Studds Accessories Limited (STUDDS) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Studs Accessories Ltd. Q4 and FY26 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on the touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Siddharth Bhushan Khurana, Managing Director of Studs Accessories Limited. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone, and thank you for joining Studs Accessories Limited's Quarter 4 Financial Year 26 Earnings Conference Call. I hope you had a chance to go through our financial results and investor presentation, which are available on the company's website and on the stock exchanges. I am joined today by Mr. Bharat Goyal, VP Finance and Investor Relations, and SGA, our Investor Relations Advisors. Before we move to our performance, we are also delighted to announce that Mr. Bharat Goyal, currently serving as Vice President of Finance and Investor Relations, has been appointed as the Chief Financial Officer of the company, with effect from 1st July, 2026. Over the years, Bharat has played an important role in strengthening the company's financial processes and strategic planning initiatives. We are confident that his leadership will further support the company's next phase of growth and transformation. Over the last few years, the global two-wheeler industry has continued to evolve rapidly, driven by rising urbanization, increasing mobility needs, growing awareness around rider safety, and the premiumization trend across riding gear and accessories. Across international markets, consumers are increasingly moving towards technologically advanced, aesthetically superior and safety certified products. The premium motorcycle ecosystem, motorsports culture, and the adventure touring segments are also expanding steadily, creating long-term opportunities for branded helmet and riding accessory companies. India, meanwhile, continues to remain one of the largest and fastest-growing two-wheeler markets globally. Rising disposable income, increasing penetration of premium motorcycles, stricter safety regulations, and greater consumer awareness towards quality and branded products are supporting structural growth for the organized helmet industry. We believe the industry is gradually shifting from an unorganized, price-driven market to a more branded, premium, and safety-focused ecosystem. which positions companies like ours very well for the future. Since our inception, we have consistently focused on delivering high-quality, innovative, and safety-driven products to consumers. Over the years, we have built one of the strongest helmet brands in India with a wide distribution reach, strong manufacturing capabilities, and growing international recognition through our premium brand, SMK. Today, our products are present across multiple geographies, And our focus remains on strengthening our leadership position through innovation, premiumization, and global expansion. We have built Studs on a very strong foundation of scale, trust, affordability, and deep market penetration. Even today, our core Studs brand continues to operate at extremely large volumes, and that scale itself remains one of our biggest competitive strengths. In financial year 24, studs' volume stood at nearly 68.7 lakh units, and despite operating on such a high base, the brand has continued to grow steadily at around 3% CAGR to 72.6 lakh units in financial year 26. This demonstrates the brand's resilience, the strength of its distribution network, and the brand's continued relevance across the mass and commuter segments. However, what is even more exciting is the transformation happening within our portfolio mix. While the base business continues to provide stability and scale, the premium and export-focused businesses are now becoming the key drivers of future value creation. SMK is a clear reflection of this shift. SMK volumes have grown at an exceptional CAGR of around 52%. This kind of growth is not just about numbers. It reflects the growing acceptance of our premium products. Across global markets, the strengthening of our international brand positioning and our ability to compete in technologically advanced design-led categories. SMK today is evolving into a powerful premium global brand and is steadily becoming the company's growth engine. Similarly, our private label business has also scaled strongly with a CAGR of around 22%. This business is opening entirely new opportunities for partnerships with internationally recognized brands, helping us deepen our presence across export markets while also strengthening our manufacturing capabilities and product quality standards. As a result of this evolving mix, our overall volumes have grown from 71 lakh units to 77.4 lakh units in financial year 26 with a CAGR of around 4.4%. Despite the industry operating in a relatively mature environment. More importantly, this growth has come alongside improvements in the product mix and premiumization, which have supported ASP growth and stronger profitability. Coming to our performance, the year was marked by healthy growth across both domestic and export markets, supported by an improved product mix, premiumization initiatives, operational efficiencies, and strong brand acceptance across segments. We continued to witness strong traction in premium categories, particularly with SMK portfolio, which has been gaining increasing acceptance across global markets. While raw material prices have been witnessing an upward trend since March, we currently do not see any challenges in sourcing or availability of any of the key raw materials. To safeguard margins against rising input costs, we have calibrated price increases. Across our portfolio and distribution channels, averaging around 8% to 9% from first year to 2026. On the non-motorized helmet front, we continue to strengthen our brand building initiatives. We are progressing well with our decathlon engagement, with initial supplies expected to commence in July 26. In addition, we have recently hired a dedicated racing manager who will focus on strengthening our international racing ecosystem presence and enhancing SMK's global brand visibility. As part of this strategy, we recently participated in the Moto4 Latin America Cup through our premium brand SMK units. The championship, hosted alongside the prestigious MotoGP World Championship in Guania, Brazil, serves as an important platform for emerging racing talent through the FIM Latin America Road to MotoGP development program. This participation marks a significant step in positioning SMK within the global racing ecosystem and enhancing brand visibility among premium motorcycling communities worldwide. Innovation continues to remain at the core of our strategy. During the year, we launched five new products across our helmet