KDDL Limited (KDDL) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to KDDL Limited 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. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions, and expectations of the company as of the date of this call. These statements are not the guarantees of future performance and involve risk and uncertainties that are difficult to predict. Thank you.

Good afternoon, everyone. Sorry to keep you waiting a bit. Thanks again for joining us on the KDDR Limited Q4 and FY26 earnings conference call. I hope you've had the opportunity to review our financial results and investor presentation recently posted on the company's website and stock exchanges. I'm joined today by our CFO and Executive Director, Mr. Sanjeev Masson, and SGA are Investor Relations Advisors. I'm especially pleased that today Mr. Pranav Sabu, Managing Director and CEO of Ethos, is also with us. Thank you. Welcome to all of us. The global economic environment during FY26 remained uncertain and volatile, and this is continuing even now. The global watch industry also operated in a challenging environment during the year. Weak consumer demand in key luxury markets, particularly China and certain parts of Europe, continued to weigh on industry growth, while global brands remained cautious in inventory planning and procurement decisions Amid uncertain macroeconomic conditions. Despite these near-term challenges, and I say they are near-term because I am very hopeful that things will change, we remain very confident about the outlook of our businesses. Global customers are increasingly prioritizing supply chain diversification, reliability, consistent quality standards, and long-term strategic partnerships. This creates meaningful opportunities for companies like us with strong manufacturing capabilities, execution track record, and trusted customer relationships. At the same time, the domestic market environment in India continues to remain encouraging. About the watch components business, which is dials, hands, and bracelets. Despite the difficulty in the international watch scenario, our watch component business, dials and hands, forged a recovery during the second half of FY26 after a quiet first half. Even though Swiss watches continue to face headwinds in several markets, we expect H1 FY27, that is this year, to remain relatively stable for the export-oriented business, with growth being more visible during the second half of the year. We expect the domestic business to continue to remain robust, supported by healthy demand trends and increasing localization opportunities within India, which will show up in our growth numbers. Our continuing growth in a subdued market speaks volumes for the strength of our performance and our capabilities. Over the last few quarters, we have intensified our customer diversification efforts beyond Switzerland. These customers operate at different price points compared to traditional Swiss luxury brands and represent a very good medium- to long-term potential for us. We believe the benefits from these efforts will become increasingly visible over the coming years. The bracelet division continues to deliver strong performance driven by its export business, with deliveries being executed in line with the planned volumes. Bracelets are not covered under the Swissness criteria for Swiss watches, and this provides an advantage to manufacturing of our bracelets in India in the long run. Based on current visibility, we expect the Bracelets business to continue delivering good revenue growth in this financial year and the next financial year, though margins may be moderated in the near term due to lower price points of newer customers which are fueling growth. Now to eigen the precision engineering division. FY26 has been an extremely successful year for the precision engineering business. Revenue grew by more than 35% year-on-year to around Rs. 200 crores, supported by strong momentum across export markets and increasing customer confidence. We remain highly optimistic about the medium and long-term prospects of this business. Export markets will continue to remain the primary focus area for high growth potential. Our strategy remains to deepen relationships with existing customers, adding new customers, and expanding our capabilities selectively. We are undertaking further expansion in this division with backward integration and process enhancement together with some capacity addition. About the packaging division, OrnaPack, here also we witnessed encouraging progress during FY26 with revenue growth growing by over 35% year on year. The growth in this business is primarily focused on the domestic needs of international brands, although we expect business to grow in all the segments that we are in. Supplies to customers, international brands who are sourcing our packaging for the domestic market, that is the Indian market, have already convinced and the initial response has been very encouraging. While the business currently is showing a loss at its ramp-up stage, we expect the division to become profitable during the second half of the current financial year. A few words about Ethos. As you know, Ethos declared its results a week ago, and they have been in the public domain. So I am sure those of you who are interested will have gone through the numbers there. As I mentioned, we have Mr. Pranav Sabu, Managing Director And I'm sure he would be pleased to take any questions that you may have with regard to Ethos. I would like to add my comment that Ethos has done extremely well in FY26, once again, and I'm sure this year, with strong growth in number of stores, sales, profit, and visibility. Finally, about Silver City Brands. As you know, this is a company in Switzerland that owns and operates the Favre Luba brand. I'm sure many of you have already seen the amazing market success of Favre Luba watches internationally, and the amazing stories of satisfied customers, including some top celebs who have chosen Favre Luba watches for their use and their collections. At the end of the year, Savar Luba was already present in over 20 countries with more than 80 points of sales. Sales is much better than expected in the last fiscal, and most stores are actually short of stock while we are ramping up production. But this takes time and effort to maintain the quality and the amazing watch pieces that are produced. We expect to more than double the sales in FY27 and greatly expand our global footprint with exciting new product launches. All of this has been possible only due to the outstanding and unique vision of the brand guardians, including Pranav and including Patrick Hoffman, the CEO. and Chairman of Silver City Brands. Our medium and long-term vision for the brand remains very ambitious, and we hope that you will continue to enjoy the success stories and numbers from this brand in the quarters and years to come. From an overall capital allocation perspective, we have planned capex of approximately Rs.50 crores across businesses during FY27. This includes both maintenance capex and growth-oriented investments aimed at strengthening capabilities, improving efficiencies, and supporting long-term expansion opportunities across our businesses. With this, I would now like to request Mr. Sanjeev Masson to take you through the financial performance of the company.

