D. P. Abhushan Limited ($DPABHUSHAN)

Ladies and gentlemen, good day, and welcome to the D. P. Abhushan Limited Q4 FY '26 Earnings Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ajit Mishra from EY Investor Relations. Thank you, and over to you, sir.

Good evening. Thank you for joining the call. I'm Ajit Mishra from EY Investor Relations. Before we begin, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties and other factors. It must be viewed in conjunction with our business that could cause future result performance or achievement to differ significantly from what is expressed or implied by such forward-looking statements. Please note, the press release and the financial results, investor presentations have been already circulated via e-mail and are available on the stock exchanges as well as on the company's website. In case anyone has not received the documents, please feel free to reach out to us, and we'll be happy to share them. To take you through FY '26 results and business performance today, we have with us senior management team of D. P. Abhushan Limited. Mr. Anil Kataria, Wholetime Director; Mr. Vikas Kataria, Promoter; and Mr. Manish Laddha, Chief Financial Officer. We will begin the call with the management's opening remarks on the company's performance for the quarter and financial year ended 2026, followed by a question-and-answer session. With that, I will now like to hand over the call to Mr. Anil Kataria sir. Over to you, sir. Thank you.

Good evening, everyone. And thank you for joining us on the quarter 4 financial year '26 earnings call. [Foreign Language] Vikas, please.

Thank you, Anil, and welcome, everyone, on the earnings call. During the year, the company further strengthened its footprint in Central India, with the successful inauguration of a new store in [indiscernible], following the expansion in Ratlam earlier in the year, taking the total showroom network to 11 -- [ 12 ] stores we have. Our total retail store area stood 53,650 square feet, supporting our growing scale of operations. On the productivity front, we delivered an average revenue of 7.6 lakh per square feet and INR 339 crores per store for FY year '26, reflecting a strong -- strong store level performance and efficient utilization of retail estate. Our ticket size remained healthy at 1.27 lakh, indicate balance demand across categories, while inventory turned around to [ 4.7 ], highlighting efficient inventory management and faster stock locations. The company has also strengthened its risk management framework through steel adoption of gold metal loans and hedging mechanisms to manage volatility and maintain margin stability. Effectively, self-building inventory against gold price volatility. From a product mix perspective, wedding jewelry continued to dominate at 60%, followed by the festival and light weight building at 25%, and corporate and other gifting at 15%, reflecting as well diversifying and demand alone portfolio. Our store level conversion remains strong, with the key stores such as in Ratlam and Ratlam to delivering higher than average conversion level, while overall conversion has remained largely stable at 82%, 83%. During the year, we continued to deepen our presence across key markets, strengthened customer engagement initiatives, expand our retail footprint and invest in digital and omnichannel capability to make the buying experience more seamless for customers. Going ahead, we aim to expand our footprint in [indiscernible], Rajasthan, Gujarat, Maharashtra, [indiscernible] through a disciplined research-related approach met by detailed reason analysis, customer presence. At D. P. Abhushan, our focus remains clear, strengthening customer trust, improving operational efficiency, expanding responsively and continue to build a long-term sustainable business. With that said, I would now like to hand over to Manish Laddhaji for detailed financial overview. Thank you. Manishji, please.

Good afternoon, everyone. Let me now walk you all through the financial performance of Q4 FY '26 as well as the full year ended FY '26. For Q4 '26, the revenue -- total revenue stood INR 1,338.9 crores, registering a strong growth of 87% year-on-year, driven by continued traction across operating markets. EBITDA came in at INR 73 crore, up 72% year-on-year. EBITDA margin for the quarter stood 5.45%, and for the Q4 FY '26, stood INR 60.6 crores, up 101% year-on-year, with a margin of 3.78%. This strong year-on-year growth reflects our improved business scale and profitability. For the full year FY '26, revenues stood INR 4,070 crores, reflecting a healthy growth of 23% year-on-year, supporting by a strong fact lender varying demand, especially in the second half of the year, along with the contribution from newly added stores and improved customer engagement initiatives. EBITDA stood INR 309 crores, reflecting a strong growth of 77% year-on-year, with the EBITDA margin improved to 7.61% and expansion to 234 basis points over FY '25. This improvement was driven by better scale, improved operating efficiency. PAT stood at INR 212 crores, delivering a robust growth of 88% year-on-year, with the PAT margin improve to 5.2%, an expansion of 180 basis points over FY '25. On the product mix side, the revenue contribution from the gold grew 80% year-on-year for the quarter, remaining the primary growth driver for the quarter. Silver, certainly segment which made exceptional and exemplary growth arising from INR 16 crores to INR 69 crores, reflecting a sharp 333% year-on-year increase, driven by higher customer traction and improved product mix. The diamond segment also reported a healthy growth of 38% year-on-year, increasing from INR 26 crores to INR 36 crores, supported by growing acceptance of [indiscernible] and the premium offering. For the full year FY '26, gold segment revenue stood at INR 3,702 crores against the INR 3,071 crores in last year, registering a steady growth of 21% year-on-year. The silver segment emerged as a key growth area, increasing significantly from INR 68 crores to INR 183 crores, delivering a strong 168% year-on-year growth. On the other end, the diamond segment saw a marginal decline of 5% year-on-year, reflecting some moderation in the premium discretionary spending. With that, I would like to now open the floor for the question-and-answer session. Thank you.

