D. P. Abhushan (NSE:DPABHUSHAN) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to D. P. Abhushan Limited Q2 FY 'twenty seven Earnings Conference Call. As a reminder, all participant lines will be in the 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 Mr. Ajith Mishra from E and Y Investor Relations. Thank you, and over to you, sir. Good evening. Thank you for joining the call. I am Abhushan from Ernst and Young Investor Relations.

0:46 Before we proceed to the call, 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 risks that could cause future results, performance or achievements to differ significantly from what is expressed or implied by such forward looking statements. Please note, the press release, financial results and investor presentations have already been circulated via e mail and are available on the stock exchange as well as in 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 the to take you through the q two FY twenty seven... H one FY twenty seven results and business performance today.

1:35 We have with us senior management team of DPABHUSHAN Limited, mister represented by mister Anil Pattaria, full time director mister Santosh Pattaria, chairman and managing director Mr. Vikash Kattaria, Promoter and Mr. Manish Ladda, Chief Financial Officer. We will begin the call with the management's opening remark on the company's performance for the quarter and and the half year financial year, followed by question and answer session. With that, I would now like to hand over the call to Mr. Anil, Over to you. Thank you. Thank you.

4:22 Good evening, everyone. This is Vikas Kattaria. I will briefly take you through our recent retail expansion and our plan for the coming quarters. During FY twenty twenty seven, we have continued to expand our retail footprint in a disciplined manner. We opened our Dhar showroom in Madhya Pradesh in end of March two thousand twenty six with approximately 3,000 square feet of retail area. This was followed by our entry into Gujarat through the opening of our Dhar showroom in September 2026. The showroom has approximately 3,200 square feet of retail area and is strategically located close to the Madhya Pradesh, Gujarat border.

5:17 More recently, on October 30, we inaugurate our first Focal showroom in Jabalpur, Madhya Pradesh. This is an important milestone for us because it is our first operational showroom under the franchisee owned company operated model. The Jopalpur showroom has approximately 3,750 square feet of retail area. Under this structure, the franchisee partner fund the showroom capital expenditure and inventory. Day to day operations are handled by DPABHUSHAN under our established system and operating framework. With Jabalpur, our network has now expanded to 14 showrooms, comprising 13 Coco showroom and one Foco showroom.

6:04 Our expansion strategy going forward will continue to be disciplined and market specific. Our core strength remains Central India, where we have operated for several decades and have a deep understanding of customer preference, local market and purchasing behavior. Looking ahead, we plan to add approximately three to four additional showrooms by March 2027, subject to execution timeline and business consideration. We are progressing with a new Coco showroom in Jodhpur, Rajasthan with approximately 5,200 square feet of retail area, which is expected to be inaugurated by December 2026.

6:54 We have also finalized two additional Coco location in Madhya Pradesh, Mansoor with approximately 3,500 square feet and Sagar with approximately 5,800 square feet of retail area. These locations are expected to become operational by the end of financial year 2027. Over the long term, our focus remain on expanding across Madhya Pradesh, Rajasthan, Gujarat, Chhattisgarh and Maharashtra. Our approach remain very clear. We do not want to expand simply for the sake of adding a store. We want to enter market where we understand the customer, see sustainable long term demand and believe that the D. P. Jewelers brand can build a strong position.

7:41 Our successful execution across Rajas Rattlam, Dahar and Dahar under the Cocoa format, together with Jigalpur under the Focoa format, strengthen our confidence in our ability to scale the network in a disciplined manner. There are three factors supporting our confidence. First is the demand environment. The festival season has been has given us a strong start to quarter three, and we now move into the important waiting period. Second is store contribution. The store that we have added to our network will progressively contribute as their ramp up. While our established store continue to provide a strong base for the business.

