Electronics Mart India Limited (EMIL) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Q4 and FY26 earnings conference call for Electronic Smart India Limited. 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 this conference, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. This conference 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 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 very much. Good afternoon and a very warm welcome to everybody present on the call. Along with me, I am Mr. Parimjadevarakonda, our Chief Financial Officer and ASGA, our Investor Relationship Advisors. We have uploaded our results in investor presentation for the quarter and financial year in 31st March 2026 on the stock exchanges and the company's website. I hope everyone had an opportunity to go through the same. The quarter got off at a healthy start, supported by a summer season that outperformed. While March witnessed some temperature volatility and sporadic rainfall, the impact was well offset by a strong festive season across the south region. Our sales mix remained broadly in the line with the same period last year, and demand was robust across categories, and each segment delivering double-digit growth. Large appliances in particular benefited from the GST reduction and festive consumption tailwinds. We also saw a meaningful operating leverage coming through, resulting in an improvement in our operating margins, even as we continue to add new stores to our network. On the store expansion front, during the quarter four of FI26, we added four new set of stores, one each in NCR region, Telangana, and two in Andhra Pradesh. I am also pleased to share that during this quarter, both our south and north regions deliver double-digit growth in both revenue and same-store sales growth. To provide a clear picture of our store portfolio, we currently operate 223 stores, of which 83 are over 4 years old and 140 are less than 4 years old. From a profitability standpoint, matured stores continue to demonstrate strong performance with an EBITDA margin of approximately 7.3%, while newer stores are currently operating at 3.1%, consistent with their stage of ramp-up. We expect many of these stores to mature over the next couple of years and start delivering better margins. EBITDA margins for Q4, FI26 stood at 6.7% and 6.1% for FI26. On custom-level profitability, we continue to maintain a healthy EBITDA margin of 6.5% in our South Calaster, which is good, especially given that the majority of the new stores additions over the past two years have been concentrated in other positions in Lengana. Importantly, despite the entry of new players into these markets, we have been able to sustain our market share. On NCR, I am pleased to share that our operations there are now EBITDA positive on a full year basis. As strong level throughput improves, we expect better absorption of fixed costs, which should drive further margin improvement in the region over the coming quarters. Moving to category performance, in large appliance, the positive momentum we have been observing at the store level, driven by DST reduction, festive demand, and new product launches have continued. Washing machines are reporting strong double-digit growth in quarter 4 FI26, which is particularly encouraging given that the category typically sees stronger traction during the monsoon season. The growth seen over the last two quarters is therefore ahead of season norms. Panel continued their double-digit growth trajectory at 13%, sustained by the tailwind from GSE reduction. Refugiators have maintained stable, with steady demand, holding up even in the face of recent price increase. We are also seeing healthy function building up near in the newer and emerging categories, such as induction cooktops, dishwashers, and net coolers. Coming to mobile phones, the segment recorded a strong growth of 28% in quarter for FY26, supported by major new launches in January and March. Looking ahead, we believe that the mobile category is entering the next phase of this demand cycle, driven by upcoming technology upgrades and the growing integration of AI capabilities into devices. Several OEMs are actively developing next-generation AI-enabled smartphones, which we expect will stimulate consumer interest and support growth in both average selling price and volumes. On inventory, our days outstanding as the 31st past 26 stood at 73 days. We have managed inventory efficiently throughout the year, maintaining a well-calibrated mix of carry-forward and of new AC models, ensuring we were well-positioned heading into the summer season. Coming to FI27, our priorities are clear. We will continue to optimize our supply chain and inventory management with a sharp focus on cash flow generation and working capital efficiency. We will deepen our presence in existing clusters while remaining selective about new geographies, entering only where the combination of consumer demand and unit economic meets our standards. And above all, we will continue to invest in customer experience because that is what we have defined EMI's reputation over decades. And it will remain the foundation of everything we are doing going forward. With this, I request Mr. Premja Devrakonda, CAF, to update you on the financial performance. Thank you all.

Thank you, Karan, sir. Good afternoon and warm welcome to all the participants. I would like to start with Q4 FI26 performance. Our revenues for the quarter stood at 1913 crores versus 1664 crores in Q4FI25, a growth of 15%. Ebitda for Q4FI26 stood at 129 crores versus 107 crores in Q4FI25, witnessing a growth of 20%. EBITDA margin for Q4FI26 stood at 6.7% versus 5.6% of the previous year's fourth quarter. Pre-indice EBITDA for Q4FI26 stood at Rs. 91 crore with a margin of 4.7%. Ask for Q4FI26 to get Rs.40 crore. Shown a growth of approximately 49 percent. SSG for Q4 FI26 has been 12.2 percent. Now, moving on to FI26 financial, our revenues for FI26 stood at 7183 crores versus 6731 crores in FI25, a growth of 7 percent. EBITDA per FI26 stood at Rs. 438 crore and EBITDA margin per FI26 stood at 6.1%. PAT for FI26 stood at Rs. 107 crore and FI26 SSG stood at 5.3%. Pre-index cash flow from operations for the year stood at Rs. 299 crore. With this. We can open the floor for questions and answers. 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 please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question is from the line of Manoj Gauri with Equaris Capital. Please go ahead.

