V-Guard Industries Limited (VGUARD) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the WeGuard Q1-FI27 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 this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anirudha Joshi. Over to you, sir.

Yeah, thanks, Ananya. On behalf of ICICI Securities, we welcome you all to Q1FI 27 Results Conference Call of VGAD Industries Limited. We have with us today Senior Management, represented by Mr. Mithun K. Chittilapilli, Managing Director, Mr. Ramachandranvi, Director and COO, and Mr. Sudarshan Kasturi, Senior Vice President and CFO. Now, I hand over the call to the management for initial comments on the quarterly performance, and then we will open the floor for question and answer session. Thanks, and over to you, Newton, sir.

Thank you, Anurudha, and the team at ICSA Securities for hosting today's call. A warm welcome to everyone joining us to discuss our company's operating and financial performance for the first quarter of FY27. I trust all of you had the opportunity to review the investor presentation shared earlier. We started FY27 on a strong performance in the first quarter with all business segments reporting double-digit growth. Consolidated revenue for Q1 FI27 stood at 1,810 crore, representing a YOY growth of 23.5%. The quarter benefited from a more favorable summer season compared to the last year Q1. Despite supply chain disruptions and commodity cost pressures arising from the West Asia conflict, we delivered robust growth while maintaining healthy gross margin through proactive pricing actions. Discipline, cost management, and the inherent resilience of our business model and brand. The electronic segment comprises of stabilizers, UPS systems, and solar power systems. Reported a strong growth of 22.8% YOY, with all major product categories contributing positively to the quarter. The electrical segment registered a revenue growth of 27.7% YOY. Wired growth was aided by higher copper prices, while switchgear, modular switches, and pumps delivered robust volume growth. In the consumer durable segment, covering fans, water heaters, kitchen appliances, and air coolers, we reported a revenue growth of 19.2% YOY. While there was a significant spike in induction cooktops in the quarter, the broader kitchen portfolio, appliances portfolio, also delivered a healthy growth. The other categories also did well, resulting in a well-balanced performance in the segment. Sunflame reported revenue growth of 18.3% YOY in Q1. Over the past two years, we have focused on product quality, customer service, and people capabilities. Functional integration is complete, and we now have impact on a sales acceleration program. We are beginning to see the benefits in this improved business momentum. From a geographical perspective, the revenues from south markets grew by 36.7% YOY, while the non-south markets grew by 12%. The difference in growth largely reflects the variations in the summer season across the various regions in the country. The gross margin remained healthy at 36.9% in line with the corresponding quarter of the previous year, despite higher input costs during the period. The stability in margins reflects our ability to respond swiftly through calibrated pricing actions while continuing to benefit from structural improvements from our manufacturing footprint and product mix achieved over the past few years. EBITDA, excluding other income for Q1, stood at 191 crore, reflecting a YOY growth of 54.5%. EBITDA margin was at 10.5%, compared with 8.4% in Q1 of previous year. Consolidated pad for the quarter was 130 crores, up 76% YOY compared to 74 crores in Q1 FI26. Cash flow was strong with the net cash position at 670 crores compared to 155 crores a year ago. While working capital improvements were particularly favorable this quarter, we remain focused on disciplined working capital management on a sustainable basis. We will continue to monitor the geopolitical situation and will take appropriate action necessary to protect supplies and margins. We are hopeful that the growth momentum will sustain in the upcoming quarters as well. With that, I conclude my opening remarks. I would like to thank Anirudha and the team and ICSA Securities for hosting this call and would like to request the moderator to open the floor for Q&A. Thank you.

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 one on their touchstone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sameer Gupta from IIFL Capital. Please go ahead.

Hi, sir. Good afternoon. Congrats on a good set of numbers, and thanks for taking my question. Two questions from my side. First question, could you just elaborate on the kind of inflation in the RM basket and the consequent price hikes taken? If you could also break them down into how much is already there in the reported quarter and how much would be at an exit level? Also, if you could spell out the quantum of price, height, and volume growth from an agreement perspective. That would be my first question, sir.

Yeah, so I think if you look at the pricing action, I think almost 80-85% of the pricing actions are complete. A lot of the raw materials have kind of stabilized, that means that they stopped going up or they have started to normalize. Some of the commodities are remaining at the elevated level, so that's where we are right now. If you divide this 20 to 23 percent between price and volume, price growth is about 14 percent and volume growth will be about 9 percent. This is for a blended weight of average.

