Aditya Vision (NSE:AVL) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Aditya Vision Limited Q1 FY 'twenty seven Earnings Conference Call. As a reminder, all participant lines will be in a listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to miss from Access Capital. Thank you, and over to you, ma'am. Good evening, everyone, and thank you for joining us today for Aditya Vision's q one FY twenty seven earnings conference call.

0:45 We are glad to have the senior management team with us, including mister Yashuvarthan Senha, chairman and managing director, and miss Yosham Varden, board 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. Afterwards, we will move into the q and a session. Over to you, sir. Thank you, Divansi. Good evening, ladies and gentlemen. Welcome to Aditya Vision Q1 FY 'twenty seven 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 say 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.

1:41 Revenue for the quarter grew 27% Y o Y, ahead of our long term growth aspiration of 2025%, 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 and 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 three stores in Cuba, 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.

2:34 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 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.

3:30 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, full supply disruption resulted in discouraging consumers from impulsive and planned buying to preserve liquidity for a large period. The appeal from government to this is 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 risk Asia war.

4:17 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 aid. Our expanding presence in Udaipur, proved to be a strategic advantage, helping offset relatively softer cooling demand across Bihar and Sarkis. 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.

5:06 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 $6.63 crores as of June 3026, while working capital loan reduced to 125 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 three new stores. Our network has expanded to two ten stores as of yet. We remain firmly on track to add more than 30 new stores during FY27.

6:03 Following our successful entry into Chattelgarh 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 MSCA and Associates LLP, chartered accountant, one of the India's leading audit firms and an independent member firm of the Video International Network as our statutory auditor.

6:55 With our network now crossing two ten 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.

7:54 With that, I now hand over the floor to Yosham Aditya to take you through the financial 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. Revenue for q one FY twenty seven stood at 1,193 crore, registering a 27% growth Y o Y, reflecting continued market share gains and healthy demand across our operating market. Gross margin remained healthy at 16.1%, expanding by approximately 75 basis points compared to the corresponding quarter last year.

8:42 EBITDA for the quarter stood at 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 77 crores with tax 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 district, 33 in Chalkhand, covering 22 of 24 district, 54 in Uttar Pradesh, covering 30 of 25 district, and three stores in Chhattisgarh covering two out of 23 districts.

9:36 FY '27, Bihar remained our largest revenue contributor at 72 percent for quarter one, followed by UP at 16% and Harkhand at 11%. Same store sales growth for quarter one stood at 18%. We also witnessed a reduction of... In inventory by 177 crores compared to March 2026. Now the inventory stands at 663 crores and reduction of short term borrowing to approximately $1.75 crores as of 06/30/2026. Thank you for your continued trust and support. We now open the floor for questions.

10:22 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. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star N1 on the dial tone telephone. If you wish to remove yourself from the question queue, you may press 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assemble. The first question is from the line of Shivam Gupta from Asset Manager. Please proceed. Hello. Good evening, and thank you for the opportunity. I want to Sir, can you please speak little louder?

11:14 Am I audible? Yes. Yeah. What was the same store sales growth in q one? Also, the growth mainly volume or higher product prices also contributed mainly. Can you repeat the second question? Like the growth was mainly due to volume led or it was higher product prices? Okay. So our SSD in this quarter was 18% and which continued since last three quarters.

12:01 So 18% was our SSD. And it has been 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 etcetera. These are small categories. And refrigerator contributed about 15%. And how much of the older AC inventory is still left? Can also it can benefit continue in Q2?

12:52 Yes, of course. We have been June has been slightly hot. So it is continuing in quarter two also. And we are at a comfortable inventory level of Okay, sir. That's it from my side. Thank you. Thank you. Thank you. The next question is from the line of Yash from Edelweiss Public. Please proceed. Hi, team. Thank you for taking my questions. I hope I'm audible. Yes, ma'am. Yeah. So I have three 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?