Yes, thank you for the opportunity, sir. So, my first question is, if I look at the overall numbers for QPOP, one thing what actually was notable was that Hyderabad SSG was into double digits. And this has been after a very long time that we are seeing strong SSG into Hyderabad market. And probably based on our channel checks, even Q1 seems to be extremely on a stronger note. So how should we read this from Hyderabad market for FI27? That's my first question. I will come to the second question.

Good afternoon, Manuji. As you correctly said, we also have seen a good SEC coming too in Hyderabad in the last quarter as well. And even this quarter, the beginning has been really good. But I would attribute this majority of the sales coming in from a lot of, you know, benefits that have come away, especially post-September when the GST was dropped. The tailwinds that led towards a lot of improvement in categories like televisions, washing machines, dishwashers, and in the last couple of months, we've seen refrigerators and cooling products also doing really good. So, once you see a bump coming in from all categories, definitely you would see this kind of an SSG coming through. But I would say that at the same time, there were a lot of big launches of mobile phones and Androids from Samsung, Oppo, Vivo during the last quarter as well. So mobile phones also performed really well. Cooling products are doing really good. So if you look at blended art, you can see double-digit SAC, which is in quarter four. So that is the number I would say that is being attributed to all the product categories because everybody has performed in not just one category.

Sure, sure. Secondly, if I'm not wrong, when I look at the product mix, large appliances product mix has declined from 47% to 42% for fourth quarter, and despite that, the gross margins have remained very stable. So that's one more thing which we believe like seems to be on the positive side. So how should we read here and probably how should we look at the gross margins in the coming time? And obviously you were talking about the margin improvement. So if you can comment over there.

So, Manuji, again, there are smaller changes that we have made internally across categories, even mobile phones, you know, trying to do a lot of attachment there with accessories, you know, to improve our margins in mobile phones as well. Apart from the cooling product categories, for which there was a delay in starting off during that quarter, because last year Jan-Feb did really well versus Jan-Feb was a little slow in cooling product categories this year, you would see a mix of The margin being almost similar or getting a little better is because the throughput that came into other categories also was quite strong. And we're trying to improve our margins wherever we can. Even in white phones, actually, it's adding up of new categories like built-in appliances, audio, you know, X-series. So, we definitely, these categories have a higher gross margin, and that is helping us improve. So, I don't know how long will it take for us to shape up those other categories, but making sure that, you know, all categories that we are selling is selling with a certain productive gross margin improvement there as well.

Sure, sir. Last question, if I may. If I look at the cash flow from operations, I think this has been the record cash flow generation that we have done in our history. Probably, how do we plan to utilize it? Do we expect to repay loans and probably strengthen our balance sheet or probably any plans that you have for FY27 and FY28 for the utilization of this CFO?

Please, welcome to the call. Please, welcome to the call. Loans that you've taken against property that remains the same, so there'll be no repayment of that. That is going to be more organic. So whenever there is like every quarter or every month, whatever we pay for those loans is going to be a part of that. But our working capital requirement has definitely come down. So cash flows have already been flowed in to reduce our working capital. So now by the end of this quarter, end of quarter one, this year also you'll see a much more higher improvement in our working capital cycles. So the cash I suppose they've all been deployed into, you know, the business and whereas the working capital requirement has definitely gone down to what it was during the same period last year.

Sure, sir. Thank you, sir, and wish you all the best. Thank you, Malavi.

Thank you. Ladies and gentlemen, to ask a question, you may please press star and one on your touchtone telephones. Our next question is from the line of Devanshu Bansal with MK Global. Please go ahead.

Yes, hi, Karan. Congratulations on good numbers and thanks for the opportunity. Karan, summer season is expected to be strong this time around. And last year, we know that the base is quite comfortable. Can you guide us some bit on your growth expectation across regions for FY27? It will be helpful.

Sir, if you ask me, it is too early to comment right now, because, see, Delhi, the summer started a little late. Delhi has been a little warmer from the last one week onwards, whereas there was a little delayed in summer starting up there. AP and Galangana definitely have, you know, outperformed our own expectations, but we still have 45 days left for this quarter to end, and that is 50% of the quarter time still left on board with us, you know. We still... So, I would say a good positive outcome, but what helps us during this quarter is that the cooling product category is because our margins are higher there. If that outperforms on an expectation for the next 30-40 days, then you would definitely see a great result coming through.

Understood. So Delhi so far has been slow to start, but at least in the southern part, if you could help us understand what has been the growth rate, that can actually help us better sort of understand.

Devanshita, so Delhi again, see because of the base, we had a smaller base last year, so if the market did not perform, we did it in Delhi, but again the value is very small on the total number of the company in terms of any category that we look at today, but Delhi expectations are big. Delhi, we are looking at a good double-digit growth coming in for this quarter, but commenting on... We've definitely gained our market share in AP as a cluster, Telangana, where the competition was very stiff, where, again, we've gained a lot of market share. And all clusters will give you a good number to go forward. So, you'll see a good group coming in from a lot of stores that we've opened, which are yet to get matured. So, there are a lot of reasons the summer support it does. The matured stores, the stores which are on the turn of getting matured, are turning around, you know, to our numbers that we're doing. We've improved a lot in mobile phones, especially a mobile phone penetration in AP Telangana was a little poor. We've increased that also. So, not only air conditioning, coolers, or refrigerators, but other categories have also outperformed in those regions. So you'll definitely see a good SSG coming through from the mature stores from those regions.

