Aditya Vision Limited (540205) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Aditya Vision Limited Q1 FY '27 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Devanshi Kamdar from Axis Capital. Thank you, and over to you, ma'am.

Good evening, everyone, and thank you for joining us today for Aditya Vision's Q1 FY '27 Earnings Conference Call. We are glad to have the senior management team with us, including Mr. Yashovardhan Sinha, Chairman and Managing Director; and Ms. Yosham Vardhan, Whole-Time Director. First of all, congratulations to the management team on delivering an excellent start to the year. I will now invite the management to share their opening remarks, after which we will move into the Q&A session. Over to you, sir.

Thank you, Devanshi. Good evening, ladies and gentlemen. Welcome to Aditya Vision Q1 FY '27 Earnings Conference Call. Our earnings presentation and financial results for the quarter have been uploaded to the stock exchanges. We trust you would have reviewed it by now. I'm pleased to share that Aditya Vision has delivered another quarter of strong profitable and market share-led growth despite challenging conditions, reflecting the resilience of our business model and disciplined execution of our long-term strategy. Revenue for the quarter grew 27% Y-o-Y, ahead of our long-term growth aspiration of 20%, 25%, driven by continued market share gains, healthy demand across key product categories and the contribution from our expanding store network and strategic diversification of showrooms in different geographies pan-India. This steady diversification across India insulates our business of weather-centric challenges, and we are gradually shifting towards more stable business throughout the year. As per our strategy [ mooted ] and implemented from last financial year, we have opened only 3 stores in Q1, thereby conserving our resources and optimizing it. This shift is clearly visible in our company's marked improvement in lowering OpEx, which has boosted our profits. The quality of growth was also equally encouraging. EBITDA stood at INR 124 crores, while EBITDA margin expanded by nearly 90 basis points to 10.4%. Profit after tax grew 40% year-on-year to INR 77 crores with PAT margin improving by 61 basis points to 6.5%. The steady improvement in profitability reflects operating leverage, disciplined cost management and improving productivity across our maturing store network, coupled with sound strategies of optimization. Our performance becomes even more satisfying when viewed in the context of the operating environment. The quarter reflected the realities of consumption across real Bharat, where purchasing decisions are often influenced not only by income levels, but also by household sentiment and short-term priorities. During the quarter, LPG availability concerns in large part of our market led to panic reactions in many households. With focus on prioritizing essential spending, consumer sentiments also remained relatively cautious of prompting some families to defer discretionary purchases. In many districts of our geography, fuel supply disruption resulted in discouraging consumers from impulsive and planned buying to preserve liquidity for a large period. The appeal from government to desist from buying gold and other import-dependent products further casted gloom over our customers' buying sentiment. This situation has improved since last quarter, but uncertainty still looms large in wake of continued West Asia war. As already spoken, weather pattern also remains significantly different across our operating geographies. While Eastern India witnessed a relatively mild summer, North and Central India experienced stronger and more sustained [ heat ]. Our expanding presence in Uttar Pradesh, therefore, proved to be a strategic advantage, helping offset relatively softer cooling demand across Bihar and Jharkhand. This demonstrated the benefit of our diversified geography footprint and enabled us to continue gaining market share despite localized disruptions. As you know, our business used to be built around seasonal demand and inventory preparedness. We entered the summer with adequate inventory to service peak demand across our markets. As weather conditions evolved differently across regions, our supply chain and procurement team responded quickly by relocating inventory across [ states ] and optimizing product availability. This enabled us to maintain healthy sell-through while strengthening our working capital position. Inventory stood at INR 663 crores as of June 30, '26, while working capital loan reduced to INR 175 crores, reflecting efficient inventory management, healthy operating cash flows and continued liquidity prioritized balance sheet discipline. Our retail expansion strategy continues to progress in line with our long-term vision. During the quarter, we opened 3 new stores. Our network has expanded to 210 stores as on date. We remain firmly on track to add more than 30 new stores during FY '27. Following our successful entry into Chhattisgarh last year, we remain on track to enter Madhya Pradesh and peripheral regions of West Bengal. Our cluster-based expansion strategy allows us to leverage existing logistics infrastructure, vendor relationship and brand [ recall ], resulting in faster store ramp-up, superior capital efficiency and improved store level profitability due to penetration in newer markets. I would also like to share a very important governance update. In line with our commitment to the highest standards of corporate governance, the Board has approved the appointment of [ M S K A & Associates LLP ], Chartered Accountants, one of the India's leading audit firms and an independent member firm of the BDO International Network as our statutory auditor. With our network now crossing 210 stores, we are entering the next phase of our growth journey. As our presence expands across multiple states and our store continues to mature, future growth will increasingly be driven by productivity improvement, operating leverage and more diversified geographic mix rather than store additions alone. Looking ahead, we remain optimistic, improving disposable incomes, increasing financing of penetration, supportive government initiatives and the upcoming festive season provide a favorable backdrop for demand. More importantly, we continue to believe that the long-term opportunity for organized consumer durable retail remains highly compelling. Rising incomes, increasing premiumization, higher replacement demand and the continued shift towards organized retail across India's heartland provide a long runway for sustainable growth. With that, I now hand over the floor to Yosham Vardhan to take you through the financial highlights for the quarter. Thank you.