segment. We also designed more than 50 new graphics, and we are planning to launch another six products in the upcoming financial year. Our focus remains on continuously refreshing the portfolio with modern design, enhanced safety features, and premium styling aligned with devolving consumer preferences. Beyond helmets, we are also expanding our presence in the riding accessories ecosystem. We are currently in the advanced stages of prototype development for riding jackets and external Bluetooth communication system for helmets. We anticipate commercial sales of these products to begin from H2 financial year 27, further strengthening our premium product portfolio and increasing consumer engagement across categories. Coming to capacity expansion, we remain on track to increase our manufacturing capacity by 1.5 million minutes by Q2 financial year 27. Following this expansion, the second phase comprising of an additional 1.5 million units is expected over the subsequent 15 to 18 months. With both phases completed, our total installment capacity increases from approximately 9.25 million units to over 12 million units, representing nearly 33% increase compared to FY26 levels. Since the new capacities will become operational only during the second half of the year, we expect the full benefits to accrue gradually over time. One of the key strengths of our business model is the high fungibility and flexibility of our manufacturing operations. Depending on the product mix and manufacturing complexity, we can dynamically optimize throughput. For example, certain variants such as solid color helmets require less processing time than more complex graphic variants, allowing us to enhance production efficiency. Additionally, our flexible manufacturing setup enables us to shift production between stocks and SMK products in response to real-time market demand trends. Further, we are in process of setting up a subsidiary in Europe, in Italy. This facility will primarily function as a warehousing and distribution hub, enabling us to reduce transit times, improve supply responsiveness, and serve customers more efficiently across European markets. While we already operate to establish distributors in several regions, this setup will also help directly address markets where our presence is currently limited, thereby strengthening our reach and customer relationships internationally. During the year, we incurred approximately Rs. 23 crores towards advertising and marketing initiatives as we continue to strengthen brand visibility and consumer engagement across markets. For the next financial year, we plan to further enhance our brand-building efforts with an advertising and marketing spend of Rs. 30 crores, reflecting our continued commitment towards premiumization and global brand development. What gives us confidence that this is not growth driven by a single product of a temporary cycle. This is a structural transformation of the business. Consumers globally are increasingly shifting towards premium, feature-rich, aesthetically superior and safety-certified products. We recognize this shift early and have consistently invested in it through product innovation, brand building, export expansion, distribution strengthening, and capacity creation. Going forward, we see tremendous opportunities ahead. Studs will continue to provide strong-scale stability and the market leadership in the domestic segment, while SMK and private levels will increasingly drive premiumization, exports, ASP expansion, and overall value creation. We are building a much more diversified and globally relevant business than ever before. We are no longer thinking only about incremental growth. We are preparing the company for its next phase of transformation with enhanced capacity, stronger international relationships, expanding premium portfolio, and growing global brand recognition. We believe we are entering one of the most exciting periods in the company's journey. The ambition is clear to build studs into a globally respected guided safety company with leadership across both scale and premium categories. Overall, we remain confident about the long-term growth opportunities ahead of us. We believe the company is well positioned to continue its growth momentum in the next financial year, with an expected revenue growth of around 17-18%, while maintaining EBITDA margins at broadly similar levels. Further, in line with our long-term vision of building a high-performance and globally-aligned organization, the Board has also approved the formulation and implementation of an Employee Stock Option Plan, ESOP, for eligible employees of Studs Excessory Limited and its subsidiary companies, both in India and overseas, subject to shareholder approval at the ensuing annual general meeting. The Board of Directors has recommended a dividend of Rs.3 per equity share of face value Rs.5 each for financial year 26. That translates into a payout of 60%. Now moving to our consolidated financial performance. Q4 FY26 performance. Our two-wheeler helmet and box's volume stood at 2.08 million. Consolidated revenue at Rs. 167.5 crores, which grew by 11.9% year on year. EBITDA for the current quarter stood at Rs. 31.3 crore, increased by 11% year-over-year. So I will start from the Q4 FY26 performance. Again, our two-wheeler helmet and boxes volume stood at Rs. 2.08 million. Consolidated revenue stood at Rs. 167.5 crore, which grew by 11.9% year-on-year. EBITDA for the quarter stood at Rs. 31.3 crore, which increased by 11% year-on-year. EBITDA margin stood at 18.7% in Q4 FY26. PACT for Q4 FY26 stood at Rs. 21.1 crore as compared to Rs. 19.9 crore in Q4 FY25, which grew by 6.1% year-on-year. PACT margin stood at 12.6% in Q4 FY26. The capacity utilization for two-wheeler helmets and boxes was at 89%, for EPS was 91%, and for water decals was at 57% for Q4, financial year 26. I will now move on to the full financial year 26 performance. Our two-wheeler helmet and boxes volume stood at 8.12 million. Consolidated revenue stood at Rs. 634.2 crores, which grew by 8.6% year-on-year. EBITDA stood at Rs. 122.2 crores, increased by 16.4% year-on-year. EBITDA margin stood at 19.3% in FY26. PAT for FY26 stood at 82.7 crores as compared to 69.6 crores in FY25, which is a growth of 18.7% year-on-year. PAT margin stood at 13% in FY26. Capacity utilization on a full year basis was 89% for two-wheeler helmets and boxes, 88% for EPS, and 57% on water decals for financial year 26. The total capex incurred in FY26 is Rs.48 crores. With this, I open the floor for questions and answers. Operator, over to you. 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 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. First question is from the line of Shreder Kalyani from Antics Talk Broking Limited. Please go ahead.