And the quantum of pricing would be similar across these segments, or I think the electricals will be higher?

Yeah. Ram, you want to take this? Yeah.

No, I think, you know, it will vary, right? It will vary depending on the category. And it is higher in some and lower in some. As far as the pricing growth is concerned.

It's quite a wide range. I will say it's almost from 5% to, you know, 30%. Yeah, yeah.

About 17-18%. Yeah, 5-18%. Yeah.

Got it, got it. No worries, sir. Second question is on the gross margin. Now, you have taken price highs, there is a RM inflation, but the gross margin is still flattish on a wire-wise basis. Would it imply that one, we have passed on large part of the commodity cost inflation in 1K itself, or we might have still consumed some lower cost inventory and some bit of margin pressure is yet to be seen in the P&R?

No, I think largely it has passed through. Like I said, almost 75-80% we have passed through. Of course, we do have raw materials and all that. But, you know, a lot of the inflation has happened during the month of March. So we are now, you know, if you look at June, we would have consumed everything. So it's largely through. And like I said, you know, it's fluctuating. It's not like, you know, like I said, some raw material prices have eased. Some have continued to stay elevated, and some are going up as well. So, it's still a mixed bag, but as we stand today, we are in a pretty comfortable position. It doesn't look like a lot more increases are warranted. Some product segments, we are still required to take some more actions, and that will probably happen in the next, in the current quarter.

Got it, and when you say 75 to 80% is passed through, so the balance, it would have still resulted in a GM contraction, but it has not resulted is because of your own efficiencies and manufacturing. Yeah, cool.

No, I think so. It's a moving thing, right? So as we, you know, we will have raw materials procured at various rates. It's a moving target, right? And these, like, let me put it this way, all the larger categories were largely fine. Some of the smaller categories, we still have some pricing actions to take, but that may not impact the overall gross margin. As we stand today, we are hoping to, you know, hold this gross margin.

Got it, sir. That's all from me. Thanks and all the best. I'll come back in the queue for any follow-ups.

Thank you. The next question is from the line of Rahul Adhul from Ididai Asset.

Yeah, hi. Good afternoon. Thank you so much. Does the voice echo you? Yes, we can hear you. Okay, perfect. Thank you so much for the opportunity and congratulations for a good quarter. Sir, three questions. Firstly, on the South India growth, you commented that largely because of summer variations across the country, if you could elaborate more on that, a bit of state-level discussion might help. Second question was on ECD. You mentioned on your opening commentary that ECD across segments is being okay. If you just comment on fans versus… What other categories actually contributed here? I understand Kitchen has obviously had abnormal demand this quarter, but we just elaborate on that a bit. And third is on the balance sheet. The creditor number looks very high to me. If you could please explain that. Those were my three questions. Thank you.

So, you know, we don't give out statewide numbers, but we can say that the summer in South India was fairly good in almost all the states, okay? If you go to the other parts, Western India also experienced a decent summer. Both North and East, it was disturbed. North was highly disturbed. So, if you ask me, like, South is the best, followed by West, then East, and then last place. The north was the most impacted, you know, north our, you know, north our, you know, Our summer products did not take off because it was raining, there were multiple interruptions for the summer. So that is as far as the various difference between the zones. That is one part. The second is on the ECD. ECD, I think, FAN has also grown. It has not grown, you know, exponentially high, but it has done reasonably well. So, in FAN, we experienced good demand for pedestal EPW fans in South India, and unfortunately, we were caught off guard by the demand because the summer was very strong, and we... Getting into April, we were not having adequate inventory, so we did, you know, lose out on some sales. Ceiling fans did okay, okay, because, like, you know, there was a star rating change in January, so a lot of sales have happened in, you know, November, December, before the star rating, so the channel also was having a lot of, you know, inventory, but overall sign has done reasonably well. Kitchen has done well. It's not only induction, the others have also done well. You know, where we have not done that well is Hercules, primarily because of two reasons. Like we said, we were... You know, we did increase prices, but, you know, we found that certain players in the market had not increased prices or delayed prices and all that. So, there was some market share loss in air coolers. But I think most of the issue was contributed by the fact that for us, North India is the main, Northern Zone is the main contributor for air coolers, and Northern Zone did not really take off, you know, for air coolers. The last part, Sugishan, you want to take it?

