Vedant Fashions Limited (MANYAVAR) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Vedant Fashion Limited Q4FI26 Earnings Conference Call hosted by Amandus Park. 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 an assistance during this conference call, please signal an operator by pressing star and zero on your trash-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Tejas Shah from Avengers Park. Thank you, and over to you, sir.

Thanks, Nilou. Hello, everyone. On behalf of Aventus Park, I would like to welcome you all to Vedant Fash's order of FY26 earnings conference call. From the management today, we have with us Mr. Vedant Modi, Chief Revenue Officer, and Mr. Rahul Mararka, Chief Financial Officer. Thank you and over to the management for opening remarks.

Good afternoon, namastar, and a warm welcome to all the participants. I am Vedant Modi, the Chief Revenue Officer of the company. Thank you for joining us today to discuss Vedant Fashions Limited Quarter 4 and Financial Year 26 results. I hope you have got an opportunity to go through our financial results and investor presentation, which have been uploaded on the stock exchange as well as the company's website. Vedant Fashions is India's leading wedding and celebration wear company. During the fourth quarter of FY26, retail sales, that is the sale of our customers, The call stood at approximately 561 crores, reflecting a growth of 7.8% over Q4 FY25, with SSG of approximately 4.6%. FY26 marked an important milestone for the company as retail sales of our customers cropped the 2000 crore mark, reaching 2008 crores and reflecting a growth of 6.1% over FY25. Our strategic focus on enhancing customer experience, retail training, data-driven merchandising, and replenishment, omni-channel integration, and disciplined KPI management drove a same-store sales growth of approximately 2.7% for the full year. We are pleased to report that our retail KPIs have improved in a healthy and sustainable manner, both for the quarter and on an annual basis, consistent with our stated priorities. Our focus this year has been on strengthening the quality of retail as foundation for sustained long-term growth. Reflecting this philosophy and in the context of prevailing market conditions and an evolving retail landscape, we adopted a focused and disciplined approach to network expansion, prioritizing strategic sustainable store openings. During the year, we selectively added new stores while also rationalizing underperforming locations. Resulting in a net addition of about 4,200 square feet to our retail area. We also successfully expanded our Twamev brand through a new EBO during the financial year. As of March 2026, Milan Fashion's EBO network stands at Medan Fashion's EBO network stands at about 1.79 million square feet, spanning across 669 stores in 252 cities and towns globally. Across the quarter and throughout the year, we executed a powerful and wide-ranging marketing initiatives, spanning multiple brands and channels, seamlessly integrating digital and traditional platforms to elevate brand visibility, sharpen positioning, and foster deeper consumer engagement. Our efforts encompass celebrity-fronted campaigns, a podcast, and lifestyle series offering wedding planning guidance featuring real couples and celebrity guests, category-specific campaigns, social media activations, new wedding collection unveilings, festive and occasion-driven outreach, in-store events, and influencer partnerships, all working in concert to reimpose brand equity and strengthen our connection with consumers. A defining highlight of a marketing calendar was the launch of the landmark Made for Each Other campaign, featuring Rashmika Vannana and Vijay Levrakonda. Conceptualized as a high-energy musical rom-com by celebrity composer Amit Rivedi, the campaign beautifully captures the couple's playful dynamic around wedding attire, celebrating how their... Differences make them perfectly matched, a narrative that mirrors the modern, stylish fusion embodied by Mohay and Mandivar. The campaign resonated powerfully with audiences, surpassing 1 billion plus views and becoming the most liked organic branded collaboration on Instagram in India, generating more than 11 million likes. A testament to the strength and cultural relevance of our brands. This was also one of the fastest campaign turnarounds that we've ever done, from receiving the confirmation from the celebrities to production in just six days. We further deepened our consumer connect during the year through the launch of the Maniavar Shadi Show, a six-episode YouTube podcast hosted by renowned celebrity Karan Johar. The show brought together multiple personalities including Kriti Kharbanda, Pulkit Samrat, the Mohan Sisters, Vishal Punjabi alongside many industry experts. The idea was to explore modern Indian wedding planning through humor, candid conversations, and expert insights, spanning themes from wedding fashion and styling to photography and evolving consumer expectations. The show garnered strong viewership and an overwhelmingly positive audience response, further strengthening brand equity and deepening our connect with the modern Indian wedding consumer. Adding to this momentum, our Mannevar social media campaign featuring cricketer Rinku Singh Amplified brand visibility and engagement across platforms complemented by the successful launch of Aranya collection. Our brand-building momentum extended confidently across our wider portfolio as well. Mohay deepens its cultural resonance through Mohay Rangdo campaign, while Twamev advanced its Truly You proposition through fresh collection launches, influencer-driven narratives, and curated experiential activations. Mewa's reinforced its positioning through the Celebration Begin With Mewa's campaign, keeping the brand firmly anchored in its core wedding and occasion wear identity. Diva's executed sharp, targeted digital and social media initiatives during the key festive windows, broadening reach and driving meaningful engagement across marketplaces. Collectively, these initiatives have significantly strengthened our brand presence and deepened consumer engagement across our entire portfolio. As we look ahead, we remain confident in the strength of our business and firmly committed to our core strengths of brand equity, operational efficiency, and customer experience. Our robust tone network, relevant inventory and designs, multi-dimensional marketing initiatives, efficient auto-repunishment systems, all anchored by a strong backend infrastructure, position as well for long, sustainable growth, and value creation for all our stakeholders. This confidence is further reinforced. By our strong structural moats, a resilient business model, a disciplined approach, overall giving us significant advantage of cross-brand leverage across our portfolio. With this, I will now hand it over to Mr. Rahul Murarka to take you through the financial performance of the company. Thank you.