Thank you, sir, and good evening, everyone. We are pleased to report another quarter of strong and profitable growth. The revenue for Q1 FY '27 stood at INR 1,193 crores, registering a 27% growth Y-o-Y, reflecting continued market share gains and healthy demand across our operating markets. Gross margin remained healthy at 16.1%, expanding by approximately 75 basis points compared to the corresponding quarter last year. EBITDA for the quarter stood at INR 124 crores with EBITDA margin improving to 10.4%, reflecting an expansion of around 89 basis points year-on-year. Profit after tax stood at INR 77 crores with PAT margin improving by approximately 61 basis points to 6.5% reflecting disciplined cost management and healthy operating leverage. Our retail footprint continues to expand. As of June 30, we operate 210 stores, 120 in Bihar present across all 38 districts, 33 in Jharkhand, covering 22 of 24 districts, 54 in Uttar Pradesh covering 30 of 25 districts (sic) [ 75 districts ] and 3 stores in Chhattisgarh covering 2 out of 23 districts (sic) [ 33 districts ] . FY '27, Bihar remained our largest revenue contributor at 72% for quarter 1, followed by UP at 16% and Jharkhand at 11%. Same-store sales growth for quarter 1 stood at 18%. We also witnessed a reduction of inventory by INR 177 crores compared to March 2026. Now the inventory stands at INR 663 crores and reduction of short-term borrowing to approximately INR 175 crores as of June 30, 2026. Thank you for your continued trust and support. We now open the floor for questions. We request all participants to ask questions which have not been addressed either in earnings call or our investor presentation to save on time and enable us to take more questions from all of you.

[Operator Instructions] The first question is the from the line of Shivam Gupta from Trinetra Asset Managers.

Hello. Good evening and thank you for the opportunity. I want to know that...

Sir, can you please speak little louder?

Am I audible?

Yes.

What was the same-store sales growth in Q1? Also the growth mainly volume-led or higher product prices contributed [ meaningfully ]?

Can you repeat the second question?

Like the growth was mainly due to volume led or it was higher product prices?

Okay. So our SSG (sic) [ SSSG ] in this quarter was 18% and which continued since last 3 quarters. So 18% was our SSG (sic) [ SSSG ] . And volume -- there was a volume growth as well as ASP growth both.

Okay. And my second is like could you give some color on the product category, like how did AC cooler, refrigerator, mobile and television perform?

AC contributed to around 42% of our [ entire ] sales. And other cooling products, we don't give any figure for coolers or et cetera. These are small categories. And refrigerator contributed about 15%.

And how much of the older AC inventory still left -- also it can benefit continue in Q2?

Yes, of course, we have been -- June has been slightly hot. So it is continuing in quarter 2 also. And we are at a comfortable inventory level of AC.

The next question is from the line of Yash from Edelweiss.

So I have 3 questions. So my first question is, like you already mentioned, the summer was delayed this time. So what was the run rate we ended June with the Y-o-Y growth for June? And if the summer was delayed, how was the month of July for us? Is the summer really good in July for us or not?

July, I just spoke summer is good in July, and it has remained relatively hotter one -- month. So it is a good one. What else you wanted to know?

Run rate of June, which was like proper Y-o-Y, the summer [ hit ] June for us. So what was the run rate growth run rate for June month?

We actually all 3 months equally contribute to our top line.

