in recent years.
- Higher operational costs in the NCR region compared to the southern markets.
- Trade receivables stood at INR180 crores, with INR40 crores being more than six months old, raising concerns about cash flow management.
Q & A Highlights
Highlights of Electronics Mart India Ltd (BOM:543626, Financial) Q1 FY '25 Earnings Call
Q: Can you provide details on the performance of the new stores in Delhi, particularly the first set of eight stores launched in August 2022?
A: The first set of eight stores in Delhi are performing well, achieving the INR30 crores plus mark as initially targeted. These stores are EBITDA positive and have contributed significantly to the 96% growth from the Delhi region. (Karan Bajaj, CEO)
Q: How has the performance been in your key market of Telangana in terms of revenue?
A: Telangana and Andhra Pradesh have shown strong growth, with Andhra Pradesh growing by almost 45-50% and Telangana upcountry stores showing similar growth. Hyderabad, with a high market share, grew by around 4.5%. (Karan Bajaj, CEO)
Q: What is the timeline for achieving a 5% EBITDA margin in the North region?
A: It is too early to provide an exact timeline, but we hope to achieve this by FY26. The plan is to stabilize by FY26 and reach similar profitability levels as in Hyderabad by FY27 or FY28. (Karan Bajaj, CEO)
Q: Can you share the sales growth between sub-segments within the large appliances category?
A: Air conditioners grew by 50%, refrigerators by 8.5%, washing machines by 2.5%, and televisions by around 8.5-9%. (Karan Bajaj, CEO)
Q: What is the strategy to deal with competition in the NCR region?
A: Our strategy focuses on showcasing premium products, better store locations, enhanced displays, and exclusive brands. We do not compete on pricing but rather on the quality and variety of our offerings. (Karan Bajaj, CEO)
Q: What is the EBITDA margin guidance for the NCR region and overall pre-Ind AS EBITDA margin?
A: For NCR, the overall pre-Ind AS EBITDA margin is expected to be around 6-6.5%, and post-Ind AS, it would be around 7.5-7.8%. (Karan Bajaj, CEO)
Q: How much growth have you seen in sales excluding compressor products?
A: Mobile and IT products grew by around 10-12%, and televisions showed similar growth. (Karan Bajaj, CEO)
Q: What explains the high trade receivables for a retail store?
A: The trade receivables are mainly due from banks and NBFCs for settlements, credit card settlements, and accrued incentives. Wholesale business contributes a smaller portion. (Premchand Devarakonda, CFO)
Q: What growth rate should we expect in the average ticket size for the upcoming years?
A: Growth in average ticket size will be limited unless there is a significant technology change. We expect more volume growth rather than value growth. (Karan Bajaj, CEO)
Q: What has been the same-store sales growth in the NCR region?
A: The first set of eight stores in NCR showed upwards of 70% growth, driven by a strong cooling season. (Karan Bajaj, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