13:49 July, I just spoke with... Summer is good in July, and it has remained relatively hotter one month. So it is good one. What else you wanted to know? The run rate of June, which was, like, proper y o y. The summer heated June for us. So what was the run rate... Growth run rate for June month? We... Actually, all three 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?

14:43 I don't think there was any meaningful change in strategy. It was the same just like any other QQ one. And there was no policy set. Got it. Got it. And one last question. Right now, it has been a lot of time for some of our UP stores. Around 19, 20 stores has been running for last two years or more than two years. So can you just provide some gist on what is the sales per store or EBITDA margin different between the Bihar store and UP store who has been running for last two years? Yes. I'm sorry. Actually, we do not give this figure in our running call.

15:31 So I can only tell you that share of UP as a state. So it has gone up from 13% Y o Y to 16% 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 Shikharji Advisors. Hello. Am I audible? Yes. Go ahead, Napul.

16:17 Congratulations, sir, for a 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 set for a year or so. But now in f twenty seven, we are heading to... Moving into two states. So how do you see that? It was it was a... And actually, was a very strategic shift. Actually, we had 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 the only reason that we have started to expand in peripheral...

17:03 The the such cities like Delhi, Guri, Athens, Soh, Durga, Gurgaon, etcetera, 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 twenty eight as well? If you can provide that, that would be good. We have been adding around 30 stores, not less than 30 stores every year. And, again, we have already told in the earning call that we'll be definitely doing more than 30 stores this year also.

17:53 And if we take FY '28, we are going to... We'll definitely try to even further increase that run rate. Okay, sir. Okay, sir. Thank you so much for that. Thank you. Good luck. Thank you. Good luck for the future. Thank you. The next question is from the line of Rakshir Desai from IIFL Capital. Please proceed. Hi. Sir, my 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 have we have... We were more than 10%.

18:40 We 15.3% gross margin sitting on 15.3% gross margin. This year due to some slight hike also, which where we could have taken leverage on something, which was around 50 bps. So going ahead, I'll say that we'll be definitely between 1516%. 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 128% ASP growth.

19:32 Got it. Thank you. Thank you. The next question is from the line of from Monarch Network. Please proceed. Sir, there? Yes. Sir, can you share the SSG, I mean, regional wise? I mean, from Bihar, what what was our SSG growth versus in Jharkhand and UP? I just did call one other participant. We do not drive our SSG statewide or regionwide or anything.

20:18 Overall, SSG was 18%, and which has been... Which has continued since last three 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 We suppose we see laptops or we see mobile phones. So are we seeing major price hikes being taken by the OEMs? In the Yes. There have been hike by the way 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 conditioner, it just has been 5% to 6%.

21:10 Got it, sir. And sir, I just wanted a guidance on sustainable OPM going forward this year. 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 will take place now and going forward as well. Actually, very good, let me see, yeah, the margins are dependent on quarter 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 nine to 10% of margin.

21:57 Sir, I'm saying for the full year, this quarter, we've achieved 10.4. So for the full year, can we achieve 10%? I have told you percent? I told you that we give our guidance in investor presentation also that we'll be receiving... We'll be definitely between eight to 10%, and anything better than that is always welcome. Okay, sir. Okay. So that's it from me. Thank you, sir. Thank you. A reminder to all participants, anyone who wishes to ask a question may press star and one on their touch tone telephone. The next question is from the line of Bharat Shah from BCS Capital. Please proceed. Sheena, Namaskar, I didn't really have Namaskar, I didn't really have a question to ask, but I wanted to convey my compliments over the years that I've observed, Aditya Vision, the very careful and disciplined way the business is being managed.

23:09 Have you expanded from one geography to three? And I'm glad to see that the hunger to grow continues by entry into A and P and West Bengal in the current year. All of these, while we have seen much larger and excellent competitors stumbling in many, many ways, Aditya Vision remains at a smaller scale, but a very prudent, wise and disciplined execution of the business opportunity while maintaining growth as well as the hygiene of the balance sheet and the capital efficiency. So sincere compliments, Sinasa. Thank you so much, Bharat and Rajanji.