Fair enough, fair enough. Karan, I also want to check on the extent of sourcing that is directly from brands and that by our distributors currently. So I wanted to understand, is there a scope to increase our sourcing directly from brands, which might help in margin improvement going ahead?

So, Devash, most of it is done directly from the OEMs or the brands directly, apart from a few categories like, you know, accessories or small appliances where the values are very low. I think would not even contribute to more than 50 crores a year that we would buy from local distributors because of the inventory management of any other issue. But apart from that, most of the sourcing now is done directly only.

Okay, and is this applicable also to mobile phones category? You're speaking more from a large appliance perspective.

Tell me about the group, the whole group. So if you're talking about a 7,000 plus crore revenue, only 50-odd crore comes in from the distributors going forward, and that also is reducing day by day. So, you know, it is made to do with the logistics for the smaller products, you know, like Axelie's headphones, soundbars, you know, where logistically it becomes a challenge. Distribute to 200 stores, so those local distributors are used in those regions. But apart from that, the majority of the products going forward also will be through a direct billing. But anyway, if it's direct or indirect through big distributors, it doesn't change the margin anyway, because the brands directly, you know, get involved in giving us a margin. So we enjoy same cash discounts, the same schemes that direct or indirect billing would, you know, enjoy because of our volumes. You know, it doesn't matter much to us now.

Great. And last question from Ayn Karn, you mentioned in your remarks that there is a sizable difference between margins for mature stores and young stores. By when do you expect these younger stores also to reach that 7% dividend margin that we sort of see in the mature store portfolio?

It's a cycle, for example, for example, for example, the date of store is mature, which is below 4 years, okay? Now, the date of store will be mature, which will give you 5-6% of the margin, but the date of store will also be in the cycle of getting matured at any time. But at the same time, idea is that are the stores which are 2 years old, 3 years old, 15 months old, are they maturing in terms of revenue and the EBITDA profitability? That is what we look at. And those stores are trending up really well.

Got it, Karin. Thanks for taking my questions. Thank you.

Thank you. Participants, to ask a question, you may press star and one. Our next question is from the line of Yash Suntalia with Edelweiss Public Alternates. Please go ahead.

Hi, fighting. Thanks for taking my question and congrats on good set of numbers. So, my first is a follow-up on the first question on gross profit margin. So, basically, is there anything which is related to mobile phone price hikes and any one-off in the margins or all this improvement after the mix change also the margin remaining stable is structural for us and it will continue happening.

Yes, I hope it continues to, you know, be this way or get better than this because that is what we are thriving right now for because as I told you earlier, there is a deep isolation of every category, every brand, every SQ, you know, trying to maintain gross margin levels across all regions and you would see, you know, because you would see a better improvement coming through, especially in the Telangana or Andhra Pradesh market where the competitive scenario was very different. And our stores were still getting matured. The blended gross margin was, because of the competition, was a little poor there, which now they're improving there, you know. So you would see not only like one reason for it, but multiple changes and multiple in-depth, you know, push that we have across regions, across categories to better those margins up, not only at gross margin level, but even at the EBITDA level.

Got it, got it. And my second question is more specific to RAC category, like there has been a lot of price hike recently. So how has been the absorption in the market and how has it impacted the demand and anything we are absorbing on our end which will impact our gross margins going ahead because of this price hike?

So here's two things. Firstly, we had an advantage of carrying our previous inventory from last year. So that helped us in the initial beginning days of the summer starting of this year. And then we did do purchase, right, in January, February. We didn't pick up usually the way we would pick up, but anticipating a little demand. We already had picked up enough inventory at the older pricing. So for us, we will not see a huge change in pricing during the whole summer period. We still have some inventory left that is sufficing our growth as well as our requirement, but at the same time, probably going another 20 days or so, we would be then picking up a little more inventory if required. That would be at a newer price, but not with a major price increase. I'm talking about 2% or 3% maximum, not more than that, and we don't absorb any hike in the price. It's all passed on to the customer. So, if there is an increase of 1,500 rupees or 2,000 rupees, depending on the FCU, it is all increased in the selling price on the storefront, and that is how it is divided. Either the manufacturer would take it, or we'll have to increase the pricing on the storefront, but usually as a retailer, we can't afford, with our margin, we can't afford taking that price increase.

Got it. Got it. And one last question, like there has been some huge price hike in mobile phones. Was it already in this quarter or it will reflect in Q1 more?

So it has been happening especially for the entry level product categories in mobile phones but unfortunately or fortunately we are not that strong in that you know 15,000, 15,000, 18,000 kind of category. Our ASPs are about 35,000, 40,000 rupees for a mobile phone today. Good morning, everyone, and welcome to the call.

Got it. So, it's not important to me. Makes sense. Correct. Correct. Correct.

Thank you. Thank you. Thank you.

Thank you. Our next question is from the line of Vineet with Investec. Please go ahead.

