Electronics Mart India Limited (EMIL) Q3 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Electronic Smart India Limited Q3 and FY26 earnings conference call. As a reminder, all participants' line 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 this conference call, please signal an operator by pressing star and then zero on your touch-tone phone. Please note that this conference is being recorded. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements are not the guarantees of the future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr. Karan Bajaj, CEO and promoter. Thank you and over to you, sir.

Thank you. We'll start with that. Good evening and a very warm welcome to everyone present on the call. Along with me, I am Mr. Premshith Debarakonda, our Chief Financial Officer. We have uploaded our result and investor presentation for the quarter in the nine months ended 31st December 25 on the stock exchanges and the company's website. Hope everyone has a chance to go through it. The quarter began on a positive note with the festive season, with Diwali falling in October alongside the implementation of the GST rate cut during the period. While our sales mix remained broadly in the same line with the same period last year, demand across categories, particularly in large appliances, were supported by the GHG reduction and further aided by festival-led consumption. Importantly, on festival-to-festive comparison, we delivered a robust growth of approximately 25%, indicating a strong underlining demand. At the same time, we saw operating leverage play out, resulting in an improvement in operating margins. Despite the continued additions of new stores, overall, The absence of a prolonged festive season, we delivered a steady growth performance with the GHD card providing an additional tailwind to consumption trends. During Q3 Fi26, we added four new stores, two in NCR region and two in Andhra Pradesh. I would like to highlight that our Andhra Pradesh market has seen a strong recovery, delivering approximately 14% growth in Q3. And we continue to grow our market share. Over the last two years, we have added nearly 100 stores. This now accounts for approximately 50% of our total store portfolio. As a result, a significant portion of our network is relatively young and still in the early stages of maturing, yet to reach optimal throughput. Constantly fixed costs such as manpower, marketing, and promotional spends are not yet fully absorbed, while finance costs and depreciation remains elevated, partly due to INDS 116 adjustment. This has had a short-term impact on overall profitability. As these stores continue to ramp up and move up the maturity curve, we expect operating leverages to play out, leading to a gradual improvement in profitability and ROEC as they mature. To give a clear perspective on our store portfolio, for 9 months, FI26, we opted 219 stores, out of which 83 stores are over 4 years old and 136 stores are less than 4 years old. In the first nine months of FI26, the matured stores generated product revenue of approximately 3523 crores, while the newer stores contributed to around 1528 crores. From a profitability standpoint, the matured stores continue to demonstrate strong performance with an EBITDA margin of 7%, whereas the new stores are currently operating at an EBITDA margin of 3%. I would like to highlight our geographical performance. We witnessed a broad-based recovery in demand across our key clusters during this quarter. In quarter 3, Fi26, our core market of Hyderabad delivered a year-on-year revenue growth of 6.4% with SSG of 3.3%, supported by the revival of real estate projects across Hyderabad, which had impacted performance in Fi25. In the Telangana factory market, revenue grew by 2%. Andhra Pradesh reported a strong performance with a revenue growth of 18.2% and an SSG of 4.9%. Lastly, our NCR cluster continued to scale up while recording a revenue growth of 30% along with an SAG of 7.1%. Turning to cluster-wise profitability, we continue to maintain a healthy EBITDA margin of around 6% in our southern cluster despite 70% of our new stores being added across Andhra Pradesh and Telangana in the past 2 years. We are also pleased to share that our NCR operations remain EBITDA positive on a 9-month basis, delivering an EBITDA margin of around 0.5%, translating to around 2 crore rupees. This performance would have been stronger for the nine months ended than if you have experienced normal summer season up north. We expect margins in the region to improve further as we continue to enhance store level throughput, which will drive better absorption of fixed costs such as manpower marketing rentals. Moving to category specific performance, in terms of contribution, larger appliances accounted for about 42% revenue in quarter three, FI26, and around 43% in the nine months FI26. A positive 10, we are observing as a Store level following the DSE reduction is a gradual shift in consumer preferences toward large televisions and high-value appliances such as transporting washing machines and dishwashers. Notably, washing machines' demand has remained stagnant over the last four quarters and registered a growth of approximately 11% during the current quarter. We are also seeing an increased traction in new categories such as dishwashers, air coolers, and other categories. This growing presence of premium products has helped us sustain our average selling price during Q3 FI26. Coming to the mobile categories, mobile contributed to around 44% of our total revenue in both Q3 FI26 and the 9 months of FI26. The mobile phone segment recorded a growth of approximately 10% in Q3 FI26. Looking ahead, we believe that the category is entering the next phase of demand driven by upcoming technologies, upgrades, and feature announcements. Several OEMs are actively working on the next generation AI-enabled devices, which we expect will further stimulate consumer interest in support growth in both ASPs and volumes. This positions us well to benefit as the replacement and upgrade cycle gains momentum. We believe the broader environment remains supportive, GSE rates have come down, and the government also reduced income tax lapse previously, which is expected to boost disposable income. Together, these factors are likely to create a compounding effect on consumption and drive long-term structural demand for consumer durables. Several categories in our portfolio continue to remain unpenetrated, often significant growth potential. As our newly opened stores mature and reach steady-state performance, we expect margins to progressively normalize, hitting a strong foundation for sustained and profitable growth in the years to come. With this, I request Mr. Prinseth Divrakonda, RCA4, to update you on the financial performance. Thank you all.