Thank you, Vidant. Namaskar and good afternoon, everyone. I would like to highlight the key financial performance matrices for the fourth quarter and full financial year ended, 31st March, 2026. Starting from Q4, FY26 performance update. Revenue from operation during the quarter was around 399% with a growth of 8.7% over Q4 of FY25. The company continued to report industry-leading gross margin of 65% and healthy EBITDA margin of 45.6%. The company also reported strong fat margin of around 28.6% and the profit after tax stood at around 114 crore with a growth of around 13% over Q4 of FY25. Moreover, sale of our customer during the quarter was around 561 crore with a growth of 7.8% while SSG grew by 4.6% over Q4 of FY25. Now coming to full financial year FY26 performance update. The company reported revenue from operation of around 1,436 crore, with a growth of around 3.5%. The company continued to report industry rating gross margin of around 65.7%, along with healthy EBITDA margin of around 44.3%. The EBITDA during the period stood at around 636 crore. The company also reported healthy fat margin of 26.2%, and the profit after tax stood at around 376 crore. Moreover, during FY26, the company reported strong cash conversion ratio of approximately 98% which has been computed based upon operating cash flow to patch excluding finance income. Sale of our customer during the year was 2008 crore with a growth of around 6.1% while SSD during FY26 grew by 2.7% over FY25. As we look ahead, we remain firmly committed to our core strengths, brand equity, operational efficiency, and customer experience, supported by a range of strategic initiatives designed to drive sustainable and long-term value creation for all our stakeholders. Now we can move to the Q&A session.

Thank you very much.

We will now begin with the question and answer session.

Anyone who wishes to ask a question may press star and 1 on the touchstone 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. Participants, you may press star and 1 to ask the question. The first question is from the line of Rahul Abarwal from EKI Asset Managers. Please, go ahead.

Yeah, hi. Very good evening. Thank you for the opportunity. Three quick questions. Firstly, on your outlook with Anton, how do you see the SSG continuing the momentum going into next year, fiscal 27, and the new store openings? If you just comment on that, how are you thinking? What's the plan ahead? Second question was on input inflation. Just wanted to know your thoughts in terms of, you know, how are we booked on fabric and other input materials for the festival season going forward? How should we look at gross margins? Apart from the mix and GST, I understand that's going to be a favorable thing going forward in terms of base. But just incrementally, just from an input cost inflation perspective, just guide us on gross margins and operating margins. Guidance as in what, like, looking at specific numbers, just directionally, how does the company usually pick? And third was on the gap between the retail sales and net sales, I see the gap is increasing on a full year basis, fiscal 26 over 25. This number has almost gone up to 29%. I just wanted to know what is changing here. So these are my few questions.