Good as a CFO. Just a few queries. One on the capacity side, you did mention that we are expecting to reach 12 million units over the next 18 to 24 months. I just wanted to understand if solid helmets are only manufactured in place of graphic-oriented helmets, is it fair to assume that our capacity would be significantly higher than the targeted 12 million?

Yeah, hi, Srila.

So, I think the capacity what we have mentioned is... We have a split between unpainted and painted and also graphics. So as it is fungible, right, so the capacity does vary. If we produce more helmets without graphics, the capacity goes slightly higher. And if it is unpainted, the capacity goes further higher. So the consideration of 12 million capacity is with 50% painted, 50% unpainted product mix. But depending on if the unpainted is more, we expect this to be more.

Got it. And in terms of your facility that you mentioned in Spain, Europe, the warehousing facility, what would be the kind of inventory that you would like to maintain over there? Just want to understand the ideal inventory level over there.

Sure. So we have actually opened the subsidiary in Italy, not in Spain. The earlier plan was in Spain, but then it was moved to Italy. And the inventory plan there is that we will be stocking about 15,000 units to start with, between 10,000 to 15,000 units to start with. And then depending on how the volume grows from there, we will plan. But I would assume in terms of number of months coverage, we will averagely be about three months in entry there.

Okay, expected timeline is the same as, like earlier mentioned, my 42 end is expected to start our warehousing facility over there?

Yes. So, mid of Q2, the operations will start. So, we have already signed the documents for incorporation of the company. We are expecting the incorporation documents to arrive in the next two to three days. And the warehousing arrangements are being set up right now with a third-party 3PL. So, we expect mid of Q2, the sales will start to happen from that sector.

Got it. And the brand-building response, I think you just mentioned around 20 to 30 crores this will be spent. You just wanted to understand how much will you spend in the domestic market, how much in the international market, and the time period within which this will be spent?

So, I don't have it offhand. The total spend next year is 30 crores, and once again. Excellent. So, I will send you the split, I will send to HDL, they can send it to you, but 30 crores is across domestic and exports.

Alright, so 30 crores will be spent in FY27 itself, or is it paid for the next two years, just wanting to understand that. So, this is the budget for FY2627. Okay. And what would be the current ASP for the quarter-year, the NDISP, if possible?

Can you repeat the ASP form?

For the quarter gone by, quarter 4 ASP.

Yeah, just one second. So, the ASP for Q4 across domestic and export was 815, 815 rupees, which in Q3 was 752. So, there is a jump there. Thank you.

I got it. Thank you, sir. I just call back in the queue.

Thank you. Participants who wishes to ask a question, please press star and 1. The next question is from the line of Aditya from Securities Investment Management. Please go ahead.

Yeah, hi, thanks for the opportunity. I had two questions. So firstly, on the gross margins. So this quarter, our gross margins have been relatively stable, in spite of raw material prices increasing. You mentioned that you have taken prices of 8 to 9%. But just wanted to understand what kind of raw material inflation have we witnessed for us? And are these prices of 8 to 9% enough to compensate for these increased costs?