Hi, Karan. Hi, team. Good afternoon. I have a couple of questions. How are we seeing the store addition for the next year or next couple of years, number one? And which are the geographies where we'll add these stores? And a similar question to this is, are we looking at any new geographies to foray into? And by when should we get into those new geographies?

Okay, so we need to... We are currently concentrating on NCR, AP and Telangana. So organically, we will be looking at anywhere between 12 to 15 stores in this region. We will be opening up at least 4 to 5 stores which are getting ready in Delhi region and adding up another 3 or 4 new contracts in that region as well. So probably this year, we might add 7 to 8 more stores in Delhi NCR region and a similar number down south. This would be organically happening as we talked. So we will be opening some stores this quarter in the coming times as well in this financial year. And for the second question of yours, for the new geography, we shortlisted few areas out of which very strongly we would be entering east and starting our base with Calcutta in the eastern market organically. And here we plan to open... Say, either the end of quarter two or the beginning of quarter three, so that we can capture on the Durga, Puja, Dasera, Diwali period there, we would at least start off with five to seven stores in that region, you know, by the end of quarter two or the beginning of quarter three. So, Calcutta would be a new base for east, and from there on, we will start expanding organically in the eastern part of the country.

Understood, understood. So, more like 20 store additions is what we plan for this year? More on it, yes. Understood. And should we assume a normal sort of a capex which we do on a post-store basis for all of these? So, something in the region of 3 to 4 crores?

All that, all the store sizes, everything, all that remains in line only. So, like, even the new regions, we at least plan to open 8-10,000 square feet stores. Some might be 7-6,000, some might be, you know, 10-12,000 also. But the average would be 8-10,000 square feet is what we look at with a similar capex. So, the similar product mix. So, no changes. The idea is to remain strict to our basics, what we are doing.

Understood, understood. And just one more question from my side. Now, when, given the inflationary environment we are in, where we are, Essentially, all the product categories are seeing significant price hikes. How does it work for us? Do we still work on a percentage margin basis or given pricing is going up, we are okay lowering up percentages a bit and focus more on absolute EBITDA growth? How does our thought process work in that scenario?

So definitely percentage becomes the basis for our calculations, irrespective of the price that we operate at, right? So if it is a 1,00,000 phone, I can't expect, okay, I can't buy a 1,000,000 phone, so usually it is a math of the percentage that we look at. But what we look at is that because there are fixed expenses that we have to base, there are marketing expenses, manpower, a lot of other things are in terms of fixed to us. So we at least make sure that, you know, when we look at profitability, we look at now in a deeper level where we look at profitability per store, so to look at the productivity, how to increase the productivity, because it can't be a varied price between, you know, the categories in different stores, but it can be a varied price strategy for clusters, like I can offer probably a Daikin AC at a higher or lower price in, say, Delhi versus Andhra. That can be only a level of 1 or 2%. I can't go drastic. I can't be higher than the market or way lower than the market as well. So it is going to be a balanced act. But look at at least a certain percentage of gross margins that we retain on our product categories that we sell. Because mobile phones would be different to large appliances, to say kitchen appliances, to say a Dyson product, to an auxiliary product or a warranty product, right? So there is different category to category.

Understood, understood, Karan. This is helpful. Thank you so much. Thank you, Vineet.

Thank you. Ladies and gentlemen, if you wish to ask questions, you may please press star and one. Our next question is from the line of Rupesh Tatiya with Longquiti Partners. Please go ahead.

Yeah, hi, Karan. Congratulations on good results. My first question, sir, is on ASPs, right? I mean, one of the struggles we all, all electronic retailers have is that the ASPs go down 5 to 15 percent, you know, every year, and this is what has been happening in the last three, four years. But now it looks like the underlying deflationary trends may be changing towards inflationary. So any comment on how do you see ASPs moving?

So, Rupi Ji, as you said, there is a very thin line between how an online player or a mom and pop store versus a premium modern retail store would look at ASPs. As you said, few markets look at this problem differently, but we being a premium seller, we've always seen our graph of ASPs going up across categories. The value on the bill cuts might be a little different because you're talking about increase in a lot of newer, low-price product categories like app series, audio product categories, which have increased a lot for us. So, the ASP on the bill cut, you would see a little different scenario versus the individual ASP increase. So, basically, AC ka price budh gaya, TB ka price budh gaya, yaar mobile ka price budh gaya. So, automatically, our price ASP to automatically budh raha hai. Agar aapne same volume bhecha last year te, to ASPs have gone up at least by 5-6% this year, and on average. The last year's dayton 3 star versus dayton 3 star is higher by 5% for example. So you have the same volume based on your ASP 5% there. But otherwise, there is a lot of improvement in technology, a lot of ASPs going up. After post-GASP drop, people who were buying 55 inch have started shifting to 65 or 75 inch because it became more affordable. So automatically you are taking a big size, you will see ASPs change there. Same thing with washing machines, refrigerators, accessories, every category. So, people who buy an airport today, for example, earlier they're buying a 50-50,000 headphone, now they're buying a 15-20,000 headphone. So, every category is seeing a definite increase in ASP. So, there is not even one single category across the board where we would see a reduction in ASP.

