Page Industries Limited ($PAGEIND)

Ladies and gentlemen, good day, and welcome to the Q4 FY '26 Earnings Conference Call of Page Industries Limited. [Operator Instructions]. I now hand the conference over to Ms. Purvangi Jain from Valorem Advisors. Thank you, and over to you, ma'am.

Thank you. Good afternoon, everyone, and a very warm welcome to you all. My name is Purvangi Jain from Valprem Advisors. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the fourth quarter and financial year ended 26 in before we begin a quick cautionary statement. Some of the statements made in today's earnings conference call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decision. The purpose of today's conference call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Now I would like to introduce you to the management participating with us in today's earnings call and hand it over to them for their opening remarks. We have with us Mr. V.S. Ganesh, Managing Director; Mr. Deepanjan Bandyopadhyay, Chief Financial Officer; and Mr. Karthik Yathindra, Chief Executive Officer. Without any delay, I request Mr.V. Ganesh to begin with his opening remarks. Thank you, and over to you, sir.

Thank you. Thank you so much, and good evening, ladies and gentlemen. Welcome to the earnings call for the fourth quarter of FY '26. I have the pleasure of having Mr. Deepanjan and Mr. Kartik, and we will together present the key highlights of the I will begin with a brief overview of our business performance, following which Mr. Deepanjan will take you through the financial details. During the fourth quarter, we witnessed a meaningful improvement in overall consumer sentiment and retail demand. This was reflected across all our categories and channels. While the improving consumption environment certainly supported growth during the period. We also believe our performance was equally driven by the strategic initiatives and disciplined execution undertaken over the last several quarters. These included focus refers to strengthen our distribution inventory held testing brand building and marketing implemention, sharp product innovation and calibrated expansion across both retail and manufacturing. Together, these initiatives have enabled us to respond effectively to the improving demand environment and strengthen our market position. The strong demand momentum observed in the quarter was instrumental in driving volume net revenue growth. This has led to healthy sales across all distribution channels. We continue to see increasing adoption of value-added premium products as well as [indiscernible] with supported premiumization and contributed positively to the average selling price. In addition, we undertook calibrated pace increase in select styles to maintain pricing alignment and portfolio [indiscernible]. We continue to witness inflationary pressure across key input costs during the quarter, particularly in cotton along with increase in certain other raw materials and operating inputs. To a large extent, these challenges we effectively manage through strategic sourcing initiatives, apply chain optimization, operational efficiencies and calibrated pricing actions. Our continued focus on disciplined execution and cost management enable us to mitigate input cost per share while maintaining healthy profitability. As regards to digital transformation journey, it continues to progress steadily with focused investments in technology, process integration, analytics and system capabilities across the value chain. These initiatives are helping improve agility enhanced decision-making, streamline [indiscernible] and build a stronger foundation to scalable future growth. In parallel, we have continued to strengthen our cybersecurity and detail protection framework in line with evolving regulatory requirements and industry best practices. On the financial front, we are pleased to report strong growth in both revenue and profit after tax. For the quarter, revenue grew by 14.1% while the profit after tax increased by 9%. For FY '26, revenue growth was 6.3%, and PAT increase was 4.8%. With distribution expansion, our network stood at around 116,600-plus multi-brand outlets, 1,615 exclusive bank stores. and 893 large format stores. We continue to lead across e-commerce platforms, recording strong growth in that [indiscernible] as well. Looking ahead, we remain positive on the outlook for the coming quarters. The underlying demand environment, coupled with a continued focus on brand strength, product innovation, distribution capabilities, retail excellence and sharp supply chain provide us with the confidence in sustaining our growth trajectory. I would like to sincerely thank all our stakeholders for their continued support, trust and partnership with the company. As brand Jockey celebrates a remarkable milestone of 150 years, we are proud of a long and enduring association with this iconic brand. We are also deeply honored to have been recognized by Jockey International with the licensee of the decade award for the second consecutive term. This reflects the strength of our partnership and the collective efforts of our teams over the years. On this special occasion, we extend our heartfelt congratulations and best wishes to Zaki International for this extraordinary legacy and continued global success. With that, I now request Mr. Deepanjan to take you through the financial performance in greater detail. Thank you.