8:26 And third is expansion. We are entering the next phase of growth with a clear pipeline of new location and significantly greater financial capacity to support this expansion. With that, I would now hand over the call to Santosh Ji, who will take you through our recent festival performance and some of the key operational development. Thank you. Thank you, Mikashi. Good afternoon, everyone. Decrease 716 crore 13.8% growth diamond jewelry 14

10:15 crore 38 crore 289% growth 51 crore customer one hundred and forty four sixty We've been e commerce website or mobile application digital presence online market exhibition or customers organize In activity new connection display customers communicate or brand customer Financial

11:52 year two thousand twenty six twenty seven, first six month 1.02 lakh customers by 81% customers financial performance balance sheet or company Thank you so much. Thank you, Sandozhi. Good afternoon, everyone. Let me briefly take you through the financial performance of Q2 and half yearly of FY 'twenty seven, followed by an update on our funding and capital position. For Q2 FY 'twenty seven, total income stood at INR $7.61 crore, EBITDA was INR 61 crore and the payout was approximately INR 40 crore.

12:44 As explained earlier, the quarterly comparison needs to be seen in the context of the shift in the festive calendar. Therefore, happily, H1 provides a more comprehensive and representative picture of our underlying performance. For H1 FY 'twenty seven, total income increased by 7% year on year to approximately INR $16.15 crore. EBITDA grew by 18% to approximately INR 155 crore with EBITDA margin improving to 9.61 from 8.68% in FY 'twenty six. Profit after tax increased by 19% to approximately 104 crores, while the PAT margin improved to 6.45% from 5.82% in the corresponding period last year.

13:33 As we prepare for the next phase of growth, inventory funding and capital efficiency remains a key area of focus. We follow multiple mechanism to manage gold procurement and gold price exposure, including the customer gold exchange and gold metal loans, and of course, the hedging mechanism. See, gold received through exchange is particularly important because it reduces our dependence on incremental fresh gold procurement and effectively forms part of natural hedging mechanism within the business. Going forward, increasing the contribution of the exchange linked gold and structured gold accumulation program to further support the capital efficiency. Another important step to our business model is our established presence in the Central India.

14:24 This is relevant not only from a revenue perspective, but also from an operating cost perspective. We already have a strong sourcing framework, operating infrastructures, employee base, brand recall, logistic network, and understanding of these markets. Therefore, as we expand further within our core markets, particularly in the Madhya Pradesh and adjourning geographies, we believe we can leverage much of the existing infrastructure. This would allow us to grow without a proportionate increase in our underlying fixed cost base. I would also like to briefly address you guys about our recently announced fundraising initiative. This is our first investor call following the decision to undertake the fundraise, and we believe it is an important step in our preparing to the company for the next phase of growth.

15:18 We propose the potential issue of equity share and fully convertible warrants aggregate to approximately 558 crore, of which approximately 513 crore is intended towards expanding our retail network, funding the inventory requirement for the new store and showroom, and with the remaining amount proposed for the general corporate purpose. For us, this fund raise now... Raise is not simply about strengthening the balance sheet. It is about creating the financial capacity required to pursue the business opportunity we see ahead in a disciplined manner. We believe D. P. Abhushan has a several strengths that provide confidence in our underlying potential of the businesses.

16:05 The combination of internal accruals, our proposed capital raise, efficient inventory management mechanisms and selective use of COCO and FOCO formats gives us a greater flexibility to pursue this expansion while maintaining the financial discipline. Our objective is therefore not only to grow the showroom network, but to do so while protecting the return on capital, maintaining healthy profitability, and building a stronger platform for sustainable growth over the coming years. With that, I conclude my remarks. I would now request the moderator to open the floor for the questions. Thank you very much. Thank you very much, sir. We will now begin the question and answer session.

17:01 You may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Isha Shah from Malhotra Family Office. I have two questions. So firstly, on the Jabalpur Foco store, could you please help us understand the economics on the of the model and the franchisee partner? And how does the company own under this arrangement? Is it through revenue sharing, operating fees, product margins, or it's a combination of all of these? And also, if possible, could you please quantify D. P. Abhushan's share on earning potential under the Focal model?

18:05 Hello? Good evening. Thank you for asking. So you want to understand the FocoMetrics, basically? Yes. The FocoMetrics the economics model. And, also, how does the company own under this arrangement? Is it through revenue sharing, operating fees, product margins, or it's a combination of these? So, yeah, basically, in our FOCO model, the franchisee on the inventory and the CapEx. So both is done by the franchisee owner, and then we'll share them with the revenue. So we like the different category because we are selling the big four categories. So we have a gold jewelry.

