Aditya Vision Limited (AVL) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Azitya Vision Ltd. Q1 FY27 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on question 4. Please note that this conference is being recorded. I now hand the conference over to Ms. Devanshee Kandar from Access Capital. Thank you, and over to you, ma'am.

Good evening, everyone, and thank you for joining us today for our DITI Visions Q1-FI27 Oerthens Conference call. We are glad to have the senior management team with us, including Mr. Yoshim Vardin Senha, Chairman and Management Director, and Ms. Yoshim Vardin, Whole-Time Director. First of all, congratulations to the management team on delivering an excellent start to the year. I will now invite the management to share their opening remarks, after which we will move into the Q&A session. Over to you, sir.

Thank you, Devansi. Good evening, ladies and gentlemen. Welcome to Aris Division Q1 FY27 Earning Conference Call. Our earnings presentation and financial results for the quarter have been uploaded to the stock exchanges. We trust you would have reviewed it by now. I am pleased to say that Aditya Vision has delivered another quarter of strong, profitable, and market share-led growth, despite challenging conditions, reflecting the resilience of our business model and disciplined execution of our long-term strategy. Revenue for the quarter grew 27% YOY, ahead of our long-term growth aspiration of 20-25%, driven by continued market share gains. Healthy demand across key products categories, and the contribution from our expanding store network and strategic diversification of showrooms in different geographies span India. This stated diversification across India insulates our business of weather-centric challenges, and we are gradually shifting towards more stable business throughout the year. As per our strategy mooted and implemented from last financial year, we have opened only three stores in Cuba, thereby conserving our resources and optimizing it. This shift is clearly visible in our company's marked improvement in lowering OPEX, which has boosted our profits. The quality of growth was also equally encouraging. EBITDA stood at 124 crores, while EBITDA margin expanded by nearly 90 basis points to 10.4%. Profit of the tax grew 40% year-on-year to 77 crores, with that margin improving by 61 basis points to 6.5%. The steady improvement in profitability reflects operating leverage, disciplined cost management, and improving productivity across our measuring store network coupled with sound strategies of optimization. Our performance becomes even more satisfying when viewed in the context of the operating environment. The quarter reflected the realities of consumption across real Bharat, where purchasing decisions are often influenced not only by income levels but also by household sentiment and short-term priorities. During the quarter, LPG availability concerns in large part of our market led to panic reactions in many households. With focus on prioritizing essential spending, consumer sentiments also remained relatively cautious of prompting some families to defer discretionary purchases. In many districts of our geography, fuel supply distribution resulted in discouraging consumers from impulsive and planned buying to preserve liquidity for a large period. The appeal from government to desist from buying gold and other import-dependent products further cast a gloom over our customers' buying sentiment. This situation has improved since last quarter, but uncertainty still looms large in wake of continued West Asia war. As already spoken, weather patterns also remain significantly different across our operating geographies, while Eastern India witnessed a relatively mild-diver. Summer, North and Central India experienced stronger and more sustained ease. Our expanding presence in Uttar Pradesh, therefore, proved to be a strategic advantage, helping offset relatively softer cooling demand across Bihar and Sharshan. This demonstrated the benefit of our diversified geography footprint and enabled us to continue gaining markets there despite localized disruptions. As you know, our business used to be built around seasonal demand and inventory preparedness. We entered the summer with adequate inventory to service peak demand across our markets. As weather conditions evolved differently across regions, our supply chain and procurement team responded quickly by relocating inventory across states and optimizing product availability. This enables us to maintain healthy sell-through. While strengthening our working capital position, inventory stood at 663 crores as of June 3026, while working capital loan reduced to 175 crores, reflecting efficient inventory management, healthy operating cash flows, and continued liquidity prioritized balance sheet discipline. Our retail expansion strategy continues to progress in line with our long-term vision. During the quarter, we opened three new stores. Our network has expanded to 210 stores as a week. We remain firmly on track to add more than 30 new stores during FY27. Following our successful entry into Chhattisos last year, we remain on track to enter Madhya Pradesh and peripheral regions of West Bengal.

