Aditya Vision (NSE:AVL) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY 'twenty seven Earnings Conference Call of Aditya Vision Limited hosted by Monarch Network Capital Limited. 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. I now hand the conference over to Mr. Rahul Dani from Monarch Network Capital Limited. Thank you, and over to you, sir. Yeah. Thank you,. Good afternoon, everyone. On behalf of Monarch Network Capital, it's our pleasure to host Aditya Vision's management. We have with us today mister Ashwar Vardan Sena, chairman and managing director, and miss Yosham Vardan, who is the director.

0:49 I will now hand over the call to the management for opening remarks, and then we move to q and a. Thank you, and over to you, sir. I'm sorry to interrupt, sir. We are unable to hear you. Sorry. Thank you, Rahul. Good evening, ladies and gentlemen, and a very warm welcome to Aditya Vision's q two and H1 FY twenty seven earnings conference call. Before we begin, I would like to extend my warm... Warmest wishes to all of you and your families on location of Diwali. May the festival bring happiness, peace, prosperity, and good health to everyone. I'm pleased to share that Aditya Vision has delivered its best ever Q2 performance, with revenue growing 28% year on year to INR $5.86 crore.

1:45 This reflects the resilience of our business model, the strength of our customer franchise, and our continued focus on execution. For H1 FY twenty seven, revenue grew 27% year on year to INR $17.79 crore, keeping us ahead of our long term revenue growth aspiration of between 20% to 25%. The quarter witnessed several headwinds impacting discretionary spending, driven by the prolonged domestic Asia crisis, disruption in energy supplies, and a sharp rise in global crude oil prices. These developments heightened inflationary concerns and put pressure on central banks to consider interest rate hikes after an extended period of stability.

2:36 The situation was further compounded by flood and cyclone related disruption in Bihar alongside rising prices of essential staples and cooking gas amid the ongoing conflict, placing additional pressure on household budgets and dampening consumer sentiment. Despite these challenging operating conditions, we demonstrated resilience and delivered a strong performance with EBITDA growing by 32% and translating into an impressive 45% growth in profit after tax in Q2 FY 'twenty seven. Notably, H1 FY 'twenty seven PAT has already reached over 90% of the entire PAT reported in FY 'twenty five, reflecting the strength of our operating performance and sustained profitability momentum.

3:29 For H1 FY 'twenty seven, EBITDA grew by 3037%, with EBITDA margin expanding to 9.6%. Profit after tax increased by 41%, with PAT margin improving to 5.4%, reflecting healthy earnings growth and improved profitability. While consumer demand has moderated somewhat, underlying demand remains resilient across our market. Same store sales growth for H1 FY 'twenty seven stood at 18% compared to just 2% in H1 FY 'twenty six, when unseasonal rains impacted customer footfalls and sales. Our consistent high double digit SSG reflects sustained customer traction and continued growth across our established markets, supported by deeper penetration and improving store productivity.

4:25 Our expansion strategy combines deeper penetration in existing markets with entry into new geographies. As of September 3026, our network comprised two fourteen stores compared with 188 a year earlier. Our retail footprint expanded by 18.3% to approximately 9.51 lakh square feet. During this calendar year 'twenty six, we have entered three new states, Khartizar, Madhya Pradesh, and West Bengal. As of September thirty two two thousand twenty six, our network comprised 214 stores compared with one eighty eight a year earlier.

5:11 Our retail footprint expanded by 18.3% to approximately 9.51 lakh square feet. During this calendar year '26, we have entered three new states, Chattisgarh, Madhya Pradesh and West Bengal. As of yesterday, we have made our entry into West Bengal and Madhya Pradesh opening up additional growth opportunities. We continue to follow a cluster based expansion strategy, leveraging our logistics infrastructure, vendor relationship and brand recall to support efficient store ramp up. Our focus remains on building productive outlets that contribute sustainably as they mature. Alongside expansion, we remain focused on inventory availability and working capital discipline.

6:00 As of 09/30/2026, inventory stood at $8.65 crores compared with INR $8.40 crores at the end of March twenty six. This reflects the stocking ahead of the festive season and competitive pricing due to anticipated price increase across consumer durables. Borrowings stood at INR $2.93 crores at the end of September twenty six, down from INR $3.31 crores at the end of March twenty six. However, borrowings were higher year on year, reflecting funding requirements associated with inventory, new stores and business growth. We see a significant long term opportunity in India's consumer durable market, particularly across the heartland, where rising disposable income, increasing financing penetration and the shift towards organized retail creates substantial headroom for growth.

