Aditya Vision Limited (AVL) Q2 2027 Earnings Call Transcript

Good morning, everyone. Good day, and welcome to the Q2 and H1FI27 earnings conference call of Aditya Vision Ltd. hosted by Monarch Network Capital Ltd. 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 start and zero on your touch-tone phone. I now hand the conference over to Mr. Rahul Dhani from Monarch Network Capital Limited. Thank you, and over to you, sir.

Yeah, thank you, Dr. Toja. Good afternoon, everyone. On behalf of Monarch Network Capital, it's our pleasure to host Aditya Visions Management. We have with us today Mr. Ashur Vardhan Sina, Chairman and Managing Director, and Ms. Yosham Vardhan, Whole-Time Director. I will now hand over the call to the management for opening remarks, and then we'll move to Q&A. Thank you, and over to you, sir.

I'm sorry to interrupt, sir. We are unable to hear you. Sorry.

Thank you, Rahul. Good evening, ladies and gentlemen, and a very warm welcome to Aditya Division's Q2 and H1 FY27 Earning Conference call. Before we begin, I would like to extend my warmest wishes to all of you and your families on the occasion of Diwali. May the festival bring happiness, peace, prosperity, and good health to everyone. I am pleased to share that Addictivision has delivered its best-ever Q2 performance, with revenue growing 28% year-on-year to Rs.586 crores. This reflects the resilience of our business model, the strength of our customer franchise, and our continued focus on execution. For H1 FY27, revenue grew 27% year-on-year to Rs.1,779 crore, keeping us ahead of our long-term revenue growth aspiration of between 20% to 25%. The quarter witnessed several headwinds impacting discretionary spending, driven by the prolonged West Asia crisis, disruption in energy supplies, and a sharp rise in global food oil prices. These developments heightened inflationary concerns and put pressure on central banks to consider interest rate heights after an extended period of stability. The situation was further compounded by flood and cyclone-related disruption in Bihar alongside rising prices of essential staples and cooking gas amid the ongoing conflict, placing additional pressure on household budgets and dampening consumer sentiment. Despite these challenges, challenging operating conditions, we demonstrated resilience and delivered a strong performance, with EBITDA growing by 32% and translating into an impressive 45% growth in profit after tax in Q2-FY27. Notably, H1-FY27 PAT has already reached over 90% of the entire PAT reported in FY25, reflecting the strength of our operating performance and sustained profitability momentum. For H1 FY27, EBITDA grew by 37%, with EBITDA margin expanding to 9.6%. Profit after tax increased by 41%, with FAT margin improving to 5.4%, reflecting healthy earning growth and improved profitability. While consumer demand has moderated somewhat, underlying demand remains resilient across our market. Same store sales growth for H1 FY27 stood at 18%, compared to just 2% in H1 FY26, when unseasonal rains impacted customer footfalls and sales. Our consistent high double-digit SSG reflects sustained customer traction and continued growth across our established markets, supported by deeper penetration and improving store productivity. Our expansion strategy combines deeper penetration in existing markets with entry into new geographies. As of September 30, 26, our network comprised 214 stores, compared with 188 a year earlier. Our retail footprint expanded by 18.3% to approximately 9.51 lakh square feet. During this calendar year, 26, we have entered three new states, Sathisgarh, Madhya Pradesh, and Res Bengal. As of September 30, 2026, our network comprised 214 stores compared with 188 a year earlier. Our retail footprint expanded by 18.3% to approximately 9.51 lakh square feet. During this calendar year 26, we have entered three new states, Satishgarh, Madhya Pradesh, and West Bengal. As of yesterday, we have made our entry into West Bengal and Madhya Pradesh, opening up additional growth opportunities. We continue to follow a cluster-based expansion strategy, leveraging our logistics infrastructure, vendor relationship, and brand recall to support efficient store ramp-up. Our focus remains on building productive outlets that contribute sustainably as they mature. Alongside expansion, we remain focused on inventory availability and working capital discipline. As of September 13, 26, inventory stood at 865 crores compared with 840 crores at the end of March 26. This reflects stocking ahead of the festive season and competitive pricing due to anticipated price increase across consumer durables. Borrowings stood at 293 crores at the end of September 26, down from 331 crores at the end of March 26. However, borrowings were higher year-on-year, reflecting funding requirements associated with inventory, new stores, and business growth. We see a significant long-term opportunity in India's consumer durable market, particularly across the heartland, We are rising disposable income, increasing financing penetration, and the shift towards organized retail create substantial headroom for growth. Our immediate focus remains on ensuring strong product availability, meeting customer demand efficiently, and staying competitive, while continuing to improve store productivity and maintain disciplined inventory management and cost control. When I look at where we stand today, what gives me confidence is that we are not just expanding our footprint. We are building a more resilient business and reaching a wider set of markets with significant populations and rising purchasing power. Our vision now extends well beyond our established strongholds towards capturing the immense potential of these under-penetrated geographies. Backed by disciplined execution, strong regional understanding, and a customer-first mindset, we believe we are well-positioned to capture this opportunity and deliver consistent, sustainable growth over the medium to long term. With that, I would like to hand over the floor to Mr. Yosham Vardhan to take you through the financial highlights in greater detail. Thank you.