Thank you, Mr. Sabu. Good afternoon, everyone. Now, let me take you through the company's financial performance. Initially, I will be sharing the standard one financial performance. Total income for quarter 4 FY26 stood at Rs. 145.3 crores and it grew by almost 42% YOY over the last year's NPA. And for the full year, the revenue was 506 crores and which grew by almost 31.9%. When I say 506 crores, it includes only the operational profit and not the non-operational income which is there. EBITDA for the quarter 4 was at Rs. 36.4 crore and it grew by 87.6% YOY, while for the full year, FI26, the EBITDA was 116.9 crore, presenting a growth of 32.2% YOY. EBITDA margin for quarter 4 was ever highest at 25.1% and for the full year, EBITDA is 23.1%. Pat for quarter 4 stood at Rs.19.8 crores with a pat margin of 13.6% and for the full year FY26 pat stood at 76.6 crores with a margin of 15.1%. During the year, the company invested approximately 34 crores for the capex in the various divisions. And now coming to the consolidated financial performance, total income for the quarter for FY26 was at Rs. 585 crores, and it grew by almost 35.6% by UI. And for the full year FY26, the revenue was Rs. 2207.8 crores, and it grew by almost 30.3%. EBITDA for the quarter stood at Rs.95 crore, growing by 25.2% YOY, while for the full year EBITDA was at 363 crores, representing 18.3% growth over the previous year. EBITDA margins for quarter 4 at a consolidated level was 16.3% and for the full year almost at a similar level of 16.4%. Pat for quarter 4 was at Rs.34.5 crores with a pat margin of 5.9% and for the full year pat was at Rs.135.2 crores with a margin of 6.1%. Now, when we exclude the ethos in the consolidated financial results, the watch component business in the manufacturing reported revenue of almost 240 crores As compared to 200 crores in the previous year, so registering a growth of almost 20% YOY. In the precision engineering business, the revenue during the year is 200 crores compared to the previous year revenue of 147 crores, reflecting a growth of 35% plus YOY. On up end, where the base is much lower, the last year's revenue was around 17 crores, and during the current year, we reported 23 crores, representing a growth of almost 37%. And with this, now I open the floor for the questions and answers. You are free to ask questions which you feel are relevant. 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 answers 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 Pritesh Chedav from Lucky Investments. Please go ahead.

Sir, the bracelet is a part of the watch components in the 240 crores, or should we have a number separately?

No, the bracelet is separate. No, not part of the 240 crores.

So, can you give the bracelets revenue?

Around 40 crores.

The other question is, on the two capacities that you have put, one is for packaging and the other for bracelet, What kind of peak revenues is possible from those capacities?

Sorry, what do you mean by peak revenue? Can you have a full utility?

On full utility.

Ritesh, why don't you ask all your questions at one go so we can tackle them all?

No problem. So my second question is on the peak utilization of these two capacities or two businesses, bracelets and packaging, what can be the revenue on peak utilization? My other question is, if you could share the outlook on the growth in precision components, what kind of visibility or backlog or growth that you see in precision, is the other question.

Okay. So, you know, it's a little bit hard for us to sort of define what is the peak utilization because both capabilities and capacity in our kind of businesses, they expand incrementally. When a capability expands, actually our capacity in terms of value also expands. So, let us say I add one machine today. It gives me a new capability to make a slightly higher value Bracelet or a different type of bracelet, which also adds to the value. So, it's hard to say that, you know, and add to that the fact that we are continuing to do the capex required for our, you know, better capability and quality and capacity enhancement, as I told you, both in packaging as well as in bracelets. Yes. So, it's hard to speak about what can be the turnover at peak utilization. I think what is important is to speak about what we expect the turnover or revenue to be from these businesses in the current year. And this brings me also to your second point as to how do we see the outlook for the precision engineering business. For both the businesses.

Sir, you may want to give them the outlook for all the three, Precision, Packaging, and Bracelets.

So, for bracelets and for Precision Engineering, we believe medium-term to long-term, we find it hard to predict as to what's going to happen in one quarter or two quarters, but in the medium and long-term, both these businesses have, we believe they will grow at about 25% CAGR. The watch component business will probably grow a little bit less than that, but again, a lot depends on how the macroeconomic environment changes. It could well grow faster as well.

Just clarifying, 25% is for precision packaging and bracelets, all right?

Yes. Yes.

Okay. Any color on the margins based on the product mix or any changes on the gross margin when one segment vis-a-vis the other?

It's very hard to say that. In today's environment, it's extremely hard to say that, Pritesh, as you will know. We are facing very challenging environments in markets with our customers and so on. If we need to compromise margin a bit for strategically gaining market share and gaining new markets, we have always used that tool in our strategy kit. We try to protect margins, but we also protect the growth of our business. So it's hard to predict which way it's going to go. You have seen the margins have remained stable. What we can say is that we do not expect any great change in the margin picture over this year.