So, just to summarize, I mean, generally, for example, TVs, we see, you know, 15% price decline across years is very common. Even with the phones, it's the same, right? I mean, like, after one year, the... Older model goes down quite a bit, but what you are saying is on an average, in every category, TV, phone, I mean, AC refrigerator are still a bit different, more electronics. There you are saying even there the ASPs have gone up this year, and they might go up over next to three years.

Correct. As you have given a correct example, as you are talking about the market, there are many retailers who focus on entry-level product categories and majorly older models. So, the ASP has changed there, that's not my idea. But as you have iPhone 17, we don't have iPhone 17, for example. We have new models, latest models, based on all the brands. So, as you can see there, you can see the improvement in ASPs. But if you see, as you said earlier, the iPhone 15-16 has a low price in the market, but my mix on that product category is very low, but where a lot of other retailers might be predominantly selling only 15 or 16, I would be selling only 17-17 Pro Max. For me, the product mix is more premium always. Okay, okay, that's clear.

The second question is that the rate of store opening has come off quite significantly in FY26 versus FY25. I think it's 23 this year versus 40 last year, and I think that is what has come into the cash flow from operation. So is this now, is there some change in strategy? Because I remember in one of the discussions that what you had sent is that whatever cash flow operation we generated, everything will be reinvested back into the business. That is what we were looking at or thinking a few years ago. But is there some change now in the strategy? No, no, sir.

That remains the same. But it is more to do with the penetration that you would have in a certain market. So, like Delhi was a new market. So, we now had majority of the stores opening up at Delhi. So, for example, this year also, once you plan to go to a new region and automatically with the organic existing region like NCR and South, you would be adding up a new cluster altogether. So, you will see that improvement. But we have a requirement of opening stores. We would definitely do that. But we would not shy away from that. But until and unless we don't feel there is a potential in a certain market to open and expand further, you know, we would, you know, slow down that. So, if you look at Hyderabad, you know, an average of 1-2 stores open every year. You know, either we relocate our smaller stores to bigger ones or we find a new geography in Hyderabad. But because it is already an older market for us, already penetrated with, you know, a good number of stores here, we don't see more potential of opening stores like 10-15 years, no? So, we opened up in Andhra. So, we opened up in Andhra, we opened up in Andhra, we opened up in 45 stores, in 60 stores, in 55 stores, in 75 stores, in 80 stores, in 100 stores. So, there's no potential there. Then, organically, Vijaywada and Vishakha Patnam, you'll have a big store in one of these big towns. But, it's Delhi. You'll see Noida, Gurdjana, Gurdjana, Gurdjana. So, Perip 3 is more than the city. You'll see the round market that will expand.

So, what you are saying is, in our Telangana, Hyderabad, AP, NCR, in all four geographies, we have reached now enough scale and incremental store opening run rate will now be low. It will not fly away if the requirement will open up, but on average it looks like it will be now low. Correct.

So, organically, between the existing older clusters, we would be opening not more than 20-odd stores this year. 20 plus the new geography will be opened, if you have a new geography, then you will not open up to the B-Store. In the 20th, you will get 10 years old and 10 years old. Something like that. If you get 20 years old, then you will open up to 21 years old.

Okay, okay, understood. And north cluster, any margin trajectory for FY27, FY28? Now, I mean, it's profitable now, so congratulations on that. But maybe FY28, you see, it'll be around south cluster margins?

Not by 20, not just financially, sir. You'll have to give me at least 20-24 months more, because...

28, I'm not saying 28, FY28.

Yeah, so by FY28, we should at least, not the same number as South, but at least, you know, at least a 3-4% higher number than what it is currently.

Okay, okay, perfect. And there is this mature versus non-mature slide. So what I understood is, what you are saying is that 30 stores, for example, on average will move from non-mature to mature, and then newer, whatever you open newer, we will get into non-mature, correct? That is the rough understanding. I mean, maybe in 20 years. In 2018, is it fair to assume that mature, non-mature mix will move to 50-50?

Not really, sir, suppose in 28th, suppose I enter, to give you an example, but don't catch me for that, but suppose if I enter UP as a market, so UP is, say, a 50-70 store kind of a market, right? Right? If I want to open the FI 285 field, I am getting 30-40 properties, probably in one year I might open 30-40 properties there. Okay? So then if that kind of an expansion happens in a bigger state, suppose if I have to go to Goa or if I have to go to Dehradun, I will open only one store each. You know, in a new cluster. So depending on the cluster that after Calcutta that we would enter into, that would, you know, define this. But this is... Actually, you know, if you ask me, it is something that is secondary for us. Primarily, what we look at is, you know, the productivity of the existing stores also. So that is more important. 140 are non-mature stores. How are they trending? You know, though they might be aging towards mature stores, but they actually are delivering revenue and profits as per a mature store is required to do. That is more important for us.

Yes, yes. This is one final question. I mean, NCR market had its own nuances, and you had to buy properties, and which has kind of suppressed our, I mean, it has increased our depreciation and suppressed return ratio. Is Kolkata also has a similar nuance where you have to buy properties, or Kolkata expansion will largely be leased?

See, it is going to be a mix of both, but for this financial year, I don't look at, you know, more than a 50-odd crore investment happening in real estate there. So, probably over a period of time, we might, you know, end up doing not more than 100 crores of acquisition there in the next 12-14 months. Yes, yes.