Our cluster-based expansion strategy

allows us to leverage existing logistics infrastructure, vendor relationship, and brand recall, resulting in faster store ramp-up, superior capital efficiency, and improved store-level profitability due to penetration in newer markets. I would also like to share a very important governance update. In line with our commitment to the highest standards of corporate governance, the board has approved appointment of MSK and Associates LLP, Chartered Accountants, one of India's leading audit firms, and an independent member firm of the BDO International Network as our statutory auditor. With our network now crossing 210 stores, we are entering the next phase of our growth journey. As our presence expands across multiple states and our store continues to mature, future growth will increasingly be driven by productivity improvement, operating leverage, and more diversified geographic mix rather than store additions alone. Looking ahead, we remain optimistic, improving disposable incomes, increasing financing of penetration, supportive government initiatives, and the upcoming festive season provide a favorable backdrop for demand. More importantly, we continue to believe that the long-term opportunity for organized consumer durable retail remains highly compelling, rising incomes, including premiumization, higher replacement demand, and the continued shift towards organized retail across India's heartland provide a long runway for a sustainable growth. With that, I now hand over the floor to Yosem Vargan to take you through the financial highlights for the quarter.

Thank you.

Thank you, sir, and good evening, everyone. We are pleased to report another quarter of strong and profitable growth. Revenue for Q1 FY27 stood at 1,193 crore, registering a 27% growth YOY, reflecting continued market share gains and healthy demand across our operating market. Gross margin remained healthy at 16.1%, expanding by approximately 75 basis points compared to the corresponding quarter last year. EBITDA for the quarter stood at 124 crore, with EBITDA margin improving to 10.4%, reflecting an expansion of around 89 basis points year on year. Profit after tax stood at 77 crores, with fat margin improving by approximately 61 basis points to 6.5%, reflecting disciplined cost management and healthy operating leverage. Our retail footprint continues to expand. As of June 30th, we operate 210 stores, 120 in Bihar, present across all 38 districts, 33 in Jharkhand, covering 22 of 24 districts, 54 in Uttar Pradesh, covering 30 of 25 districts, and 3 stores in Chhattazhar, covering 2 out of 23 districts. FY27, Bihar remained our largest revenue contributor at 72% for Q1, followed by UP at 16% and Jharkhand at 11%. Same-store sales growth for Q1 stood at 18%. We also witnessed a reduction in inventory by 177 crores compared to March 2026. Now, the inventory stands at 663 crores and reduction of short-term borrowing to approximately 175 crores as of June 30, 2026. Thank you for your continued trust and support. We now open the floor for questions. We request all participants to ask questions which have not been addressed either in earnings call or our investor presentation to save on time and enable us to take more questions from all of you.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star N1 on their touch phone telephone. If you wish to remove yourself from the question queue, you may press star N2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Shivam Gupta from Suneetra Asset Managers. Please proceed.

Hello. Good evening and thank you for the opportunity. Sir, can you please speak a little louder? Am I audible?

Yes.

Yeah, so... What was the same sales growth in Q1? Also, the growth mainly, volume or higher product prices also contributed minimally. Hello. Can you repeat the second question? Like the growth was mainly due to volume rate or it was higher product prices. Okay.

So our SSD in this quarter was 18% and which continued since last three quarters. So 18% was our SSD. And that was the volume growth as well as ASP growth, both.

Okay. And my second is, like, would you give some color on the product category, like how did AC, cooler, refrigerator, mobile, and television perform?

ASP contributed to around 42% of our entire sales. And other cooling products, we don't give anything for coolers, etc. These are small categories. And refrigerator contributed over 15%.

And how much of the older AC inventory is still left? Also, it can benefit continuing Q2?

Yes, of course, June has been slightly hot. So, it is continuing in quarter two also, and we are at a comfortable inventory level of AC.

Okay, sir. That's it from my side. Thank you. Thank you.

Thank you. The next question is from the line of Yash from Edelweiss Public. Please proceed.

Hi, Tim. Thank you for taking my questions. I hope I'm audible. Yes, you're welcome. Yeah, so I have three questions. So my first question is, like you already mentioned, the summer was delayed this time. So what was the run rate we ended June with the YOY growth for June? And if the summer was delayed, how was the month of July for us? Is the summer really good in July for us or not?

July, I just spoke, summer is good in July, and it has remained relatively hotter month, so it is a good one. What else you wanted to know?

The run rate of June, which was like proper why the summer hit June for us, so what was the run rate, growth run rate for June month?

We actually all three months equally contribute to our top line.