18:51 We have diamond jewelry and the silver jewelry. So according to the jewelry categories, we we are sharing some revenue with them. So this kind of the more... Structure we built with the Foco model. And, sir, secondly, on the upcoming Foco stores at Jodhpur, could you please provide, the expected capital expenditure and the opening inventory requirement of these stores? And also, what kind of revenue potential and payback period should we expect on one of these stores? So ideally, we are expecting the breakeven is the six to nine months for the new stores where we are going. And approximately, the Jodhpur, the inventory requirement is somewhere around 60 crores to INR 70 crores is the requirement for the inventory.

19:39 And the CapEx will be somewhere around INR 3.5 crores to 4 crores, the CapEx required. Okay. So thank you. That's all from my side. Thank you. The next question is from the line of Atisher Jain from. Please go ahead. Sorry, am I audible? Yes. Yes, sir. So firstly, thanks for the opportunity, and congratulations on the fund raise. Sir, I have two questions. Firstly firstly, regarding the fund raise, the price at which you raise the funds. So it is quite substantially lower than the closing price of the day, first. And second, recently, we gave a update regarding the festive season sales.

20:28 So can we please expect more such updates in the future like other players in this industry also do? Okay. So as you said, let us take first question about the the pricing mechanism which you were asking. So there is a dedicated formula available which is given by the for calculating this price. And when we decided that we need to raise this fundraise, so this is that there is a reverse working happens for last ninety odd days about the pricing and taking that as an average, then we decide the final pricing. Basically, that is the entire understanding happen. Okay. Being a minority shareholder or analyst from the perspective.

21:18 Minority shareholder acquired within last week. It... He's acquiring with... Between 1,500 to 2,000 or 2,100, but we are allocating shares to the institutional investor lower price. So, of course, it has to be happened with the close vicinity of the investors who are keenly interested to invest into the company. And being a listed company, it is always has to be at part of the market price and the necessary formula given by the CB. So this is that only one can pursue and can apply for the press first. Right? As an individual or as a minority, of course, when we look at the price of today, then definitely everybody will be, like, kind of maybe use my part is better. But when we...

22:11 It is not, like, open for sale kind of mechanism. It is a preferential allotment. So, of course, it has to be within the close vicinity of the investor only. But, yes, the pricing is as per the market formula given by the CB. And the second one was about the festive season which you were asking about. See, definitely, as all of our promoters and Andy and whatever told that the seasons got shifted from the second quarter to the third quarter basically. So of course, now the season has started for festive as well as for the wedding. And we have seen a phenomenal response in our first month of this particular quarter and hope so that the same momentum will remain continuing. We will keep on posting all the updates to our stakeholders.

23:07 Okay. Thank you and best wishes. Thank you. Thank you. A reminder to all the participants, you can press star and one to ask questions. The next question is from the line of, an individual investor. Please go ahead. Hi, sir. First of all, congratulations for such numbers. I have couple of questions. My first question is, can you facilitate the debt in GML and non GML? Okay. So let us understand that we have a banking funding with the... All the banks with the understanding of the entire limit, which is a fungible between GML and the non GML.

24:01 GML always being an opportunity we look at from the market perspective. We compare with our international pricing with the spot market, And then this is that we always look for availing GML. And from an overall limit perspective, when we look at, then, of course, around 60, 65% is our GML dedicated limit available with us from our total limit. So whenever we get opportunity, we do fungibility and can avail that GML. Okay. Yeah. My next question is, sir, I wanna know the... How much of the asset is from investment customers this quarter? So, see, we have several schemes riding on our company's letter. The... In in first quarter, we introduced one scheme with the name called Gold Swan Plus scheme.

24:57 So when we look at that scheme, then definitely we've got a wonderful response. That is a Gold's OnePlus scheme is nothing but a scheme where a customer comes and enroll in that scheme and making payment on monthly basis. Besides that, we, being a company, provide a dedicated gold weight line to that particular EMI of every month. So customer gets an advantage here of price fluctuations. So it is like averaging its pricing with regard to their rates. So whenever customer makes payment on the same day, we apply the gold rate and then the dedicated gold is being, like, aligned to that particular customer in our system so that after nine or ten months, whatever scheme is there, then they see that customer can come and buy jewelry from our store. So whatever balance lying in that particular scheme, we adjust that particular gold with that particular invoice.