And I don't know how many of our stores are franchisees, but any color of that, and how do you see the percentage of franchises moving up? Is it going to move up over next two, three years?

So, sir, we only, company operated stores only, so we don't have a franchisee model currently. So, we would be sticking to this current model only where we only open stores and operate them, sir.

But, I mean, franchises will give you significant capital efficiency, right? So, I mean, what prevents us from going into franchisee model? I mean, even experimenting, for example, let's say.

So definitely we can look at it, but franchisee to me sounds more like an affair that one would have, a married man. So I would rather stick to my wife rather than, you know, having an affair outside. So I'm happy doing that. So, you know, so I would consider it that way. But given, I mean, definitely keep on internally discussing it. But, you know, if given an opportunity, if, you know, we have all the support from our OEMs and we feel that, you know, a certain region or a geography requires a franchisee model, we'll definitely explore that.

So you're feeling consumer experience is not, I mean, you're afraid that consumer experience might go down if you go frontage it out.

The consumer experience, there are a lot of nuances that are involved in our business on a daily level. So, you know, there is a lot of control that is needed, you know. So, there are good to it, there is bad to it as well. But right now, you know, as you said correctly, one major advantage that we will have is our capital allocation will be much lower and growing in a franchisee model versus what it is today. But for a long-term strategy, the mindshare has to be of, you know, a partner also coming on board to what our requirements are, what, you know, it's just not only about the capital investment by the franchisee partner, but, you know, we need a lot of... You know, mindshare of them because there is a lot of seasonality involved. There are a lot of ups and downs in seasons, in quarters. So, you know, the expectations have to be very varied compared to what a regular franchisee partner of any big brand would have.

Okay. Okay. Thank you. Thank you for being so candid, sir. And thank you, sir, for asking all the questions. Thank you, sir.

Thank you. To ask a question, ladies and gentlemen, you may press star and one. Our next question is from the line of Akhil Parekh with 361 Capital. Please go ahead.

Hi, thanks for the opportunity. Karam, my first question is on the EBITDA margin slide for a north cluster. If I remember correctly, you had said at 1000 crore, we can do 3 to 4% EBITDA margin. Is that correct? And should we be looking at that number in FY27 or 28? If you can please help here.

So, Akhil, you are absolutely right. I think the last discussion we had, we had come out with that number. But FI27, I hope that we achieve that number in FI27 itself. But FI28 is definite for sure. So, we closed the FI26 at 585 crore rupees for NCR as a region. The additions of stores, the stores getting matured. We see a bigger traction. Plus, FI26 definitely was a bad year for summer. And then we anticipate that this summer at least is going to give us that bump organically and then, you know, we're increasing our market share there. So, 27 is also going to be a good year than what it was in 26 compared to 26. So, 585 versus say we end up doing 800 plus odd crores in FI26, that is the target that we're looking at. And then with a good summer or a good festive period, we would definitely look at a slighter bump there. And then if we achieve that kind of a number, we would look at an EBITDA margin of at least 2-4% kind of a number there. So that is the least that we have in mind for Delhi as a region.

So, is it then fair to assume that in Andhra and Telangana upcountry, we would be doing at least 3% of EBITDA margins, given both of these regions have now crossed 1000 crore plus revenues?

So, Telangana, if you look at Andhra and Telangana, the EBITDA margin is much better than that number that you just said, 3%, because, sir, here are the set-up, compared to what Delhi is at, and, yes, not only this year, but last year also, we crossed that number there. So, we are on a good track. If you look at the cluster-wise number in Andhra and Telangana, you would definitely from, say, you know, about 1100 and... 11.000 crores in Andhra and then 1,000 crores in Telangana, we would definitely look at a higher single digit or a SAC I'm talking about with the new additions of stores which would definitely be a little more higher number. So both the clusters would definitely contribute to anywhere between 24 to 2700 crores in the coming year.

Okay. Sorry, just to clarify, when you say things are different in NCR versus Andhra and Telangana upcountry, it's to do with the buying of the property versus rented property, or is there anything else basically which gives us the difference?

Sir, our interest and depreciation has come up. We have talked about the revenue level, so we have marketing costs, manpower costs, you know. So, this is your competitive scenario. So, our gross margin is a little lower there versus gross margin here. You know, productivity per store. So, if you get it all, you will definitely see improvement.

I think competitive intensity is higher than the sheer geography, basically, vis-a-vis South.

In Delhi, not only like you say, your competitive intensity with bigger guys like Roma, Reliance, Vijay Singh, you are working there. Whereas, you are working there, you are working there. So, your margin discounting structure, product mix, and other expenses, even manpower, marketing costs, rental costs, these are all different.

Got it, got it, got it. This is clear. Second, would you be able to give the store count for Hyderabad and the sales for Hyderabad?

Sorry, sir? Can you repeat your question?

Sales and store count for Hyderabad, basically.

Okay. So, sir, FY26, currently we operate around 72 stores in Hyderabad City.

Okay.

And for FI26, the revenue generated out of these stores were 1422 crores, 4122 crores, approximately.

Got it. So, there is a huge difference in the product to obviously Hyderabad being our core geography.