Sure, I think you've covered majority of the questions for the entire earnings call, but thank you for those. So starting off with SSG, as a company, I think we are very optimistic, and we always remain very optimistic. So our goal is to work on everything that we can internally, starting from working on footfalls by continuing to make campaigns similar to the ones we made for each other. Working on improving our conversion rate through multiple tech initiatives we've actually taken on the ground level. One thing which, you know, I would like to reflect on is that due to the kind of pressure we were feeling in the last two years, our ASPs have not moved as quickly as they've typically moved in the past. So this is one thing which we will be changing as we move ahead and focusing on improving our ASPs. That would also help us improve SSGs. And finally, continuous investment in terms of training to improve our average basket size. So while I can't give you a particular guidance on what SSG do we aim to achieve for the next financial year, what I can tell you is that anything and everything which we should be doing as a company to achieve better SSG numbers is something which we are targeting. From a business development point of view with regards to new store openings, The period we are currently in the cycle of the company, we feel the main goal for us right now is to focus on SSG, which is what we have been doing. So while gross openings will remain stable in the next financial years and we will continue to open decent number of stores, some level of consolidation will remain. So one thing which I would like to emphasize on is the quality of new stores that we open will be much better than the quality of the stores that we will close. So net-net the quality of retail should actually improve quite a lot. So this is broadly what I would like to speak on in terms of SSG in business development. And there are also a lot of plans in terms of further improving our business when it comes to our other channels such as multi-brand outlets through the SIS format. And also working extra hard on our online segments, especially with Divas now starting to scale up there. Moving to your second point, which was on, you know, the cost and the how are we looking at, you know, the cost inflation majorly on account of the war. Typically, fabric is a very large part of Corks for most companies. In our case, one good thing is that fabrics as a component. is not a very large part of our overall COGS. Shall I give you an example, a product of 100 rupees MRP, fabric will typically be 8 to 10 rupees of the overall cost. So, in our case, we do anticipate about 50 to 150 basis point increase in the total, you know, sort of this number, which is, let's say on a 100 rupee product, we can see an impact of 1 to 1.5 rupees. On the cost, but I think with time we will be able to manage this pretty well. Finally, I would let Rahulji take the question on retail sales versus net sales.

Sure. Thank you, Vidal. So typically, you know, as we have been mentioning that this year after revised GST rates were rolled out in September 25, that has affected our sales and pad both, including the gross margins. So the difference which we are looking at between the primary sales and the secondary sales, 71% and 73%, it is majorly on account of the GST aspect, which we understand will get normalized to a great extent from the upcoming financial year.

Alright, so basically that means the gap will go back again to like 25, 26, 26 and a half percent, right? That was the past average.

No, so basically, look, I mean, the right way to look at it is that how much is my growth in primary and secondary? Generally, in all financial years, you will see that it was moving in the same direction. But this year, there is a gap of 2 to 3 percent, 2 and a half, 3 percent. It is mainly because of GST only. The margin aspect which you are mentioning, it is combination of our two modules. One is 18% and 29.5% comes GST. So, it all depends upon, you know, which store we are opening, at what percentage, and majorly, it is 18% store we are opening and today on 5% also. So, that does not play a big role. It is important that the GST aspect which I mentioned, that is the main reason why we see a difference which should get normalized on the upcoming franchisees.

So, I'll just add on to that. So, basically what happens is consumer sales minus the GST component and the franchisee margin is our reported revenue. Now, the average pre-GST change was approximately 10% was our blended GST, which has now increased slightly. And hence, this difference is here to stay now between the two numbers at a decent level. But the growth levels will now start to follow the same trend as what Rahulji is trying to say.

Got it, I'm very clear. Thank you so much. I have more questions. I'll get back in the queue. Thank you. All the best.

Thank you. Participants, remember to start and want to ask a question. Next question is from the line of Rishi Modi from RDM Advisory. Please go ahead.

Yeah. Hi, Vedhan. Can you hear me?

Hi. Yes.

Yeah. So a few questions from my end. Just continuing on the store addition piece for the coming year, right? Should we expect the net addition growth to be similar as this year? And secondly, the inventory quality or the inventory ASP in the new stores, is it higher than the company average today?

So, to answer your first question, the way I would say is that we will see net openings happening in the new financial year. However, majority of our growth will stem from SSG. You know, that is the kind of stance we've taken as a company, that we want to focus on improving the quality of retail and really focusing on driving much higher throughputs. Even though at a gross level, we will have a lot of openings happening. In important parts of India where we currently don't have a store. We do feel that from a net perspective, next financial year is when things will get a lot better. To answer your second question, there is definitely a slight advantage when it comes to our newer stores. There are ASPs on average are better. This is also because... The kind of stores that we are opening now are slightly larger, allowing us to carry mohe in a lot of these stores. So there are many nuances that comes to this answer, but yes, on average, a new store has a much better ASP.

Okay, and the willingness for franchisees to invest in the coming year is also there, given the lack of wedding dates in the coming year?