Yeah, hi, sir. So, yes, you're right that our loss margins were pretty stable last quarter, and this quarter we are seeing, especially for the raw material as well. I think the 8 to 9 percent would almost offset the material price. The material price is very volatile right now. And if I was to assume that this material price would remain the same for the full year, then the eight to nine percent is not enough. But I don't assume that material price is going to remain the same for the full year. And we've already started seeing major drops in material in the last two weeks. And I expect going forward, we'll see more drops. I would say on a full year basis, this 8-9% would cover most of the material increases because once the material falls, the next few quarters, we will see increase in gross margins even from the previous levels. But this quarter, we will see a pressure on the gross margin.

Understood. And lastly, sir, on the distribution expansion which we are doing in Europe, so just wanted to understand, so there might be some initial setup costs which we might be incurring. So, would that impact margins going forward or do you think these are not that material?

Obviously, when you start up something, there is cost to it. And we had bought this U.S. subsidiary also a couple of years ago, right? And this year is the first year that it has made profits as well. So first, one or two years, there are pressures, but obviously you go into these subsidiaries with not heavy investments. Like, for example, we are not doing our own warehousing right now. We are hiring a 3PL. And we would like to start with lower inventory levels there. So as the market grows, you ramp it up. So there will be some margin pressures there, but the scale will be so low that you will not see it on the consolidated balance sheet.

Interesting. Sure, sir. Thanks, sir. I'm sorry. Any questions?

Sure. Sure.

Thank you. Ladies and gentlemen, to ask a question, please press star and 1. The next question is from the line of JJM from JJ Capital. Please go ahead.

Hi, sir. Sir, congratulations on the strong set of numbers. Sir, my first question is about gross margins. Sir, we have seen meaningful expansion from 48% in FY23 to 60% approximately in FY26. Sir, how did we manage to improve so drastically and the reasons behind we have taken for this margin expansion?

So, the margin expansion has happened because of multiple reasons, but the two primary reasons, I would say, is product mix. And the material decreased. That in financial year 23, there was a shipping crisis and also the material price was higher. And from there on, the material had gone lower. But over the last two years, there's not been significant change in material prices, I would say. But you still see gross margin improvements over the last two years as well. Just to give you an example, our exports has gone up in last quarter. So Q3, we were at 16%.

One second, I'll just give you the exact number.

So, for example, Q3, our exports was 17% of our revenues. In Q4, the exports is 22.79%. So, there is a jump in exports. And obviously, within the domestic market also, On SMK, which is our premium brand, the numbers have grown. On SMK, I think we have grown close to 30% year-on-year, the numbers. So product exchange has improved the gross margin, and that's the focus of the company as well. But going forward, we will focus more on premiumization, and that's what is going to further expand the margins long-term.

Okay, and sir, my second question would be on the volume front. So, SMK and private label have grown tremendously. How should we look at it from an ASP perspective over the last three years for both?

Yeah, I'll just give you the data. So, I have the two-year data. I'll give you 24, 25, and 25, 26. So, export ASP in, sorry, SMK ASP in 24-25 was 2359 degrees, full year basis, which in 25-26 grew to 2552, which is almost like a close to 10% increase, maybe 8%. And then on the private label, the ASP has grown across various white labels. I have individual white labels. I'll give you the biggest one, which is O'Neill. The 2024-25, the ASP was 1831, which has grown to 1918. So the ASP has grown across SMK and also the white labeling as well. And going forward, I expect the ASPs will further grow because we are also taking in a price increase on export markets as well from 1st of April, which is to the tune of almost 9-10% as well. So, we expect these ASPs to grow further.

Thank you, sir. That's helpful. All the best, sir.

Thank you. Participants who wishes to ask a question, please press star and 1. The next question is from the line of Dave Titani from Incred Asset Management. Please go ahead.

Thank you for the opportunity, sir. I would just like to follow up on previous participants' question. If you could just let us know what would be the margin differential between export and domestic and your normal studs helmet and SMK helmet. In ballpark number also, it would work. Okay.

So, ballpark, I'm telling you the difference between margins, between studs and SMK, would be slightly upwards of 10%. And between, the second question was between export and domestic, right? Yeah. Yeah. So, export and domestic would be quite similar because most of the exports is with SMK. So, I would say ballpark 10% between export and domestic as well.

So, by 10%, you mean that if the gross profit for export is 50, for domestic, it will be 45. Am I correct?

I'm talking about, I'm talking about EBITDAs.

So if EBITDA margin, if you are making like 20% and tech food level, you will be making 22%. Something like that, right?

No, no. I mean, if I'm making 17% on studs, EBITDA, I'll be making 27% on SMK. Okay, okay.