[Operator Instructions] The first question is from the line of Chetan from Systematix Group.

Congratulations to the team on a very strong top line performance. I had a few questions. So firstly, during the quarter, we witnessed a drop in our gross margin. So what drove this Q4 margin compression? Like was it product mix or lower inventory gains as the gold prices have stabilized or some other reason?

See, definitely, the gold prices playing very important role in the last quarter, which everybody has visualized because of the geopolitical situation. But nevertheless, on the SPV side, for the entire year, when we look at the numbers, so the DC has been increased almost 30% as compared to the previous year where we had a duty of around 7.72% compared to with the 10% GP we have achieved during this year.

Okay, sir. And sir, secondly, sir, we have now initiated gold metal loans and hedging strategy. So how should we look at, say, steady state margins going ahead?

It may have an impact slightly on the margin side. But yes, we have started taking all the possible segment of the products available in the market, whether it is BNL or whether it is future market or any kind of leasing, which is available in the market. I mean it is going to help in our working capital cycle also. And definitely, the finance cost is going to gradually down also.

Okay. And just, sir, just one last question. If you can tell us how has the demand deal in April and May until now?

So, so far as April and mid-May when you look at, which is before p.m. comment. So I think the growth was doing good at us. We did not find any kind of pressure on any of the store and the walk-ins are -- keep on coming. I think so far, it was a very good 1.5 months.

The next question is from the line of [ Ganesh Gupta ] from SS Family Office.

Sir, I wanted to ask you, you had discussed the QIP plans and multistate expansion strategy during the Q2 FY '26 call. So over the next 5 years, what kind of revenue scale does the company internally want to achieve through this expansion? And what would be the key drivers behind this growth? Would it be the store additions or same-store sales growth or market share gains?

Thank you, Kanish, for asking the question. So yes, we are planning to do clearly, but we just hold this [indiscernible] because the market is not in the favor. So we have not completed this really. But yes, point of the growth plan. So we are on the standing, we are growing every year. So this year, we also -- as we mentioned, we have planned to expansion in [indiscernible] and Maharashtra. So I think every year, like this year, we are going to open like 3 to 4 stores this year as well as we already finalized the one [indiscernible]. So we are opening on [indiscernible] as well.

Sir, approximately after the next 5 years, internally, any discussions on the revenue that you want to achieve?

So yes, after 5 years, by the end of 2030, so we grow almost like 25% to 30% every year.

In terms of top line, sir?

In terms of top line, yes.

Okay, sir. And a follow-up on this also, as the business scale, as you said, do you expect operating leverage benefits and margin improvement once the newer stores mature and fixed cost gets absorbed by the larger revenue base?

Yes, definitely, the margins are getting better, and our efficiency will also better. So unlike definitely, the couple of their professional team will join us. So we are trying to achieve the [indiscernible] level.

Sir, when can we see the improvement kicking in rapidly?

Like every year, every year, you can see the -- some improvement in the margin.

Okay, sir. And can you provide me with a number of the same-store sales growth?

So yes, the number of the same-store sales growth is 20% is the HSB growth.

And this would be Y-o-Y?

Y-o-Y, yes.

Okay. Sir, just the last question would be that last few years, operating cash flow conversion has remained weak despite PAT growth, largely due to mainly inventory requirements. So how would the working capital normalization be going forward? And when can the business start generating sustainable positive operating cash flows?