On the creditor's part, yeah, so we usually import a portion of our copper purchases where we pay in advance. This quarter we only bought from domestic suppliers who give us credit. It's a sort of one of...

Our purchase mix was like maybe 80-20, where 80% was domestic and 20% were imports, or even 70-30. But now it is like 95-5, you know, there's hardly any imports because... There are some suppliers from West Asia who could not supply because of the war, and even, you know, even the other, you know, Asian countries also, we did not, shipping rates were too high and volatile and all that. We are finding it difficult to get ships and all that stuff. So, the domestic suppliers give us credit, whereas all the others are paid on, you know, LC and stuff like that. So, that's one of the main reasons the, you know, payables have gone up.

So, the stables are going to be like similarly for the full year, or we will see this again going back to 70 days, kind of?

Well, it's sort of unusually good this quarter. We will come back to normative levels, or maybe slight improvement.

Go ahead, Sudarshan. Thank you so much, Mithun and Tim. All the best.

Thank you. The next question is from the line of Agitya Bhartya from Investec India. Please go ahead.

Hi, good afternoon, Mathur. My first question is on this one. Hi. I think as of now, we are mainly focusing on solar inverter. Wanted to understand how big could solar rooftop or pumps be for us, and what is the strategy behind the larger solar piece? What kind of growth are we anticipating over the next three, four years, and how large could this portfolio be today?

So, we are not going to give out any specific numbers on any categories, but I will ask Ram to answer this in as qualitative way as possible.

So, basically, we are just about 18 months into this category, and mainly we are focusing on the domestic part of the market, which is mostly B2C. And we're focusing on rooftop and, you know, next generation battery. I think that's still to come, though.

Yeah.

And we will be launching that in the next two, three months. Yeah. So this is the space that, you know, we are going to play. Yeah. Yes, I think this space is going to grow fast in the coming period. And hopefully.

Sure, and as of now, it's all B2C, and nothing is tentative. Yeah, yeah, B2C. Is my understanding correct?

We have a small part which is going into the solar pump business, but that is maybe like a couple of crores, you know, in Q1. So it is a very, the solar pump business we just started supplying to Maharashtra State Government, and that's a B2G business, but that's very small, and that's also new. We just started it like three months back or something like that. So, but yeah, bulk of the sales will continue to be B2C, where we are supplying rooftop solutions, you know, solar rooftop solutions for residential customers mainly, and for small offices, small, you know, SME, you know, also we will be supplying. We don't supply to large, very large institutions in that sense.

Understood, sir. And so my second question is on southern India outpacing non-south, and this is, I think, the fourth consecutive quarter wherein this has happened. Would you attribute that largely to weather, or is there something else that's playing a part as well, given that we already have a fairly high market share in south, and still we are kind of growing fairly fast over there? Ram, you want to take this?

The view is this is due to weather. See, two things have happened this quarter. One is, you know, we have been, you know, given the uncertainty prevailing and the significant increase in input cost. We've been aggressive in pricing transmission and probably also in non-south markets, you know, we have landed the pricing corrections, you know, ahead of some of our competitors. Obviously, you know, we have much stronger brand equity in South. So, it was, you know, easier to transmit, sustain, and make sure that, you know, also deliver the business interest, right? That's one part of it. Second part of it is certainly, you know, the… As far as, you know, east is concerned and north is concerned, we have seen a significant impact because of season. It started last year. You know, last year was, I mean, year before last, for example, if you look at, I mean, we had extraordinary growth in some of these markets, yeah, and therefore last year, you know, when the summer was not good, it reflected in the performance in these two regions, yeah. So that's, I think, how I would put it. The, These factors have impacted our business in East. I think although East has recovered We don't share our category-wise numbers, but if you want to look at the category-wise numbers, you will find that the impact is straight on categories which are seasonal.

Understood. Helpful. Thank you so much.

Thank you. The next question is from the line of Sonali Salogar from Jefferies. Please go ahead.

Thank you for the opportunity. Sir, my first question is regarding the CapEx. Do we retain the CapEx guidance of about 2.5 billion per annum? Or are we looking into, you know, new categories or adding on to CapEx in new categories?

CapEx, no, two and a half billion unlikely. It won't be that high. 150, 170 crores is okay.

Yeah. Maybe for the next two years, it will be an average of 150 crores each. Yeah, 150 to 170 crores each.

