Vaibhav Global (NSE:VAIBHAVGBL) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Vaibhav Global Limited Q1 FY 'twenty seven Earnings Conference Call hosted by Arihant Capital Markets Limited. 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 Ms. Natasha Singh from Ariant Capital Markets Limited. Thank you and over to you ma'am. Thank you. Good afternoon everyone and thank you for joining us on Vaibhav Global Limited earning conference call for Q1 FY twenty seven.

0:51 We have with us Mr. Suneel Agarwal, Managing Director Mr. Nitin Panwar, Group CFO and Mr. Vivek Jain, Head of Investor Relations. We will begin the call with an opening remarks by Mr. Subhir Agarwal on the business operations, key initiatives and board outlook, followed by discussion on the financial performance by Mr. Nitin sir. After which, the management will open the forum for the Q and A session. Before we get started, I would like to point out that some statements made or discussed on today's call may be forward looking in nature and must be viewed in conjunction with the risks and uncertainties that we face. A detailed statement and explanation of this risk is included in the earnings presentation, which has been uploaded and shared with you all earlier.

1:44 The company does not undertake to update this forward looking statement publicly. I would now like to invite Mr. Sunil Agarwal, sir, to make his opening remarks. Over to you, sir. Thank you, Natasha. Good afternoon, everyone, and thank you for joining VGBL's Q1 FY 'twenty seven earnings conference call. I trust you have a chance to review our results and the investor presentation. We commenced FY 2027 on a healthy note, building on the momentum of FY 2026. For the June quarter, we reported consolidated revenue of INR917 crores, a growth of 12.7% Y o Y.

2:35 EBITDA came in at INR102 crores up 37 year on year with EBITDA margin at 11%. A strong improvement from 9.2% in Q1 FY twenty twenty six. Profit after tax grew 50% year on year to INR 56 crores. Reported growth benefited from favorable foreign exchange and U. S. Tariff refund during the quarter. On a constant currency basis, revenue was broadly flat, largely due to Middle East conflict related disruptions early in the quarter and a cautious consumer spending environment across our key markets. These are near term factors and do not change the long term growth potential for of our business or our progress against strategic priorities.

3:30 Let me briefly touch upon the macro backdrop. In The U. S, consumer confidence stayed weak through the quarter, with households prioritizing essentials for discretionary categories in face of increased fuel costs. Against this backdrop, our U. S. Business delivered a steady performance, a resilient outcome related to the wider caution across the discretionary retail sectors and one that reflects the continued strength of our value oriented omni channel proposition. In The UK, the overall operating environment remained challenging during the quarter with consumers staying cautious on discretionary spend. While the core TSC business was subdued, our proprietary brand, Rachel Galley and Ideal World continued to perform strongly and help offset the broader softness.

4:25 Overall, U. K. Performance remained flat, but the momentum in these two brands remain encouraging and gives us confidence in the medium term recovery of the market. In Germany, consumer sentiment showed early signs of stabilization on the back of improving income expectations. Our Germany business also delivered good growth of 6% in local currency with improving margins during the quarter. As you will recall, Germany achieved EBITDA breakeven for the full year FY '26, I'm pleased to confirm that the business is now on track to contribute positively to good profitability from FY 2027 consistent with the trajectory we had guided to. Coming to our strategic priorities, our in house brands now contribute around 57% of B2C sales, sustaining the milestone we closed during FY 2026 and continuing to support our margins and sourcing efficiencies.

5:25 Digital sales accounted for 45% of B2C revenue during the quarter, and we remain on track to reach our 50% digital mix target by the end of FY 'twenty seven. Lab grown diamonds continued their strong momentum at around 13% of retail revenue, broadening our price of architecture and meeting a clear shift in consumer preference. Our growth continues to be guided by our four R priorities that is reach, look at some registration, retention and repeat purchases. During the quarter, our TV networks reached around 127,000,000 households globally consistent with recent quarters.

6:11 Unique customers stood at 6.77 and retention at 38%. I would like to share a bit context here. The moderation in customer count and retention reflects our deliberate shift towards higher value, higher lifetime value customers, primarily with scale up of our lab grown diamond portfolio, which has a higher ASP of around US$2.50. Average pieces per customer on a trailing twelve month basis remained healthy at 23 and customer economics have improved meaningfully. During the quarter, we have successfully migrated all our key e commerce platforms from Salesforce to Shopify enterpriseecom platform.