So we are into the jewelry business where the major portion is into the inventory. So whenever we open a new store, so inventory will require. [Foreign Language]

[Foreign Language] FY '30 [Foreign Language]

FY '30 [Foreign Language]

[Operator Instructions] The next question is from the line of [ Shriya Bhatia ], an individual investor.

Sir, multiple questions, a couple of questions to ask. So firstly, what is the outlook for FY '27 demand considering that the gold prices have increased and the geopolitical uncertainty? So can the company sustain 20% plus revenue growth going ahead?

Definitely, we can achieve like the 20% growth going ahead and because of the highly wedding demand in the country. And we are promoting more on only gold policy and like the exchange gold. So we are pretty much shortly on gold, 20% plus [indiscernible].

Okay, sir. Okay. That is really helpful, sir. And sir, can you provide some light on the recent customer demand scenario post government announcement in the regency of present, basically the [indiscernible], Rajasthan region? How's the customer demand scenario there?

Yes. So there is a customer demand [Foreign Language] So in this next month, July or June or July [Foreign Language]

Okay, sir. And sir, one last question from my side is. During FY '26, how much benefit came from the inventory gains due to the increase in gold prices?

So around 20% to 30% inventory gain is coming through the book.

[Operator Instructions] The next question is from the line of [ Shafat Husen ], as an individual investor.

Congratulations on a good set of numbers. Sir, hello? Sir, my question is that [Foreign Language] Q1 FY '27 or Q2 [Foreign Language]. FY '25 because the Q1 is [Foreign Language] the INR 36 crores question on profit this quarter in Q1.

Right, right, right. Definitely, [Foreign Language]

The INR 36 crores [Foreign Language]

Yes, yes.

[Foreign Language]

[Foreign Language] we are planning to open in [indiscernible] or therefore, we definitely future plan [Foreign Language]

Sir, my last question, maybe sort of [Foreign Language]

[Foreign Language] I think this is a good, I guess becoming [Foreign Language]

The next question is from the line of [ Subhanu Mangal ] from Asset Capital.

Yes. Sir, I hope I'm audible. [Foreign Language] around 80% plus growth [Foreign Language] [ Hamada ], 20% [Foreign Language]

Sorry. Can you ask the question [indiscernible].

[Foreign Language] Q4 FY '26 [indiscernible] growth 80% plus [Foreign Language]

Okay. So FY '26 [Foreign Language] volume growth may ramp volume [indiscernible] 20% decline overall. So I think industry has [Foreign Language] to be the gold price high or continues to be gold price [Foreign Language] FY '26. [Foreign Language]

[Foreign Language] total growth [Foreign Language]

Sorry?

[Foreign Language] Is my understanding correct?

Yes, yes.

My next question on margin. [Foreign Language] gold segment growth around 21% and diamond segment around [Foreign Language] Your margin guidance [Foreign Language] FY '27?

Margin guidance of [ 6.5% ] [Foreign Language]

The next question is from the line of [ Abhih Bilal ], an individual investor.

Hello, Am I audible?

Yes.

Congratulations on a good set of numbers. So a couple of questions have already been answered. So like my last question would be like what would be the revenue guidance for the coming year, FY '27 and FY '28?

FY '27 and FY '28.

Yes.

So FY '27 and FY '28, the revenue we are planning around like 20%, 25% growth. So 4,800, and next year will be [ 5,500 ].

Okay, okay. And the store expansion would be like in the range of like around 4 to 5 stores per year, that's correct?

Yes, Yes.

The next question is from the line of Ganesh Gupta from SS Family Office.

Sir, on Q1 of FY '26 May peak margins [Foreign Language] FY '27?

Sorry Ganesh, can you please come again?

Yes, sir. Sir, Q1 FY '26 May, our margins were 10% approximately. And in Q4 FY '26, it has come down to 5.5 percentage. So how are we planning to get back on track to achieve the 10%?

See, the margin is going to remain steady. So far as gross margin is concerned, yes, the business is going to achieve approximately 10% to 11% of the gross margin. And so far as EBITDA is concerned, which we are targeting, between 6% to 6.5% is the normal level, which we have been following. Except this abnormal gold pricing movement on account of geopolitical situation, it is going to remain like EBITDA between 6%, 6.5%.

Sir, with the hedging strategy, as we discussed before by the management, what would be the kind of the peak margins that you would achieve, let's say, until FY '30?

FY '30?

Yes, sir.