Rishi, honestly, to be honest, there is no challenge in terms of wedding dates. If you ask me, when we analyze the entire financial year, May as a month carries Adikmas, so May will be slightly impacted, but hopefully June should take care of that, because July has wedding dates, versus last year not having any wedding dates in July. Alright. Last year had an early Navratri. So we had Navratri in September, which is typically very good for us. And this year is normalized with Navratri now happening in October. So these are the two big differences. But at a cold level, there are not any large wedding date challenges that I would, you know, say. From a franchising perspective, to be very honest, the way our company functions is that we are the ones that sign majority of the stores. So there has not been a single case where we've signed the store and faced an issue with franchisees. So that is something which does not exist at all. The challenge fully lies in the current real estate market where rentals are so high that we want to actually sign stores that we are confident we can sustain for the next 12 to 15 years at the rental levels we are signing them on. So that's the big challenge and not at all anything around franchisee partners.

Okay. All right. Got it. Second, on the marketing piece, right? We've tried all three types of marketing in this quarter, especially, right? You've got the influencer marketing, you've got the YouTube series, and then we've gone kind of back to the traditional way of us doing our marketing with, say, movie stars and a slightly festive way of doing it on the more generic platforms. What would you say has contributed to the SST, and is there something that we are planning for the next year, based on this observation?

So, this is a very difficult question to answer, because in our case, every time we've run marketing mix modeling, we've gotten very funny answers, so to say. So the way I would break it down is that something like a campaign like Vijay Rasmika. It helps us for the next five to six years, similar to the Virat Anusha campaign we did in 2017. So these are those big milestone campaigns that keep us on top of mind of any consumer that could potentially come in our TG in the next two to three years. So these campaigns should continuously happen in a period of every year or two years. Because from the wedding podcast which we did with Karan Johar, the idea behind that was that today... All modern wedding couples do a lot of research online. So how can we be a central part of that? So the goal was that people who don't really have great way of researching about how to do a wedding can actually watch our podcast to get this information. And this also keeps Maniva top of their mind. Finally, you know, we do a lot of influencers, etc. But one thing I would say that we invest a lot now on is the search keywords. Because anyone in market is typically searching for a Sherwani or searching for an Indo-Western. So, that is also one place where we spend heavily. So, it's a mix of everything that keeps us top of mind and helps us drive people to the stores.

Okay. Final, just a quick question. Bivash, any plans of adding physical stores?

Sorry, for Divas? Adding physicals to Divas. So, regarding this, you know, I think currently for this financial year, we are not planning to do anything. Maybe we do a pilot just to have concept ready internally, but there are no plans of opening these properly as of now. But what we are going to pilot is Kurta stores. But under the Mandivar brand. So this is something which we are actively working on, where there are a lot of opportunities in, let's say, high-throughput neighborhoods of Bangalore, where we want to open a 1,000-square-feet Mandivar store, but we want to do it in a slightly differentiated manner, where we primarily keep kurtas and jackets at categories. So this is something which we are actively working on right now.

And these will be, say, associated with... Some sort of a quick commerce, like, I don't know, Zillow or something. Like, I don't know how that model works, but I'm assuming it works well for this.

Unfortunately, no quick commerce companies are willing to use our store's inventory. So typically, be it a Zillow or a Blinket, everyone wants to keep Mandevo products in their own warehouse. So, that is the model that all of these work in today. If we do someday decide, then we will have to launch our own quick commerce service on our website or make an app out of it to enable all our stores to act as dark hubs as well.

Okay. All right. Fine. Yeah. That's it from my end for the time being. Thank you.

Thank you.

Thank you. Next question is from the line of Kaurav Jagani from JM Financial. Please, go ahead.

Thank you for taking my question. My first question is with regards to the revenue.

Gaurav, sorry, we are not even here.

Hello, am I audible now?

Yes, we can hear you, Gaurav.

Yeah, so my first question is with regards to the revenue growth for the quarter. Despite Jan being a non-wedding month, still we were able to report an 8% kind of a growth. So just wanted to know what led to this, how progressively the growth has come by, and is it still sustaining? So that is the first question.

Thank you for the question. So, if I speak about the quarter, majority of the quarter growth actually came from March itself, which actually was a tremendous month for us. And, you know, overall, we saw that footballs had improved pretty decently, and this also gave us a lot of excitement for the upcoming financial year. And overall, April has also been decent as a follow-up to March. But what is interesting now to see is how it may work for us given that there is Adik Maas, but June should again then be exciting given weddings in July. So that is how we are looking at things. Overall, I think consumer sentiments were turning to be positive as the quarter progressed. But given that the war started in the later parts of end of Feb, early March, that's when I feel that consumer sentiments, not to a large extent, but then again became sort of neutral. So we'll have to see how these things pan out, and if things continue to be the way they are, we could potentially have decent green shoots in the upcoming financial year.

