Earnings Call Transcript - XNSE:DPABHUSHAN 2026-11-12

Operator

Ladies and gentlemen, good day and welcome to DP Abhushan Limited Q2F527 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 your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ajit Mishra from E&Y Investor Relations. Thank you, and over to you, sir.

Ajit Mishra, Head of Investor Relations

Good evening. Thank you for joining the call. I am Ajit Mishra from Ernst & Young Investor Relations. Before we proceed to the call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risk, uncertainties, and other factors. It must be viewed in conjunction with our business risk that could cause future results performance or achievement to differ significantly from what it expressed or implied by such forward-looking statements. Please note, the Prestonese financial results and investor presentations have already been circulated via email and are available on the stock exchange as well as on the company's website. In case anyone has not received the documents, please feel free to reach out to us and we'll be happy to share them. To take you through the Q2 F527, H1 F527 results, and business performance today, we have with us Senior Management Team of DPA Abushan Limited, represented by Mr. Anil Kataria, full-time director, Mr. Santosh Kataria, chairman and managing director, Mr. Vikash Kataria, promoter, and Mr. Manish Ladda, chief financial officer. We will begin the call with the management's opening remark on the company's performance for the quarter and the half year financial year, followed by question and answer session. With that, I would now like to hand over the call to Mr. Anil, sir. Over to you. Thank you.

Anil Kataria, Other

Thank you. Thank you. Thank you. Thank you. Thank you.

Vikash Kataria, Analyst — Promoter

Good evening, everyone. This is Vikas Katariya. I will briefly take you through our recent retail expansion and our plan for the coming quarters. During FY27, we have continued to expand our retail footprint in a disciplined manner. We open our Dhar showroom in Madhya Pradesh in end of... March 2026 with approximately 3,000 square feet of retail area. This was followed by our entry into Gujarat through the opening of our Dahod showroom in September 2026. The showroom has approximately 3,200 square feet of retail area and is strategically located close to the Madhya Pradesh-Gujarat border. More recently, on 30th October, we inaugurate our first four-core showroom in Jabalpur, Madhya Pradesh. This is an important milestone for us because it is our first operational showroom under the franchisee-owned company-operated model. The Jabalpur showroom has approximately 3,750 square feet of retail area. Under this structure, the franchisee partners fund the showroom capital, expenditure, and inventory. Day-to-day operations are handled by D.P. Agushan under our established system and operating framework. With Jabalpur, our network has now expanded to 14 showrooms, comprising 13 COCO showrooms and 1 FOCO showrooms. Our expansion strategy going forward will continue to be discipline and market specific. Our core strength remains Central India where we have operated for several decades and have a deep understanding of customer preference, local market and purchasing behaviour. Looking ahead, we plan to add approximately 3 to 4 additional showrooms by March 20, 2027, subject to execution timeline and business consideration. We are progressing with a new Cocoa showroom in Jodhpur, Rajasthan, with approximately 5,200 square feet of retail area, which is expected to be inaugurated by December 2026. We have also finalized two additional COCO locations in Madhya Pradesh, Mansoor with approximately 3,500 square feet and Sagar with approximately 5,800 square feet of retail area. These locations are expected to become operational by the end of financial year 27. Over the long term, our focus remains on expanding across Madhya Pradesh, Rajasthan, Gujarat, Chhattisgarh and Maharashtra. Our approach remains very clear. We do not want to expand simply for the sake of adding store. We want to enter market where we understand the customer, see sustainable long-term demand, and believe that the DP jewelers' brand can build a strong position. Our successful execution across Rathnam, Dhar, and Dahod under the COCO format Together with Jagalpur under the FOCO format, strengthen our confidence in our ability to scale the network in a disciplined manner. There are 30 factors supporting our confidence. First is the demand environment. The festival season has given us a strong start to Quarter 3 and we now move into the important wedding period. Second is store contribution. The store that we have added to our network will progressively contribute as their ramp-up, while our established store continues to provide a strong base for the business. And third is expansion. We are entering the next phase of growth with a clear pipeline of new location and significantly greater financial capacity to support this expansion. With that, I would now hand over the call to Sankosji, who will take you through our recent festival performance and some of the key operational developments. Thank you.