Thank you, current sir. Good evening and warm welcome to all the participants. Now, moving on to the panacheal performance of Q3 and nine months of FI26. First, I would like to start with Q3 FI26 performance. Our revenues for the quarter stood at Rs.1939.7 crore versus Rs. 1805 crore in Q3 FI 25, a growth of 8%. EBITDA for Q3 FI 26 stood at Rs. 119 crore vs. 102 crore in Q3 FI 25, witnessing a growth of 17%. EBITDA margin for Q3 FI 26 stood at 6.1% vs. 5.6% of the last year. Friends. EBITDA for Q3 FI26 stood at Rs. 82 crores with a margin of 4.2%. SAT including exceptional items for Q3 FI26 stood at Rs. 30 crore. Same store sales growth for Q3 FI26 was 2.54%. Now moving on to nine months of FI26 financial. Our revenues for 9 months of FI26 stood at Rs. 5270 crore versus 5067.1 crore in 9 months FI25, a growth of 4%. EBITDA for 9 months FI26 stood at Rs. 311 crore. EBITDA margins for 9 months FI26 stood at 5.9%. Pre-index EBITDA for 9 months FI26 to debt Rs. 204 crores with a rate of 3.9%. PAT including exceptional items for 9 months FI26 to debt Rs. 67 crores. For 9 months FI26, SSSZ to debt 0.19%. ROCE and ROE on an annualized basis for 9 months FI 26 stood at 11% and 5.8% respectively. The working capital days as on 31st December 25 stood at 60 days. Pre-induced cash flows from operations as on 31st December for the 9 months period stood at Rs. 500 pro. With this, now I open the floor for questions. Thank you.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone 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 Aditya Bhartia from Investec. Please go ahead.

Hi, good evening, sir. My first question is on SSG growth in upcountry Telangna, wherein it appears to be a little on the weaker side. I think there's been a slight decline on an SSG basis. And even from a slightly longer term perspective, we are not really seeing that part of the business scaling up very sharply. So what's the outlook in that region, and what do you attribute the SSSG decline to?

Hi, so if you actually look at the number, it is, when we look at category-wise change, or if you look at the overall number, firstly, the revenues are up, but with a marginal 2% up, including the new 6-7 stores that we opened up compared to last year, quarter 3. But if you look at the overall demand, there is a little slowdown. So I would not attribute or You know, be at, you know, a spot where, you know, we won't, things are under control, we are not losing market share, you know, how is the productivity course going on. So, if you look at the overall sentiment of the market, it is a little weaker compared to the other clusters that we are operating in today. So, I would attribute that degrowth to that. But if you look at overall number, there was a good positive sign in January as well in And this is predominantly the other categories. The cooling product is not started yet at the full pledge, but looking at the big days of January, looking at the festival there of Sankrantri Pungal and the 26th of January, it really performed well there. So I think it is a matter of time. So we will definitely see a positive SSG in the quarter four there. Perfect.

And my next question was on the demand trends that you are seeing in January, pretty much across the country, and how are things shaping up between north and south clusters in January?

So, things look good for now. No complaints. I think we have finished the bad quarters that we had in the last financial year. And I think we're only looking for the positive upside coming in the coming quarters. Especially with the AC base being or the cooling product base being quite low in the last quarter, the last few quarters, I think the coming summer quarters are going to be good. So, no complaints of that. We're already ready for it. So, we started buying and, you know, started shelving our stores with the newer inventory for the new rating as well. So I think we are quite optimistic on the upcoming season. Perfect. That's helpful, sir. Thank you. Thank you.

Thank you. Participants who wish to ask a question may press star and 1 at this time. To ask a question, please press star and 1 now. The next question is from the line of Siddharth S. from Vittai Mani. Please go ahead. Hello, Timo.