Understood. So, my second question is regarding cables and wires division, particularly in wires. Two questions here. Firstly, this quarter's growth, could you help us understand how much was volume-led, particularly in wires, and how much was value-led? And secondly, one of the key competitors, a new entrant, is thinking of launching their wires around the festive season. So, any thoughts on that, any channel feedback on that?

So, as far as VYAS is concerned, there has been significant price increase. So, volume growth is very minimal. It's hardly any, I would say. Because of the quantum is so large that we believe that some customers have decided to postpone. Because we're talking about a huge increase in the price. So, we believe there has been some deferment or postponement and all that. Because the quantum of price increase was very high. But value growth is there, obviously, because of price growth. And we have also held margins reasonably well in that segment. So, that way, it's fine. As far as the new entrant is concerned, Ram, you want to take this?

Yeah, I think there have been a number of entrants. I mean, you know, there are a number of companies which have gotten to wire. We have become more aggressive in this category over a period of time. I think the competitive intensity is going to remain high in this category. But we remain focused on making sure that our interests are protected and we have necessary contingency plans in place to protect our business interests. I think the retail wire business is not going to be easy. It's It's going to take time to... Build equity and brand awareness. There is not enough room in this category for physical distribution. We have a necessary intervention. I think, you know... Thank you.

Understood. And lastly, on guidance, I generally understand you give a medium-term guidance, but given the very strong performance in Q1, would you want to hazard a guess on the FI27 guidance, either in terms of sales growth or the margins?

See, we have always said we will grow by 15%, but obviously, you know, this year we have some price growth as well, you know, so it can be higher. So we will take a call because, you know, things are still volatile. We don't know, you know, the commodity prices, some are going up, some are, you know, coming back to normal and all that. But definitely, it will be more than 15%. But I don't want to give out any specific numbers. But this year, maybe, we may do, you know, a bit more than 15%. But definitely, you know, our longer term, 15% is something that we, you know, we hope to grow.

While retaining our 9% EBITDA margin, right?

Yes. Yeah, yeah. 9 to 10% EBITDA margin, we should be retaining, yes.

Got it, sir. Thank you, and all the best to the team.

Thank you. The next question is from the line of Mr. Achal Lohade from Nuwama Institutional Equities. Please go ahead.

Yeah, good afternoon, team. Thank you for the opportunity. Congratulations for a good set of numbers. Mitun, the question I had in mind first was, you know, in terms of, if I look back last 15, 17 years, you know, we have extended geographies, categories. Now, from here on, how do we see that journey? Will this be more geographical and more deeper penetration and wallet share gain, or we could look at any category which could add substantial growth to our overall number?

No, it'll be a mix of both. I mean, like, so at any given point of time, we are, you know, incubating two or three categories. So, if you ask me, you know, a lot of our categories we were incubating, like fans, inverter battery, kitchen to some degree, they've all started to become mature and we have built a very strong, you know, backend that is R&D, manufacturing, a new product development team. We also have a fairly decent marketing and sales team. So those kind of categories are now slowly moving to autopilot kind of mode, where our bandwidth is not required so much. So then when we have, you know, so when we have bandwidth, then we will like to again, you know, incubate categories. So we have talked about solar, which is something that we are incubating now. Lighting is something that we are launching in this financial year. So I think with lighting, we have completed almost all the large categories. Now I don't know whether, we'll keep looking at adjacencies. Solar is something that you asked me 10 years back. Solar rooftop was there, but it was not expected to be such a large category. So, sometimes these kind of opportunities do come up, you know, so it's very difficult to say, but broadly speaking, yeah, it will be a mix of both. I think geographical, you know, so if you look at, ideally, if you look at the kind of penetration, the depth we have of distribution in South, that's something we would like to replicate in the other markets. Some market is happening and some other market is, you know, slow to start, but it's getting there. So it'll be a mix of both. And of course, you know, I think, if you ask me, there is no one answer like that. But yeah, but solar definitely was an opportunity. We were already doing inverter battery business. For ages, so when this came up, it became, it was very easy for us to get into it in a way, because we understood this product better than most companies in India. And we understand electronics better than most companies in India. So when those opportunities come up, we'll definitely get into it. Lighting was mostly a portfolio issue because we had a lot of distributors that are forced to take competitor brands or lighting company brands or local regional lighting company brands because we were not offering lighting. So it was creating a, it was more of a portfolio issue. And again, we took it up when we had, you know, we have enough bandwidth on our hands. So we'll see. I mean, if something new comes up adjacent, we will look at it.