Thank you, V.S Ganesh. Good afternoon, and welcome to today's earnings call. I will now walk you through the results of Q4 FY '26. In quarter 4, revenue was INR 12,526 million, which is 14.1% growth year-on-year. Sales volume in the quarter was 54.5 million pieces growing by 2.8% year-on-year. EBITDA for the period was INR 3605 million, which has grown by 10.7% year-on-year. EBITDA margin was 20.8%, with continued focus on operating efficiencies, EBITDA margin has remained strong. Profit after tax for the quarter was INR 1,087 million which has increased by 9% year-on-year. Inventory days was 73 in the end of quarter 4 as again 64 days in the beginning of the year. Net working capital days was 66 as against 54 days in the beginning of the year. For FY '26, revenue was INR 52,468 million, which is 6.3% growth year-on-year. Sales volume was it is 228.4 million pieces, growing by 3.9% year-on-year. EBITDA for the period was INR 11,529 million, growing by 8.5% year-on-year. EBITDA margin was 32%. Profit after tax was INR 7,678 million, which is a growth of 4.8% year-on-year. We can now take up your questions.

[Operator Instructions] The first question is from the line of Nihal Jham from HSBC.

Congratulations on the strong performance Sir, I had 2 questions. First is that if we look at last quarter, we were obviously mentioning about the demand environment sort of being not the best and the most supportive. In this quarter, we've obviously seen volume growth, see a sharp improvement to double digit. So if you could just give more clarity both from what changed from a demand perspective versus last quarter? And also from our side, what are the initiatives that we've taken. And if you could bifurcate the growth both on a category and channel perspective given that we mentioned that at fusion has been facing the part of a high channel. I'll take my second question [indiscernible].

Thank you for the question. Karthik [indiscernible]. We've definitely seen some level of uptick in terms of consumer demand in quarter 4, which is reflecting in the performance. We've also seen some level of revival with at leisure as a category. That's because we've kind of reached the fag end of the correction in distributor inventory, which is something that's been plaguing us for the last, I think, years now, maybe a little over that. Specifically, the month of March, we've seen [indiscernible] uptick Feb and January were cut as well in relation to the first 3 quarters of the year, and that's what is reflecting in the performance that has been published. . So the combination of 2 things, do you seeing we've witnessed better [indiscernible] format at the consumer level in quarter 4. And 2 is we've also seen a very close connect between secondary performance and primary performance because inventory levels have now come back to where it needs to be, something that we've not been able to achieved in the past as finally, in some form, taken shape in quarter 4. The combination of these 2 has got the results.

Sure. Perfect. Second question was, obviously, you highlighted about -- and how to think of margins with all the initiatives, does the range of 19% to 21% of EBITDA, colo say or maybe there could be a slight slip to this inflation business.

Well, initiatives wise, I think we are going to be aggressive as far as an generation is concerned. However, the macroeconomic conditions is something that we want to keep a very close watch on the effect of the input cost, which the Managing Director mentioned in the commentary is real, and that is something we're keeping the cap on. There's the confident that we will operate between 19% to 21%. This year, 25%, 26% has been a year of very good performance in terms of margin. We closed the year with 22%, but our range, we believe, will be between '19 and '21, and that's what we'll be targeting for the coming year as well.

The next question is from the line of Arjan Garodia from Ambit Capital.

This is [indiscernible] here from Ambit. So just again on the volume piece, so this 11% growth has been delivered on the days of 9%. So I wanted to understand incrementally moving to parts to the same. So obviously, one part you mentioned that there is -- there were positive consumer sentiment along with company-level initiatives, but anything on the festive timing or anticipation of even price hikes playing our role on the volume growth? Has that also aided some acceleration.

I don't think so. From a festive point of view, the only large festive which -- festival, which impacts our business was eased. But quarter-to-quarter comparison, it was well within March in both the years. So in a way, that would have been between months or between weeks level of difference. But within the quarter, I don't think festive has played a very big role. Your second question was in terms of upstocking for price benefits, that's something we don't engage. We have completely moved towards replenishment. And hence, all of this is purely demand-driven. So as long as secondary performance happens primary is an outcome. So there is no upstocking in the channel. In fact, we've been working very hard for the last 2 years to ensure we come back to acceptable stock levels. And hence, we have not encouraged any former but upstocking at the channel level to gain benefits from the price increase.

Okay. And just as a follow-up to this, the calibrated price hikes which have taken to now, what would be the quantum of the same and would the effect [indiscernible]

Yes. So we took a price increase. I mean, we initiated it in the month of January, sometime mid-January as far as production is concerned. But I think the benefit of that has flown in only from mid of March, that's because of the C4 model that we operate with, and that is to the tune of about 2% weighted average, but indeed of how much has flown into revenues at you be quite minimal because, let's say, about 2 to 3 weeks at best within the quarter where we would have realized the revised prices. .