Thank you, sir. Good evening, everyone. We are pleased to present the financial performance for Q2FY27 and H1FY27. For Q2 FY27, revenue increased by 28.1% YOY to 586.23 crores. Gross profit grew by 38.8% to 95.59 crores, with gross margin expanding by 125 BIS to 16.3%. EBITDA increased by 31.6% to 45.65 crores, with EBITDA margin improving by 21 bips to 7.8%. Profit before tax grew by 45.3% to 24.26 crores, while profit after tax increased by 45.2% to 18.47 crores. Back margin improved by 37 bips to 3.2%. Same store sales growth for the quarter stood at 18%. As of September 30, 2026, our store network comprises of 214 stores, which includes 120 stores across all 38 districts of Bihar, 56 stores across 32 of Uttar Pradesh's 75 districts, 33 stores across 22 of Jharsan's 24 districts, and 5 stores across 3 of Chhattisgarh's 33 districts. Bihar contributed approximately 73% of Q2 revenue, followed by Uttar Pradesh at 15%, Jharsan at 11%, and Chhattisgarh at 1%. For H1FY27, revenue grew by 27.3% YOY to 1778.91 crore. Gross profit increased by 34.9% to 287.42 crore with gross margin expanding by 91 bits to 16.2%. EBITDA grew by 36.8% to 170.13 crore with EBITDA margin improving by 66 bps to 9.6%. Profit before tax increased by 41.1% to 127.08 crore while profit after tax grew by 41% to 95.69 crore. Fat margin improved by 52 basis points to 5.4%. Same store sales growth for H1FY27 stored at 18% compared with 2% in H1FY26. Our store network increased by 13.8% to 214 stores compared with 188 stores a year earlier. We can now open the floor for questions. Thank you.

Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may please 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 answers while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

Participants, to ask a question, please press star and 1 now. Anyone who wishes to ask a question, may press star and 1. First question is from the line of Vedic Bafna from Monarch Network Capital.

Please go ahead.

Congratulations, ma'am, on this excellent set of numbers. So, ma'am, firstly, I'll have just two questions. Firstly, I wanted to understand more about our gross margin expansion as to what has led to more than 120-125 odd bits of gross margin expansion during the quarter. Is it the price ics with the OEMs I have taken or is there any other change in product mix or such for the quarter? And what is your second question? Question and second question would be on the margin guidance for the full year.

Okay. There was a price hike, of course, but going by the percentage of our sale comprising where there was significant price rise, it was not very significant in our case. So, around the 75 to 80% dips of margin has come from price size, and rest has, we have, that margin has been through normal trading.

Okay. And, sir, can we, can you brief us down as to which product categories have led to this growth in the current quarter? And also, as we see that during the start of the quarter, we saw extended summer season. So, did we see any strong growth in the AC category sales as well? And which all OEMs have contributed to such growth?

In fact, our growth was mainly driven by sale of, of course, as you said, that extended summer period was there. So, it was led by AC. Followed by mobile and refrigerators. Secondly, what you asked about guidance of gross margin, then our normal guidance will be the same around 15 to 15.5 percent.

But, sir, in H1, we have already reported gross margin of more than 16 percent. So, do we see any kind of gross margin coming down?

Actually, we do not take into account any price, I guess, you know, because it is not a permanent thing to have in your gross margin. So, normal gross margin, when we say about anticipated gross margin, we talk about constant price.

Okay, sir. And, sir, one last question on the store expansion strategy. At present, we are at 214-odd stores. So, where do we see our store count going by the end of April 27? And in the next two years, what kind of store expansion strategy are we looking at?

I think we'll be closing at around 230 stores in this financial year. And maybe More than 230, it can go up to 235. And next year, again, we are anticipating an addition of another 35 stores around. So, that will come to around 270 stores.