Santosh Kataria, Chairman

Thank you, Vikashi. Good afternoon, everyone. आज मैं आपको हमारे बिजनेस में कुछ प्रमुक बदलाओ और फेस्टिव सुजन के दोरान कंपनी के प्रदर्शन के बारे में जानकारी लेना चाहूंगा. जैसा कि अनिल भाई ने बताया, इस वस फेस्टिव दिमान के समय में इस पस्ट बदलाओ देखने को मिला है और म Thank you. This was the first time of the year, when we started the year, when we started the year, we had more than 1.8 crores. When we started the year, the year was more than 1.8 crores. Good morning, everyone, and welcome. Good morning, everyone, and welcome to the call. Good morning, everyone, and welcome to the call. Thank you. Thank you. Thank you.

Manish Ladakh, CFO

Thank you, Sandozji. Good afternoon, everyone. Let me briefly take you through the financial performance of Q2 and afterly of FI27, followed by an update on our funding and capital position. For Q2 FI27, total income stood at 761 crore, EBITDA was 61 crore, and the PED was approximately 40 crore. As explained earlier, The quarterly comparison needs to be seen in the context of the shift in the festive calendar. Therefore, happily, H1 provides a more comprehensive and representative picture of our underlying performance. For H1 FY27, total income increased by 7% year-on-year to approximately 1615 crore. EBITDA grew by 18% to approximately 155 crore, with EBITDA margin improving to 9.61% from 8.68% in FI26. Profit after tax increased by 19% to approximately 104 crore, while the pet margin improved to 6.45% from 5.82% in the corresponding period last year. As we prepare for the next phase of growth, inventory funding and capital efficiency remains a key area of focus. We follow multiple mechanisms to manage gold procurement and gold price exposure, including the customer gold exchange and gold metal loans, and of course the hedging mechanism. See, gold received through exchange is particularly important because it reduces our dependence on incremental fresh gold procurement. And effectively forms part of natural housing mechanism within the business. Going forward, increasing the contribution of the exchange-linked gold and structured gold accumulation program should further support the capital efficiency. Another important strength to our business model is our established presence in the central India. This is relevant not only from a revenue perspective, but also from an operating cost perspective. We already have a strong sourcing framework, operating infrastructures, employee base, brand recall, logistic network, and understanding of these markets. Therefore, as we expand further within our core markets, particularly in the Madhya Pradesh and adjoining geography, we believe we can leverage much of the existing infrastructure. This would allow us to grow without a proportionate increase in our underlying fixed cost base. I would also like to briefly address you guys about our recently announced fundraising initiative. This is our first investor call following the decision to undertake the fundraise, and we believe it is an important step in our preparing to the company for the next phase of growth. We propose the preferential issue of equity share and fully convertible warrants aggregate to approximately 558 crore, of which approximately 513 crore is intended toward expanding our retail network, funding the inventory requirement for the new store and showroom, and with the remaining amount proposed for the general corporate purpose. For us, this fund Rage is not simply about strengthening the balance sheet. It is about creating the financial capacity required to pursue the business opportunity we see ahead in a disciplined manner. We believe BP Abhuzhan has several strengths that provide confidence in our underlying potential of the business. The combination of internal accruals, our proposed capital raise, efficient inventory management mechanisms, and selective use of COCO and FOCO formats gives us greater flexibility to pursue this expansion while maintaining the financial discipline. Our objective is therefore not only to grow the showroom network. But to do so while protecting return on capital, maintaining healthy profitability, and building a stronger platform for sustainable growth over the coming years. With that, I conclude my remarks. I would now request the moderator to open the floor for the questions. Thank you very much.

Operator

Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets 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 Isha Shah from Malhotra Family Office. Please go ahead.

Isha Shah, Analyst — Malhotra Family Office

Hi, sir. Thank you for the opportunity. I have two questions. So firstly, on the Jabalpur FOCO store, could you please help us understand the economics of the model and the franchisee partner? And how does the company earn under this arrangement? Is it through revenue sharing, operating fees, product margins, or is it a combination of all of these? And also, if possible, could you please quantify D.P. Abhushan's share on earning potential under the FOCO model?