Okay, sure. And just on the, you know, the multiple campaigns and the multiple initiatives that you have taken, not only towards rationalizing the non-performing stores or the quality of the stores, at the same time launching new merchandise, new collection, etc. So, has that, you know, helped you improve the conversions or the portfalls? Have you seen any changes in both of these metrics that, you know, that you give the confidence to you for the future coming years, that your actions are panning out the way you're disarging?

Yes, absolutely. So, you know, if you look at it from two, three different perspectives, if I speak about just the last quarter, we saw footfalls improving by low single digits. Although that low single digits looks like a low number, it's after many quarters, we saw that increase happening. Conversions, on the other hand, have remained stable. They're already very high. So as the competitive intensity in this industry has escalated quite a lot, just because we've been so quick with our merchandising and been doing almost 2.5x designs now last financial year, it has helped us remain at the same conversion levels, which has always been very high. So broadly, these are two points, and at the same time, our average basket size also improved by about 1.5%, further helping us achieve better volumes in the last quarter.

Sure. Thanks. And just last one from me is on the competitive intensity. I know as you highlighted that it has been a bit escalated over the past couple of years. So how do you see that now? You know, there was a view quite some time back, you know, that given that majority of these pop-up stores will struggle, given that, you know, they came in, come out and profitability is not really there. So, have you seen the intensity in any way fading or, you know, moving as per your expectations that you had thought before?

So we track any competition in any market very closely. And what we've seen in the last seven to eight months is that the players who had entered in 2022, they have started to close down, whereas players who entered recently in the last one to two years have still continued to add stores at the pan and the 11th. So all in all, what we saw is that net quite a few stores closed, but also few stores opened. But in a consolidated manner, net new openings didn't exist in the industry. So that is one aspect. My understanding about the regional competition, I can't comment on the larger national groups because their dynamics are very different. But the regional players, and there are many, many of them, is that typically when they open a new store, the first year is very exciting because it's a new store, new investment that they've put in. Second year, when sales are not coming to their expectations, that's when they invest even more money in the form of marketing, in the form of investment into new types of merchandising. Third year, due to all the pain, they start to have heavy discounts, try to liquidate. And fourth year is typically when the store closure happens. That is my understanding of how regional players who don't have a lot of equity backing typically function. So, this is what we have understood from the ground, and this is a cycle that is, you know, sort of natural in detail.

Scott, thanks, Vidhan, for answering all my questions. All the best. Thank you. Thank you.

Thank you very much.

Thank you. Next question is from the line of Samir Gupta from IIFL Capital. Please go ahead.

Hi, good evening, everyone, and thanks for taking my question. So, firstly, if you – so, improving retail quality is an aspect that you have highlighted. If you break down the performance of stores, which you would classify, let's say, as newer or better quality, are you seeing any big delta in the SSS growth versus those that you intend to replace, and how many search stores typically are still existing in the system? And then a follow-up to this is how much was the gross retail area addition in F526.

Sure. So I'll answer the last question first. So we added about 1 lakh odd square feet at the gross level in the last financial year. To your second question, I will give you a broad understanding. At a broad level, revenue per square feet of the new stores that we open versus the ones we close is about 85% better. So, any closed store versus any new store. So, that's the difference in the revenue per square feet that we see. And thirdly, to answer your question, I would say, right now, we would have about 5-6% retail area that falls in that category which we don't love. In any retail company, I would say the normal rate of closure is typically 2-3% because markets within cities can move.

So, just to follow up on this, when you say 85% better, let's say the store that you're trying to close is 100, the new store that you open with a better area or something is 185 on a higher area, on a revenue per square foot basis.

Correct.

And this is from day one.

I am giving you averages. So, for example, all the stores that we opened in FY26, their average revenue per square feet versus the stores that we closed in FY26, their average revenue per square feet.

Got it. Got it. Fair. Second question is, when you say ASP increase, That is one thing you'll focus on. Is it larger stores, which is resulting in better mix, as you highlighted to one of the participants, or are you also looking to take price increases in the portfolio?