So, last one, what's the size of Favrelua brand now? And these capexes that you put every year, usually at what asset turn these capexes are put? And these are my last two.

I'm not sure if we would like to share those numbers with you right now. Those are confidential numbers, which we would, yeah. But as I said, Pavan Luba is doing excellently well. The results have been better than expected. We are selling more quantity than we expected. Stores have less than the stock they need, and we are doing everything possible to ramp up the supplies. It takes a little bit of time to ramp up with this quality and the kind of components that we use. But yes, you will see a very strong growth. We will see a very strong growth in numbers as well as the footprint of the brand globally.

And asset turn off the capexes? Annual capex that you do, let's say, this year you said 50 crores.

That's not a number that we can share, unfortunately. Thank you.

Thank you very much, sir. Thank you.

Your line has been unmuted. Please go ahead with the question.

Yeah, hi. Very good afternoon, sir. And congratulations on the amazing set of numbers. I have three questions. One, the first one is, how much has been the volume growth versus value growth in this quarter versus and also in the full year for the standalone business?

For which, sorry, for which company are you talking about?

For the standalone business.

For which business are you talking about?

The standalone business, which includes the watch component and the eigen.

Okay.

The second question is, the Capex 50 crores is for watch components, eigen, saver, luba, everything included, or it's just for the standalone business that is watch components and eigen and all the pack. Okay. And the third question is, in the bracelet division, which currently is about 40 crores, how do Do we plan to grow at 25%? Currently, we are just doing steel bracelets. Are we going to diversify from steel to other materials also, or is it going to be only steel bracelets? These are my three questions. And one more is on the EBITDA margins as well, if you can throw some light on that.

So Kunal, first of all, volume in the manufacturing business is something that we actually don't really combine and take it up because these businesses make a very diverse range of products. Hands are produced in millions. Boxes are produced in thousands. Dials are produced in lakhs.

Sir, I'm not asking the unit. I'm asking in terms of percentage how much has been.

So, again, I'm saying that because the volumes are so disparate, it doesn't make sense for us to combine them because today we are making a small quantity of very expensive products and it may morph to larger quantities. So quantity is not something that we count really. Maybe individual businesses at an operational level they may be doing, but at a financial level we don't really sum up the volumes. So I'm not sure I can answer that question meaningfully at any time. As far as the capex is concerned, the 50 crores that I mentioned is in the standalone business. In our businesses, it includes bracelets, it includes watch components, it includes the precision engineering as well as packaging. So it's across that. It does not include investments made by subsidiary companies such as university brands, Fogaluba, and so on. And bracelets, look, 80% of the metal bracelets in the world are steel. So, while we are not ruling out going into other metals, but right now there is a huge scope in development of steel bracelets, and there is a global need for that. So, as that, and we are experiencing that need. So, that's why we believe that a 20-25% growth in the bracelet division is quite easily possible.

Okay. And, sir, you took on a new customer outside Switzerland. Can you give some flavor on which geography are we targeting?

So, look, outside, you know, first of all, I want to say that Switzerland is still by far the largest in terms of value. So, it's like, I don't want to give the impression that, you know, other countries are out there, you know, taking my major market shares. But there are other countries where watchmaking is developing, and some of these countries' watchmaking was already there in the past, and it is seeing a revival. Germany has always been, has strong sort of traditions of watchmaking, so it is reviving in Germany, it's reviving in France. What is little known is that watchmaking in the world actually originated in UK, and UK is seeing a strong revival in watchmaking. The US, which had some very well-known brands in the past, is seeing a revival, and of course for us, we have not been present in the Japanese market. Everyone knows Japan's strength in watches. So, we are seeing that also as a potential future market.

Sir, in Aiden, we have done a commendable job.

Maybe you can, can you come back again?

Sure, sure. Okay, I'll come back.

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 Ganesh Kukta from SM Family Office. Please go ahead.

Yes, sir. I'm audible. Yeah, it's great to speak with you. My first question would be to Mr. Pranav. As post IPO commentary in the conference call, he said about 10x revenue in the next 10 years. And I would like to hear him on brief about that. And second question would be, how do you think about onboarding ultra high or energy brand? Sorry, ultra high?

Your voice is echoing.

Yeah, no, it's fine.

Yes.

Yeah, I'm asking about onboarding ultra high horology brands like Patek or NAP, given their preference for mono brand retail.

Okay, any other questions? Any other questions, Kanish?

No, sir, those were the two questions. Okay, great.

Prana, would you like to answer them?

As I had mentioned, at the time that we listed the company, we had mentioned our goal of growing 10x in 10 years, and I think that we are ahead of that vision. That requires us to give a 26% CAGR, 25.9% or 26% CAGR. I think we've been delivering that through times that are, through the good and the bad times, and I don't think that our vision has changed. I'm committed to delivering that vision, and I feel very confident that our teams have the resources, the partnerships, and the energy to be able to deliver that vision on time. We have crossed 100 boutiques this year, and I do believe that if things go well, we should be doubling our network of boutiques in the next three years, and we are well within our – we are executing as per our vision of the 10x in 10 years given at the time of listing of the company. Talking about ultra-high-end brands, our vision is to serve the Indian customers through whatever means or whatever routes put in a monogrand environment, which is an environment that is exclusive to them. Then we will deliver on that as well, boutiques, and we perform very well with them. At the same time, we want to ensure that our business is not built only upon supply-constrained brands, and we want to make sure that, in our vision, supply doesn't become a constraining factor. And we believe that we will be able to represent many of them to the best set benchmarks around the world.