Got it. Got it. And another question is from OEM perspective, there has been a lot of raw material pressure. So has there any change in the incentives or contribution OEM provide in the EMI schemes or anywhere else in our part of the region or everything stays intact?

[indiscernible] I don't think there was any meaningful change in strategy. It was the same just like any other [indiscernible]. And there was no [ year ] policy [shift].

Got it. Got it. And one last question, like now it has been a lot of time for some of our UP stores, around 19, 20 stores has been running for last 2 years or more than 2 years. So can you just provide some gist on what is the sales per store or EBITDA margin difference between the Bihar store and UP store who has been running for last 2 years?

Yes, I'm sorry. Actually we do not give this figure in our earnings call. So I can only tell you the share of UP as a state. So it has gone up from 13% Y-o-Y to 16% in overall sales, which is quite robust. And from 14% even from comparing from quarter-on-quarter also, it has gone up from 14% to 16%.

The next question is from the line of Nakul Gupta from [indiscernible] Advisor.

Congratulations, sir, for great set of numbers. I just have one question, like what has been the rationale for entering West Bengal even when we are just entering Madhya Pradesh, like in the past, we have entered one state per year or so. But now in FY '27, we are heading to moving into 2 states. So how do you see that?

It was, it was a Nakul, it was a very strategic [ shift ], strategy we have not planned. That is also very true recently. But due to sudden political changes and we are expecting quite a lot of growth coming in Bengal. So this was our the only reason that we have started to expand in peripheral -- such cities like Siliguri, Assam, Asansol, Durgapur et cetera, which are on the borders of Bihar. And we are testing -- definitely, we'll be testing waters also in Bengal. And then only we'll decide how further we can penetrate into Bengal.

That's great. That's great. Another question is like what has been the reason for slow growth in store opening in this quarter? And what is the full year guidance for FY '28 as well? If you can provide that, that would be great.

We have been adding around 30 stores, not less than 30 stores every year. And again, we have already told in the earnings call that we'll be definitely doing more than 30 stores this year also. And if we take FY '28, we are going to -- we'll definitely try to even further increase that run rate.

The next question is from the line of Rakshit Desai from IIFL Capital.

First question was what has led to the gross margin expansion during the quarter? And is it sustainable going ahead?

We have been maintaining the gross margins like even Y-o-Y last year. We were more than 10%, 15.3% gross we are sitting on 15.3% gross margin. This year, due to some price hike also which where we could have taken leverage and something, which was around 50 bps. So going ahead, I'll say that we'll be definitely between 15% and 16%.

Got it. My second question was how much was the volume and ASP growth for the quarter?

Volume growth was around 17% and ASP growth was around -- 19% volume growth and 12% -- 8% ASP growth.

The next question is from the line of Vaidik Bafna from Monarch Networth.

Sir, can you share the SSG (sic) [ SSSG ] , I mean, region-wise I mean from Bihar, what was our SSG (sic) [ SSSG ] growth versus in Jharkhand and UP?

I just told another participant that we do not [ give ] our SSG (sic) [ SSSG ] state-wise or region-wise or anything. Overall, SSG (sic) [ SSSG ] was 18% and which has continued since last 3 quarters.

Okay. And sir, second question would be on the product category-wise, which product category are we seeing drastic increase in price as we suppose we see laptops or mobile phones. So are we seeing major price hikes taken by the OEMs? In those..

Price hike by the OEM for laptops, mobile. So in fact, ASP has gone up by 20%, 25% for mobiles and laptop as well. And it has been quite less for air conditioners. It just has been 5% to 6%.

Got it, sir. And sir, I just wanted a guidance on sustainable OPM going forward. This quarter, we achieved a 10.4% OPM. So what do you think would be our sustainable OPM for this year? Where our major store expansion would take place now and going forward as well?

Actually Vaidik, margins are dependent on quarters as well. So margins will vary quarter-to-quarter. And like this, this remains our good quarter, best quarter. So margins are there, but we will be definitely achieving around 9% to 10% of margin.

Sir, I'm saying for the full year. This quarter, we achieved 10.4% for the full year. Can we [indiscernible] 10%.

I told you that we give our guidance in the investor presentation also that we'll be receiving -- we'll be definitely between 8% to 10% and anything better than that is always welcome.

The next question is from the line of Bharat Shah from BCS Capital.