So, I would say neither from that perspective. So, category mix is something which we drive through training, and that is an endeavor that we continuously have where we want to cross-sell multiple consumers to become Twormave consumers. or Mannevar consumers to buy more Mohe products, with both these brands actually having higher ASP than Mannevar. But the point I was trying to make is, as a company, what we do is we upgrade our merchandising every single financial year, with the goal in mind of improving ASP by about 3-3.5% in each of the categories we operate. So we will not be taking any price hikes in existing products, but the goal would be to upgrade our collection. So, for example, if Mandivar's core kurtas, the best kurtas exist today at 4,000 rupees, some of the new collection that we make will be in the 4,500 rupee bracket, to give you an example.

Got it. So, it's largely mix and that too via upgradation.

Correct.

Got it. Last question, if I may squeeze in. So, gross margin contraction of around 150 basis points during the year, I understand it is still in the broad range of 65% plus, but still, if you could highlight the reasons for the contraction this year, is it higher provisioning, mixed impact, GST impact, if you can just classify it within these buckets.

So, the gap which we are seeing, for me, it is majorly on account of GST only. Which has impacted our revenue and lost content as well.

Okay, so it's largely GST. Fair enough, sir. Thanks for answering all these questions. I'll come back in the queue for any follow-ups. Thanks. Thank you.

Thank you. I request to all the participants, kindly limit yourself to two questions per participant and rejoin for a follow-up. Next question is from the line of Shravan Gora, from Morgan Stanley. Please go ahead.

Yeah, hi, Dean. Good evening. I just wanted to delve a little bit deeper on your comment around March. And could you just talk a little bit more about how was March and what actually changed and any region-based divergence that you saw in March?

Oh, well, you see, I could go deeper into this, but our business is very dynamic. Certain months can perform much better also because of the way wedding dates can move between quarters. So I think that is one of the core reasons why March was much better than any other month in the last quarter. On the other hand, from a region perspective, you know, what we saw is that overall all regions did decently well. We did see that some of the pockets that we operate in performed a little better than others.

Got it. The second question, I just wanted to understand the other expense line a little better going into F27. This quarter on a decent top-line growth, the other expenses were down about 7%. So how should we look at this other expense deceleration that we saw in this quarter and also going into F27? Any color around that? What's driving this deceleration?

So, the other expenses comprise of a lot of things, actually. The major things which were there as a result of which it has gone down. One was, if you see our inventory, we have bring in efficiency in the inventory thing. So, as a result, our job expenses have gone down. Our marketing costs overall were higher than last year, but if you look at only Q4, it was a bit lower. So, on account of these things, our other expenses have gone down. In Q4, compared to ASTF Q4.

Perfect. Got it. Thank you so much.

Thank you.

Thank you. Next question is from the line of Harsha from Bandhan Mutual Fund. Please go ahead.

Hey, hi, Vidhan. Am I audible?

Yes.

Hi, Vidhan. Vidhan, you mentioned about, you know, focusing on getting the SSV momentum first, right, and then thinking about store expansion. So, in that sense, what would be a marker for you as to when to start pursuing sure expansion, as in would three, four quarters of consistent mid-single lipid SSG be a marker, let's say, for example, for you guys to start trusting and believing that, okay, fine, you've got the SSG momentum now, and this is the phase to kind of start going into expansion.

So, I just wanted to get a brief sense on Yes, I think that is definitely a key factor where if we are able to sustain very good SSGs, that also allows us to move faster into newer markets that we have not explored. So that definitely remains as a large factor. On the other hand, rentals have become so expensive in the newer parts of India that we want to experiment with, that we've also been a little cautious. So, with improved SSGs and higher revenue per square feet that our model can then carry, this will also allow us to explore new areas and even at higher rental level sign these stores. So, they sort of go hand in hand, which is what I've been sort of trying to refer to. But at the same time, you know, there are also a lot of existing areas. And we want to open our store in. If I give an example very close to majority of you, then we don't have any store in South Bombay beyond Lower Parel. I think there is definitely scope for two stores in that area, regardless of rental levels. But our goal is that even though rentals are high, we want to get a property which really has a high visibility value. So there are also many markets in India where we have been trying to get a very good store, but it's just when an existing tenant actually quits that we will be able to get this opportunity.

Okay, but I just wanted the directional sense, Vedanta, as in how long would you kind of wait and see the momentum sustained before you take the call of going again into expansion mode?

See, I think the goal is to be at higher SSG numbers and then take those, you know, sort of calls. Broadly, if you ask me, is like I was mentioning, typically a retail company closes about 3-4% of their retail area in a given year. This year, we might again close 5-6% and still try to have net square feet positive growth. I think by next financial year, we will be in a position where openings start to normalize and that is when things should sort of turn around in terms of openings.