Correct, correct, correct. Absolutely right, absolutely. I wish all the stores in the country wherever we open start performing like Hyderabad. Yeah, yeah, yeah.

Great, great. These are my questions. Thank you so much and best luck for coming with us.

Thank you, thank you. Thank you very much.

Thank you. Our next question is from the line of Pawan Vinodh Katariya with Bullseye. Please go ahead.

Thank you for the opportunity. My question is, could you just share how do you mind trends how do you show for in the current quarter?

So, I didn't get your question. You want to understand the trends for quarter one?

Sir, the current participant seems to have dropped from the queue. We will proceed to the next questioner in the queue. The next question comes from the line of Hitendra Pradhan with Maximal Capital. Please go ahead.

Yeah, hi, sir. I hope I'm audible. So, if you can say like, I joined a little bit late, so it might be repetitive, but on the HHSG for the Q4, for the South versus the, you know, North Valley MCF, if you can bifurcate the volume versus value, that would be helpful.

Okay. Okay, so, uh, uh... One thing, so go back on the previous slide, go back back to the store wallop us in a... Sister, in terms of store count, today in South, we've got 72 stores in Hyderabad, 69 stores operating in Andhra Pradesh, and around 46 stores in the Telangana region. This contributes to around 6,000 crores of revenue, 6,000 plus, around 6,500 crores comes in from this region, And around 590, 590 or comes in from Delhi as a region, which operates currently at 35 stores, out of which 6 stores were open in this financial year, the last financial year, FI26. So, this is the split that we have today between North and South in terms of store counts and revenue that we generated from these regions.

Yes, that's helpful, but I was specifically asking about SSHT, what was the contribution from volume versus value, because I see that in Australia, Delhi has done like 18.6% SSHTQ4, so just wondering, you know, what is the volume contribution versus the value contribution.

Okay, so sir, I don't have to, you want the volume contribution, you say?

Yeah, I mean, Ballpark would do, sir. I mean, just wanted to see, you know, the volume side.

I mean, I don't know the exact volume category-wise, but in terms of the revenue that we've generated, if we split, the volumes would be in the similar percentage of the revenue that we've generated out of different clusters. So, Telangana definitely would be one of the highest volume generators for us. Almost 70% comes in from here, and then another 10% comes in from Delhi, and around 20, 18% comes in from APN Telangana, the country market. That is how the split is more or less.

No, no, no, that is your overall what is the contribution you are saying. Delhi, sir, like to like store, you know, sales has grown by 19%, right, in Q4. Yeah. So in that, sir, 19%, I mean, what is the contribution of, you know, the volume? Is it more volumely or more value-led in the Delhi region?

Sir, I didn't understand the last part you said.

Yeah, this 80-90% growth on the mature store that we are currently showing you. So that growth was dead by volume or value, sir?

So volume, okay, okay. So that, yeah, so it is a mix of both. I'll just give you the exact number one second. Give me a second, I'll just open the recorder for you. So if you look at deleture across categories, so if I give you a detailed number, say, The mobile phones would be, say, at 70% value growth, whereas the volume would be around 50%. That is the number. Because it's based in Delhi, it was practically less. So if you look at television, value growth, there would be around, say, 18%. But the volume growth also would be around a similar 17% kind of a number. The maximum jump that we would see overall categories would be for, you know, categories like kitchen appliances, audio devices, you know, where the value and volume growth were upwards of all 30-40% kind of a number. But overall contribution would be much lesser to the... Thank you for the complaint there.

No, no, got it, got it. I mean, the numbers are higher in Delhi region because of the smaller base, whereas your Telangana and Andhra Pradesh stores are already kind of, you know, way ahead in terms of your sales numbers. The growth is still impressive, but Delhi, it is more to do with our base, right, but you are also seeing a lot of volume and value growth in the Delhi kind of, you know.

Absolutely, absolutely, because the base itself is quite low, right, there.

Right, right, right. So, sir, in terms of the base and, you know, how you're ramping up because, you know, in past few photos, we didn't seem that, you know, purely like the competition, competitive pressure in Delhi was way higher and the ramping up, you know, took a longer, longer time for us and you have to do additional marketing as you, you know, described earlier as well. So, so, sir, like in terms of this ramping up and all, and do you think that from here we can at least, you know, improve our per store sales, you know, for FI27 in the Delhi cluster, like, say, more than, like, you know, can we sustain the Q4 SSH? That's what my question is, for Delhi specifically, because we know that South, you have a good presence, but for Delhi cluster, you know, can you sustain this kind of 19% level of growth, like to like this?

So, two things have been here. Last year, Summer didn't support us that well across the country. So, this year, automatically, you know, you're looking at a much better number because Summer is supporting you. You know, so that is more organic, right? But if you ask me, we have another option. So, we are in Delhi right now. We've invested so much. We have to make sure that we start delivering numbers, right? And there has to be a reason for us not delivering it, right? So we have to figure it out, fix that problem a quarter on quarter, month on month, start moving from there on, fix issues, whatever the issues are, either from our end, from the OEM, from the store level, you know, customer perceptions, marketing issues, whatever it is. So we have to move on day by day.