25:58 And remaining, if any available, then customer makes payment of that additional amount only. And So we have we look at on an overall basis, then around the... From this particular course, plus, around 50 crores, we have already got a contribution in last almost five months. And the the remaining other schemes of nine plus one and ten plus one is also available in that way. Okay. That's good. I have just a class one question. And Yeah. Can you tell me the date of inventory that you have as on date? Rate? Rate. Rate. Rate of inventory. See, we we follow kg and rate. So we follow weighted average cost concept.

26:46 Okay. So what happens that whenever we buy any new jewelry that is being adding to our existing jewelry and the new weighted average comes on that particular line item. So broadly, we are categorizing our entire inventory into gold, and studded mix. Okay. And as on today, when we look at, then around 1,250 CR of inventory as on September 30, but that was available with us. And broadly, when we predominantly bifurcating these inventory into the three segments, of course, the 90% around inventory from gold segment only and remaining five to 6% is dedicatedly for started mix, and the remaining is for silver and gift article. This is how we have allocated.

27:47 And they see that only sales are getting generated also. Okay. Yeah. Okay. That's all I have. Thank you so much, sir. Thank you. A reminder to all the participants, to ask questions, you can press star and 1. The next question is from the line of Saurabh Patel from Purnartha Investment Advisors. So I have one question to ask, I mean, one request to me.

28:33 So the... My request, can you just publish the storewide revenue and bold for you about each quarter, basically? Because that will be very sufficient, very useful for the investor. Okay. So, Saurabh, actually, what happened as of now to... We have only 14 showroom. When the list will gradually increase, then it would be very difficult to publish the storewide revenue on our present as anyone. But, yes, we will consider this that how we can provide you geographical information. But, yes, from an... Our industry perspective, it is not like that we take decision basis, our storewide revenue. We always look on an overall picture, like how the company is selling and how much is the company is, like, arranging their inventory.

29:23 Because it is, like, geographically somewhere, some festive comes in some period and some festive comes in a different period. So the inventory gets resupplied on periodic basis to that. But, yes, we'll definitely look into this and we'll provide geographically also. Yeah. Yeah. Thank you so much. And my question is again on the inventory part. So how much of the gold price rate do you actually carry today, and how much of it reaches the profit, actually? How much is it to? Profit. So basically, value appreciation out of inventory gain, How much of the total inventory gain, which is actually within the p and l? So, see, frankly, there is no specific formula which can be given with regard to when we are applying weighted average cost. But, yes, on an overall basis when we look at then the price which is available as on today and the price at which we are selling to the market around 18 to 20%, not more than that because the gold prices are keep on on the higher side. So 18 to 20% might be the inventory gain available in that available profit.

30:38 Okay. So... And what about the balance 80%? I mean It is, of course, from the making charges only. It is pure making charges. Reason being, we are charging... Making charges based on the present gold rate and not the historical price. Okay? The mechanism works like that way. So whenever a gold prices may remain high, of course, the making charges contribution will remain high only. So the rest of the profit is 100% from the making charges. Okay. Got Got it. And one more question, sorry about that. So you had disclosed the revenue for this quarter, for this period.

31:24 So how much of this is a price price growth and volume growth? Can you probably bifurcate that? See, when when we look at our yearly number, Uh-huh. Because the season has got shifted from one layer to another as we have discussed also that this is a seasonal business. And of course, whenever these kind of seasons remains shifted from second quarter to third quarter, it is always like when we look at numbers, then everybody gets confused why this is coming slow or why this is coming less. But this is not the case. Definitely, when all these numbers put together, when we look at, then performance should be visible and should be seen in a proper way.

32:16 So if we look at the performance put together, then the gold component from that overall perspective. Of course, as compared to the last last year half year number and the current year half year number when we compare, then from amount perspective, we have received almost 8% of growth in the gold. In silver, we have received almost 68% of the growth in the value. And Diamond, yes, it is not yet fixed. So we are lacking on it and we are working on it. So definitely, the big contribution is going to come from the Diamond being a good revenue Okay.