Okay, sir. Got it, sir. That's it from my end.

Thank you. Next question is from the line of Venet Prasad from Investec.

Please go ahead.

Hi. Good afternoon, sir. Hi. Good afternoon, Yusham. So, my first question is on demand. First, was it a case wherein delayed Diwali would have impacted Q2 demand, number one, and second is a part of the festive has already passed. How has been the demand so far in the month of October or festives, so to say?

In fact, demand has been slow, I'll put it like this, but we are expecting that as we come nearer to Dhanteras and Diwali, because Dhanteras is the main festivities around this geography, so as we come nearer to the date, Dhanteras date and Diwali, I think it will be going to pick up.

Understood, understood. And would you want to conclude saying that the growth rates which we have seen in the past, and it has come off from those levels as far as SSHG is concerned, is that the right way to understand?

For which quarter? For the current quarter you are asking? Yeah, for October month. Up to 1. This is what I said, that right now sales are slow and very difficult to predict right now what will exactly happen. But sales, growth of sales has been quite slow at the moment. But it is picking up, and we are expecting that as we go into the main festivity, I think it is going to, demand will start picking up.

Understood. And my second question is on OPEX, which is shot up fairly sharply in this quarter. Was there any element of one-off or given we were entering into a new state and we had to incur higher bit of OPEX, which should normalize in the coming quarters?

But our OPEX was not higher in this quarter, I suppose. It was quite controlled, and it was the same level of, I think, almost same ratio compared to the sale, what we had last time.

No, sir, if I look at indirect expenses, those had increased from 17 crores in Q2 of last year to almost 28 crores, 64% jump on our YVY business.

That's right. That depends on the sale also. As you know, as you ramp up to your sale, then so many expenses, allied expenses, they also go up. Just like financing costs will go up, credit card costs will go up, CMS charges will go up, freight will go up. And plus, we were adding 30 stores also in the meantime, in the same one year time.

Understood, understood. Okay, fair enough.

But if you will compare sequentially, then you will find it is a sharp drop, because the factor is the top line.

Okay. Understood. Understood. Thank you so much, sir.

Thank you. Participants who wishes to ask a question, please press star and 1. Next question is from the line of Devanshi Kamdar from Access Capital. Please go ahead.

Hi, am I audible? Yes, you are. Please go ahead. Yeah. Yeah. So, sir, could you give us a bit of a flavor, geography-wise revenue, how it's performed, why or why as well, versus, like, the second quarter last year?

We have already provided this, and in my earning call also, in fact, Yosem has also told you, but I will again repeat. Bihar has contributed around 74%, 72-74%. In 2002, Bihar has contributed 74%, Dharkhand 11%, and UP 15%. And since we have opened just now, it has contributed 1%.

Okay. And, sir, due to the cyclone and those conditions in Bihar, how much was the impact, like the loss of revenue, if you could quantify that?

Bihar, it is very difficult to quantify because of cyclone, but this definitely disrupts market. It is very hard to quantify what loss of sale actually it happens.

Okay, and sir, within the new geographies that we entered, can you give us like any plan for the next two years, like the number of stores that we would be adding in both of these geographies?

Yes, definitely, I can give you. In Chhattisgarh, we plan to open another, we have already opened five showrooms, six showrooms. We plan to open another nine to ten stores in Chhattisgarh. In Madhya Pradesh, we plan to open around, already we will be opening around three stores very shortly. And we plan to add another, let us say, 15 to 17 stores in the coming month, a year. And in West Bengal, we have already opened two stores and another two are in the working process. So we are expecting to add at least 15 stores in West Bengal also.

Understood, sir.

Apart from strengthening Western UP as well as certain pockets of Bihar.

Okay, sir. And would these new geographies, they will be revenue generating, of course, and also a bit generating from our first year of entering, or would there be sort of a break-even period that, you know?

Again, very hard to answer at this time, but whatever we have in fact anticipated, what we have been anticipating, we are getting it also. So we are hoping to have it, definitely it will break even very soon.

Okay, but do we see, during the year, do we see any margin dilution due to the new index?

Actually, what happens, Devansi, is that whatever margin gets diluted with the new stores, that gets compensated by the older stores which are maturing. So, the whole thing gets balanced, more or less. I hope you understand what I'm trying to tell you.

Right, right.

No, no, definitely.

Okay, sir, thank you. That's all from my side.

Thank you. Thank you. Next question is from the line of Bhavya Gandhi from Bajaj Alternate Investment Management. Please go ahead.