Got it. Got it. And another question is from OEM perspective, there has been a lot of raw material pressure. So, has there any change in the incentives or contribution OEM provide in the EMI schemes or anywhere else in our part of the region or everything stays intact?

I don't think there was any meaningful change in strategy. It was the same just like any other Q1, and there was no policy set.

Got it. And one last question, like now it has been a lot of time for some of our UP stores around 1920 store has been running for last two years or more than two years. So can you just provide some gist on what is the sales per store or EBITDA margin difference between the BR store and UP store who has been running for last two years?

Yes, I'm sorry.

Actually, we do not give this figure in our running call. So, I can only tell you the share of UP as a state. So, it has gone up from 13% YAY to 16% overall sales. Which is quite robust. And from 14, even from comparing from quarter on quarter also, it has gone up from 14% to 16%.

Got it. Thank you. That's all from my end.

Thank you. Thank you. The next question is from the line of Napur Gupta from Shikharji Advisors. Please proceed.

Hello. Am I audible?

Yes, go ahead, Nakul.

Congratulations, sir, for a great set of numbers. I just have one question, like, what has been the rationale for entering West Bengal, even when we are just entering Madhya Pradesh? Like, in the past, we have entered one state per year or so, but now in FP27, we are heading to moving into two states. So, how do you see that?

It was a very strategic shift. Actually, we have not planned. That is also very true recently. But due to sudden political changes and we are expecting quite a lot of growth coming in Bengal. So, this was the only reason that we have started to expand in peripheral such cities like Seliguri, Asan, Seoul, Durgapur, etc., which are on the borders of Vihar, and we are testing, definitely we will be testing waters also in Bengal, and then only we will decide how further we can penetrate into Bengal.

No, that's great. That's great. Another question is like, what has been the reason for slow growth in store opening in this quarter, and what is the full yield guidance for half by 28 as well? If you can provide that, that would be great.

We have been adding around 30 stores, not less than 30 stores every year. And again, we have already told in the earning call that we'll be definitely doing more than 30 stores this year also. And if we take FY28, we are going to, we'll definitely try to even further increase that run rate.

Okay, sir. Okay, sir. Thank you, sir. Thank you, sir.

Thank you. Good luck.

Thank you. The next question is from the line of Rakshit Desai from IIFL Capital. Please proceed.

Hi, sir. My first question was what has led to the gross margin expansion during the quarter and is it sustainable going around?

We have been maintaining gross margins like even YOY last year. We were more than 10%, 15.3% gross margin. This year, due to some price hike also, it's where we could have taken leverage on something, which was around 50 dips. So going ahead, I'll say that we'll be definitely between 15 and 16 percent.

Got it. My second question was, how much was the volume and ASP growth for the call time?

Volume of growth was around 17%, and ASP growth was around 19% volume growth and 8% ASP growth.

Got it. Thank you.

Thank you. The next question is from the line of Vaidik Bhafna from Monarch Network. Please proceed.

Sir, can you share the SSG, I mean, regional-wise, I mean, from Bihar, what was our SSG growth versus in Jharkhand and UP?

I just told another participant that we do not divulge our SSG statewide or region-wise or anything. Overall, SSG was 18%, which has continued since the last three quarters.

Okay. And the second question would be on the product category-wise. Which product category are we seeing drastic increase in price as we suppose we see laptops or we see mobile phones? So, are we seeing major prices being taken by the OEMs?

It is going to be... Priced, by the way, for laptops, mobile. So, in fact, ASP has gone up by 20-25% for mobiles and laptops as well. And it has been quite less for air conditioners. It just has been 5-6%.

Got it, sir. And, sir, I just wanted a guidance on sustainable OPM. Going forward this quarter, we achieved a 10.4% UPM. So, what do you think would be our sustainable UPM for this year, where our major store expansion would take place now, and going forward as well?

Actually, I think margins are dependent on quarters as well. So, margins will vary quarter to quarter. And like this, this remains our good quarter, best quarter, so margins are there, but we will be definitely achieving around 9 to 10% of margin.

Sir, I'm saying for the full year, this quarter we've achieved 10.4, so for the full year, can we add up 10%? I have told you.

I told you that we give our guidance in the university presentation, so that we will be receiving, we will be definitely receiving between 8 to 10 percent, and anything better than that is always welcome.