Just a comment on the battery energy storage front, you know. With the immortal battery thing, does that complete? Does that help? And what could be the opportunity or the market size according to you at this stage?

So, there are two parts. One is your solar rooftop business, and the mother one is within that, you know, a new part will be also best, which is your battery energy storage system. This solar rooftop market is something that the government has put in a lot of, you know, incentives so that customers get a good payback, you know, someone is investing. They are getting, you know, they are able to recoup their investment in three to four years' time, and that's why you see a lot of the, you know, customers buying this and moving at least part of their energy requirements from grid to, you know, their own, you know, rooftop. This is something that is new, you know, in terms of as an industry, it is just starting. And the incentive system and all that, they have not started to, you know, they have not spelled it out yet, but definitely, you know, battery storage is going to be the next big thing. This can be huge because we are talking about an average price of between one and a half to two lakh rupee per house. So, the value is very high for a rooftop system. So, even if you, you know, even if you do 100,000 customers, we are looking at, you know, close to, I don't know, 100 crores or something else. So, what I'm saying is this is a very large opportunity, and even now, as we speak, only maybe eight states in India are properly implementing this, three of the south states and some of the BJP rule states. So, we still have a large part of the country where the solar rooftop is yet to even, you know, start in a meaningful way. So, I think the government is on the job, and the recent changes of government in both West Bengal and Tamil Nadu will definitely increase the scope of this, because these two states were very small adopters. So, we'll see. I mean, so, it can be very large. What I'm saying is, the potential of this is quite large, and it's a win-win. Like, the government is... Able to move a part of its power to distributed renewable energy. Customer is paying lower price. Of course, the state electricity boards will lose some of their high-paying customers, which I think government will have to find a way to, you know, compensate them.

Got it. Just another question on Sunclaim. You know, in terms of the growth, it looks good, 18%, but it's on a low base. So, you know, the challenges, what we faced after the acquisition, you know, are we done with that? How do you see the growth playing out from here on?

I'll just say, you know, just one thing about Sunflame is, Sunflame has a big presence in gas term, and not a very large presence in induction cooktop, so it's very unfortunate that Sunflame was not able to take advantage of this whole gas shortage thingy, like what Weegard was able to do, because Weegard is quite large in the induction cooktop space. Ram, you want to take the rest?

I think, you know, we are on course as we guided earlier. I think the integration is more or less behind us now. And we, as I told you earlier also, Q2 onwards, we are expecting to have the NPD impact being rolled out. Yeah, so we have focus interventions now. So the next 6 to 12 months, we are working on improving our reach. Yeah, across general trade and organized retail, yeah. So, I think, you know, we should start to see, you know, better growth, and I think you are already seeing that. Challenges are there, fundamentally related to price.

Got it. This is very helpful. If I may ask one last question, in terms of, you know, category presence, if you could talk about categories where we are among top three players or the market leader, please.

I think beyond stabilizer, I would rather say that beyond stabilizer, I think we have a decent presence in water heater. We should be in the top three there. We should be in the top four in domestic wires. So, these are categories that, you know, we are particularly strong on, right, in terms of market presence. In domestic pumps, also, I think we have a decent presence, yeah. So, these are categories where we have top three or top four positions, yeah.

Got it, sir. Thank you so much for the answer. Thank you.

Thank you. The next question. It's from the line of Kiyur Pandya from ICICI Prudential Life Insurance Ltd. Please go ahead.

Thank you. First question is on electronics and electrical segment. If you can just throw some light on how solar has grown versus... ...business of UPS or innovators have grown or stabilizers have grown. So stabilizer UPS and solar if you can segregate growth and at the same time in the electrical house your buyers have grown and the rest of the portfolio. are at the different stage of, say, growth journey, and thereby growth, personally, this may be very different to the content to understand, say, wire and X wire within electrical and inverter and X inverter in electronics.

No, as a matter of policy, we don't give out categorized numbers, but definitely, if you qualitatively, I'll answer the solar, you know, rooftop business is growing much faster because it's also on a smaller base. If you look at the electrical basket, wire is the largest category in the electrical basket, and wire growth has been higher because of very high price growth. So, this is one way I can answer this question, but we don't give out category-wise numbers or margin.