Okay, and when you spoke about this new India opportunity, right, what exactly, I mean, what kind of cities, towns are you alluding to here in this new India kind of remark here?

So, you know, broadly, if I give you one example, let's say, let's take a city like Bhopal. So in a city like Bhopal, I think we want to open a very large door. But, for example, the challenge lies in the rental levels, even in markets like Bhopal, where if we expect the rentals to be X, they are currently 1.3, 1.4X. So that is the kind of fight we're having across the country, where we want to get stores at very good rental levels, and it's being very difficult to find those stores. But we continue to invest the resources into ensuring we continue signing stores at... Rental levels which we feel are sustainable for the next 12 to 15 years for a retail store.

Okay, got it. And just one question on the inflation bit. You said that there is 100-150 basis point of RM inflation, which you would be able to absorb over time. So, there might be some hit for us initially and then probably we'll be able to make it up for it. Is that the right understanding?

So, you know, the thing here is that majority of our orders, For current SKUs are already placed in the existing prices, so the new products for which we are ordering the new fabric takes into account these prices. So broadly, my understanding is that it should not affect our gross margins much, but 10-15 basis points here and there is something which might happen, but broadly, they should not impact anything.

Got it. And just lastly, on this capital allocation thing for the cash balance we have with us, any kind of thoughts there in terms of returning it back to shareholders or retaining it for, let's say, inorganic acquisition or something of that sort?

So again, a very interesting question. Up until now, what we've been doing in the history of the company after IPO is that we've been doing about 50% profits as dividends. So that is a model which we've been doing. Regarding the current policy, this is something that we have been actively discussing internally. And while I don't have something concrete to tell you right now, I think hopefully by next earnings call, we will have a very concrete answer on this.

Got it. Thank you so much.

Thank you. Thank you.

I request to all the participants, kindly limit yourself to two questions per participant. The next follow-up question is from the line of Rishi Modi from RDM Advisory. Please, go ahead.

Yeah, hi. Thanks for giving me the opportunity again. Two questions from my end, rather quick ones. First one, any inorganic opportunities, Vedan, that you're seeing in the market now that you mentioned players from 2022 have shut down, and I'm sure there might be some stress in some regional players?

Sorry, did you mention inorganic opportunities?

Yeah.

All right, so broadly, if you ask me, we do track every single company in the space. While there is nothing in the pipeline that we have or nothing that we are actively exploring, the way I would put it is overall, you know, we do have the cash in our books, you know, explore acquisitions, but there is nothing that we have currently in the pipeline. Yes, we feel that the company has advantages where we could really turn around the bottom line of a company, like in the case of Maybars, which is something which we have done. So we are open to acquisitions, but again, we are not currently looking at anything or exploring anything because nothing in scale exists in the kind of sector we currently operate in. So all these players are too small. Where the cost of acquisition would actually be a lot higher than just opening stores in that area.

Okay, understood. Second, just if you could give me the store mix, like how many Mani over Mohay, how many Tuamev, how many Mohay standalone, how many Mani over standalone do we have? And if you have to rank their sales per square feet by each format, how would you rank them?

Yes, so we have about eight Tuamev EBOs and similar number of Mohay EBOs. Broadly, from a revenue per square feet point of view, Tuame would be slightly better off than Maniavar EBOs, and Mohay would be slightly lower than them, but broadly, similar lines.

The mix between Maniavar and Mohay combined versus only Maniavar?

You mean revenue-wise?

No, no. In store-wise as well, like, if you could just help me understand how many stores where there's still scope of, you know, making Mannyavar Mohay combined versus today we have only a Mannyavar store.

Any store where we could have added Mohay, that exercise has been long completed. So it's not feasible to add Mohay in any of the existing Mannyavar stores. However, what we are doing is that wherever we have very high revenue per square feet in a Mandeva store, we are actively looking for a bigger store where we can also add Mohen.

Okay. All right. And do we have any pipeline like where we know we want to do this?

Yes, of course. I mean, this is an exercise which we do on a quarterly basis, where we track every store and try to understand if there is opportunity for Mohay or opportunity for a bigger store. And then we go deep into that and try to find a larger store. So this is something which we actively do on a quarterly basis.

And the plan for Thomeev remains the same? Put these stores in India first and then decide on expanding?

Absolutely. So the top markets of India. And the best store within these markets, that is the core strategy, and we are actively trying to sign stores in the next set of five to six stores now.