That was impossible. And another question on raw material cost, you mentioned that it is falling. If current level of raw material cost remains thin, what kind of size does it need to take to offset entire raw material parcel?

So, another about 2-2.5%. If we take another price increase and this current price hike sustains for the full year, we should be good. But I don't see that scenario happening. I'll be honest.

Thank you so much. I'll join back in the queue. Thank you.

Thank you. The next question is from the line of Saurabh Daga, an individual investor. Please go ahead.

Hello. Good afternoon, Mr. Siddhar. Sir, I will, previously, when there was a credit rating report before two years, in that it was mentioned that once the company crosses 750 crores of turnover, A big operating leverage will kick in. Like the EBITDA margin should go about 22%. So, at the start of the call, when you mentioned that next year you are seeing 17-18% revenue growth. So, can we expect EBITDA margin to move to 22%?

Sir, I don't think so. It will move because of the first quarter price pressure. Originally, it was planned that the moment you touch those turnovers, 750 crores, you will see the EBITDA margins growing to 22-23%, which was there in the case of 1920 as well. But because of the current impact of vomited prices, I think there will be some pressure in this quarter. We will be able to recover a lot of the pressure in the future quarters, but I don't think 22-23% is what I think this will happen this year.

Like, once the turnover crosses, maybe after 12 months or so, once the turnover crosses 750, this is your operating leverage kick-in?

Yes, it will. And if you look at our export numbers, right, basically exports and SMKs are the higher margin business. They have grown significantly. SMKs have grown by about 30%. And exports are also growing. Exports now form, I tell you exactly how much. So, on a full year basis, exports was 20% in 25-26, which in 24-25 was 16.75%. So, it's almost like a 3.25% growth on export in terms of our total revenue. And we see these numbers getting stronger going forward as well. And as these numbers grow, the margins will grow. So, I think 12 months down the line, to answer your questions, are we looking at better margins than last year? Yes, I would say we're looking at better margins.

It's a last question. Like in the third quarter, you had done marketing expenses for the global event. So after that, in the fourth quarter, in the other expenses also, like it was nearly 49 crore. So did you spend in the fourth quarter also something like that? Because in general, like from quarter two to quarter four, your other expenses are somewhat higher, comparable to quarter three. So in quarter four also, did you make some marketing expense?

For the store, we did make some afternoon expenses, but it was not for events, and I'll just give you a brief one second of those announcements. So, for example, in Haryana, there was a wage change recently from 1st of April. So, the gratitude calculation for that wage change was also incorporated. Under various heads, right, so you see changes in miscellaneous expenses, interest on taxes as well a little bit, but it's not substantial. I can send you the split later. I don't have it right now head-wise in the other expenses.

Okay, sir. Thank you for answering. Best of luck for your endeavor.

Thank you.

Ladies and gentlemen, to ask a question, you may press star and 1. The next question is from the line of Simran Singh from PS Securities. Please go ahead.

Hello. Hi, sir. Could you help us understand how seasonality typically plays out across quarters and how it affects volume visibility during the years?

Hi. So, I would say that seasonality is 45% first half year, 55% second half year. So, typically, that has been the range for last two to three years, anywhere between 45 to 47% in the first half year. And the main reason is that in winters, People typically prefer to wear helmets more than summer because it feels very hot, but it's not very significant, I would say. That's the number 45 versus 55 for both the half years.

Okay, thank you, sir.

Thank you. Participants to ask a question, you may press star and 1. The next question is from the line of Yathar Saluja from Corliss Investments. Please go ahead.

Hello, sir.

Could you elaborate on the strategic significance of the Moto Latin Cup for participation and how it is helping strengthen the company's brand visibility and market presence? Additionally, you had earlier indicated plans to participate in MotoGP. Could you share the expected timeline for this initiative? And are there any plans to participate in other global racing or motorsports events? So, Moto4 participation is actually the start to a process of getting into MotoGP. So, below MotoGP, you have Moto2, Moto3, and then you have the Moto4. So, Moto4 is what we have started with, and the plan to go to MotoGP is after two years, so 2027-28. So, end of 28, I mean, I would say around, because they have their years, they work on calendar years. So, I would rather say, if I was to say, Calendar year 28 is when we plan to go to MotoGP. For calendar year 27, our plan is to go to other motorcycling events like SBK, which already has four races underway, and then the Moto2 and the Moto3. Beyond this, it's not only the Moto4 Latin Cup, we also have certain other riders right now in the Italian Championship, in the kids' circuit as well. So, we would currently have anywhere between 10 to 15 riders. And this helps because you have to cash these guys very young if you have to grow the brand long term. One strategy is directly go into MotoGP, spend a lot of money, and that's it. But the other thought is that you cash these riders very young and you work with them as they go into MotoGP. Although we will be going to MotoGP in 2020, it's calendar year, but our long-term plan is to work with these guys and their families from now when they are like 10 years old or 12 years old and work with them for next 10 years so that by the time they are 20 years and they go into MotoGP, they have always used your helmets and that's how the brand will grow among this community as well.