6:58 Our immediate focus remains on ensuring strong product availability, meeting customer demand efficiently and staying competitive while continuing to improve store productivity and maintain disciplined inventory management and cost control. When I look at where we stand today, what gives me confidence is that we are not just expanding our footprint, we are building a more resilient business and reaching a wider set of markets with significant populations and rising purchasing power. Our vision now stands well beyond our established strongholds towards capturing the immense potential of these underpenetrated geographies. Backed by disciplined execution, strong regional understanding and a customer first mindset, We believe we are well positioned to capture this opportunity and deliver consistent, sustainable growth over the medium to long term.

7:57 With that, I would like to hand over the floor to Mr. Yosham Varjan to take you through the financial highlights in greater detail. Thank you. Thank you, sir. Good evening, everyone. We are pleased to present the financial performance for q two f y twenty seven and h one f y twenty seven. For q two f y twenty seven, revenue increased by 28.1% y o y to 586.23 crore. Gross profit grew by 38.8% to 95.59 crore. This gross margin expanding by one twenty five bps to 16.3%. EBITDA increased by 31.6% to 45.65 with EBITDA margin improving by 21 bps to 7.8%.

8:53 Profit before tax grew by 45.3% to 24.26 crore, while profit after tax increased by 45.2% to 18.47 crore. FAT margin improved by 37 bps to 3.2%. Same store sales growth for the quarter stood at 18%. As of 09/30/2026, our store network comprises of 214 stores, which includes 120 stores across all 38 districts of Bihar, 56 stores across 32 of Uttar Pradesh 75 districts, 33 stores across 22 of Kharkhand's 24 district, and five stores across three of 33 district.

9:47 Bihar contributed approximately 73% of q two revenue followed by Uttar Pradesh at 15, Dharcan at 11%, and Chattisgarh at 1%. For h one f y twenty seven, revenue grew by 27.3% y o y to 1,778.91 crore. Gross profit increased by 34.9% to two eighty seven point four two crore, with gross margin expanding by 91 bps to 16.2%. EBITDA grew by 36.8% to $1.70.13 crore with EBITDA margin improving by 66 bps to 9.6%.

10:34 Profit before tax increased by 41.1% to $1.27.08 crore, while profit after tax grew by 41% to 95.69 crore. FAT margin improved by 52 basis points to 5.4%. Same store sales growth for h one FY twenty seven stood at 18% compared with 2% in h one FY twenty six. Our store network increased by 13.8% to 214 stores compared with one eighty eight stores a year earlier. We can now open the floor for questions. Thank you. Thank you very much.

11:20 Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may please press star and one on the touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use answers while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants to ask a question, please press star and 1 now. Anyone who wishes to ask a question may press star and 1.

12:17 First question is from the line of from Monarch Network Capital. Congratulations, ma'am, on this excellent set of numbers. So, ma'am, firstly, I'll have just two questions. Firstly, I wanted to understand more about our gross margin expansion as to what has led to more than 120,125 odd bps of gross margin expansion during the quarter. Is it the price hikes which the OEMs have taken? Or is there any other change in product mix as such for the quarter? And what is your second question? And second question would be on the margin guidance for the full year.

13:10 Okay. Price... There was a price hike, of course, but going by the percentage of our sale comprising where there there there was significant price. Right? It was not very significant in our case. So around 50... 75 to 80% bps of margin has come from price. Right? And rest has... We have... That margin has been through normal trading. Okay. And sir, can we... Can you brief us down as to which product categories have led to this growth in the current quarter? And also, as we see that during the start of the quarter, we saw extended summer season. So did we see any strong growth in the AC category sales as well? And which all OEMs have contributed to such growth?

14:10 In fact, our growth was mainly driven by sale of... Of course, as you said, that extended the summer period was there. So it was led by AC followed by mobile and. Secondly, what you asked about guidance of gross margin, then our our normal guidance will be the same around 15 to 15.5%. But, sir, in h one, we've already reported gross margin of more than 16. So do we see any kind of gross margin coming down? We do not take into we do not take into account any price cycle, you know, because it is not a permanent, yeah, thing to to have in your gross margin.

15:01 So, normally, gross margin, when we say about anticipated gross margin, we talk about constant price. Sir. And sir, one last question on the store expansion strategy. At present, we are at two fourteen odd stores. So where do we see our store count going by the end of April twenty seven? And in the next two years, what kind of store expansion strategy are we looking at? I think we'll be closing at around 230 stores in this financial year. Maybe more than 230, it can go up to 235.