Sir, many congratulations on the century of boutiques you hit with ethos, and I want to know anything about the connection with Audemars and Patek particularly going on. Thank you.

I will not be able to answer, in particular, Brandwise connections.

Thank you. The next question is from the line of Yash Sondhalia from Edelweiss Public Alternatives. Please go ahead.

Hi, thank you for taking my question, and congrats on good set-up numbers. So, my questions are regarding KDDR majorly. So, first of all, can you help me with stand-alone revenue and EBITDA for Q4 and full year existing for currency? So, currency moments and impact of currency. Second, I want to understand like our ambition or our goal of 25% Kager in Aigan. Can you give us some color about how we are aiming to do that by adding more customers or getting more wallet shares of the customer or something else? Third, a follow-up on the dials business, like in the PPT, you have given a growth number, and also, like we are saying, if the headwinds on the industry from China and some other markets revives, we can have a better growth. So, this 11-12% growth, what we try to, I want to understand, is it including that headwinds, or if those headwinds go away, where can this growth can go? And last on February, like you said, we are expecting to double our sales. So can you give us some quantitative numbers like the new watches which we sold on new plus old and how much we are ambitizing for next year in volume terms, if you can help me for that. Thanks.

So I'm going to let our CFO answer about currency. I'm not sure if that's a number that we can easily share. But Aigen, actually the answer is very simple. All of the things you mentioned, all of them. Deepening, and I mentioned this in my short address as well, deepening existing customer relationships, new customers, and new products and capability. So the growth has come from these steps, and it will continue to come from these steps. I want to point out that actually our market share in the business of precision stamping is extremely small. So there is a huge headroom for growth, and so I believe all the three avenues will be used for the growth. As far as dials is concerned, it's not only dials. I mean, I always talk about dials and the watch components in general. And yes, if the environment in the global market for expensive watches for our export, the brands that we export to, if that improves, then we expect that the growth can go higher than 11 or 12 percent. As far as Favadruba is concerned, I am not sure if we can share exact numbers, but as I told you, we have sold more than we were projecting, and we expect to double the sales in this financial year.

What is actually the question regarding the currency? I have not understood. What do you mean by it?

So, I wanted to understand, adjusted for any gains or losses for currency, what is our revenue growth and EBITDA margin?

We do not calculate adjusted with the currency, especially at a console level. Broadly, it gets even acted out because in KDDL, where the exports are there, we stand to gain. In ETHOS, where mainly the imports are there, there is a forex loss. So, at a console level, there is...

So, my question was more on stand-alone. Like, we have seen a huge jump in EBITDA margin, and my understanding is some part of it is because of currency.

That has nothing to do exclusively with this quarter. So, over the year, as such, this currency movement has been there, and with we escorting mainly to Switzerland and the Swiss franc being a strong currency, we do stand to gain. But I think going forward also, it will be expected to remain similar levels or be stronger. And it's difficult to quantify that, okay, one rupee or Swiss franc leading to how much of my EBITDA margin.

Got it. Got it. Thanks. Thanks for answering all my questions. Thank you.

The next question is from the line of Ajay Surya from Nevesher. Please go ahead.

Thanks for the opportunity. Sir, my questions are primarily on the precision engineering business. So, sir, we were to come up with the new CAPEX in Bangalore. So, wanted to ask, like, has that commissioned or will that commission in Q1? And also the new Capex, which we are talking about, if you can give the breakup, like will that be more on the precision engineering business or on the phase two of bracelet division, which we were to maybe do it sometime after the success of our past phase one. Also, so the second question is on the bracelet division. You mentioned that current revenue for this year is, I guess if I heard it right, around 40 crore. So, maybe if you can help us understand the utilization level for bracelet division at this moment, and how are we expecting that utilization to ramp up going forward, and on the customer when for the bracelet division, I guess it was just one customer who was driving this segment. So, if we are winning any new customers or any progress on that, that will be helpful. So, third question is on, again, the precision engineering.

Ajay, sorry, there are a lot of participants waiting. So, maybe you can limit your questions to two, please, and come back later.

So, just last one, if I can explain. So, just on the precision engineering, I mean, majority of the revenue is being driven by a global OEM for which we were supplying these buzzbar products. So, wanted to understand like, is it like we are putting up this keeping bagged by the orders, maybe all confirmed visibility from the OEMs, or we have one new customer also on that.

So, maybe on that, if you can So let me answer your questions on the bracelets. We are adding new customers. Capacity utilization on the capacity that was existing was about 75% to 80%. This year, as I told you, we are continuously adding to capacity, and it doesn't happen with one big jump. We are incrementally adding capability and capacity, all of which leads to a revenue growth. So, this will go up this year, and it will go up not only due to that, but also due to the addition of new customers. As far as Aigen is concerned, I will let Sanjeev answer that. And you had one question on CapEx.