Okay, okay. That was very enlightening, so thank you.

Thank you. Participants to ask a question, please press star and 1. Anyone who wishes to ask a question, please press star and one now. The next question is from the Lion of Lakshmi Narayanan from Tunga Investments. Please go ahead.

Hi, and I see that the exports have actually gone up for this year. Can you just explain to me what are the key initiatives you're taking to expand exports, which countries and what kind of channels you are strengthening in the next year or maybe next one to three years, And what kind of new markets you are actually, you intend to enter in FY2027. Thank you.

Sure.

So, I think we are taking a lot of new initiatives in countries like Colombia, Mexico, Europe, Turkey, Italy, currently. So, within the next financial year, I would say the big focus for us would be Colombia, we are already very strong, and it's going quite well for us. Mexico, USA for sure. Italy, because Italy, we have our own warehouse now for next quarter, and we will be going dealer direct. Till the time, till now, we were going through the distributor. So the moment you go dealer direct, your reach or the penetration in the market really increases. So Italy will be an area of focus for us. Then Turkey, as I said, we've just recently, I think about a couple of quarters back also entered into England, where we are very strong distributors as well. Then Indonesia, we are also entering Sri Lanka now, and Indonesia is growing. Philippines, so I would say these are the countries where the strategy around exports growth will be built going forward.

All right. So, the key countries are Italy, Sri Lanka, and Colombia, right?

India, Colombia, Mexico, Italy, Turkey, Sri Lanka, Indonesia, Philippines, and USA.

Have you appointed any new distributors there? I mean, you talked about one in Sri Lanka, and also you said in Italy you are going. In any other markets, you think there is a large potential, and you are appointing dealers?

Yes. In Mexico, we have just signed up with a chain that has 1,200 retail stores across the country. They're the largest. In Turkey, we have appointed a new distributor this month, and as I said, a couple of quarters ago, we found somebody in England as well, and so these are the new distributors that we have found in the last six months.

And in these markets, whether every market has a different regulation or you have a global... Kind of a standard for helmet, and all your helmets actually meet that standard, or it is, you need to go through different standardization procedures or certifications from different markets.

So, for example, Latin America, Brazil has its own certification. It's mandatory to have their certification as well, but in all the other countries of Latin America, either it's European or American nomination. If I talk about the bigger markets, Indonesia has its own certification. Philippines accepts the European homologation and the American homologation. So it's very country-specific, but I would say if you have the European and the American regulation, you would cover maybe 70 to 80 percent of the world. But some of the bigger markets like Indonesia and Brazil have their own certifications as well. So we have the Brazilian certification and we have also the Indonesian certification. We have recently applied for the Sri Lankan certification, although it's not a very big market.

And what kind of growth you can actually expect in the exports from, you know, if you look at your basis fundraisers now? What would be the growth, and how much would be contributed by these new markets, and how much would be the existing, because I think we have done extremely well in the report, so I'm just trying to understand how you are running through it.

So, I think Exports currently forms 20% of our total revenues. We expect this to grow close to about 23% to 24% in the current year, and eventually this will go to close to 30% in 2-3 years of our total revenues. And I think we are present in most of the countries right now. I don't think we will go into a lot of new countries. Maybe here and there you will find us entering into a new country. But those will not be very large markets because we are already present into most of the large markets. It is about penetrating these markets because these markets are very large. And we've just taken some market share. So I think the potential is immense there. For example, I'm talking about this Mexico customer. They have 1,200 retail chains. And Mexico is more than, I think, about a 2.5 million helmet unit market, whereas for us, we are not even 1% of the market right now. So we are penetrating into these markets, and the acceptance is phenomenal. That's why you see these numbers going up, and I'm very confident in two years, close to 30% will be the revenue share of exports in our profit inbox.

And in Mexico, you know, from the other participants, which country is actually into Mexico, and whether Mexico itself has a large helmet market, I mean, helmet manufacturer, that you are cost competitive as well as your products are superior.

So, the main countries supplying to Mexico right now are Indonesia, India, China, and Vietnam. Actually, these are the four countries supplying to all parts of the world. So, these are the four big manufacturing hubs. Any country you talk about, these are the four countries which will be supplying. Mexico at the moment doesn't have internal manufacturing. Even if they have, that's like minimal. So, even in complete Latin America, except Brazil, and one company in Colombia, there is not a lot of manufacturing of helmets happening, and these four countries are supplying, and I don't think that's going to change anytime soon.