Got it. And the second question was then pertaining to margin now. Of course, we've got the inflation piece. But incrementally, or [indiscernible] incentive in traditional or tallest channels have also increased. So would you expect that also to play role, of course, that would amplify revenue growth or volume growth is there from a margin standpoint, how should one be thinking about the thing?

For the [indiscernible] here, I don't think there's been increase in incentives as a percentage of revenue.

I should have clarified. [indiscernible] FY '27.

FY '27. No, I don't think there is a conscious push to increase margins. We are going to be investing in the brand. We're going to be investing in demand at the consumer, that's the work that is happening, and that's where additional investments will go. The intent is not to, in a way, load more stock into the channel by just providing incentives. .

The next question is from the line of Avi Mehta from Macquarie.

Congratulations just wanted to check double on this volume growth momentum and given the trend that you are witnessing, is this something that is despite the macro environment. So are we seeing this sustain? Is that what gives us confidence? Is that volume driven or is the price hike? I just wanted to kind of better appreciate the confidence in looking at continuing the 14% growth momentum.

Avi, thanks for the question. Like I mentioned, I don't think we've are a significant price increase benefits in quarter 4. To some exceed, yes, because the weighted average price increase is 12 or 6%. And from a period point of view, like I mentioned earlier, about 2 weeks -- at best 3 weeks of the quarter is where we would have gained from the new prices going into the market. So I don't see too much of a difference there. The delta between volume performance and value performance of about 4 percentage points is largely a reflection of mix and premiumization and very little to do with rise increase. Our intent in the year going forward is a volume growth intent. And of course, anything that reflects because of price increase would be largely driven by input cost-related measures, but not as a means to increase top line. .

And so when you say the scale volume is up so you see [indiscernible] growth momentum, you mean volumes sustaining at the current range of 11% and pricing probably depending on how it pans out. Is that understand [indiscernible] .

Yes. I mean, we -- as an organization, also we're chasing volume growth, that's what the entire team in [indiscernible]. Value growth, obviously, at the management level at the CFO level, we are obviously accountable for that. But as far as sales intent is concerned, is essentially to drive volume growth. And what we will be targeting going forward is to try and maintain this momentum on double digit as we take on the [indiscernible]. .

Okay, okay. And second bit, I just wanted to clarify, you've retained the guidance of 19% to 21%, you've been kind of arguing or locating this guidance. But what exactly we saw last year, you've been able to deliver a much higher margin trajectory. What is it that changes now, which kind of gives you wouldn't kind of change there? Because if I not appreciate [indiscernible] levels that we saw there no one-off here should kind of moderate. So any understanding -- is the initiative have already been done this year. So that's where I come from.

No. So I think the [indiscernible] . Yes, please go ahead. .

I have explained that. So the 19% to 21% margin range that we typically target is considering certain cost components such as marketing a maintain certain gross margin levels. certain cost of salary and corporate staff. So considering all those factors, we aim for a margin range of 19%, 21%.

Lastly, specifically, the fact that we got slightly higher margins as because our marketing expenses were lesser than 5%. We also could sustain the gross margin significantly.

So going forward, if you have a normal level of marketing spend. And we do see some inflation sure coming into the product cost. There will be some pressure on the EBITDA margin for sure. It's not -- it's expected to be as innovative as 22% last year. But still within the range of 19% to 21%.

The next question is from the line of Gaurav Jogani from JM Financial.

My first question is with regards to the over competitive intensity. In a rising pricing scenario, that is the inflation scenario, do you think it kind of benefits to a market reason and the other people kind of seen to get the [indiscernible] and other stuff. And that is also, in some extent, is helping to drive a better March on [indiscernible], the improvement [indiscernible]

Gaurva, I would agree with what you are saying. Usually when there is adversity of any form be it inflationary pressure, be it macroeconomic conditions, and we've seen it in the past multiple times. Typically, a market leader, a large player with sound supply chain capabilities, sound investments, well established, stable distribution network [indiscernible] We've gained from such situations in the past. And hence, if any form of adversity should come by I would imagine we would be competitively in a much better position than other players and hence, we will stand to gain. Also, given the healthy margins that we today enjoy, it is a choice for us to absorb those inflationary pressures to the extreme possible and not really pass it on to consumers so that we can still hold and grow share and keep top lines intact and demanded at. It's a choice. So that's something that we will take a call as we study the market as we see what form of pressures come in as we see how competition be hits and also see how consumer sentiment moves forward.