Yes, yes.

I think Sanjeev is going to answer that. Hi, Ajit. I think you asked a few questions regarding the CapEx. Let me tell you, as far as the Eigen CapEx is concerned, which we started last year, that is still under progress. Hopefully, in the next three to four months, this backward integration of some of the processes, which we are planning to do through this CapEx, will be commissioned, and we will start utilizing the facility. Going forward, for the next year, when we have shared that approximately 50 crores is planned to be invested in GK5, it is spread over all the businesses, but the major part will be for the precision engineering and the bracelet. And as we progress and based on the need and the development in the market, the investments will be done. You also asked about something Talking about the busbars and exports to the customer. For us, I think you need to understand Aigan as such is not a product selling company. For Aigan, it does not matter whether it's a busbar or is it some other component for some other application. We continue to remain a capability selling company, and we will continue to focusing into that. So there are opportunities into the different products and to the different segments, and that has That has been our strategy and that will continue to remain our strategy for going forward also. So it does not matter whether we are supplying buzz bars or tomorrow the customer changes and something else comes up. We will keep selling our capabilities.

Thank you. The next question is from the line of Devanshu Bansal from MK Global.

Please Yes, sir. Hi. Congratulations on Devanshu. Hi, sir. Sir, congratulations on very strong performance across both KVDM standalone and Ethos as well. And Ethos specifically, because the team has achieved the key milestone of 100 stores, plus the format has been sort of delivering significant growth at our performance versus the other consumer names. Just three questions from my end, sir. Do we have anything significant demand elasticity to inflation as we are entering into that phase going into FY27? So based on your historical experience, do we have any evidence of maybe some growth impact due to higher inflation? Second, on margins, I wanted to check from P&L perspective, last year, our store expansion was quite aggressive. So, that impact of new store additions is already in the P&L now. So, can we assume that the worst is behind us from a margin perspective, and incrementally from here on, we should see margins improving? And thirdly, quite a commendable performance on working capital front. There is a sizable optimization that has happened in FY26. So, wanted to check if we could highlight a few key initiatives, as well as whether we can expect a continued improvement on this front going ahead. So, yeah, these were my questions.

I'll let Pranav answer the questions on ethos. As far as demand elasticity is concerned, I think you mentioned, you are talking about price elasticity. If inflation goes up, will demand suffer? You know, we made made-to-order products, right? So they are made specifically for customers' specific needs. So, it's not really going to be impacted if there is inflation and if some of this has to be passed on to the customer. It doesn't usually impact. But in the end, it also depends on how much is the overall general inflation, right? If there's overall inflation and uncertainty and, you know, demand globally in the, let's say, growth globally dips, right, then everyone starts to make corrections in their stocking, in their inventory, in their purchases. So, that is a different thing, you know, where the global demand drops. We don't see that impacting us right now. Even last year was a, you know, uncertain and quite a heavily impacted year. We all know that. But we have seen the growth that has happened. And we believe that if things moderate from here on and, you know, stabilize, we will be pretty much on track. So there is not that much of an issue if, you know, there is a little higher inflation on our demand. That's what I wanted to say. For the ethos questions on margin and working capital, Pranav, will you take them, please?

Thanks for the questions. I think our focus, as you know, right now will remain upon increasing our network Because we believe that the opportunity in India is massive, and I believe that no one else is better equipped to take on this opportunity and deliver customer excellence as we are. Our focus right now is a further acceleration on store openings. Yes, this has been the most accelerated development this year. So are costs getting baked in? Yes. However, setting directionally for us to be able to double the network in the next three years is my goal. Maybe it will take four years. My goal is to double the network in the next three years. I do believe from a margin perspective, a little bit depends upon currency fluctuation. I think that if currency is stabilized, we are in a good position. I have to say whether it's bottomed out or it's going to be better, etc. Our focus is to keep making sure that it becomes better. If the rupee stabilizes, the full price will be passed on, and I don't see any impact on volumes if price of luxury products is priced on. It's just that we do it every six months, and in luxury, we want to make sure that that price, once a certain currency has reached a certain stage, Fundamentally, it's there to stay. We don't want to be, therefore, there's a time gap in it. Once it stabilizes, I do believe margins will become better. Is there costs that are increasing in making sure our foundational costs, foundational layers are better? Yes. Today, we want deeper relationships with our brand. For example, we have dedicated brand managers, etc. Those are the costs that have come in already. A little bit may come in. As I mentioned earlier in my interactions as well, we're going through this three-year investment cycle, after which it will start to pay off very, very well. This year, April was a fantastic month, in fact, one of our best months in terms of growth, and we are continuing to focus on growth over everything else at this point of time. In terms of working capital, we are making massive investments into our merchandising team, into our processes, and into strengthening our relationships much more with our brands so that they understand deeply what sells, what doesn't sell in India, and to be able to cater products specifically for this market. We've gone from nearly 247 days of inventory to 221 days at cost. It is something that we're going to be focusing on. I've announced that we are doing an AI lab. AI labs is an internal thing to be able to help all our departments make better decisions in terms of pace, in terms of capability. And our biggest focus area will be on ordering better, so much more granular level with the team sizes increasing and their KPIs being linked to it. 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 Pranjal Mukheja from Growth Spear Ventures LLP. Please go ahead.