Okay, sir. Okay. So, that's it from my head. Thank you, sir.

Thank you. A reminder to all participants, anyone who wishes to ask a question, may press star and one on their touch on telephone. The next question is from the line of Bharat Shah, from BCS Capital. Please proceed.

Srinath Shah, Namaskar. I didn't really have a question to ask, but I wanted to convey my compliments over the years that I've observed Aditya Vizan. The very careful and disciplined way the business is being managed, how you expanded from one geography to three, and I'm glad to see that the hunger to grow continues by entry into MP in West Bengal in the current year. All of this, while we have seen much larger and excellent competitors stumbling in many, many ways, additive vision demands at a smaller scale, but a very prudent, wise, and disciplined execution of the business opportunity while maintaining growth as well as the hygiene of the balance sheet and the capital efficiency. So, sincere compliments, Sinasa.

Thank you so much. It means a lot coming from you. Thank you.

Thank you. The next question is on the line of Vaibhav Gupta, Rambo Head. Please proceed.

Hi, sir. Congrats on a great set of numbers, sir. Just wanted to understand which categories were seeing the highest growth rates, be it AC or refrigerators or washers or TV, laptop, mobile. I understand there was a big component of ASP growth in mobiles and laptops. So broadly, if you could give color, which categories are seeing fast growth and which are seeing somewhat slowdown.

In this quarter, Q1, actually, AC contributed the largest, of course, contributed around 35. The contribution of 42% of overall sales and with a growth of around 35% over last year.

Understood. Then, sir, what about refrigerators, washing machines?

They were quite a flattest type. It was between 10% growth was there in a refrigerator of a washing machine and panels.

Panels also saw 10% kind of growth? Yes, sir. Understood, understood. Understood, sir. That's all from my side for now. Thank you.

Thank you. The next question is from the line of Rabat Avasti from Ultras Investment. Please proceed. Are you there Mr. Awasthi?

Hi, am I audible? So, firstly, congratulations for the set of numbers. My question is with respect to seasonality, sir. AVL experienced strong quarterly seasonality driven by Q1 and then in Q2 drops significantly. So what does the management think? Do we think that is there any way to cater this seasonality or reduce the impact of seasonality? What is your thought on it, sir?

I will have to understand one thing, Ravad, that major categories which we deal, like cooling products, it consists of a lot of many things. It consists of room air conditioner, commercial air conditioner as well, along with that refrigerators, deep fridges, commercial refrigerators. So this will definitely have this category can only be very, very, it has to be there during summer. So, Madhav, this seasonality is not, Madhav, has been there always throughout India, wherever there is a climate like this. So, wherever the climate is not there, of course, you know, Madhav, it won't be sold there. But as you know, more and more geographies are experiencing hot temperatures. So, this augurs well for us. Maybe in time to come, it will spill over to U2 also. Then, like what I just said, that June was quite good, quite hot this year. So, July, month of July was quite hot this year. So, maybe we expect that gradually, where we are shifting, we actually see that maybe it will be entire HOI which will be catering to this cooling product.

Yeah, actually, I get it, sir. I was just looking at numbers, and I saw that, like, it dropped 50% and 52% that quantum. Like, it was seasonality. I was just trying to understand that. Do we think that is there any way that we can manage this seasonality or reduce the quantum of it?

I don't think so, because you cannot refuse the business which is coming in Cuba, and rather it is market so competitive that we have to take all the advantage of weather conditions.

Well, no worries. And second thing, sir, if you could help me to understand that what would be the, like, what is our EBITDA margin guidance for the longer, like two to three years, in the next three years, what we are thinking that how does our EBITDA margin look like?

We have already given the guidance that our EBITDA margin will be between 8 to 10 percent, and it will not be comparable quarter to quarter over quarter, but the annual, whatever I am saying is your annual figure, so 8 to 10 percent, but what we have seen that we have been able to cling on to more than 9 percent.

Okay, okay.

Get it, sir.

Thank you. Thank you.

Thank you.

Thank you. A reminder to all participants, anyone who wishes to ask a question, may press star N1 on their touchtone telephone. The next question is from the line of Jitaksh Gupta from Thakri Investments. Please proceed.

Oh, yes. Am I audible, sir?

Yes, yes. Go ahead.