Can you come back and hear?

Sure.

Thank you. Participants to ask a question, please press star and one now. The next question is from the line of Anut Seigel from Manus Asian Equities Value Fund. Please go ahead.

Yeah, hi, Mr. Tana, can you hear me? Yeah, hi, I can. Yeah, so I have two questions. First of all, can you explain the reason for changing the warehouse that you were and the subsidiary that you were looking to set up in Spain earlier? You have changed that to Italy. What was the reason for changing the location of the warehouse and the subsidiary? And then secondly, on the price increases, you mentioned that you've taken 8% to 9% price increases from 1st April, but then you also mentioned that right now raw material prices have actually come down from the April level. So is that to say that, and then you also mentioned that first quarter could see some margin pressure, but subsequently you can actually see margin expansion. So are we saying that the 8% to 9% price increases were as per raw material prices prevailing in April, but you have taken higher price increases, now raw material prices have come up, and therefore you could actually see margin expansion in the second, third, fourth quarter?

Sure. So, I think to answer the first question about the reason of changing the subsidiary location from Spain to Italy. So, it was a strategic discussion with our team as well and the distributor in Spain because we have a very strong distributor in Spain. Now, if we have a warehouse and the company in Spain, that means we will be exporting everything out of Spain and Spain will be fed through a distributor. So we had an alignment with the distributor that he's going to keep the inventories for us. And in that case, if we are warehouse, right, we are also stocking in Spain, he's also stocking in Spain. We are stocking for the export market. It doesn't make sense. So Italy was a market where we didn't have a direct importer. And it was being fed through a Dutch distributor, and the volumes were very small. Whereas Italy is the largest market in Europe, one of the top two markets in Europe. So that's the reason that we decided to move from Spain to Italy because we open a warehouse and Italy is the place that you have to go dealer direct. Spain, we didn't want to go dealer direct and Spain, we decided just to move with the distributor for the moment. So that was the reason of moving the subsidiary from Italy to Spain. Now, if we were to have the subsidy in Spain, the transportation cost to Italy, which is a significantly big market, and you will be selling the goods to dealers. That means a lot of small shipments will be going out. So the transportation cost would have been substantial. Now, moving into Italy, and we are actually, our warehouse will be in a place called Reggio Emilia, which is near Parma. So you are right in the center of the country, and the transportation cost will not be substantial for the dealer model. Now, when it's distributor, we expect a lot of distributors to keep buying from India because they will be avoiding the warehousing cost there. But some of the distributors will buy some products also from Italy. So I think Italy made a lot of sense because of the strong dealer market there. That is the reason we decided to move from Spain to Italy. To answer your second question about the material cost, So, when we had increased the material price of 8% to 9%, we had already known that it will not completely offset the material price, when we increase the prices of the products, because we were of the opinion that this price increase is not going to sustain for long, and over the year, you don't want to out-price yourself in the market. So, for example, if you increase the price by 20%, and the raw material comes down significantly, So, you'll get into a cash 22 position because you don't want to ever reduce your prices. We have never reduced our prices. So, it was more of a staged kind of thing that we want to do in a staged manner that first you do 8-9%. If the material cost doesn't come down, then you do another 3-4% increase henceforth, looking at the market conditions. So, at the moment, also you had a question that... The prices are currently down from the April level, which is correct. But the prices have shot up, for example, if a price of a certain raw material was 100, it went to maybe 150 at one point in time, and now it's back to, say, 120, 125. So it's not really come back to the original prices, and we expect it to take another two, three months for it to come back to November, December pricing again.

Okay, so just to follow up, so on the Spain and Italy discussion, I mean, you know, correct me if I'm wrong, but is this largely because of, I mean, the facts that you explained to us were probably something that you already knew, right? So is this some pressure from your distributor in Spain who did not want to be sort of cannibalized? And of course, as you said, Italy is a larger market. Is that why you had to change that decision?

Yeah, I would say realignment with the distributor, that the distributor said that if you're coming to Spain, because he was kind of feeling cannibalized that if the company comes to Spain, maybe I'm not required then, which is not what the thought was for us. And he committed to keep more inventory and serve the market better. So we moved from Spain to Italy, where we have no distributor, and there is no conflict with anybody. And the market size...