If you can enter, that would be really helpful. I mean, we just hear that, you know, the regional competition, you know, regional stores and local store competition is very high. But also the customer, like, perception in Delhi is very different compared to, say, South. You know, they don't trust, like, probably the bigger, former stores and all. So, you know, we don't know. We are speculating. So, if you can, you know, elaborate more on what went wrong or, you know, what was the market study like and what did you experience? What has been your learning? So far in the daily market. Like, from the customer point of view and the competition point of view, you know, that would be helpful.

So, see, now, sir, even if I have done a mistake, I will not agree to it. So, I think you've done everything right, that's why we're sitting here. That is, just to start on a lighter note. But on a serious point... So, every market, even Hyderabad today, there is a new learning that we go through every day. So, it is not that, you know, because we are sitting here at a much higher market share or we are the leaders here, it doesn't mean that, you know, we don't change our customer experience, introduce new product categories, or don't understand what the market is operating and what the demand on the storefront is. So what we have to understand on a daily basis is that are the positioning of a brand right, are the pricing right, are the store's location right. So every small detail in detail matters a lot, right? So that is very important for us to understand that why a customer is coming to a store in Hyderabad and why not in Delhi, right? So there has to be a reason for it. And I don't think our conversions are good, but our footfalls are lower. So we have to increase on our footfalls in Delhi. The market size is so big. How do we move customers from, say, not only from the modern retail store, but even from a mom and pop distribution market to a modern retail format? So we are opening stores relevant to sizes or markets where either a market leader is a mom and pop store or a LFR format store. So we have to look at those things. We have to concentrate on a lot of marketing. We have to start educating our customers a lot that, you know, that we are available in this location with these many products. So, brands, you know, and pricing, if you ask me, any of the markets, there are set customers who are, you know, price sensitive, a lot of customers who want service, so customers who believe in faster deliveries, customer whose store ambience matters a lot, you know, or the range that we offer, especially the premium range matters a lot. So, there are a set of different customers everywhere. So, you've got to make sure that, you know, you have a bouquet of different experiences and offerings to your customer so that, you know, You can improve your market share in that new market especially.

Got it, sir. But, like, you know, on that, like, note, I mean, we are also expanding to Kolkata, right? I mean, shouldn't we, like, you know, just pause on that and, you know, just try to, you know, focus on improving the profitability of the north, first of course, and before, you know, moving to Kolkata? Because that market is also kind of pretty much fragmented and might surprise you in terms of, you know, again, you know, ramping up and, you know, getting the market set. So what are your thoughts, or do you think that, you know, you have some advantage in Kolkata, and, you know, so that's why you are pouring into that micro-market?

Sir, one to say that Delhi is, you know, now the stabilisation has been in Delhi. You know, it's going to be a more organic journey from here on. And then we can't expect that Delhi is going to keep giving us 50% year-on-year growth, right? It has to be more organic, it has to be more trending with what the market demand is.

What is your growth and margin outlook for Delhi for FI27?

So, sir, at least, you know, for that particular cluster, we'll be looking at 25 to 30% kind of a growth from the existing 590 kind of a number.

And margins, sir?

Margin will improve from, say, so right now, I would consider it at 0.2, 0.3 kind of an EBITDA margin, which would definitely increase to 2.5, 3% kind of a number. And these are all free index, right?

Free index EBITDA number. Yeah. Yeah, yeah. Yeah, yeah. Okay. Sorry, sir. I just interrupted you.

Yeah, so, no, no. See, till the time we enter a new market, also, see, like, we can't, you know, I can't expect that Calcutta is going to turn shape up from day one onwards, right? It's going to take a little time. Till the time we open 15-20 stores, we understand the market better. So, it's going to be an organic learning. So, that will at least take us, from the day of opening, it will take us at least a year or two to understand, set up things better, right? So, till the time we do that, there actually always have to be a new cluster for us to explore from year on. So, Delhi has now started stabilizing. We'll see a better result coming from Delhi on this onwards. So, it is just an improvement from the existing base, whereas creating a new market would always take some time, right? So, even if we start off by quarter two, quarter three this year, we would at least take some time to, you know, get in the right people, the right brand, the product mix, the pricing, competition, are you right marketing? So, a lot of this learning happens only after because you... It's not that you go blind to a market, you understand the market, you do a lot of your research, have your people on the ground, you know, get the right team in, and then you launch a store in a new geography. But from there on, the learning happens on a practical level, where on a daily basis, you understand customer requirements, pricing, marketing, everything, and then you improvise from there on. So that cycle is, say, a 12-14 month cycle for you to get things right on the floor, and then from there on, you move ahead. So that is how things work, for us at least. So we plan to, you know, get into a new market. So Calcutta came in our way, so that's why we entered Calcutta, but there are a lot of other markets also that we would like to explore in the future, for which, you know, once, say, Calcutta stabilizes, then we will enter those markets. Got it, sir.

Okay, sir. That's all from my side. All the best. Thank you, Dunder.

Thank you. Ladies and gentlemen, we will take that as our last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, sir.

Thank you. I would like to thank all of you for joining into the call. I hope that we were able to answer all your questions. For any of the queries, you may get in touch with our team or SGA. They will be happy to address all your queries. Thank you once again. Thank you.

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