Thanks a lot for the opportunity here. So, I would just like to understand that, you know, this could be a, you know, previous, you know, two, three quarters, and I'm just taking you through the, you know, previous two, three quarters back. So, it was said that, you know, since there was a lot of, you know, credit scrutiny going around, there was a lot of, you know, issues or the sanctions of the credits that was, you know, issued as a proportion of 100 was going lower because banks were rejecting a lot of, you know, what do you say, the EMA eligibilities of customers due to strict underwriting policies. I just want to understand how is the, you know, how is the outlook on that or how is it, you know, going on right now because most of the sales that are being, you know, done or, you know, sanctioned by you is going to be credit sales only and this could be an important factor, you know, impacting the same. We just want to understand that note. And since you guys have been in a very good spirit of expansion, and there has been a lot of expansion that's been going on, how would you give us an outlook in terms of how the future expansions is going to be, and when are these stores respectively going to contribute to the revenues respectively, as the majority of the stores right now are non-maturity stores.

Hi. To answer your first question, usually every year after the two big seasons of festival as a summer season, we would see a little slowdown in approval rate from the NBFCs. That is a normal trend in industry. So definitely after Diwali, we did see that trend going a little slower. But then usually once like the Christmas days always starts off well. And now they already would get ready with the upcoming summer season. So that is a trend that we see always where the approval rates go a little lower, not too low. But, you know, I think going back again to the summer upcoming season, we will have a higher approval rate coming back on all through all the NBFCs. So that is how it works for them. And for the second question of future expansion, currently we are looking at opening the set number of stores in NCR, AP and Telangana that are lined up already in the pipeline yet to open up. So, by... 31st March or maximum second week of April, we'll have additions of new stores in this geography, which were already under construction or already for which we've signed up. We stick to our plan of further expansion into a new territory that probably after the quarter 1 is when we would venture out into the new geography that we are currently looking into. Could be Orissa, could be Western UP, and some of the newer markets that are exploding right now. So between me and the teams, we are looking at a further newer cluster that we will definitely add up in probably the quarter 2 or the quarter 3 of FI27.

Okay, okay. Got it. So, I just get some clarity on this. I just have to follow up questions on the MSN line. So, the next thing would be, a majority of the MSN makes up, you know, it is made up of, you know, white goods and electronics. So, the thing is that, you know, when we, you know, look at AC as a, you know, good in terms of the case, there is some reports or there is some study suggesting that this summer is not as short as it is expected to be in the, you know, previous years going ahead. How would you think that would impact the AC sales of the company in general, or what is your outlook as an opinion of yours or something? So that's one question from my end. The next thing is that there is a lot of talk going around in terms of the increase in RAM prices, which is going to translate into a higher final sale price of the mobiles and other electronics. Since electronics also makes up a huge mix of your, you know, books at the moment, their books at the moment, what do you think is going to be the impact in general that can be attributed to the price increase in the electronics and the slower than expected, you know, summer this quarter, this will essentially, how can it have an impact on the AC sales aspect?

Okay, so, uh, uh, I wish what you said is not true, that the summer season is not going to be good. Let's not hope for that. But what we experienced last year in the quarter one, or say mid of March, we got the flavour of the weather not supporting us for the season. But being that being a low point, I would still put in the base at that level and expect at least some growth from that number from there on. I think if that is also delivered at a higher number from the last year's pace, I think we're sorted. We don't need to look at a 70-80% kind of a jump, right? So we are still optimistic on the category because the penetration is still very low. The new rating has also come in. We don't see a drastic increase in pricing from the AC brand. It is a nominal price increase, and that would get mitigated with the EMI offers and the cashbacks that the brands provide during the summer period. So I think we're looking at an optimistic sale, and we are ready. To, you know, go ahead for the season, and we've aligned our inventory accordingly, so that, you know, we're going to start.

Sorry to interrupt, just to start with us, so you're also forced to, in terms of how the underwriting is going to be from the NBFCs and banks, right, coming up on the, you know, quarters as well?

Yeah, absolutely. So, the NBFCs are also ready. So, currently, all the NBFCs that we work with, IDFC, Bajaj, FinServ, SDB, so all are lined up and gated up for the season as well. So, you know, so they're also looking forward because Coolings products on a whole contributes to a bigger book size for them as well.

Yeah, yeah, correct. So, you expect them to have some softer underwriting policies in general, unlike how it was, you know, multiple quarters.

Absolutely, absolutely.

Yeah, yeah, got it. So, I did get some, so, in general, you are also caused to warn how the AC sales is going to roll out in general, considering the fact that, you know, we are going to hopefully mark the, you know, worst season in terms of, you know, slow down in the AC segment.

Correct, correct, correct. Because January, you've also seen a positive uptrend in the category. You know, but last year, if I actually attribute the AC sale in quarter four, it was majorly February and couple of weeks in the March month. That did well. But then after that, after March 20th, we definitely saw downfall up till May. So usually that is the peak season for us for AC sellout, AC and cooling product sellout. But hopefully this year, we might have a longer winter in place, but so we expect a longer summer going forward. And at least they ran this summer with no rains in between.