Fair enough. So, fair enough. Basically, even, say, X-Wire portfolio is also growing in double digits.

So, we have a high double-digit growth in X-Wires in the electrical segment. We also have strong growth in inverter batteries also. Yeah.

So, yeah, like, apart from wires and solar, the other businesses have also grown. But these guys would have, these two would have grown larger than, you know, average.

Understood. And just lastly on Sunflame, you mentioned integration is completely focused on growth. Now, with growth, how should we think of, say, profitability as well as we get some opening leverage? I mean, it has been challenged both on the growth and margin side. So, if you can just share more on Sunflame, what are, say, one-year or two-year targets we should keep in mind?

Yeah.

Ram, you want to take this?

Yeah, yeah. So, I think our initial focus will be to get the volume growth going. I think the margin growth will also depend on pricing transmission. I think the price increases, as you all are aware, has been significant. And some of the channels like CSD endorse, there is a longer lead time for pricing transmission. Some of the categories also in kitchen, you know, the transmission of pricing in general trade has been slower, particularly in non-south. I think the margin recovery will be more gradual compared to the top-line recovery, yes, so that's how I would put it. Yes, of course, you know, we would like to restore what I would say as the financial health of Sunflame, yes, to what it was pre-acquisition, and that's our plan from a three to five-year standpoint, you know, and we expect to scale WeGuard and Sunflame. Probably in four digits.

Understood. Thanks a lot. All the best.

Thank you.

Thank you.

Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The next question is from the line of Deepak Lalwani from Unify Capital. Please go ahead.

Hello, sir. Thank you for the opportunity. So, my first question is on the gross margin. We've done a good work by passing on prices, but our gross margin profile is still stronger than all the peers. So, do you think there's a risk from competition or… So, are we going to take any steps to chase market share in order to reduce our gross margins going forward? So, that is one. And, sir, on the cost side, you know, our employee cost and other expenses cost count has almost doubled in the last five years, and we have not gotten the benefit of the higher gross margins in the EBITDA profile yet. So, how should you look at? So, the cost base for the company going forward, have we built out the cost that is needed for manufacturing, for sales over the last five years, and should we expect to benefit out of it in the next coming few years, if you can guide us on the cost profile and the margin profile of the company in the future.

Ram, you want to take this? Yeah, yeah. The margin profile is a function of category mix and, you know, greater insourcing. As we move from an outsourced product into own manufacturing, I think the gross margin improves. So I think, you know, that's basically what has been driving our gross margin improvement, and we are now at, you know, closer to 65% manufactured product from, sorry, yeah, I think slightly more than 65%, you know, as far as own manufacturing is concerned. So that's what has driven that. I think that we... on the manufacturing side, and also we are focused on, you know, improving sourcing benefits. So I think these two should be able to offset, you know, any inflation and any pricing challenges. Over a period of time. On the cost side, I think, you know, the significant increase in cost is certainly observed. You know, it's also related to, you know, Vigard shifting from sourcing to manufacturing. Some of it is, you know, that is, I think, one key lever in that. The other part also is that, you know, we have been building out the organization, both in terms of technology, systems, processes, and enterprise capability to scale Vigard into a large place. Our domain, and towards that, you know. We are also getting into multiple categories, right? And as we get into each of these categories over a period of time, you know, we have to support these categories with the right organization and right capability. So, you know, we've been through an extended investment phase. Probably the investment phase will last another 2-3 years before it will plateau because now we've just got into the renewable space and we've also got into lighting. We are also strengthening our innovation capabilities. So there are some of the areas which we are still building out. But, yes, I think, you know, we are now pretty much in progress in terms of… Our investments in capability, which would stand us in good stead in the long term.

Understood. Thank you. That was good. And, sir, our second question was on the volume growth. We did about 9% in this quarter, which is good. But, sir, this is coming on a low base. So, how should you think about, you know, the volume growth over a long-term perspective, you know, from a category perspective, if you can highlight what the volume growth that you see for the category? Because, see, most of our categories, what we reckon is that the penetration levels are reaching to a higher level. So, from a category growth perspective, we can highlight. And also, from a market share. In the overall 15% that you are targeting, you know, how much volume growth can come in that 15% that you are targeting, considering the category and Vigar's efforts in volume growth.