I'm audible.

So, thank you for giving me this opportunity. I have a couple of questions. So, firstly, on the bracelet side, maybe two, two and a half years back, I got an opportunity to visit the plant. So, around then, we were talking about, you know, that the current capacity of bracelets will be close to 70,000, 75,000 units per year. And, you know, we'll incrementally increase it to a much larger number, given the fact that a lot of the Chinese players, I mean, the smaller players are also doing some 300,000 units capacity. So, like, can you just, like, share some roadmap on the, like, how this capacity will increase here? The second question, yeah, the second question is on IGN, basically. Just wanted to understand, And now that we're further expanding the capacity here, if you could just provide the capacity before the addition and what would be the total capacity post the expansion. And secondly, like you mentioned that, you know, we're also thinking of backward integrating here. So does that mean we're thinking of entering into forging, casting, that kind of a setup? And one question in this I wanted to understand. Currently in iGIN, what kind of metals are we dealing with? It's primarily steel or like some other metals also we're dealing with because of the other industries like aerospace and, you know, global consumer electronic, the electronic industry, you know. So these are my two questions.

So second question, first, I'll just have a go at it. Sanjeev, you can supplement it. Again, you know, it's hard to specify or calculate in terms of capacity. I know you want to plug in a number in your model over there, but if you remember seeing the Eigen factory or the bracelet factory, maybe you saw both of them, there are very many different products that are made. And how many products we can make really depends on what is the mix of orders that we get. We can get orders, three orders for, you know, a million pieces, or we can get 20 orders for much smaller numbers. So we don't know. So we don't really calculate quantity in terms of what is the kgs of production or units of production. We really tend to see it in terms of value. And as we have said, we expect value to grow at about 25% CAGR. As far as the bracelet is concerned, you are right. 75,000 was the approximate kind of capacity. As I told you, we are at about 80%. It is true that China has larger plants. Many of the larger plants actually make a much lower quality, so that has to be taken into consideration. This is a fact across businesses in every industry that Chinese factories are larger than Indian factories, and it's not easy for Indian factories to match the scale of China. I'm not saying anything new. That's unfortunately a reality of manufacturing in India. However, our plan is to compete with China, not always on price, but on quality and producing and delivering the best value. Our goal is not really to race with China on producing cheap parts, but to race with the best in the world on producing higher quality and delivering high value. So, the expansion in Breslau, I have already spoken about it earlier, so I am not going to say that again. Okay. So, I hope that answers your questions, Ranjit.

In the expansion, if not, in terms of what is the output, actually, this is a follow-up. My question was not answered completely.

So, as I told you, we tend to look at, it's important that we understand that we look at our, in terms of value. What is the value of production that we have given? And the value, as I told you, will grow by about 25%.

Sir, not the sales part, if you could just provide like how much the production area has increased or the facility has increased and a little bit on the backward integration, but what exactly what are we thinking of doing in backward integration?

The backward integration is a plating process, which we were getting it done outside. Now for further ensuring the quality and the consistency as well as the ramp up of the volumes which are happening, we want to bring this process in-house. That's the backward integration of that. And you asked about earlier these revenues, which Mr. Sabu has already answered, and the capacity in terms of prices, it becomes very difficult. We make parts which are 2 paisa, and we make parts which is 200 rupees. Now, going forward, the only thing which has to be seen is what is the growth possible.

Sir, in terms of size, if you could quantify, in terms of size, how big is the facility?

Ganjal, we cannot quantify. And you are welcome to, you know, whenever we are visiting next time, we organize a factory visit, you are welcome to come there, and we can show you why it is difficult to quantify. It doesn't mean anything. If we were to say 5 million components, it doesn't mean anything.

Right, sir. I understand. Thank you.

Thank you. The next question is from the line of Sujal Janwar from Opportunity Wealth Advisors Private Limited.

Good evening, sir. Am I audible?

Hi. Yes, Sujan, you are.

So, sir, first question is on part of my bracelet division that if we are expanding and increasing the capacity, are we like on the bracelet part of division, increasing the capacity or doing the backward integration? And my second question is in the part of the precision engineering that in the part of how much CAPEX we are doing for the precision engineering and this is for also backward integration. Am I right?

So these are your two questions? Yes, sir. Yes, sir. Yeah.

So I think somewhere you have not understood properly. The backward integration is being done in the precision engineering business, not in the bracelet.

Okay.

That is the plating process for the precision engineering business. As far as the bracelet business is concerned, there we are planning some capacity increase in line with the market requirement. But more is your specific question regarding the bracelet.

So for the bracelet, your increase, doing expansion in the bracelet division, so how much increment capacity are you bringing for the bracelet?