Got it, got it, got it. Next, as a follow-up, I'd just like to reiterate on the question of how do you feel the RAM prices, which as an expectation, they're saying the mobile and the electronic price in general is expected to go by 8-10%. And there's a lot of proxy companies and the companies which are directly, that can be impacted as sales is expected to see them slow down. How do you view that and what is your outlook in general of how you're going to navigate or how the numbers are going to play out for the electronic segment in general?

So right now, we don't see a drastic change in the pricing from any OEMs right now. It could be a minuscule change going forward. But as I told you earlier, EMI schemes are available after 24 months. Brands are forwarding that. There are cashback offers. There are one EMI off, two EMI off coming in from other OEMs as well. So eventually, the price is going to be in line with what it is currently operating at. So there would be a major jump there as well because a lot of these OEMs do absorb the cost as well. So not necessarily that they always keep on increasing the price to the end consumer.

Okay, okay, okay, understood. So, in general, it is also expected to have a good view, and just to catch you on the last point there, you are also saying that apart from the soft underwriting, there is also a lot of, you know, customer-friendly policies that are going to come up, like cashback and a lot of, you know, offers in general to incentivize the customers.

Absolutely. So, until then, there is a new technology change. For example, if it is like a 4K technology moving towards 8K, you know, or something better in any phone devices with the AI coming in. So, if there is a new add-on on the technology, definitely the price goes up. But apart from that, there is no price increase for like-to-like product.

No, I just asked it on the front of, you know, the memory and RAM price, which is the existing same technology of, you know, electronics, just upgrading due to the, you know, RAM price hike in general, which was, you know, observed and which is a hot talk that's going on in the market now. So, yeah, I just did it. As a last question, I'd like to know which are the major NBFC's partners or, you know, major bank partners that you guys have tied up with, and in terms of who, basically, you know, let's take account of funded and, you know, there is going to be credit sales of you guys in general, which NBFC or banks takes up the major, you know, major portion of these customers of yours who are available for the EMI sales in general? And as a mix, I would like to understand that for some better clarity.

So the NDFCs that are prevalent in our industry and consumer durables are the biggest players. So our share or any retailer's share is in line with what they are as market leaders. Number one, number two would be IDFC, then would be HDB, ICICI, and you know... Okay, okay.

Can you just take me through who is that HDB? I am unaware of all the other parties.

HDB is a subsidiary of HDFC Bank.

Oh, okay, okay, okay. Got it, got it. Sure, sure. Okay. So, yeah, so, thanks a lot for the clarity product from your end, and I'm looking forward, you know, for the upcoming, I mean, you know, business to go well, and, yeah, hopefully, it is expected to do so. Thank you.

Just pray for the summer to go well.

Sure, sir. Definitely. Thank you.

Thank you. The next question is from the line of Aves Bakshi from Sundaram. Sundaram Mutual Fund. Please go ahead.

Hi, sir. Thank you for taking my question. Am I audible? Yes, please. Sir, just first question on the pricing side. You mentioned that the new BEE pricing are in. So, what's the differential, sir, right now versus the earlier price views?

I think it's not much. It is like 1-1-2% plus or minus, and not more than that.

Okay. So just one follow-up here. Given that the price differential is not much worse than others, wouldn't it somewhere affect the sale of existing non-DE products in our portfolio?

So, if the difference on pricing is not much, but the rating and, you know, if you're comparing it, the lineup right now is still in the transition of having a complete range of the new BE rating on the storefront because it is hardly a month in because the production plus the stock are not completely available across all brands. So, and then we also are left with some older inventory, though we started buying the newer ones now, but we are left with some older inventories also. So, by say, I think the summer season is not picked up yet. So, if I look at second week of March, that is when we will have a complete transition of the newer models on the storefront. So, by then it will be hardly, you know, left with some 10-20,000 units that will sell through the summer period after that.

Okay, and sir, just one question here on the overall inventory, what would be the AC inventory right now in our system?

Right now, AC, we've already picked up for the season, right? So, we are already at the same current levels of usually what we would have for our beginning of summer season. So, a little upwards of 300,000 units. No, no, sorry. One second, one second.

Yeah, so in terms of units, we are around

250,000 units ready for the summer season.

250,000, got it. And this will be more or less the older non-BE normal, right? Sorry, sorry, I didn't get your question. These 250,000 units, this will not be the new PE norm, right?

No, no, almost 50% of this inventory is the newer rating.

Oh, okay. Okay, understood. Also, just one more question in terms of discounting intensity this quarter. What was the status coming in from, say, the September quarter to December? Any changes there?

Sorry, I didn't hear you. Can you repeat your question, please?

So, in terms of discounting intensity, September, we had a higher instant of discounting, right, given the GST, etc. So, is that continued in December or did that intensity have cooled off?