6:59 This is a significant structural step and marks an important milestone in our journey towards becoming a truly digital native organization. With this migration, we now operate on a unified cloud based and highly scalable technology backbone across all our brands and geographies. This gives us several important advantages: faster deployment of new features across markets a single unified view of customers across TV and digital channels, seamless integration with modern marketing technology, analytics and AI tools, improved site performance and conversions and lower long term platform costs.

7:45 It also positions us to launch and scale new brands, categories and geographies with far greater speed and efficiency. On AI initiatives, we have implemented many important AI tools encompassing product scheduling, content generation, personalized marketing and demand forecasting, etcetera. This transformation is helping us fundamentally reengineer how we operate, evolving from traditional TV led retailer with digital add ons into an integrated digital first AI led omnichannel retailer. We believe this shift will be a key structural driver of both growth and operating leverage over the coming years.

8:33 Sustainability and community remain at the core of our business. Our ICRA ESG ratings stood at 74 marked as strong. In line with FY 2026, under our flagship your purchase fees program, we have now served over 115,000,000 meals to school going children since inception, currently providing around 58,000 meals every school day. We remain committed to our long term goal of 1,000,000 meals per school day by FY 'forty. On capital allocation, the Board has recommended a first interim dividend of INR 1.5 per equity share.

9:21 On the outlook front, we reiterate our FY twenty twenty guidance of 9% to 11% revenue growth with EBITDA margin expansion of 50 to 100 basis points over FY twenty twenty six. Looking further ahead, we remain confident in our journey towards achieving 12% to 15% growth in mid to long term as we continue to scale our digital platforms across geographies, brands and channels. With that, I will hand over the call to Nitin to take you through the financial performance in greater detail. Over to you Nitin. Thank you, Sunil. Good afternoon, everyone, and thank you for joining us today.

10:07 I will now take you through the key financial and operational highlights for the first quarter of FY twenty twenty seven. We have started the year on a strong note, delivering another quarter of profitable growth. Revenue from operations stood at INR $9.17 crores, a growth of 12.7% year over year, despite a relatively soft consumer spending environment across some of our key international markets. EBITDA increased 37% year over year to INR 102 crores and EBITDA margin expanded to 11%, up from 9.2 in Q1 FY twenty six. Profit after tax grew 50% year over year to 56 crore with PAT margin improving to 6%.

10:57 The improvement in profitability reflects the continued benefit in our strategic initiatives around product mix, operating efficiencies and quality. In local currency terms, our Q1 FY twenty twenty seven growth was 4% in U. S, flat in UK and 6% in Germany. Overall B2C growth is 2% in U. S. Dollar terms and excluding the impact of tariff refund, it is largely flat. In The U. S, our vertically integrated model and diversified sourcing helped us to expand margins despite ongoing tariff related pressures and softer consumer demand. In UK, Idle World continued its strong momentum with healthy double digit growth.

11:47 Overall, UK performance remained flat, but momentum in Idle World and Rachael Dempsey remain encouraging and gives us confidence in medium term recovery of the market. Germany continued a meaningful improvement in bottom line. While EBITDA for the quarter was marginally grew breakeven, the underlying trajectory remain on track. We remain confident that Germany will contribute meaningfully to our group profitability from FY 'twenty seven. In line with our earlier commitment, Mindful Souls, our first digital acquisition brand, also continued its steady performance with strong gross margin and growing consumer base.

12:35 On channel mix, digital revenue grew 21% year over year to $3.98 crores, while television revenue grew 9% to INR $4.84 crores. Digital now contributes around 45% of our B2C revenue, and we remain firmly on a track to gross 50% mark during FY 2027. This digital transition is important because it allow us to build a stronger customer relationship, improve customer acquisition economics and generate better lifetime value through first party customer data. Lifestyle products contributes around 40% of B2C revenue this quarter with a medium term target of 50%.

13:23 Our budget option, which allows consumer to pay purchase on EMI, remained popular and accounted for 36% of our total retail sales. Gross margin for the quarter was 67%, reflecting the strength of our vertically integrated business model and our in house brand mix. On the cost side, we continue to see benefit from headcount rationalization, better logistic efficiencies, sharper airtime negotiation and higher utilization of automation in AI tools across the organization. Our digital marketing spend remain focused on acquiring higher quality of customers with better lifetime value, which is helping strengthen long term customer growth.