Then, we, you know, you tend to look at it in terms of quantities. We tend to look at it in terms of values and capabilities. But if I were to say that, I think we are going to expand from the current or from the original level of about 75,000 over the next 12 months to about 110,000 to 120,000.

Okay, sir. And, sir, one last question on the part of overall revenue part on the standalone KTDL. Is it more of volume growth or realization increment happening on the top nine words?

The same question with the different shades of the volume and the value. For us, we are worried and always concerned about the value growth. Whether it comes through a mix of the segment growth, whether it comes through the volume, or whether it comes through the average realization. So, neither we monitor nor we feel it's important to monitor. in terms of payback experience.

That is question number one. The second is that AFP on FI25 versus FI26 has kind of flattened. So how should we think about that? And last in CHF cover, obviously, look, the CHF is now 122 versus it was 106 when you held the analyst meet. So how much have you covered for and what's the journey left?

Pranav, would you answer those questions, please?

I didn't understand the last question.

How much of the CHF exposure do we cover?

No, no, I think that was not the question, the pricing. So essentially, look, versus rupee, CHF was 106, now it's like 122, and obviously we passed this increase in prices gradually. So how much have we passed on and how much is left to be passed on, which is hitting our gross price?

Understood, understood. I got it. It's different for different brands, but I'll answer it. So the first question was on how's the experience on new stores. It is, as per expected lines, it is exactly what we thought it would be. Monitoring this, as you go into Tier 2 cities, it takes a little bit longer, but then costs are also lower. So, we have a station, and year one of an accelerated expansion gives us the confidence to continue our acceleration, and as I announced that we will be opening many more stores this year and the next three years, we are signing on aggressively locations because we are confident on how well we are doing with these boutiques. Is it sometimes a mixed bag? Yes, but is it a world decision are we regretting? Some may take a little bit longer than the others. So, a store like Srinagar, in six months, someone in the first month. So, it's a good mix. None of them do we regret. The second question was on, I forgot the second question.

ASP.

ASP is going to, we are not focusing on ASP increase. That is not our focus. As we go into tier 2 and tier 3 cities, it is natural that volumes will increase faster because the kind of stocking we do over there is different. We were, in the first three years, after the listing, we had taken more luxury positions. Our luxury expansion will be more calibrated because of the fact that we feel we are the ultra luxury, because of the fact that we feel we are well exposed over there, well or well entrenched over there. It's not that we've covered it, but the growth is on the ultra ultra luxury where we're talking 50 lakh, 1 crore, etc. The growth on the price where the brands are more in the one-and-a-half to three-and-a-half, four-lakh-rupee price point, that will be into tier two where it matches better. A one-crow-rupee, Jacob, or a one-crow-rupee watch once in a while? Yes, but we don't need to stock that over there. That can come in from our main network and be fed in from there. We will also be launching a format. We believe that the threat from wearables is over, and that allows us a lot of expansion back in a price point between 25,000 and 2 lakhs, and that will be a new format that we are working on. It's very exciting, and it will further give us growth into the future.

And this new format is a part of your doubling guidance, which you just gave?

It may be not a very significant part, but it will be. Definitely, we are going to be launching this year a new format over there, which is going to be very exciting, very different from what we have. But we had earlier believed that, you know, 10 years back or 7, 8 years ago when Apple Watch had launched, we had decided to go slow in that sector. We believe that threat is over and that there is a lot of expansion possibilities over there as well for us. Brands want to work with us over there. They're welcoming us over there. We've tied up contracts already. So there's a lot happening over there. On your question on ASP, I think for us, revenue growth and margin is important. Again, not so much the average selling price per watch. Thank you. Need to be right now in general. Now, it takes time to pass it on for two reasons. One, it is not one brand that is deciding. It is 50 brands that is deciding. Everybody looks at the industry. It is comparative. It is comparative in nature. Typically, it happens once in six months. And secondly, nobody wants to be raising prices and dropping prices because that erodes customer confidence. And at no point of time do I want to erode customer confidence because there's a volatility in currency. Whether it is one, two, or three years, we'd rather win over customer confidence. That's the difference that I would see. But yes, 7-8% will be even if the Swiss franc doesn't move anymore.

Sir, when you said expected lines, would 12-month exit from the start of a store mean we break-even? I am saying exit month, we have 12-month break-even.

Can we move to other, please, because there are a lot of... But yes, yes, yes, but we can move on from there, yeah.

Thank you. The next question is from the line of Naman from Sangree Family Office. Please go ahead.

Thanks for taking the question. Most of the questions are answered. Very good chat-up for us. Just wanted to understand that in our resilient components business side, which of these sectors are witnessing the fastest growth of, you know, the EV, aerospace, defense, auto components? Could you give us some light on that part, which or any visibility in these segments that we are getting into the next year? Okay. Do you have a second question, Naman? No, it was on electroplating, but that is not answered, right? So we are already activated that part, correct?