Not, no, no. So, that was up till Diwali would end up, probably the first week of October, that's when Diwali ended up, and then after that, we did see an increase in pricing again, or the discounting was reduced to the minimum during that period again.

Understood. Those were the questions from Mayim. Thank you. Thank you.

Thank you. Anyone who wishes to ask a question may press star and one. The next question is from the line of Devanshu Bansal from MK Global. Please go ahead.

Hi, Karan. Thanks for the opportunity. Karan, Hyderabad cluster has seen a good pickup over the last couple of quarters. So, I wanted to check what is the confidence on sustainability of this growth for this cluster. You did mention that some of the real estate projects are picking up, but if you could give some confidence on the sustainability of this trend.

Hi. So, if you look at, definitely there's no store addition in this cluster. You know, we've already captured the market here. The market would organically grow from here on. But the newer product categories like dishwashers, you know, audio is picked up here. Act series are doing really well. The attachment has definitely gone up, especially in mobile phones and televisions. And post the cut down on GST, we have definitely seen an uptrend on the sellout on televisions. So, looking at that number, I think going forward, but not a big jump from here on, I think it will be in line with what the numbers are for this cluster. The SAG would remain under 3-4% kind of a number. So, I think on such a big base, that kind of an SAG without new store opening, all mature stores, I think it is a good sign that, you know, it is sustainable for the coming quarters as well.

Fair enough, fair enough. And from Delhi perspective, sir, the growth is a tad lower, right? 7-8% SSG, while this cluster particularly should see very high SSG, right? Just because the majority of sources are relatively lower. What's your expectation from this cluster, maybe going into FY27, or what is the kind of growth minimum we should see in this cluster?

So, if you actually see Delhi would also have an extended, you know, cooling product sale, which we didn't see this year at the level that we would see in the previous year, would attribute a little SEG growth flow down to that as well. But overall, if you see, our contribution on the premium is definitely increasing there. The ASPs are going up, the ticket sizes are going up Y on Y, and especially for the new stores that we opened up in the major clusters like Janakpudi, Pitampura, So, I think in Faridabad, we opened a store recently. So, the new store that are there actually are more prevalent and more bigger clusters. So, the SAG that you'd see a drop in, especially for older markets like, you know, Daria Guns, Karol Bagh, or in Punjabi Bagh, where the market size has not increased much, you know, because there is no new construction in that area. So, the market size demand is muted there, the growth in the market size. So, overall, I think if you look at the number, it is up by 30%. I think in the coming quarters, you'll definitely see a higher growth coming in from this region because on a daily level, when we look at the sales, January also did very well for us in that cluster or every weekend that we look at the sales from every productive store, it's growing by and by. So, we're quite impressed on the growth coming in, but definitely Delhi would need another year or so to stabilize further and at the same time, a good summer season would boost the sales from there on because it would create a huge custom base for us during the summer period as well.

So just to better understand, are you indicating that maybe FI27 would also be like a break-even kind of a year for Delhi market, or we will see some kind of a profitability in Delhi?

We will definitely see a profitable FI27 in Delhi, but what I was suggesting was that if you have a great summer in that region, then you will see a better profitable margin for that cluster.

Fair enough, fair enough. And sir, lastly, I noticed that the inventory levels are about 15 days higher versus last year. You did mention that you're stocked up for the upcoming season, but that would be the case last year as well, right? So, I wanted to check, because in the channel also, every player would be having higher inventory this time around. So, any opinion in terms of, say, competitive intensity from sale of these cooling products in the upcoming season, can that impact our margins to some extent?

So the margins, just to answer your first question, yes, you would definitely see an increase in number of days of inventory. But that is in line with what we had planned, especially with the television stocks, because we picked up a lot of television stocks post Diwali as well, because the sellout was good and we were seeing, of course, a drop in GST. There was a shortage of the stocks, so we had to pick up a little more stocks there. And definitely, yes, we were sitting on a higher inventory of air conditioners, but compared to that particular year, quarter in Fi25, we would not see, you know, the inventory of ACs at that level. So ACs of inventory were lower, but the purchase would start off in January or so. That is why you would see that number coming in quarter four rather than quarter one for cooling products. So this would include a little bit of ACs that were still stuck from the summer of Fi25 quarter 1.

No, anything on the competitive intensity, sir, do you foresee there may be some extra discounts that we may have to offer to liquidate?

Not really. So that is in line. So that is in line. So whatever, wherever it is needed to discount, especially to liquidate the stocks of ACs that we, whatever support we got additionally from the brands is what was passed on. So we didn't go ahead and discounting a lot from our end. 1% here or there in terms of gross margin for that product category. But everything else remains intact.