And he's your largest distributor in Europe, right? Second largest. Okay. And then secondly, on the price increases, can you give us a sense as to have people or smaller players or players in the unorganized market, have they also increased prices or are you seeing that some of these guys are not able to source raw material or have, I don't know, shut shop? What is the feedback you have from the unorganized market for helmets in India?

So I think what we think is going to happen is that this price pressure, the unorganized market, might not be able to actually tolerate as well. And some of the smaller... People might shut shops because the larger, I mean, when we are having margin pressures, all the brands, right, they're also having a lot of pressures, cost pressures as well. So some might be able to sustain, some might not be able to sustain, but I have a feeling that some will shut shop, as you say. And in terms of price increase, everybody has done a price increase. All the brands have done a price increase. And some of the brands have done a price increase, which is even higher than us. China has done a price increase for all the OEM customers. So we are seeing it all across, depending on what kind of inventory levels you are carrying, the times are varying, but everybody is doing a price increase.

Okay, understood. And then just last question. Since you increased the prices in April, we are now already towards the end of May. Have you seen any impact on volume and demand?

No, the demand still remains very, very strong internationally and in India as well because I think the dealers and the customers were expecting a bigger price increase because everybody knew the price change which was happening, the cost change which was happening for us. So it was very well taken and I think we even heard from people that we have not done a significant price increase and we told them the reason that we don't want to reduce the prices once the cost pressures are off. So I don't see any demand pressures as of now.

Okay, thank you very much.

Thank you. Participants, you may please press star and want to ask a question now. The next question is from the line of Lakshmi Narayanan from Tunga Investment. Please go ahead.

Yeah, thank you. Just one question.

I'm sorry to interrupt you, sir. We are unable to hear you clearly. Your voice is breaking.

Yeah, is it better now?

No, there is still a disturbance from your line. Is it better now?

Hello? Yeah, is this better now?

Yes, please go ahead. Yeah, actually, go ahead.

Yeah, my question. From a distribution point, how many, what kind of distribution footprint we have expanded in FY26, and what is the plan to expand into, you know, as you look at FY27?

So, Mr. Akshay, are you talking about domestic or international? I'm talking about domestic. So, domestically, we would have added maybe a couple of distributors, but the plan is not to add a lot of distributors, but rather to penetrate the market with the current distributors, because if you add a lot of distributors in the market, there is a price war, and for us, our partner's profitability is of prime importance. So we kind of try to work with the current distributors more, but if we feel that the market is underpenetrated somewhere, then we would appoint a distributor, but I would not think that we would go and hire 10 distributors in a financial year, maybe one or two, and this will keep continuing like this only.

Got it. And in terms of, you know, to the earlier question, you actually talked about price increase. That is, you talked about domestic price increase. That's why you talked about international price increase.

So we have increased our prices all across, domestically and internationally. But Europe, I mean, there could be difference. Somewhere it is 9%, somewhere it is 8%, somewhere it is 10%. But overall, I would assume it will be anywhere close to 9%. But nowhere it is 15% or 5% as well.

Got it, got it. Thank you so much.

Thank you. The next question is from the line of Ganesh Minut from Motida Loswal. Please go ahead.

Hello, good morning. Good evening. Company, am I audible?

Yes, Ganesh.

Yes, basically, my question is whether the inventory days have increased, you know, materially from 80 days to 107 days in FY26. So, could the management explain whether this is driven by, you know, export ramp-up or new product launches or whether there is any channel stocking or slow domestic demand? Also, what is the sustainable inventory level going at, you know?

The inventory days have gone up, and the current inventory days are consequences, or 91 days. Thank you.

All right. Logical. So given another question, so given increasing, you know the enforcement of helmet regulations in India, so are you seeing any structural shift from unorganized to organized pairs? And how much market share gain opportunity still repains?

So, there is a massive shift happening from unorganized to organized, and we feel that this... We will kind of exaggerate the whole process because, as I said earlier, the smaller players, some of them might not be able to take this hit and they might actually shut shop. So, I think this is happening, and over the last five years, it's been happening, and I think, at the moment, ballpark figure, my idea is that unorganized is about 25 to 30 percent. Not more than 30 for sure, but not less than 20 as well. And this, my idea is that next, maybe, three years might trim down to about 10 to 15 percent.

For the next how many years, sir, Adam?

Two to three years.

Two to three, okay. Grateful, grateful for the insight, sir. Thank you so much.

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

Thank you all for joining us today. We hope we have addressed your questions and provided valuable insights into our performance and strategy. If you have any further queries or need additional information, please feel free to reach out to our team or our Investor Relations Advisors at SGA. Thank you.

Thank you. Ladies and gentlemen, on behalf of Stud at Accessories Ltd., that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.