Typically, you know, this is a very unusual, you know, four, five months where we had significant, you know, inflation. You know, like, for example, the kind of pricing increase we have taken in the last four or five months is not something that we have taken even when the Ukraine war has happened, because the cost inflation was that, the shock was that high. In that environment, delivering a 9% volume growth is good, considering that only, you know, one-fourth of the country received support of weather, whereas, you know, the bulk of the country was... So, that's one thing. And we also have to see how our peer companies have performed as well. So, you will understand in terms of market share and all that what has happened. So, that's one thing. Second thing is when we say 15% growth, we typically only talk about price growth. We only expect about 2-3%. Every year, we don't expect. You know, 11% or 12% pricing growth, because that's unheard of. Usually, the usual inflation, if you remove wires, which is largely inflationary in nature or deflatory in nature because of copper prices, but even copper has been arranged more for a long time. This has partly been driven by the AI mania and all that. Some of the commodities have been driven up because of that. Otherwise, 2% to 3% price growth and about 12% volume growth is what we should do. Having said that, this year it's only 9% because, like I said, this is a very unusual time where we have huge price increases, so it is very natural for some customers to downtrade, it is very natural for customers to postpone, especially in wires, I think, you know, some people building something, constructing something, it has been a huge shock and I think I would not be surprised if some people have postponed. You know, their choice to construct and all that. Wait for things to, you know, settle down a little bit. So in a normal environment, yes, we should grow at 10 to 12 percent volume growth and 2 to 3 percent price growth.

Okay, so thank you and all the best.

Thank you. The next question is from the line of Nushar Chaudhary from Aditya Birla, Sun Life Insurance Limited. Please go ahead.

Hi. Thank you for the opportunity and congrats on a good set of numbers. From a private point of view, When last industry would have taken, you know, this kind of prize hike across the basket in the last 10-20 years of the journey? Sorry? Can we repeat the question? The prize hike which this time industry has experienced, when last this would have been experienced?

I don't like it. That's what I meant, right? I don't know. Ram, I don't think we have experienced...

I don't think there's a precedent for this. Yeah, yeah, that's what I said, like, they're talking about, uh, mid-teens, right, so at a portfolio level, which is like a 12 to

14% price increase over four months is unheard of, at least since 2006, since I've been here, and even for many, even for Ram, and we've not seen, because this is kind of a shock, like a shock, yeah.

And given this kind of price hike, shouldn't the aspiration of double-digit EBITDA margin should be earlier than what initially we had envisaged?

No, anyway, we have delivered double-digit EBITDA margin this quarter. Let's wait and see what happens, you know, in the following quarters. But yeah, we should be okay this year in terms of margin, is what we see.

Okay, and similarly on the growth side, So we have touched upon it. It could be slightly higher than 15 of our aspiration. But given the price hike, and it seems looking at the volume growth, consumers are accepting it. Shouldn't this year at least your growth should be much higher than the long-term range of 15% series you have?

That's what I'm saying, so we, we, let's not, I mean, it's difficult to say what will be the, you know, stage year growth, but for this year, I've already indicated the growth will be more than 15%.

Last on the Gigadyne startup, if you could update at what stage it is and what exactly is happening. Okay. Ram, you want to take this?

Gigadine? So, yeah, Gigadine has now moved to commercializing, and it is exploring opportunity to make batteries in India. They have started, you know, commercial supplies, you know, to some small customers. And I think we, you know, they have moved from R&D to commercialization right over the last...

And anything would come to our portfolio from that startup or would it completely be a separate entity and you would be an equity investor there?

No, that entity will have its own plans. And yes, I think we will also be, you know, sourcing batteries and, you know, from them and, you know, what I would say, offering them to the market. Because the scope of what they make has applications across multiple industries, and our go-to-market is fundamentally focused on consumer homes, so I think that's where we will focus on, but the entity has its own scope, which is wider and just beyond the domestic applications, including auto and many other sectors.

All right, sir. All the best. Thank you so much.

Thank you.

The next question is from the line of Natasha Jent from Phillip Capital. Please go ahead.

Thank you. Good afternoon, gentlemen. First question on kitchen appliances. So you've mentioned in your opening commentary that... Apart from induction also, the portfolio has grown in double digits. So, could you throw some color as to how kitchen appliances and the segment is doing? This industry has been marred with very, very low growth for the past couple of quarters. So, are you seeing green shoots across the category? And has the downgrading stopped or meaningfully stopped at all?