I don't know. So, just to summarize, so FY27, ideally, if summer goes well, should see return of double digit growth in the business, right? Hopefully, hopefully. Okay, okay. Fair enough. Thank you. Thank you.

Thank you. The next question is from the line of Ankit Kedia from Philip Capital. Please go ahead.

Kharad, you mentioned that, you know, Festive saw 25% growth, but ex-Festive, the growth would have been pretty much flat or low single digit. So what happened in ex-Festive days that the growth was so dismal, while in Festive, you saw 25% growth if I had quarter to quarter three together?

So, firstly, there was 9-10 days of split between quarter 2 and quarter 3 in terms of the festival sale. Dashera, Navratri and all went up to the quarter 2, whereas the beginning of Dashera till Diwali was in quarter 3. And by the first week of November, we were done with the season. So, of course, that November definitely saw a huge drop, you know, which we usually see. So, it was no surprise to us. The recovery, which was, say, two weeks or three weeks down of slowdown of sale, went up to almost second week of December. That's when we started seeing an uptrend coming back again, and then the Christmas and New Year sales were really fantastic. So, that is what you would see usually as a trend, but there were no external factors for us to push the sales back, especially after the festival period when they grew at 25%, and the offers were really great. So they were really, on the televisions and appliances as a category, they were used discounts, cashbacks, freebies, offers from the manufacturers, which ended up by the first week of November, right? So definitely you would see... A lot of free-point sale, also getting booked during that period for the offers that were on the floor for the manufacturers. So these are normal trends, but I think the recovery was a week later, 10 days later, in November-December transition, and picked up after second week of December. That's when we saw the uptrend in all categories pushing up to the first week of January.

But even quarter to quarter three together is just 12% growth, right? And if festive is 25% growth, that too because of the GST push which came in. And, you know, going forward, if summer is just normal and not very harsh, do you think double digit growth rate can come back?

If you look at the trend that is going on right now, there is nothing that is going to stop us from that. The market trends that we would have seen for quarter 1, quarter 2, quarter 3, FI25 versus what we anticipate going forward is quite positive than what has happened in the past. And if I look at the base on the cooling product categories, Feb and March last year was, you know, a very normal sale that I would look at, that is very organic that we would do, rather than, you know, not attributing it to a double digit or a higher number of growth. Because if I break up and give you that number, January last year it was 38 crores, February was 104 crores, March was 168 crores. So it was around 343 or 50 crores in quarter 4, which we see that that's going to definitely grow on in the quarter 4 this year. And going forward, you know, April was really bad again and there was no sale practically in May and June again in quarter 1 last year. So I think we're quite positive. Same thing with refrigerators or air coolers. They were practically, you know, next to zero in terms of what we would deliver during that period. So we're quite optimistic on how the season is going to pan out. But this time we're a little cautious on inventory pile-up so that, you know, even if the season goes at a double-digit growth, we still don't need to, you know, suffice our need for high inventory risk that we had throughout the FI 25 year.

The second question is on the Delhi market. It's been three years for the first six stores which we opened, right? We will complete three years now. When do you think would be the right trajectory for us to achieve company-level margins from a Delhi market perspective? I'm not looking at the full break-even because obviously we're continuing to expand stores in the region, but at least the earlier stores which we have opened, the first 10-12 stores, when do you think they can break-even?

So, if I look at those numbers, they are quite optimistic and quite positive on the throughput that you would expect from them. So, I think if you look at, I think if we do this same question at the end of quarter one, I think we'll have a better answer for this because we'll have a good summer and hoping that Delhi is going to have a good summer this year. Then we'll have a, you know, we'll understand how the contribution of cooling products in Delhi as a market can change the whole game compared to what it happens in the southern So the throughput is going to be, you know, surviving the need for a few quarters there. So that is how it's going to be. And hopefully by quarter two, FI 27, we should see that numbers going up in terms of profitability from that region.

So, from a store economics perspective, earlier you had clearly mentioned that it takes three years for the store to break even, right? And more than that, actually, to take company-level margins. Now, do you think as a unit economics, given the competitive intensity and the season change, which is more frequent now, and dependence on season change is much higher, do you think that unit economics doesn't hold through today for the new stores opening, or you still stick your neck out and say, no, in three years for the new stores, we can break even?

We stick to the same concept and the same numbers. They're still prevalent if you look at the numbers. If I break down Delhi in terms of the first 628 store that we opened up in August 22, they are in line with the same number. But then the attribution majorly in Delhi as a region, if you look at, comes at the depreciation and interest level because the cost is a little higher because we did a lot of capital investment in buying our properties there. But if I look at the store level EBITDA or if I look at the store level performance for these stores, the store economics for these set of 8 stores, in fact, the other ones that we opened up also are showing up results much sooner than expected. So, you know, the burn is much lesser, the marketing cost is all divided, absorbed between all the stores. So, if I look at the revenue going up there. It is a matter of the Delta coming through, which definitely you will see, not only for the set of eight stores, which are three years old, but even for the newer ones that we recently opened up in the coming quarters.