Yes. Hi, sir. Thank you for the opportunity. I have two questions. So, first is, how many stores are we targeting in West Bengal? And what is the, like, market size do you see in the entire West Bengal? And what will be our store size in West Bengal, especially? Average store size.

Okay. That's all.

And the second question is a bookkeeping question. So why did the depreciation went up on quarter-on-quarter basis? Because we only opened three stores. So just wanted to understand this.

We are planning, actually, we had taken this decision, abrupt decision to open in Bengal because of certain development, and we are hoping to add 6 to 10 stores in this financial year. And typically, our store size will be between 4,000 to 6,000 square feet. And depreciation, I'm afraid it includes amortization of rent also. So you are taking out that factor. So it has not gone up that much. And more actually, there is a lot of working progress going on where we have to provide rent also.

And, sir, lastly, how many stores are we planning for MP?

Initially, we are planning to open in, we have already working in progress in Indore, Ujayan, Bhopal, and we are planning to open later on, we are planning to open in Jambalpur, Gualiar, etc. So, you can safely take it as 6 to 10 stores will be opening in Madhupadish.

So, will it be this financial year or next year also? Okay, sir. Okay, sir. Understood. So, thank you so much.

Thank you. The next question is from the line of Palash from Investec. Please proceed.

Yeah. Hi, sir. Is my voice audible?

Yes. Please go ahead.

Sir, we are entering new geographies. So, do we think our other expenses, mainly A&P spends, would increase significantly this year?

Of course, other expenses depends on, in fact, your volume also, sale also. More you sell, more freight is required, more credit card commission is required, more DVDs are required. So definitely it is related with the sale. So operating expenses, I don't expect that it will go up significantly, but it will go up consummate to the sales.

Okay, good. And the second question is, what is your plan towards Chhattisgarh? How many stores are we looking to add in FI27?

Again, in Chhattisgarh also, we have already opened three work-in-progresses in around four, five stores. So let us keep it at 10 to 12 stores in Chhattisgarh.

10 to 12 stores, this financial year? Yeah, I'm talking about this financial year. Sir, 10 to 12 stores in Satchadgarh, 6 to 10 in MP, and 6 to 10 in West Bengal, and our normal run rate of UP would be above 15. So, it will be ending up significantly over our guidance of 30 stores.

Yeah, UP we have not guidance for that, what number you are saying, but definitely we will be looking at, we have been improving, but we never, in fact, give our guidance in such a way. We always say that we will be opening more than 30 stores, and if you do it better, I hope, I'm sure you are going to be happy.

Yes, sir. Thank you, sir. Okay.

Thank you. The next question is from the line of Devanshi Kandar from Access Capital. Please proceed. Yeah, hi. Am I audible?

Yes, yes. Thank you very much, sir.

Yes, so I just wanted to understand how is our Chhattaskar EBITDA looking like? Are we on the path of breakeven and what is the timeline for that? Since we entered last year.

Only for two months. So I don't think it is good for me to comment on EBITDA or anything. So let's wait. But they are doing well.

Okay, and since we are planning our new entry in MP and West Bengal over the next 12 to 18 months, I assume, would that be EBITDA diluted in any sort of, like, would we still come within our 8 to 10% guidance?

No, no, we'll stick to this guidance, as I told you, and what we have experienced in the past also, entering a new state doesn't dilute any EBITDA for us.

Okay, understood. And if you could, just lastly, if you could talk more about our strategy for West Bengal and Madhya Pradesh. These are new geographies for us.

Madhya Pradesh offers a very good potential, especially in the town of Mindore, even Ujjain, Bhopal is another very good state. If you go north of Madhya Palace, Gualir is a very good market. This side, toward eastern, you will come to Jabalpur. That is also very good. Even Kutki, Tarsi, these are the big cities. They will also offer us a good opportunity. So, overall, I think it is going to do well.

Understood. Just one last question, sir. So, we talked about our inventory levels, which had come down. So, what are the, basically, our working capital days for this quarter? If you could comment on that.

We don't take it for any quarterly advancements.

Right, right. Okay, first.

Okay, thank you.

Yeah. Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I now hand the conference over to the management for closing comments. Over to you.

Thank you very much for participating in Ajit Vision's Q1 earnings call, conference call. Thank you very much. And be safe and healthy. Thank you very much. All the best.

Thank you. On behalf of Access Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.