Just one follow-up to this. We have been mariabout the women were one of the large competitor kind of fixing services, are you also seeing the same? And is there an opportunity for you to gain that part of the budget?

I'll reserve my comments on what's happening with another brand. But yes, if there is a a vacuum that is created in the marketplace because of whatever reasons. And we believe that it is a space that Jockey can own and serve consumers by all means, yes, we will certainly be very aggressive in enhancing product portfolio and deepening our presence in those areas so that we can capitalize on the opportunity.

Just one [indiscernible] questions from my end for depending specifically. The inventory this time around is quite higher [indiscernible], is this a delicate strategy to keeping in mind the coming into [indiscernible] we are talking some are because of this? And also on [indiscernible] that we expected to receive from that success.

Okay. So on the inventory side, you're right, it has been a conscious call to build up inventory both as a hedging technique against anticipated raw material price increase as well as to ensure our supply chain is adequately stocked. So from both the perspective, it has been a concept point to build up the inventory. Also, typically, in the quarter 4, we do have a buildup of inventory because the Q1 is typically much easier. . So that way, you take a conference call. On the [indiscernible], yes, we didn't plan to utilize any subsidy in FY '26. But in FY '27, we plan to start realizing the subsidies. So over the year, I think we are expecting we should be getting around INR 40 crores to INR 50 crores of subsidy and that will happen. But currently, we are not realizing [indiscernible].

Depending on what period it will continue to receive the subsidiary? .

Is there a multiple subsidiaries in Orissa, for example, wage subsidiary, which will be available with -- for us for 7 years. power subsidiary, which will be there for almost 5 years. There is capital investment in lean subsidies, which is there for 3 years. So there are multiple subsidies, and this is set over over more than 1 year.

Do you tend to assume that this will at least continue funding of 4 to 5.

No, no, it's not that way. I mean it depends on multiple factors. For example, as we that subsidy is concerned, it depends on the number of people that we recruit over time. So depending on that, the way we can vary. The current INR 40 crores, INR 50 crores is related to certain fixed subsidies, which we are expected to get the at subsidiary this year. and a portion of it is a wage subsidy. So this INR 50 crores is more static in at relevant to this financial year. Going forward, the amounts can vary.

The next question is from the line of Sameer Gupta from India Infoline.

Firstly, [indiscernible] this is a second consecutive year where we started the year in a rapid manner but it has been strong. Now if I go back, let's say, 3 years and look at the share of the subsequent quarters, 1Q used to be very high at around 28% and 42 is to be the lowest [indiscernible], and this has changed materially this year. So 1Q is at 25% and 4Q is at 24%. By any chance, is it more a realignment given that we have gone into another replenishment system and now primaries are much more aligned with secondaries than what it used to be in the past. And therefore, if 1 has to gauge a more representative growth number, it is closer to the full year growth rather than 4Q growth? And in conjunction to this, if you could give the EPO channel growth in 4Q and however it was in 1Q? Or any data to evaluate or invalidate this analysis [indiscernible]?

Sameer, firstly, I think excellent observation. And you've answered the question as well. As we moved from a push model to a pull model, it's only natural that sales curve across the year normalizes, of course, this normalization of sales curve also is a phased manner. So year after year, you will see the differential between quarters becoming probably lower. But that having said, I will not attribute all of the performance only to that. And hence, the second hypotheses of hemp, should we look at the annual performance as the performance going forward. I wouldn't probably allude to that because also quarter 4 has gained in terms of better consumer sentiment than what we experienced in the first few quarters. If you recall, we've had floods, we've had operations in due have multiple things that had operated in the first half of last year, which also was in a way, reflecting in our performance. But in terms of the sales mix across the quarter, I'm in complete alignment with your observation that going forward, you will see better normalization between quarters in terms of performance. You will still have few quarters doing better than the other because there is festivities in Q3, there is winter in Q3. There is Q1, which is the start-up of financial year where purchases typically tend to be high. So these factors still continue to apply. But yes, when compared to the past, you'll see better normalization.