Sure. Kavan, I don't know if you answered this question on store opening. I joined late. I just wanted to know, for this year and for next year, what is the store opening items we are giving?

So this year, this quarter, we've ended up opening another four more stores. So the store count definitely from 2019. If I finish the making of the stores, which summer is usually when we, if you remember, every 31st or 30th of March, every year, we add up 87-inch stores. So that is in line. So in case we finish making those stores both up north and down south, we will add up another five to six stores by the end of March. That is the plan. And probably, if not in first week of April, but once the quarter ends, the first quarter ends in FI27, that's when we plan to venture out to a new geography. Either it could be Odisha, it could be Western UP, and we are evaluating a couple of more areas there up north also. So if things work out, we will definitely, after the good summer season, we will definitely venture out to a new geography as well.

So, this year, the store opening is lower than last year on gross basis also, if not net. Is this a conscious call because of summer being poor this year?

Absolutely. So, we have to make sure that, you know, the store count that were added last year, we were seeing, you know, at the same time, see, Delhi was a new market for us. So, as you look at Delhi's main stores added, 3-4 towns added, AP Salangana, where we were not present. Currently, we are all present in the markets that we look at. So, organically, if you look at, there are 1-2 markets left in AP and Salangana, where we are adding up stores. It's not just to increase the store per se, this number, but we have to evaluate the market, make sure the markets are big enough. In fact, after a very long time, Hyderabad might see another two or three stores coming up in the next couple of quarters. So we are looking at areas in the peripheries of Hyderabad to add up new stores, because that is where the market would demand them. And right now, if you look at the stores which are in the pipeline, there will be a similar number of stores. But a lot of these stores, especially the stores in Delhi, took a longer time to finish because of the graph again there, This happens every year. So we got delayed with the store. So if you see Faridabad second store and Budlihar is what we were able to end up opening up. But if I look at the pipeline there again, we have six to seven stores in the pipeline in Delhi which are getting ready. Which will open up in the coming time. So, the overall expansion plan that we had is in line with around, say, 20 org scores that we opened up this year. Another 10 probably will add up in the next couple of months. That summer that went through, we were cautious not to, otherwise by now we'd have been into a new geography, and automatically you'd see a much higher addition of store count, with a new geography as well.

So if the summer is poor, this year the new geography can get delayed further?

No, no, no, irrespective of how the summer pandered, we're ready to expand further.

No, because last year you delayed, so I'm just thinking that this year again, could you delay if the summer is bad?

No, no, irrespective of how the summer fans are, we are ready for it, and we hope that all of you also pray that, you know, the summer goes well, because, you know, an optimistic, you know, mindset will definitely change the weather for us.

Uh, and, uh... From Orisa or Western UP, between the two clusters, which you would plan to add, where do you think is the bigger opportunity and where is the less competition for you?

So, apart from this, we are definitely evaluating a lot of other regions in and around our southern markets as well as some western and eastern markets as well. So, because we have time on hand, we've got one more quarter to go. Because Western UP will be more organic because we already are present in Noida, Greater Noida, from there on expanding into Western UP much easier. But both Odisha and Western UP will not be more than a 10 store count. That will increase our footprint in the geography. So apart from that, because we will be ready to expand further by quarter 3 next year, so we wanted to make sure that we at least enter one more new geography on a newer cluster altogether.

And obviously, they will not be ownership model like we went in Delhi, right? Because I don't think they would have such flagship location who would need to invest on that plan. Exactly.

And most of the market would have lower enters, longer leases available. Until and unless, you know, there is an opportunity for us, but majority of them are going to be, in fact, in Delhi as well also. If you see now, the periphery is Budviyar, we opened Faridabad, one more store, all are on rental only that we are planning to open. Apart from the stores that we have already procured, which are under construction, like Saket is under construction, two stores in Golpo, two stores in Gurgaon are under construction. So those stores will take time, because we are constructing it from scratch, we bought the land out. Apart from that, there is no need further acquisition up north as well.

My last question, if I may, on the average, do you think the price cuts taken or the discounting given is impacting SSHG growth overall, or do you think volumes today are good enough to sustain the drop or the promotions which are being offered by the brands?