23:58 It means a lot coming from you. Thank you. Thank you. The next question is from the line of Devhav Gupta from BoHead. Please proceed. Hi, sir. Congrats on a great set of numbers, sir. Just wanted to understand which categories were seeing the highest growth rates, be it AC or refrigerators or washers or TV, laptop, mobile. I understand there was a big component of ASP growth in mobiles and laptops. So broadly, if you could give color which categories are seeing fast growth and which are seeing somewhat slowdown. In this in this quarter, q one, actually, AC contributes the largest cost contributed contributed around 35.

24:51 And for they have contributed 42% of overall sales and growth... With a growth of around 35% over last year. Understood. And sir, what about refrigerators, washing machines? Sales, they were they were quite flattish type. It was between 1010% growth was there in a refrigerator of washing machine and panel. Panels also saw 10% kind of growth only? Yes, sir. Understood. Understood. Understood, sir. That's all from my side for now. Thank you, sir. Thank you. Thank you. The next question is from the line of Prabhat Avasti from Altrax Investment.

25:41 Please proceed. Are you there, mister? Hi. Am I audible? Yes. Yes. Yeah. So firstly, congratulations for the good set of number. My question is with respect to seasonality, sir. AVL experienced strong quarterly seasonality driven by Q1 and then in Q2, it drops significantly. So what does the management think? Do we think that is there any way to cater this seasonality or reduce the seasonality based back to seasonality? What is your thought on it, sir? I will have to understand one thing, provide that major categories, which we deal in, like cooling products.

26:35 It consists lot lot many things. It can constitute air... Room air conditioner, commercial air conditioner as well. Along with that, refrigerators, deep fridges, commercial refrigerators. So, this will definitely have this category can only be very very... It has to be there in... During summer. So, mother, this seasonality is not... Mother has been there always throughout India. Wherever there is a climate like this. So whenever the climate is not there, of course, know, Madhya, it won't be sold there. But as you know, more and more geographies are experiencing hot temperature.

27:25 So this is... This all goes well for us. Maybe in time to come, it will spill over to due to also. Then I'd like to... What I just said that June was quite good and quite hot this year. So July, month of July was quite hot this year. So maybe we expect that gradually where we are shifting, we actually see that maybe it will be entire H1, which will be catering to the schooling product. Yes. Actually, I get it, sir. I was just looking at numbers, and I saw that like it dropped fifty percent and fifty two percent that quantum like it was seasonality. I was just trying to understand that. Do we think that is there any way that we can manage the seasonality or reduce the quantum of it?

28:17 No, I don't think so because you cannot recruit the business, it is coming in Q1. And we rather it is market so competitive that we have to be much of to take all the advantage of weather conditions. Of course, no worries. And second thing, sir, if you could help me to understand that what would be the like what is our EBITDA margin guidance so that longer be like two, three years in the next three years, what we are thinking that how does our EBITDA margin look like? We have already given the guidance that our EBITDA margins will be between eight to 10%, and it will not be comparable quarter to quarter over quarter. But the annual annual and whatever I'm saying is your annual figure.

29:03 So eight to 10%, but what we have seen that we have been able to cling on to more than 9%. Okay. Okay. Yes. Yes, sir. Thank you. Thank you. Thank you. Thank you. A reminder to all participants, anyone who wishes to ask a question may press star and one on the touch tone telephone. The next question is from the line of Gupta from Citi Investments. Please proceed. Yes. Am I audible, sir? Yes. Yes. Go ahead. Yes. Hi, sir. Thank you for the opportunity. I have two questions. So first is how many stores are we targeting in West Bengal? And what is the like market size do you see in the entire West Bengal?

29:54 And what will be our store size in West Bengal especially, average store size? Okay. That's all. And the second question is bookkeeping question. So why did the depreciation went up on quarter on quarter basis because we only opened three stores. So just wanted to understand this. Okay. Yeah. And we are planning... Actually, we had taken this. This is an abrupt decision to open in Bengal because of certain development. And we are hoping to add the six to 10 stores in this financial year. And our... Typically, our store size will be between four to 6,000 square feet.