Speaker 0

Good evening.

Vikash Kataria, Analyst — Promoter

Thank you for asking. So, you want to understand the FOCO matrix, basically?

Isha Shah, Analyst — Malhotra Family Office

Yes, the FOCO matrix, the economics model, and also how does the company own under this arrangement? Is it through revenue sharing, operating fees, product margins, or it's a combination of these?

Vikash Kataria, Analyst — Promoter

So, yeah, basically, in our FOCO model, the franchisee, or the inventory, and the capex, so both. This is done by the franchise owner and then we will share them with the revenue. So we decide the different category because we are selling the three four categories. So we have a gold jewelry, we have diamond jewelry and the silver jewelry. So according to the jewelry categories, we are sharing some revenue with them. So this kind of the model, especially we built with the Foco model.

Isha Shah, Analyst — Malhotra Family Office

And so, secondly, on the upcoming Cocoa stores at Jodhpur, could you please provide the expected capital expenditure and the opening inventory requirement of these stores? And also, what kind of revenue potential and payback period should we expect on one of these stores?

Vikash Kataria, Analyst — Promoter

So, ideally, we are expecting the break-even is the 6 to 9 month for the new stores where we are going. And approximately, the Jodhpur, the inventory requirement is somewhere around 60 to 70 crores is the requirement for the inventory. And the capex will be somewhere around 3.5 to 4 crores, the capex require.

Isha Shah, Analyst — Malhotra Family Office

Okay, so thank you. That's all from my side.

Operator

Thank you. The next question is from the line of Atisha Jain from Tikshavild. Please go ahead.

Atisha Jain, Analyst — Tikshavild

Sir, am I audible?

Operator

Yes. Yes, sir.

Atisha Jain, Analyst — Tikshavild

So, firstly, thanks for the opportunity, and congratulations on the fundraise. Sir, I have two questions. Firstly, regarding the fundraise, the price at which we raise the funds. So, it is quite substantially lower than the closing price of the day, first. And second, recently we gave a update regarding the safety season sales. So, can we please expect more such updates in the future, like other players in the industry also do?

Manish Ladakh, CFO

Okay. So, at the end. Let us take first question about the pricing mechanism, which you were asking. So, there is a dedicated formula available, which is given by the SEBI for calculating this price. And when we decided that we need to raise this fundraise, so this is that there is a reverse working happens for last 90 odd days about the pricing and taking that as an average, then we decide the final pricing. Basically, that entire understanding happened. Okay.

Atisha Jain, Analyst — Tikshavild

Sir, I'm not asking all of the legal and regulatory fights. I'm being a minority shareholder or analyst from that perspective. If a minority shareholder acquires within last week, he's acquiring between 1500 to 2000 or 2100. But we are allocating shares to the institutional investors. Lower price.

Manish Ladakh, CFO

No, that's not the case. That's not the case. When we deal with pretentious deals. So, of course, it has to happen with the close vicinity of the investors who are keenly interested to invest into the company. And being a listed company, it always has to be at par of the market price and the necessary formula given by the SEBI. So, this is that only one can pursue and can apply for the PREF. First, As an individual or as a minority, of course, when we look at the price of today, then definitely everybody will be like, but it is not like an open for sale kind of mechanism. It is a preferential allotment. So, of course, it has to be within the close vicinity of the investor only. But yes, the pricing is as per the market formula given by the SEBI. And the second one was about the festive season, which you were asking about. See, definitely, as all our promoters and Andy and Anilvia, whatever, told that the season got shifted from the second quarter to the third quarter, basically. So, of course, now the season has started for festive as well as for the wedding, and we have seen a phenomenal response in our first month of this particular quarter, and hope so that the same momentum will remain continuing. We will keep on posting all the updates to our stakeholders.

Mehul Parikh, Analyst — Individual Investor

Okay. Thank you and best wishes. Thank you. Thank you.

Operator

Thank you. A reminder to all the participants, you can press star and want to ask questions. The next question is from the line of Divya Dagar, an individual investor. Please go ahead.