All right. But it won't happen in the coming year. The 8 to 30 jump won't happen in the coming year for Twamev.

Unfortunately, Rishi, the problem with Twamev EO's is that majority of the properties we are signing are built to suit. So, let's say if we sign a property today, the store actually opens 18 months from now to 20 months from now. So, there is a lag in terms of that because majority of the buildings are new and they are actually breaking down old buildings and creating new ones when Tuamev is going in. So, I hope that we will actually end the financial year with a lot of signing Tuamev videos, but openings might be staggered over the next financial year and maybe a few in first two quarters of. financial year 28 or 29 as well.

Okay. All right. So in the next 2.5 years, we should get to 30 is the target.

I would not say 30, but the idea is that we open quite a few stores. I would not say the word number 30 yet.

Okay. All right. Great. Thank you. That's it from my...

Thank you. Next question is from the line of Teja Shah from Marenda Swat. Please, go ahead.

Hi, Miran. A couple of questions. Am I audible? Yeah, yeah, I hear you. A couple of questions. So, first, looking at how MACRO is developing and what happened yesterday in terms of government discouraging foreign travels or travel as much as less as possible. So, just wanted to go next, hypothetically, this year, there are no overseas destination waiting. So, such scenarios actually work in our field or are they neutral because people in any case buy hair and then go abroad?

To be very honest with you, my honest answer here would be anyone doing an overseas wedding, that wedding family is typically not a target audience at all. These are very premium weddings. So it should not change much for us. And on the other hand, if those weddings are happening in India, and people are actually inviting guests and foreigners from across the world, that is a very strong audience for us, because for them, Marnivar is a no-brainer in terms of the kind of quick turnaround that we have.

Second, looking at on this year, what are the two, three key projects that we are excited about that they deliver as per your expectation we can materially change the growth trajectory that we are having for the last two, three years?

So, a couple of things that we are really working on very hard is on improving our retention rate. As a company, we had never focused on working on the existing consumers. So, right now, we have almost 90 lakh consumers with their data in the company. So, one big goal that we have for the year is how can we call back a lot of these consumers again this financial year. So, this is one project which I'm very excited about because the opportunity is a lot from a revenue point of view, and we've never done a lot of work for this segment. So it's a very greenfield sort of a project as well. So this is one very exciting area for us. The other area which I would not speak from an excitement perspective, but which I already mentioned is ASP is something which was lagging for the last two to three financial years. That is something we will go back to and that should also help us grow a little more within each category that we operate in. Finally, something which I am truly excited about, and this is something which whenever I meet analysts in person in the office, I would be very happy to show, is the kind of investments we are making in AI. I think AI will change the way retail companies function, and we are making significant investments across the departments to... Enable agentic AI where each and every function can actually have their own agents talking to each other so that the kind of communication you have in retail company between product, marketing, supply chain, teams can actually become a lot better. So you've already taken major steps and initiatives already showing us very good results. If I give you a small example, let's say when you do a Google campaign. There are about 20,000 line items on which you are spending on Google search. Top 20 line items, senior management would review. The next 200 line items, middle management would review. And maybe only the top 600-700 line items is what any human would actually analyze. But now we've created an AI system that is analyzing all 20,000 keywords and making changes on its own. So, those efficiencies, which would never exist, are now possible, and we are literally working on training every member of our team to understand AI and start deploying agents across the company.

Interesting. And has this been deployed or in process of deployment?

So, I think easy use cases, we've deployed them, and any tough use cases that actually have a linkage to a larger system. All of those are in progress.

Got it. That's all from my side. Thanks.

Thank you.

Thank you very much. Ladies and gentlemen, that will be the last question. I'll now hand the conference over to the management for closing comments.

It is always a pleasure interacting with all of you. I think we've been through a week, last two to three years in terms of overall financial performance, But as a company, we are... Doing everything possible to create an infrastructure in place both in terms of back-end and front-end where once the macro headwinds turn into tailwinds and we are able to also see consolidation in terms of competition, we will be set for much better growth as the company moves into the future. I think one positive is that even though times are tough, we are able to stand our ground and not make any decisions. That we feel will be wrong for long term. So I think we, as a company, have that mindset of sticking towards making decisions that only help us grow from a long term perspective. So thank you very much for attending the call and look forward to interacting with you soon.

Thank you very much. On behalf of Avengers Park, that concludes this conference. Thank you for joining us and you may now disconnect your eyes. Thank you.