33:03 Okay. Thank you. Thank you so much. Yeah. Thank you. The next question is from the line of Mehul Parekh, an individual investor. Please go ahead. Okay. Definitely. We can. Thank you, for asking you open a story in.

34:29 Okay. Thank you. Thank you. Thank you. You. Next question is from the line of from Family Office. Please go ahead. Yeah. Hello, sir? Yes, ma'am. Yeah. Thank you for the opportunity, sir. Sir, I have just a question that several biscuits will be players reported double digit revenue growth during this quarter, whereas our company reported a revenue decline of 21% year on year. So while there is a shift in the festive season, I understand from q two to q three, can you please explain the key reasons for this divergence versus peers?

35:22 And, also, was this decline entirely due to the timing of festive and wedding demand, or were there any other regional differences due to demand? Hello? Hello? Yeah. So, see, as I said that we should look at from the half yearly perspective, which will give the true and the fair view. When we look at the half year, then definitely there is a growth of approximately 7% on compared to the last half year and this half year, number one. Number two, see, our main core revenue is coming from wedding and festive season. When you look at our presentation also, it is very well mentioned there around 75 to 80% is constituting from wedding and festive.

36:14 And unfortunately or fortunately, they fall in the quarter three. So definitely, when we will look the number of quarter three and put together all three quarters, then suddenly the dynamics will get changed. There is no doubt about that. The reason when we look at from others perspective or peers perspective, they have some geographically different presentation as well as they have product mix categorically different. Like, some of them are getting more diamonds. Some of them are not, like, predominantly situated where our geography is there. So this might be the reason only. But, yes, from... Put together all three quarters, then the dynamics will be at par what others are carrying.

37:06 Sure, sir. Thank you for your ex... Explanation, sir. So just one more question. What percentage of the current sales is supported by the gold... Old gold exchange, and how has this changed compared with the last quarter and f y twenty six? So what happened that from the first quarter, then our honorable prime minister conveyed some message to all the public not to buy any gold, etcetera. Then people were taking time to understand what was their intention because he was trying to say that we need not to go for the import of the gold. Then people understood this in a proper intent manner. And then all the dealers, you might have observed that, all the dealers have started the exchange program, which actually actually, you know, flourishing their cell. Reason being when the gold prices are high, it is always advisable to use your old gold and exchange that. It will be cheaper also, and it will be beneficial also.

38:14 But, yes, whoever has a wedding dedicatedly in their family, that is a purpose led by... They will not look for the exchange perspective. But definitely, this exchange program has given an additional room to our business also, and around 28 to 30% of our business is from exchange program. And hope so that this may remain continue for over some of the quarters also because of the instability in the gold prices. The more the gold prices will be fixed, people will start again investing with the price buying. Understood, sir. Understood. Thank you for your explanation, sir. This is very helpful. Just one last question from my side. Considering that the strong...

39:00 We had a very strong base in the second half of the last year, that is f I twenty six. So how confident are we about maintaining a growth... Healthy growth in second half of f I twenty seven? That is h two of f I twenty seven. And, like, if you can provide any ballpark guidance for f I twenty seven revenue considering the contribution from all the new stores, sir? So in general, what we have seen the trend of the entire industry works, like, in the first quarter, every... They're gonna do between 30 to 40% of their total contribution or total revenue, and the remaining comes in the second half because of the, you can say, festive weddings and all. It is like a seasonal kind of thing. Okay.

39:48 So in our case also, it has been like a case between 28 to 35% comes in the first half and the remaining comes in the second half. And we are definitely firm, and we have got good response also wherever we have opened our upcoming and recent showrooms. The market is definitely very good in those geographies and we'll get a good growth as anticipated and as conveyed earlier. Okay, sir. That is very helpful, sir. Thank you for your assurance. Thank you, sir. All the very best. Thank you. Thank you. Yeah. Thank you. The next question is from the line of Mahal Pavehushan, an individual investor.

40:43 Please go ahead. Thank you. That was the last question for today. I now hand the conference over to the management for closing remarks.

41:44 Thank everyone. You. On behalf of D. P. Abhushan Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.