And Kartik, if you could just give [indiscernible] the EPO, [indiscernible]

Channel level, we don't give away numbers, but all I can say when I say consumer sentiments have gotten better, it means our reading of consumer sentiment is from our D2C business, which is largely our EBO Jockey doing kind of a business. where we were able to measure like-for-like performance, where quarter 4 has seen a decent level of uplift when compared to the first 3 quarters.

Great. This is very helpful. Second question is -- and this has been added in various forms by previous participants. But what is the current level of inflation that you're facing in the input cost basket, I understand there are inventories and I understand there are other mitigation factors. But just looking for the specific number as to rncostinfetiv at this point? .

So very, very difficult to -- so go ahead, [indiscernible] please.

The current purchases that we are doing, yes, there has been a slightly higher inflation percentage that we're looking at. Also the situation is quite dynamic. There are different inputs coming in and different uses wheat is being quoted. The situation is quite dynamic but there is a bit of elevated inflation for the fast [indiscernible].

And [indiscernible], just a follow-up here. Do you also anticipate wage inflation because employee cost is a big part of our P&L and there have been a lot of minimum wage hikes that have been announced by a lot of states. So is it fair to assume that there will be a decent or, let's say, higher than normal wage inflation this year?

Not immediately, for example, in this part of the state, [indiscernible] has been already announced, and we are not seeing any abnormal increase there

Again with deals well.

Yes. But with the new base color around the cane changes, but we have to see on how it goes.

The next question is from the line of Tejas Shah from Avendus Spark.

Just wanted, given the inflation band, I just wanted to understand the thought process of working which has gone behind 2% price hike. Just trying to understand, [indiscernible] not 4%, 5%. What are the limiting factors are the thought processes goes behind this? .

Good question, thank you for this. The price increase that we've -- am I coming through? That seems to be an echo?

Tejas, sir, please mute your line while the management speaking.

Thanks, Tejas, for the question. The price increase that I mentioned about was something that was activated in January, and that was much before the inflationary measures because of macroeconomic lesions had to come by. And that was not a measure to mitigate inflation. It was essentially taken because we had upgrades and enhancements in many of our products. And selectively, across products, we had taken a price increase, which turned out to year 2 percentage weighted average for the brand, but we have not increased prices of all of our products. Very selectively, we have taken it. So far, we have not touched the prices for inflationary pressure, but I think we will be doing it soon. we've been able to cover a lot because of measures that we had anyway taken to -- in terms of inventory repositioning. But in quarter 1, we are expecting to, again, touch our prices, given how the input costs are trending.

Clear. Second, Karthik, just a couple of months back, you were quoted in media, and I'm not sure if it has not a video [indiscernible], but you have quoted somewhere that you said that the company has not maxed out the margin expansion potential. And that was when we had a trading margin of 22% plus. So I just wanted to know that today's guidance and that commentary, how should 1 reconcile that? .

Yes. So I think if you look at it, today's guidance is largely given a year or 2's outlook, and that's why we're looking at 19% to 21% because they are going to be invesment in technology, which unprecedented as far as Page is concerned in the previous years. So that's going to add to costs. And we're also looking at, like I mentioned, because of the inflatory pressure that we are experiencing today. It's a call whether we should actually pass on all of that to consumer and keep our margins intact. So these 2 are going to play a role in terms of seeing how our margins go ahead. The comment I had made a couple of months back was largely to do with production efficiencies and that leading to better margins. I don't believe we've maxed out on production efficiencies as a manufacturing organization. We still have potential to improve our efficiencies there. As you are aware, some of our plants are still going through the learning curve. and operating at suboptimal levels today. But once we hit maturity with Odessa once we hit maturity with [indiscernible], our overall efficiencies, production efficiency for the company will be much higher than what we are delivering today. which should bring in margin expansion opportunities.

The next question is from the line of Jignesh Kamani from Nippon Mutual Fund.

Congartulations for good numbers. Earlier, you highlighted in the earlier call that an economic segment at the start of the year, we might [indiscernible] some of the market share? And you took a corrective embedding a new product also changing the packaging. So what are the initiatives you've taken till now? What are the pipeline and some color on have you regained the older market share? Or how is it [indiscernible] right now?