Yeah, Ram, you want to take this?

Yeah, yeah. I think kitchen in general is performed well in this quarter. I think we had seen some uptick in kitchen last quarter also. I think, you know, so it's now five, six months that, you know, kitchen is trending well. We have done well. We have done well in kitchen and, you know, particularly the Vigard portfolio because With the integration of WeGuard and Sunplane, there is also new energy in the WeGuard side of business. So, I think that's really what has happened. It does look like there is dynamism coming back into the kitchen space again. But there is also going to be significant price inflation, and we'll have to wait to see how that will impact going forward. But right now, it looks like it's pretty encouraging.

Understood. And the second question is on the electronics portfolio. So, here margin guidance is a long-term, I remember in the previous concourse has been mentioned around 18 to 18.5%. We've consistently beaten that on a couple of quarter basis. So, any upward revision here or we still maintain that long-term guidance?

You're talking about the margins for electronics portfolio.

Segment margins. We should just keep a stick to that.

All right. Okay. Thank you.

Thank you. The next question is from the line of Tamir Gupta from IFO Capital. Please go ahead.

Hi, sir, and thanks for the follow-up. More on a strategic point of view. So, I'm just looking at the virus portfolio, and this is across the industry. So, quantum of pricing is high this quarter, and volume is negligible. That has been the case for almost all other players, those who have reported. I just wanted to understand from a broad strategy point of view, why not use this opportunity to gain market share, maybe by not passing the full quantum of pricing, maybe, you know, aim at retaining absolute profit per kilometer or something, rather than percentage margin, and this I am seeing over years, not just this quarter. So, any thoughts you can, you know, give on this piece?

So, the wire business is a fairly commoditized business. It's not a business where you can differentiate your wire on a design, on material. Finish anything. I mean, it's a very tightly controlled thing. You have to produce a product which is, you know, passing all the specifications and passing all the tests. Okay, so it's more a utilitarian product, thereby the margins also in the business is very low. So, the problem with this price war is that you will start it, but you won't be able to end it.

Fair sense. That's all. Thanks for taking this.

It will be a lose-lose for all.

Thank you. The last question is from the line of Nikhat Koor from Dalat Capital. Please go ahead.

Thank you for the opportunity and congrats on a good set of numbers. So, in this quarter, our adspend was 2.2% versus 3% in quarter one FY26. So, for FY27, how much adspend should we estimate?

No, we will be at 2.5%. I think what happened this time was that, you know, the war broke out in end of Feb and beginning of March. So, as we were preparing to start the year, we were not sure what will happen. You know, we had concerns. We even had concerns on whether we will be able to produce certain products because there were concerns on availability of gas, you know, in our factories, both for production as well as for cooking food for our customers. Our factory employees who are working in shifts. So there were all these kinds of concerns. So our priority was not to, we were not sure what will happen. And we were looking at the kind of quantum of price sites and we were not confident that the industry will take it, to be honest. But fortunately for us, I think the industry and consumers have taken it because it's not that anyone could control it. So, we are in an okay place, but for the full year, we will be at about 2.5% of ad spend. Last year, you know, we didn't have such uncertainty, so we actually, you know, spent. And one more thing is, our revenue growth was also aided by price growth. So, I mean, like, like I said, when we do our annual, I mean, like, when we do our planning for a quarter, all these things were not known, you know, sitting in March, but one thing was known is there is going to be significant price inflation. And we thought there could be a demand problem. We were not sure. And the second thing was we could even have a supply problem. So because of all this, we were not confident to spend, but we have started to spend from, you know, May 15th or so onwards we have started to spend. So we will hit that 2.5% spend for the full year.

I think also we budget on, you know, our budgets are done on 15% growth, right, so with a 20% growth.

Yeah, so our advertisement budgets are fixed looking at the January, you know, prices, whereas the prices are significantly moved up from there. We did not revise it, obviously, for, you know, because of all the uncertainties I talked about.

Nika, does that answer your question? Yes, thank you. Thank you. That was the last question for today. I now hand the conference over to the management for closing remarks. Over to you.

Thank you all for taking time to join our earnings call. I would like to thank Anurudha and the team at ICSA Securities for hosting this call. We will look forward to interacting with all of you in the next quarter. Thank you.

On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.