15:46 And then next year, again, we are anticipating a addition of another 35 stores around. So that will come to around 270 stores. Okay, sir. Got it, sir. That's it from my end. Next question is from the line of Vinit Prasad from Investec. Sir, my first question is on demand. Was it a case wherein delayed Diwali would have impacted Q2 demand, number one? And second is a part of the festive has already passed.

16:33 How has been the demand so far in the month of October or festives, so to say? In fact, demand has been slow. I'll put it like this, but but we are expecting that as we near... Come nearer to Dhanteras and Diwali because Dhanteras is the main festivities around the geography. So as we come nearer to the date... To the Dhanteras date and Diwali, I think it will be pick up. Understood. Understood. And would you would you would you want to conclude saying that the growth rates which we've seen in the past and that it's come off from those levels as far as SSHG concern. Is that the right way to understand?

17:21 For which quarter? For the current quarter you you are asking? For for, yeah, October month. October. So this is what I said that right now, sales are slow and very difficult to predict right now what will exactly happen. But sales growth and sales has been quite slow at the moment, but it is picking up. And we are expecting that as we go into the main festivity, I think it is going to demand will start picking up. Understood. And my second question is on OpEx, which has shot up fairly sharply in this quarter. Was there any element of one off or given we were entering into a newer stage and we had to incur higher bit of OpEx, which should normalize in the coming quarters?

18:12 But our OpEx was not higher in this quarter, I suppose. It is quite controlled and it the same level of, I think, almost same ratio compared to the, let's say, what we had last time. No, If if I look at indirect expenses, those had increased from 17 crores in q two of last year to almost 28 crores, 64% jump on a Y o Y business. That's right. So that depends on the sale also. As you know, as this your ramp up to your sale, then so many expenses, expenses, also go up. Just like financing cost will go up, credit card cost will go up, the CMS charges will go up, freight will go up too. So...

18:59 And plus, we we were adding 30 stores also in the meantime in in the same one year time. Understood. Understood. Okay. Okay. Fair enough. But if you if you will compare then you will find it is a soft drop because the sales factor is the top line. Mhmm. Okay. Understood. Understood. Thank you so much, sir. Sir. Thank you. Next question is from the line of Devanshi Kangdar from Axis Capital. Please go ahead. Hi. Am I audible? Yes.

19:46 You are. Please go ahead. Yeah. Yeah. So, sir, could you give us a bit of a flavor geography wise revenue, how it performed Y o Y as well versus, like, the second quarter last year? We have already provided this and sent it in my earning call also. In fact, Yusum has also told you, but I'll again repeat. Bihar has contributed around 74%. 72, 74%. In q two, Bihar has contributed 74, Dalkhand 11%, and UP 15%. And such as that since we have opened just now, it has contributed 1%.

20:31 Okay. And, sir, due to the cyclone and those conditions, sir, Bihar, how much was the impact, like, the loss of revenue, if you could quantify that? Yeah. This is very difficult to quantify because of cyclone or whatever, but that that that... You this definitely disturbs market. And it's very hard to quantify what loss of sale actually it happens. Okay. And, sir, within our... Within the new geographies that we entered, Can you give us, like, any plan for the next two years, like, the number of stores that we would be adding in both of these geographies? Yeah. We... Definitely, I can give you. In Chattusa, we plan to open another...

21:20 We've already opened five showrooms or six showrooms. We plan to open another nine to 10 stores in Chattisgarh. In Madhya Pradesh, we plan to open around... Already, we'll be opening around three stores very shortly, and we plan to add another, let us say, 15 to 17 stores in coming month... A year. And in West Bengal, we have already opened two stores and another two is working process. So we are expecting to add at least 15 stores in West Bengal also. Understood sir and Apart apart from strengthening Western UP as well as certain pockets of Bihar.

22:08 Mhmm. Okay, sir. And would these new geographies, they they will be revenues generating, of course, and also EBIT generating from our first year of handling, or would there be sort of a breakeven period that... Or, you know Oh, again, very hard to answer at this time, but what... Whatever we have in fact to anticipate, madam, what we are... We have been anticipating, we are getting it also. So we are hoping to have it... Definitely, it will break even very soon. Okay. But do we see... During the year, do we see any margin dilution due to the new index? Actually, what happens, Divansi, is that whatever margin gets diluted with the new stores, that gets compensated by the older stores which are maturing. So you... The whole thing gets balanced more or less. I hope you are... You understand what I'm trying to tell you. Right. Right. No.

23:10 No. Definitely. Okay, sir. Thank you. That's all from my side. Thank you. Thank you. Next question is from the line of Bhagia Gandhi from Bajaj Alternate Investment Management. Please go ahead. Yeah. Hi, sir. Congratulations on a great set of numbers. So I just wanted to understand impact of eight pay commission. Will that be a significant revenue driver whenever it comes? In your past experience when the seventh k commission was there, have you seen any, you know, manifold growth in terms of demand? Because amount... A large amount will be put in the hand of pensioners. So... Yeah. Sorry. In the hand of all the workers.