30:42 And depreciation, I'm afraid it is... It includes amortization of rent also. So you are taking out that factor. So it is just it has not gone up that much. And more actually, there is a lot of work in progress going on where we have to provide also. And, sir, lastly, how many stores are we planning for MP? Initially, we are planning to open in... We have already working in progress in Indore, Ojjain, Bhopal, and we are planning to open... Later on, we are planning to open in Yabalpur, Gwalior, etcetera.

31:33 So you can safely take it as six to 10 stores, we'll be opening in Madhya Pradesh. So will it be this financial year or This one. Next year also? This one. Okay, sir. Sir. Understood, sir. Thank you so much. Thank you. The next question is from the line of Palaj from Investec. Please proceed. Yeah. Hi, sir. Is my voice audible? Yes. Please go ahead. Yeah. So so we are entering new geographies. So do we think our other expenses, mainly a and b spends, would increase significantly this year? Of course, other expenses depends on, in fact, your volume also, sale also.

32:22 So more you sell, more freight is required, more credit card commission is required, more DVDs are required. So definitely, it is related with the sale. So operating expenses, I don't expect that it will go up significantly, but it will go up to consummate to the sales. Okay. Got it. And the second question is what is your plan towards Chattelgar? How many stores are we looking to add in FY 'twenty seven? Again, Chattelgar also, we have already opened three work in progress in around four, five stores. So let us keep it at 10 to 12 stores in.

33:12 10 to 12 stores, this financial year? Yeah. I'm talking about this financial year. Sir, so 10 to 12 stores in Sattaragas, six to 10 MP, and six to 10 in West Bengal. And where normal run rate of UP would be above 15. So we're up significantly with our guidance of 30 stores. Yeah. In UP, we have not guided for that, what what number you are saying. No. But definitely definitely, we'll be looking at... We have been improving, but we never would, in fact, give a guidance of... In such a way. We always say that we will be opening more than 30 stores. And if you do it better, I I hope... I'm sure you are going to be happy. Yeah. Thank you, sir.

33:57 Yeah. Okay. Thank you. The next question is from the line of from Aditya Capital. Please proceed. Yeah. Hi. Am I audible? Yes. Yes. Yes. Very much. Oh, yes. So I just wanted to understand how is our Chattisgarh EBITDA looking like? Have we... Or are we on the path of breakeven, and, like, what is the timeline for that? Can see last year. Only only for two months, the two that Right. Right. So it is... I don't think it is good for me to comment on an EBITDA or anything. So let's wait, but they are doing well.

34:43 Okay. And since we are planning our new entry in MB and West Bengal over the next twelve to eighteen months, I assume, Would that be EBITDA dilutive in any sort? Like, would would it be still come within our eight to 10% guidance? No. No. We'll stick to the the guidance as I told you. And what we have experienced in the past also, entering a new state doesn't dilute any EBITDA for us. K. Understood. And if you could... Just lastly, if you could talk more about our strategy for West Bengal and Madhya Pradesh. These are new geographies for us. Madhya Pradesh offers a very good potential, especially in the towns of town of Mindor, even Ujjain, Bhopal is another very good state. If you go to go North of Madhya Pradesh, we will...

35:42 Valer is very good very good market. This side toward Eastern, we will come to Double Pool. That is also very good. Even Kartik, Darcy, these are the big cities. These these... They will also offer us a good opportunity. So overall, I think it is going to do well. Understood. Just one last question, sir. So we talked about our inventory levels, which had come down. So I... What what are the... Basically, our working capital days for this quarter? If you could comment on that. We don't have... Take it for any quarter by quarter.

36:30 Right. Right. Okay, sir. Okay. Thank you so much. Yeah. Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I now hand the conference over to the management for closing comments. Over to you. Thank you very much for participating in the Aditya Vision's q one earning call... Conference call. Thank you very much, and be safe and healthy. Thank you very much. All the best. Thank you. On behalf of Axis Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.