Release Date: November 11, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Electronics Mart India Ltd (BOM:543626, Financial) reported a 13% year-on-year revenue growth for H1 FY25, reaching INR 3,361 crore.
- The company opened 18 new stores in H1 FY25, expanding its footprint to 177 stores across 70 cities in six states.
- Large appliances contributed significantly to revenue, accounting for 46% of the total revenue in H1 FY25.
- The company maintained a positive EBITDA margin of 7.1% for H1 FY25, despite challenging market conditions.
- Electronics Mart India Ltd (BOM:543626) remains confident in its full-year guidance of adding 25 to 30 new stores, focusing on strengthening its presence in the NCR region.
Negative Points
- Heavy rains in South India, particularly in Hyderabad and Vijayawada, negatively impacted demand and footfall in Q2 FY25.
- The company's EBITDA margin decreased from 7.6% in H1 FY24 to 7.1% in H1 FY25.
- Same-store growth for H1 FY25 was relatively low at 6%, indicating challenges in driving sales growth in existing locations.
- The North cluster, despite being EBITDA positive for three consecutive quarters, still lags behind the South cluster in terms of margin performance.
- The company faces increased inventory levels, with 62 days of inventory as of September 2024, due to preparations for the festive season.
Q & A Highlights
Q: Has there been any postponement of sales into the current festive season due to operating challenges in Q2? How have the trends been so far in Q3?
A: Historically, Q2 is always a lower quarter compared to Q1 and Q3. The heavy rainfall in South India impacted footfalls, but the festive period in Q3 has been good. We anticipate a dip in sales post-festive period as cashback offers reduce, but overall, the trends are in line with expectations. - CEO
Q: Can you provide insights on the revenue growth guidance for the year, given the sales in the festive period?
A: We are looking at a 15% to 18% growth, which we are confident of achieving. The festive period went well, and we expect additional sales during the summer season in Q4. - CFO
Q: How are the new stores performing, and what is the expectation for debt levels at year-end?
A: The new stores are performing well, and we do not anticipate significant increases in debt levels despite the addition of new stores. We are managing inventory levels efficiently to support this. - CFO
Q: What is the current contribution of the top five brands to your sales, and how has it changed?
A: The acceptance of top brands is increasing, even in tier 2 and 3 towns. Despite new brands entering the market, customers prefer established brands, which is reflected in our sales. - CEO
Q: How are you addressing the reduction in net sales per store over the last two years?
A: The reduction is due to the rapid expansion and addition of new stores. Mature stores continue to perform well, and we are focusing on optimizing the performance of newer stores as they mature. - CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