23:57 So... Yeah. Yes, sir. Yes. Definitely, it is going to give us... That will act as a very big... Strong tailwind tailwind for us because more money will come in the hands and discretionary spending will be expected to rise. But everything depends on the macro atmosphere also. So we are all hoping just like entire world is globally hoping that these disruptions will come to an end very soon. So, again, right now, also, we are expecting a lot of discretionary money coming into the market once things stabilizes. So if there is any hike to pay pay commission or something, the money that is going to give us a good sale from that.

24:44 Right, sir. Yeah, that's it from my end, sir. Thank you. Thank you. Next question is from the line of from Aditya Public Alternate. Please go ahead. Congrats on a good set of numbers. So just one question from my end. Basically, like you already guided some 70, 80 bps of gross margin addition this year is because of price hike and we have some old inventory, which is benefiting us. So how should we also think about our EBITDA margins going ahead?

25:30 Should it our normalized range should decline by 30, 40 bps going ahead because of our re expanding in newer regions and newer states? That's all? Yeah. Yes, sir. The EBITDA margin is going to moderate to that extent what what extra margins we have been getting. Definitely, we will do in fact that year by as much as gross margin. But we have already we always guide give a guidance of EBITDA margin between 810%, and that that is also on an annual basis. We always give a guidance of between 8% to 10%.

26:16 And we are very confident that we'll drop achieving it. It, sir. Thank you. Thank you for taking my question. Thank you. Next question is from the line of Vijay Jangesh from Systematics. Please go ahead. Sir, my question is on store opening in West Bengal and AMP. So what will be the average CapEx per store in both these two states? And is it possible to give average store break break... Yeah. Break even level in month entire... In terms of months and what will be the payback period in these two states? Both the states are new to us. So, mother, it will be again very too early for me to, you know, give any guidance.

27:07 But usually, CapEx will be... Already we have already disclosed in our investor presentation. The CapEx will be around $9.90 per... Lakhs per store. That too because of this inflationary pressure coming around in last one and a half years or something. So it has gone up to 98 lakh per store. And we expect that it will be breaking even in around one year's time. Okay. Okay, sir. Thank you. That's it from my side. Thank you. Next question is from the line of Aditya Vafna from Monarch Network Capital. Please go ahead.

28:02 Sir, one last question from my end. Sir, since we've entered West Bengal now, so can you just talk to us more about the competition at present in West Bengal? Who could be our major competitors over there? There are, of course, national players are there, like, as you know, Reliance and Kumar Kumar are there in West Bengal. And local chain is also there, but they are stronger... Much more stronger in metro rather than in other peripheral district. As you know, we have been we have been targeting border districts first with our bordering Bihar. So we are we are well known also.

28:48 And so we are expecting that, of course, by the time competition will take... Will come and take place, then by that time, we'll establish ourselves there. Okay, sir. And, sir, any target as to... In the next three years, how many stores are we looking at Best Bengal? Are we looking at around 40 odd stores over there in the next three years? 40 to 50 stores? In next... Not in next three years, I'll say, but in next... Another four years, definitely, we'll be targeting close to Kolkata also, Metro also. So 30, 40, 50 stores as per is a possibility.

29:36 Okay, sir. Got it, sir. Sir, any major... I mean, sir, see, our major stores at present currently are in Bihar. And now since we are entering West Bengal as well. So, is there any CapEx difference? What would be the CapEx difference per store in Bihar versus the new markets which we are entering? The CapEx difference is there because of certain things like to create another items for vendors also. Since we have got internal vendors, so usually we were opening in this side of the geography, so now we are moving outside it. So it is around 10%, 15%, that's it.

30:23 Okay. 10% to 15% would be higher than the normal CapEx? Ahmed, that can that can be... That can increase by 10, 15 at best. Okay, sir. Got it. Thank you. All depend... But it all depends how big the store you you are opening there. It depends on that. Yeah. Yeah. I know. Okay, sir. Yeah. Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I now hand the conference over to management for closing comments. Thank you. Thank you every...

31:09 And, again, I wish you a very good Diwali, my warm... My warmest wishes to all of you and your families on the case of Diwali. May the festival bring happiness, peace, prosperity, good health to everyone. Thank you very much for attending this investor conference call. Thank you very much. Goodbye. Thank you. Ladies and gentlemen, on behalf of Monarch Network Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.