Definitely the volumes are good enough. That's right. So more than the value trend, we definitely see a very constant volume growth as well across all categories. So that is an upside, right? It's always a seller that how do you upscale your product value as well, in case the values remain constant or the values keep degrowing. That's what we always keep discussing, that we push customers to more premium, especially after post-GST drop in the televisions. In tier 3, 4 town cities, we've seen the penetration of 75 inches and above also growing drastically. Frontloading growing. Frontloading had nothing to do with washing machine. Also, I've seen a drastic change from semi-automatic or automatic towards frontloading. Dishwatches have become prominent. Dishwatches, though the category is small, but since the drop in GST, month on month, we've seen 100% growth in that category, though the base was very small. But overall, we see a good volume demand setting up across all categories. So that is a good positive.

Sure, Karan. Thank you so much. I'll come back in the queue.

Adiós.

Ladies and gentlemen, you are requested to limit your questions to two per participants. The next question is from the line of Nimish Shah from Fortune Finance. Please go ahead.

Hi, this is Limashaya. I have a question which doesn't relate so much to the operations, but just a very quick one. You know, about 18 months back, you had – or 16 or 18 months back, you had offloaded – the family had offloaded equity at around 220, 230 rupees to SBI and Mirai or some such fund, you know.

The stock price has not reached that level then for a variety of reasons, and we won't go into that.

At a price of 100, you know, don't you think you all should be doing some form of creeping acquisition, at least for tokenism or for confidence-building measures for shareholders who are stuck on?

Good evening, and... I think you have raised a point where we, not only today, but every month, every investor meet, every quarter, CFO, me, the team, dad, everybody keeps discussing it. But, I mean, I don't know what is right or what is wrong because we get a mixed review on this of giving, you know... you know, news out in the market that we would be picking up something or, you know, continue the same way. It is always a mixed review that we've got. But just to answer your question personally, I would say 65% of the company is still owned by us. So that itself is, you know, a good...

No, no. I appreciate it. No, no. I understand, sorry for butting in, but I understand where you're coming from. I know 65% is a very, very robust and a very, very healthy equity stake. So your skin is completely in the game. I'm not taking away anything from that, you know. My only point is...

But if you guarantee me that if I put some money on the table tomorrow, if it is going to, you know, help somebody or, you know, give out a positive...

Yeah, yeah, 101%, 101%, you know. But when I discuss other people, when I discuss that, I mean, like you... Tell me one thing. No, no, no, Karan, Karan, let's cut this chase. Tell me one thing. How will it harm anybody if you buy your own shares, maybe 2 lakh shares or 3 lakh shares at 100 rupees? It just gives me confidence that the promoter, I bought at 225, okay, the price does not reach that level. Today, the promoter sold at 225, today the price is 100. Promoter feels that if the promoter is buying at 100, so obviously he sees some value at 100, it just inspires me to buy more at 100, you know, that's about it.

I do agree.

It just cannot harm. We can ask 100 MLS. I've been in this business since 40 years, you know, in investment banking at Fortune.

If you let me complete, I'll answer your question. I would love to do that. Please, please, please, please. Sorry, sorry, sorry, sorry. Please go ahead. But if you let me answer my question. No, no, no, no. Yeah, please. Since after that, it is a number that we also have lost. So whenever we, it's been four quarters in the time, you know, we have discussed this with multiple investors. So, usually it is like, you know, the promoters, yeah, that's what I also had an intent of picking up something, but then always a confusion statement that I got that, sir, it would create a confusion out in the market. But as you said correctly, if you feel that, like you, a lot of other people have said yes, but a lot of other ones that I spoke to also said no. So, I always had a mixed review of whether to go ahead with that or not. See, because the money that we've raised is still lying with us, you know. It's not that I've invested in 10 other companies where I've lost money or doing something else or I'm into real estate. This is the only business that we do. So, the money is lying with us. I can definitely pick up a stake back to give the confidence to the market. And if time permits, I will definitely take in, you know, once we finish a couple of more investor rounds, investor meetings in the coming months, I would definitely take a call. And much sooner than that, probably before the end of quarter one result, we would definitely have a positive use on this as well.

Yeah, it's just, you know, tokenism. It's a confidence-building. I get your point. I get your point. I get your point.

Yeah, you know, and, you know, it's huge, huge, huge. It has nothing to do with, see, it is personal to me. It has nothing to do with, you know, what the market takes is positive or negative. But it is just a token of appreciation to the market that we are still there with you and we are going to, you know, turn things around, definitely work harder from where we are today. Anyway, give a positive sign to the market.

Absolutely. The owners of this restaurant also ETR, you know. It just helps us, you know. That's okay. It's just about that. That's nothing else, you know. It won't move the needle if you buy four file actions, you know. That's it. Definitely, definitely. Point taken on that. And all the best in your endeavours, you know. Thank you. Thank you very much. Thank you very much.

Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for closing comments.

I would like to thank you all for joining the call. I hope that you were able to answer all your questions, and for any further queries, you may get in touch with us or our HGA team. We will be happy to address all your queries. Thank you once again.

On behalf of Electronic Smart India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.