Well, I think product enhancement, packaging development is an ongoing process. I think in the last investor call, we had mentioned that there was a lot of units coming into the market, a lot of upgrades coming into the market in the month of January and February. And all of that has been very, very well accepted and it's in a way contributed to our performance in quarter 4. We continue to work on our product portfolio and making sure that we enhance it upgraded as we go forward, both the existing core line as well as the new lines that we will be bringing ahead. So that's an ongoing process. I don't know whether that has really led to increased market share in the short term. but it's about ensuring that consumers come back for more as far as jockey is concerned, that's a role that product upgrades have played. And I think so there everything that we put into the market between quarter 3 and quarter 4 have been very well accepted. We are also extremely excited about what's in store in terms of new products. Which will start -- I mean it's already started hitting the market from the month of May, and that will continue until June and July, which is our summer line. extremely excited about how they will form. Of course, we are looking forward to consumer response for those products.

Sure. And can you highlight some have the rollout of [indiscernible] collection? I think you did second phase rollout with larger MBO everything. So how is the performance and how...

So [indiscernible] grew both the summer line as well as the winter line for last year, we've sold out. sold out quicker than we anticipated to sell it. And for Group 3, which will be -- which has started hitting the market in the month of May. We are actually extending it to about 500 exclusive brand stores and select multi-brand stores and all of e-commerce. So the response has been great so far and we are anticipating equal or better response as we go into the summer this year as well. In terms of the bonded line, I think a lot of our numbers in terms of ASP increase and premiumization is thanks to the branded collection, both in men and aware as well as drag, very, very well accepted. All through quarter 3 and quarter 4. In fact, as we speak, what is today, today is 21 right? We've just gone live 21. We've just gone live with an all-India outdoor campaign for our men's bonded collection starting yesterday. So you will see holdings across. So we are now that we are confident about the product, confident about consumer response. We've penetrated the products efficiently. We are also investing heavily on marketing to build awareness around this range starting yesterday.

The next question is from the line of Laxmi Narayanan from Dubai Investments.

As a market leader, we are navigating a high base from previous years. While simultaneously, we are seeing a surge of niche retail first brand, which capture the [indiscernible] share. My question is, are these newer players actively eating into our market share? Or is there a slower growth purely a reflection of a larger denominator. And subsequently, how is our product pipeline evolving to protect our core. That is one. The second is that how is the distribution dynamics now because there have been some friction in terms of the channel when the entire new every management system was rolled out just want to check whether that is behind and things have completely smoothened out. So these are my 2 questions.

Thank you, Laxmi Narayanan. On the first question, I think very, very interesting topic of discussion. Yes, it's a lot more crowded place than it used to be, let's say, 5, 7 miles ago. And there are no large players, so to speak, probably only there as a large player, but there are several small, good, effective DTC brands that have come in over the last 4, 5 years, which is, in a way, helped us change our game as well. The way we organize ourselves today is we play a very different grain in general trade when we play a very different game in D2C or e-commerce. . Today, if you look at it, the e-commerce side of our business has been growing handsomely for 3 to 4 years in a row. And hence, we are not able to, in a way, allude to saying there is some loss of share because predominantly, the B2C brands that we spoke about operate online, and that's why we've seen substantial amount of growth over the last 3 to 4 years. And also the information that we gain from, let's say, the platforms in which we operate, who don't deliver market share, but they do give market ramping in terms of how each of these brands fare and where do we stand against them. And across all the top platforms I can think of, Jockey is #1, both in [indiscernible] as well as women's innerwear. Unfortunately, for outerwear or [indiscernible], the platforms don't categorize at leisure separately. And hence, we are in the mix along with all the apparel brands, including formal let make denim all of them and hence, ranking does not make sense. But in the core categories that we operate, we tend to be #1 even in the online platforms. And our approach to this part of our business is very, very different to how we approach other parts of the business. In fact, it's as -- it's almost as good as running a company within the company, with the e-commerce business because the competencies, the infrastructure, the team outlook, approach to marketing, approach to content development is very, very different, very, very young when compared to some of the traditional channels in which we operate. But I think we've come a very long way in terms of building infrastructure, building competence, building capability to actually with pride, call ourselves a D2C brand ourselves, right, if I look at only the e-commerce part of the business, we would probably be right up there in terms of all of these parameters to compete in the B2C space. So that's my response to first question. With regards to the second one, it's been a while now, Mr. Laxmi Narayanan since we embarked on the journey of auto replenishment almost, what, I think, close to 3 years, 2.5 years in now. I think we've settled in very, very smoothly. And all of our distributors appreciate this because it's helped them bring down their inventory levels it's helped them become a lot more lean and efficient in their working capital management at the same time made available more relevant inventory at their warehouses to serve their markets. So all the feedbacks that we have obtained both qualitative and quantitative some the distributor community has been very, very positive in favor of auto replenishment system that we put in place. In fact, with all of that in place now and we've kind of gone that journey, we are going to be undertaking the implementation of a new distribution management system, which is the next level of change management, which we will need to bring about within distribution. That's what we've embarked on as I speak. And this will be another journey over the next one year, where we upgrade our distribution management across all of our distributors, and that will get its own -- that is bringing its own games as far as running an efficient business.