So we are targeting it is going to remain between 8, 8.5 percentage of our FY '30 provision, which we have already in place. So we are going to achieve that by taking a lot of product mix in terms of hedging, in terms of PML, in terms of leading various models, which will take place. And invariably, whatever the sovereigns, which are going to mature after opening, they are also going to give us good return. So putting together all in the one basket, we will definitely achieve between 8%, 8.5% by 2030.

Okay, sir. Sir, and in terms of high-value products that you have launched, how is customer demand on foot right now? Are the customers really asking for the high-value product? How does the demand look like currently for the high-value products?

So definitely, see, our sales coming -- constituting more than 60% on account of wedding. And when we look at the term wedding, it always comes with the high-value products, whether it is necklace, [indiscernible] or any bangles and all. So it is going to remain -- continue until the wedding season will remain, and it will always dominate. In fact, when we look Tier 2 and Tier 3, people are hesitating to go on the lower carats. So it is going to remain, I think, on the upside so far as Tier 2 and Tier 3 are concerned.

Sir, and you said the QIP will be delayed a bit. So how do you plan on funding the CapEx that you are planning to do in multiple states?

So definitely, this we have on postponed, it is not yet like outside our planning. And definitely, our internal accruals are there. The funding we have arranged from our bank also as well as the various models available of the steeper financing of leaving and with VML. So we will explore all. And the expansion plan, so far as FY '27 and FY '28 is concerned, it is going to accomplish by this internal accrual as well.

So can we also expect the company getting a bit of long-term borrowings?

No. We have not yet planned for the long-term borrowings. See, our business, if you look at our numbers and balance sheet, more than 90%, 95% is coming from inventory. So our investment is going to remain in the inventory. So there is no need of long-term funding. So the funding of whatever we are anticipating without getting any cost is, of course, the equity. So let the market settle, then we'll again approach to investors. So without incurring any cost, we can take them also as our partner in the entire growth journey.

Okay, sir. And also, sir, I would like to ask that the 15% custom duty hike. Before that, the inventory days has increased for the FY '26, 200 days, and in FY '25, it was 87 days. Kindly -- can you let me know the reason for that, sir?

So basically, if you would have noticed, we had opened one showroom of [indiscernible] in the month of March only. So on account of that, we have more -- a good amount of inventory to keep at base stores, and we found good response also. On the 29th of March, we opened a showroom in [indiscernible], but the prepared and all the -- and the heavy amount of inventory is required to be placed. So that is the reason that you would have observed that the inventory is looking at the higher side. Otherwise, it wasn't.

Sir, what could be the normalized number for inventory days that you want to achieve in the long run?

It is going to remain between 75 to 85 days, not more than that so far as our business model is concerned. We have always observed that our inventory turn has deal remained between 4.5 to 5.5x, and this is going to remain the same for over the years also because our model is something different than what is available in the chain store or the big corporates.

Sir, can you share some more information on what you just said?

See, when you look at the inventory turns, we always look from the higher side of inventory when we open any stores. So when you compare with other sellers, they might be keeping between 20 to 25 [ cr ] is the higher side of the inventory. But when we open a store, it is of the larger size, between 3,000 to 5,000 square feet, and we keep the inventory between 40 to 60 [ cr ] minimum. The more the inventory we will show to our customer because nowadays, the design has become a very centric, and the generation is always coming to showrooms while working through mobile. What are the latest design available? So we have to keep the optimum amount of inventory. So that is the reason our customer conversion is also very high. So this is the reason we always keep the inventory on the higher side to get a maximum turn. And when you look at this in past also, the inventory days was 75, 77 days and around 80, 85 days. But yes, in the month of March, we opened one showroom. So on account of that 100, 125 [ pr ] work lined with the past showroom. That was the increase side when we compare these numbers. So we always compare the last month. So it might be showing like 90 days or under order. Otherwise, it will fall down definitely.

Sir, what I meant to say is that you still have many more stores to open in the future. So that in mind, you have stated the number of 75 to 85?

No. Our business model is like that only. And see, whenever -- if any inventory doesn't move, when you always re-up between 75 to 90 days, to other showrooms and check that whether any kind of likelihood is getting changed on account of reasonable preferences. And accordingly, we take also, in any case, inventory will never be old in our entire reserve. When we look at the entire number of our inventories, the entire inventory is below 365 days. So it is it is going to remain between that only. And I did a tested number. So, so far as our like SOPs are concerned, it will remain between 75 to 90 days.

Sorry to interrupt. Mr. Gupta, please rejoin the queue for more questions. [Operator Instructions] The next question is from the line of [ Isha Shah ], an individual investor.