Yeah, congratulations on a great set of numbers. I just wanted to understand the impact of eighth pay commission. Will that be a significant revenue driver whenever it comes? In your past experience when the seventh pay commission was there, have you seen any, you know, manifold growth in terms of demand because a large amount will be put in the hand of pensioners? So, yeah. Sorry, in the hand of all the workers. So, yeah.

Yes, definitely it is going to give us, that will act as a very big, strong tailwind for us. Because more money will come in the hands and discretionary spending will be expected to rise. But everything depends on the macro atmosphere also. So, we are all hoping, just like the entire world is globally hoping, that these disruptions will come to an end very soon. So, again, right now also, we are expecting a lot of discretionary money coming into the market. One thing stabilizes. So, if there is any hike to pay commission or something, the money definitely is going to give us a good sale from that.

Right, sir. Yeah, that's it for my answer. Thank you.

Thank you. Participants to ask a question, please press star and 1. Next question is from the line of Yes Santania from Edelweiss Public Alternate. Please go ahead.

Hi, sir. Thank you for taking my question and congrats on a good set of numbers. So, just one question from my end. Basically, like you already guided some 70-80 bps of gross margin addition this year is because of price hike and we have some old inventory which is benefiting us. So, how should we also think about our EBITDA margins going ahead? Should it, our normalized range should decline by 30-40 bits going ahead because of our, are we expanding in newer regions and newer states? That's all? Yeah.

You said EBITDA margin is going to moderate to that extent what extra margin we have been getting. Definitely, it will impact as much as gross margin, but we always give a guidance of EBITDA margin between 8% and 10%, and that is also on an annual basis. We always give a guidance of 8% to 10%, and we are very confident of achieving it.

Got it, sir. Thank you. Thank you for taking my question.

Thank you.

Next question is from the line of Vijay Jange from Systematics. Please go ahead.

Sir, my question is on store opening in West Bengal and MP. So, what will be the average capex per store in both these two states, and is it possible to give average store break level in terms of months, and what will be the payback period in these two states?

Both the states are new to us, so it will be again very too early for me to give any guidance, but usually CAPEX, we have already disclosed in our investor presentation, the CAPEX will be around 90 lakhs per store, that too because of the inflationary pressure coming around in the last one and a half years or something. So, it has gone up to 90 lakh per store, and we expect that it will be breaking even in around one year's time.

Okay, sir. Thank you. That's it from our side.

Thank you. Participants to ask a question, please press star and one now. Next question is from the line of Vedic Bafna from Monarch Network Tabitha. Please go ahead.

Sir, one last question from my end. I suppose since we've entered West Bengal now, so can you just talk to us more about the competition present in West Bengal? Who could be our major competitors over there?

Well, there are, of course, national players are there, like, as you know, Lance and Kromad are there in West Bengal, and local chain is also there, but they are stronger, much more strong in metro rather than in other pericural districts. As you know, we have been targeting border districts first, which are bordering Bihar. So, we are well known also. And so, we are expecting that, of course, by the time competition will come and take place, by that time, we will establish ourselves there.

Oh, okay, sir. And sir, any target as to in the next three years, how many stores are we looking at West Bengal? Are we looking at around 40 odd stores over there in the next three years, 40 to 50 stores?

In the next, not in the next three years, I'll say, but in the next another four years, definitely, we'll be targeting close to Kolgata also, Metro also. So, 40-50 stores as a possibility.

Okay, sir, got it, sir. Sir, any major, I mean, sir, see, our major stores at present currently are in Bihar, and now since we are entering West Bengal as well, so, sir, is there any CAPEX difference? What would be the CAPEX difference per store in Bihar versus the new markets which we are entering?

The KPEX difference is there because of certain things like freight and other items for vendors also. Since we have got in panel vendors, so usually we were opening in this side of the geography, so now we are moving outside it.

So it is around 10-15%, that's it. Okay, 10-15% would be higher than the normal KPEX.

That can be, that can increase by 10-15% at best.

Okay, sir. Got it.

Thank you, sir. But it all depends on how big the store you are opening there. It depends on that. Yeah, yeah, yeah.

Okay, sir.

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

Thank you. Thank you, everyone. And again, I wish you a very good Diwali, my warmest wishes to all of you and your families on the Kedam Diwali. May the festival bring happiness, peace, prosperity, and good health to everyone. Thank you very much for attending this investor conference call. Thank you very much. Goodbye.

Thank you, ladies and gentlemen, on behalf of Monarch Network Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.