Yeah, yeah. Would you like to answer that? Okay. I think, you know, so actually the way we look at it and the way we are experiencing it, all these sectors that you named, they are actually very robust. So we have to decide where we are going to Obviously, EV, the energy storage, these are sectors where we've got momentum, we have relationships, there's a lot of scope to expand that, so that is growing. On electronics, again, there is a lot of momentum. Our market share in some of these is very small, right? So as we actually get into the segment and we understand the needs of customers and we marry and we sort of tally our capabilities with that, it's like, you know, you are standing at the beach and looking at an ocean ahead of opportunities. Now, which direction you want to lift, the ocean is large everywhere, because compared to our size, the ocean is very large, right? So we have to decide which areas we want to focus on, and as I think we've spoken earlier also, our focus, because of the momentum that we are getting, is in the EV, the energy storage, and the electronic components. We have customers in other segments as well. And if opportunities come up, we will, we will, of course, examine them. But the strongest growth we see are in the sectors I mentioned.

Okay. Thank you. Oh, I'll just come back in the queue.

Yeah.

Thank you. The next question is from the line of Shreyanj from SWAN Investments. Please go ahead.

Hello. Yes, can you hear me? Yes, two questions. One is on the ethos. So when we're targeting 2x revenue stores in three years, all these stores are going to be cocoa or do you sort of look at a franchisee way of expanding stores? Because you spoke about getting into tier two and below, right? Right. And my second question is, when I look at the standalone P&M, sir, last five years, our revenues would have doubled. But if I just look at the other OPEX bit, that has grown higher than your revenue caggers, right? So I'm just trying to understand your majority of your portion is exports, revenues is exports. So you're earning in maybe dollars or CHF, but you're spending in INR. So, shouldn't there be some kind of operating leverage that sort of plays out? And, you know, when I look at your breakup of other OPECs, it's largely consumables and job work expenses. So, I'm just trying to understand, is this volume-specific pay that you give to your contractual labor, number of volumes that they do, or it's a fixed salary, or how does that work? Because I was expecting some kind of leverage in that line item.

So, I mean, obviously, leverage is a part of the business. You said, right, we earn in dollars and we spend in rupees. But don't forget that the inflation in India, including wage and manpower cost inflation, is far higher than abroad, right? In Switzerland, I'm not sure if you're aware, but in Switzerland, the annual increment that a person gets usually is between half to 2 percent. In India, 10 to 11 percent is pretty much the norm. So, it's, you know, it's not, yes, there is operating leverage in that way, but it's, we should not overplay it. You can't really rely on that because costs in India escalate much faster, which is one reason why the Indian rupee keeps depreciating. I mean, that's basic economics, which I'm sure you are familiar with. As far as the arrangements on labor and contractions, they are a mix of arrangements. Sometimes it is dependent on volume, sometimes it is a combination of volume and time, and in some skills it can only be time, it cannot be volume. So it's really a combination of many things. And overall leverage comes from the way you approach the business. We don't see the, you know, breaking it down into segments like that.

I would like to add into that. You have looked only into the one side of that we earn in the dollars or in the foreign currency, but we do have a lot of import and a lot of expenditure for the market and the business promotion in the foreign currency. So, to that extent, we have exposures into that. And number two, in the last five years, the growth of the different business segments has varied. The watch component growth has been lower than the other businesses, where the margins are different. So, this is a mix of all those things. It's difficult to point out that, okay, only because we are in the currency and then, accordingly, the margins should improve. But overall, if you The last four, five years, the margins have been either stable or it has been growing. Yes, there is always a possibility of growing, but more than what we have grown.

I'm going to, sorry, due to time constraints, we're going to take one more question. It's already, you know, one hour, ten minutes.

Sir, my ethos answer is yet pending, the first question.

Sorry, you had said, which was? Yeah, I can answer that quickly. We have not done anything other than cocoa. We are not ruling out anything in the future, but at the moment, we are really focusing on company-owned, company-operated stores.

Also, I said between three and three years. Yes, between three. I just want to make sure that we underline that.

I can answer that, you know, hard to sort of look at one quarter performance and try to judge anything by that. You have to look at years, and you have to look at a slightly longer term. As I mentioned in my speech, we expect revenues grow 20 to 25 percent. We expect margins profile to remain within a closed bank. Again, it depends how the product changes. There are some segments So, just a

follow-up on that, in that case, if you could help us understand what drove margins in this process? Sorry?

There is some echo problem. We are not understanding. We are hearing our voice and your voice is echoing again.

Is this any better? Sounds better now, yes. Looks better.

Right, so 6% increase in margins, if you could break it down in terms of operating leverage, better product mix, currency benefits, so that we can sort of make some...

It's difficult to answer. There are different business segments, export domestic mix changing, and the growth of the opportunities in the different segments. But more or less, we have already shared the indications of the revenue growth. The EBITDA margins and the overall margins will be in the same bank. It's not going to change dramatically either upward or downward. All right.

Thank you. Thank you for answering my question.

Thank you. Thank you. Ladies and gentlemen, in the interest of time, that was the last question. I would now like to hand the conference over to Mr. Yashovar Dilshabu for closing comments.

Thank you, everyone. I hope you've been able to answer your questions to your satisfaction. If you need any further clarifications or want to know more, please contact SGA, our Investor Relations Advisors. Thank you once again for being part of this call, and thanks, Sanjeev. Thanks, Ranav. Bye. Goodbye.

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