[indiscernible] just on that first part. Is the moderation of growth is a reflection of a larger denominator that we are operating because we have become significantly large and I mean is that reason also important?

Yes. No, I think the potential out there is still -- and the headroom is still quite large. Yes, we are the largest player in this space agreed. But if you look at what kind of penetration we've achieved against our [indiscernible] a lot is left to be desired. And hence, I don't think our scale should be slowing us down if at all, it should be aiding us to be a lot more aggressive in the market to grow more fast. And then I say grew more fast in saying in terms of absolute value and volume that we add to our top line year after year. that is certainly going to be in our favor given the scale at which we operate.

Sir, just 1 last question. Among the three...

I'm sorry, sir, please return to the queue. The next question is from the line of Rahul Agarwal from IKIGAI Asset.

Congratulations for a good performance. Just 2 questions. One to clarify, already mentioned 2% pipeline, does that take care of the entire RM inflation so far. And if I understand it correctly, you also mentioned some price hikes could happen in 1Q is largely also related to RM inflation is what I understand because the priority is not for growth, but it's more for covering cost. So I just need to clarify that. And secondly, what explains the reduction in the [indiscernible] count? Can you just explain how should we conduct number and what's the path of it.

So let me just repeat myself. The first price increase that we took in January was not to cover inflationary costs. it was to cover product enhancements that were done in specific products? Just to give an example is for clarity, let's say, a lot of our fabrics in our core products, we've increased the weight of the fabric for better drape on the body, better fit on the body, which comes with increasing cost. And that has been passed on to the consumer because the product has gotten better. Another example could be, let's say, a track pant, which had the regular pockets in the past. Now is being offered with zipper pockets, which means it will command a higher price point because we now have zippers in the pockets. So any kind of enhancement we did to the product portfolio that was translated to an increase in MRP, which turned out to be a weighted average of 2%. But it was not a 2% increase across all our products. It was product specifically where only there we took a price increase. And hence, the price increase that we will be taking now in quarter 1, that will be to the -- in order to cover inflationary costs. But so far, what has already hit the market in terms of price increase was not to cover inflationary costs. That's on the first question. Coming to large-format stores, I think we spoke about it in the last investor call. There was one key large format stores that we have exited because of commercial negotiations, which led to jockey having to exit a large-format store in terms of presence. For us, it is important to ensure parity across -- we are a large[indiscernible] player operating across multiple channels goes online and off-line. Very important for us to maintain channel harmony and margin parity. Given that in mind, we've had to exit one of the players in large format store, and that's what is reflecting in the reduction in the store count.

Right. Just to follow up on the first part you answered. So basically, it means that 2% rates hike happened because product enhancement, another round you're considering because of the cover RM inflation.

That's correct.

And then and then another 2%, 3%, which happens every year because of premiumization. So you're talking about like 5% to 7% of higher pricing next year, over and above the double-digit volume. Is that understood?

No, sir. Premiumization is not because of price increase. Scemamization is because of change in mix within categories that we deliver, let's say, when a higher-priced product sales in place of a lower-priced product within the same category or, let's say, across categories, let's say, if [indiscernible] share goes up, our ASPs as a brand go up. That is what we denote as premiumization. Premiumization is not a result of a price increase. So the price increase that we've been taking in quarter 1 is purely for covering input costs. Now to what extent you will pass on the input costs? To what extent would be that price increase is something we've still not got our head around. It's still a decision we need to take in terms of how much we would like to absorb and how much we'd like to pass on to the consumer.

Perfect. Karthik very clear. Thanks and wish you all the luck for the next year.

The next question is from the line of Devanshu Bansal from Emkay Global.