Sir, I had a couple of questions. Sir, what is the contribution of old gold exchange and customized jewelry overall sales mix?

So it is similar -- 35% to 40% as of now -- change.

Okay. And sir, how much of FY '26 revenue growth was driven by newly opened stores such as [indiscernible]? And so how are the customer responses and demand scenario in these regions, including [ Dhar ]?

So like the new store is somewhere around like contribution is somewhere around 12% and a new store contribution in the overall, 12% to 15%.

Okay. And sir, except [indiscernible] and Rajasthan, which state you would like to enter first on priority basis?

So Gujarat, Maharashtra and [indiscernible] on the priority basis we are like planning to [indiscernible].

The next question is from the line of Chetan from Systematix Group.

My question was on store expansion. So you said that we have also signed for a franchisee partner, right? So from a store expansion of around 4 to 5 stores on an annual basis, how much would be franchisee and how much will be coco? Any number we have decided on?

Yes. So the major is the coco, we are like we are just giving the number of the coco [Foreign Language] But for this financial year, maybe one of like the 3 to 4 [indiscernible].

The next question is from the line of Ganesh Gupta from SS Family.

Sir, once again, is it safe to say that 100 is the peak of inventory days?

Sorry?

100 would be the peak number of inventory days. Is it safe to say that?

Yes.

Okay. Sir. And post QIP, because currently, the promoter holding is really, really strong amongst -- among many multiple companies. So I would like to know, can you throw some like post-QIP how would the promoter holding look like?

So it depends on how much we will anticipate so far as Q is concerned. But yes, we have targeted that it is going to be diluted between 5% to 8%. The force valuation, I suppose we have 75% or it be around between 65% to 68%, that may remain.

Sir, this money would really support the expansion strategy that you're planning across multiple -- is that correct?

Yes.

The next question is from the line of [ Abhih Bilal ], an individual investor.

Sir, in one of the earlier calls, you had mentioned that we would be planning to open like around 6 stores in FY '26 and another 6 to 7 stores in FY '27. And also the FY '26 guidance was around like INR 4,500 crores and INR 6,000 crores for FY '27. But I see that both the numbers are being revised on the downside. So what is the reason that we are revising the number? Like is it because of the QIP or any other reason because of the demand or anything like that?

So the number is like the test can. We are like -- we are just slowdown because of this new scenario, the expansion plan. But yes, we are trying to achieve the same numbers. Our like the long-term goal is by 2030, we are planning to open like total 51 stores by the end of 2030. 1 or 2 quarters and postponed because of the new initiative by the PM. So maybe we are just waiting what is exactly like the impact on this thing, but yes. Everything is under control, so we are open like the maybe [ 5 stores ] this year and the next year also we are planning to open the same. Yes. [indiscernible] cut down like 3, 4 stores to the -- next year.

Okay. So like we are sticking with the long-term guidance of around 50 stores by FY '30? So maybe in the short term, it is affecting because of the geopolitical reasons, but we are sticking to the long term?

To the long term, yes, yes.

[Operator Instructions] The next question is from the line of [ Gaurav Gandhi ] from Gaurav Gandhi, an individual investor.

[Foreign Language]

So in the long term, on the 3 to 5 years, we are assuming [Foreign Language] top line [Foreign Language] 3% to 5% on low score target [Foreign Language] So around -- somewhere around like we are assuming the 3% to 5% over the next 5 years [Foreign Language]

Sir, is the profit [Foreign Language]

[Foreign Language] 25 to -- between the initiatives [Foreign Language]

The next question is from the line of Ganesh Gupta from SS Family Office.

Sir, [Foreign Language]

Silver demand is intact. And so gold demand [Foreign Language]

Sir, also a broader base [Foreign Language] targets carrying?

[Foreign Language] 20, 30, 151 stores total [ Amara ] planning and long-term [Foreign Language] 25% to 30% [Foreign Language]

Sir, [Foreign Language]

We are aggressive with the all 3 categories. [Foreign Language] So we are like the bullish on each front.

Sir, current Tier 2, Tier 3 cities core target core to Tier 1 expansion [Foreign Language]

[Foreign Language]

[Foreign Language] total of FY '30 [Foreign Language]

Yes. Mostly [Foreign Language]

As there are no further questions from the participants, I now hand the conference over to Mr. Anil Kataria for closing comments.

[Foreign Language]

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