I think, I just wanted to check on the volume elasticity, right? So we will be taking some price hikes in FY '27 [indiscernible]So, Can you throw some light that then when sort of [indiscernible] by these price lines? And then how are you sort of getting confidence on [indiscernible]

So good question, Devanshu, I think we're very conscious about this. And I think the real volume elasticity for the brand pretty well. our intention would be to touch prices to the extent that it does not affect our volume performance. And hence, our volume aspirations for the given year will remain intact. In spite of taking a price increase to cover or partially cover input costs. If it comes to a stage where we will need to touch prices to the extent that it's going to affect volumes. We would rather refrain from doing that given the healthy margins that we operate with and absorb that in the margins temporarily.

And I think this volume thing, there's also this confidence is this coming also from a reduced competitive intensity. If you could give some color on the intensity across categories. You have mentioned in times of inflationary, but I'm just taking on the current .[indiscernible]

Yes. So our leading has been that there has been consolidation of number of players for sure. And hence, -- and this is relative, right? Competition intensity when compared to, let's say, 1 year ago or 1.5 years ago is definitely a lot lower now than how it used to be about 1.5 years behind. So yes, and this is both in the men's as well as in the women's categories. Competition intensity is much better at rather lower than what it used to be in the past. And the way we are seeing it, there is possibility of further consolidation in the market, which only makes available most room and space for us to operate as the brand.

I understand. Sir, just last thing, I wanted to confirm that next year, a new volume can be at least higher than 5%, 6% line that [indiscernible]

Yes, our intent and target would be that certainly to deliver a better volume and value performance when compared to 25%, 26% for sure.

The next question is from the line of Prerna Jhunjhunwala from Elara Capital.

Congratulations on this set of results. Just wanted to understand on the factors that led to improvement in consumer uptake. If you could help us understand what would -- whether this is sustainable going forward? Or it is to [indiscernible]. And second question, you just mentioned about reduced competitive intensity. Could you highlight some of the instances which help us understand whether this is also sustainable or not?

Sure. Thank you, Prerna, for the question. In terms of what's led to a better consumer sentiment, very difficult to pinpoint exactly what led to that? I think partly it's to do with macro sentiment itself. And partly to do with what we've done in terms of activating consumer. And our level of activating consumer has largely been in terms of investing in marketing campaigns. We've also, in a way, shifted our contribution more towards performance-led marketing in the last few months, and that has helped us directly activate consumer and result and revenues. But I also would believe that a large portion of this would be macro-led as well. It's -- you cannot rule that out completely. That's with regards to consumer sentiment. Your second question was, could you repeat that, please, sorry?

Yes. The second question was on competitive...

On the competition intent.

How the [indiscernible] will be.

Got it. So I think this is something that we witnessed on the ground there have been -- without taking names, there have been many players who operated in the offline space who were traditionally D2C players moved in and operated in the offline space. who when we wound up operations off-line, exited general trade, consolidated their presence, either exited completely or consolidated distribution to operate in a lesser number of or shrunk their distribution to operate with lesser number of stores, et cetera. That is something we witnessed both in men's and women's. Also, intensity in terms of spend have definitely come down. I would imagine there is pressure on the bottom line across and hence, the amount of money that's going into marketing, the amount of money that's going into schemes and incentives, these brands also tend to discount. So the amount of money that is going into discounting for the consumer has also come down significantly. So this is, in a way, something that we are able to clearly see that a presence itself has come down a number of brands, which has come down and even the brands are continuing to operate their intensity with which they're activating consumers either through discounts or through marketing or through schemes has also come down.

A follow-up on this, if I may. Can you also help us understand on the online space, whether this has -- haven't had an impact. And what would be our share of online sales today versus last year?

So we've gained a couple of percentage points when compared to last year, and that is quite a lot in the basis which we operate. As we stand today, 15% of our top line is contributed by the e-commerce business. As this -- the reduction in intensity helped us definitely because the lesser money is going into brands in terms of activating consumer the more stable brands or market-leading brands tend to gain. And that's where I think we have gained. And like I also mentioned, we've also shifted our focus towards performance led marketing, which has also helped us gain significant traction in the online side of the business. .

And how much of your marketing expenditure as a percentage of sales for the entire year.

For the [indiscernible] year, it's about a little over 4%. We target to take that up to close to 5% the next year.

Ladies and gentlemen, that was the last question. I now hand the floor over to the management for closing comments.

Thank you all for joining us today. Thanks for your continued support. It seems to be appreciated time, interest and trust in the company. With that, we conclude today's earnings call. Thank you. Have a good day. .

Thank you very much. On behalf of Page Industries Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines. Thank you.