14:13 Net cash position stood at INR $2.87 crores as of 06/30/2026, giving us the flexibility to continue investing in growth while maintaining strong capital discipline. Returns ratio remained healthy, ROCE at 24%, ROE at 18%. The Board has declared a first interim dividend of INR 1.5 per expectation. While we remain disciplined on cost, we continue to invest in the areas that create long term shareholder value, scaling digital commerce across geographies, deepening own brand penetration, expanding lifestyle categories, growing our lab grown diamond portfolio, embedding AI across customer acquisition, retention, merchandising and strengthening customer engagement through our omni channel platform.

15:11 These investments are designed to improve customer lifetime value, while simultaneously expanding margins over the medium term. To conclude, we are pleased with our progress made during the first quarter. We have entered FY 'twenty seven with a healthy business momentum, improving profitability, a robust balance sheet and multiple growth drivers that position us well for the future. Thank you. We can now open the floor for the Q and A session. Thank you very much. We will now begin the question and answer Anyone who wishes to ask a question, may please press star and one on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2.

15:57 Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of from AK Investment. Please proceed with your question.

16:44 Yes. Thanks for the opportunity. Great set of number. Congratulations to the team. So my first question is regarding the guidance which we have shared that FY 'thirty vision that is INR 5,000 to INR 5,500 crore, which looks very skeptical, I mean, when I do a CAGR of roughly 10% revenue growth. And what sort of margins are we thinking when we are talking about FY 'thirty? Can you just clarify on that? Thanks, Harjit. For mid- to long term guidance, the macroeconomics is very volatile and considering shift from our TV to digital, we are confident that we continued our expansion in our digital platforms like Meta or social commerce or TikTok and other platforms.

17:41 We have given a guidance to hit INR 5,000 crore mark. In margin terms, it is continuously improving with the vertical integrated business model we have. We have our target is to improve the margin higher than our revenue growth that we do. And that we have delivered in past two years as our retail share is expanding. And in terms of the margin, where it will drive from, mainly improvement in gross margin that you see in our current quarter as well. Gross margin will continue to improve. Keeping in line our digital investment will continue to increase. So our overall EBITDA margin guidance will be in terms of improving trend.

18:30 So it will be 15% to 18 What will be the ballpark figure? Specific number is difficult to guide, but it will be improving. It will be improving trend. Okay. Okay. Okay. But still sir, I mean 10% revenue growth, if you talk about 12% EBITDA or PAT growth, it looks very I mean now we are making roughly this year we are making INR 4,000 crores. And in the next three to four years, three years, we are talking about this number, which looks very I mean, it's very difficult to think that, okay, we are just growing this much because we have made our investment in Germany and we thought that okay, the revenue growth and this should be higher when the environment improves if we are going into digital.

19:20 But yes, that's what it is. Okay. Second question? So I agree, but the macroeconomic environment is very volatile. It keeps on changing with the how the world is moving towards different war oil prices up or down. So considering all in our mind, we have kept our number. Okay. And secondly, my question is, every year, we are doing a lot of free cash flow, right? And we are returning as a dividend. So here I have two questions. One is, why are we not doing a buyback which is shareholder accretive? I've asked in the last call also. I'm asking again, why are we not doing that?

20:08 And secondly, when we are throwing this much cash, why are we not being very little aggressive, like starting initiative like we have experienced now 50% of revenue comes through digital, right? We have a good experience. We can pivot into a small team and start venturing how do we explore the India market because here a lot of new brands are trying to create a lot of value. So I think there has to be some initiative from the Board that we really think we need to think about how we can grow 15% to 20% rather than 10%. If geo economical are not good, then we have to focus on India market, how we can create a brand because right now with AI, website building is not a tough initiative to do it. And we have a lot of e commerce channels where the delivery can be fast. I think we should be a little aggressive in order to create a shareholder value in the long run. If we are growing at 10% CAGR for four to five years and there is no margin improvement, I mean, how shareholders will make money sitting in Vaibhav Global? These are two straight questions from my end.

21:16 Yes. Thank you, Arithya, for your question. So first, in terms of free cash flow, we keep on generating our cash and distributing dividend almost INR 400 crores every year. Our internal assessment is that we need to create some cushion of 50,000,000 to $100,000,000 with us for any opportunity comes with us for not only just acquisition or any other thing to expand our business. So that internal strategy we are keeping for not doing buyback right now until we have a 50,000,000 to $100,000,000 kind of cushion with us. Apart from that, the other question in terms of coming into India market, India is definitely a lucrative market. But the first opportunity for us is that we have last twenty years operating in Western economy, and that has itself has a larger potential like U. S.

22:17 And the Germany market has to grow digital business much faster. The changes we are doing internally from shifting our live television to a digital native business that recently transformed from Salesforce Commerce Cloud to Shopify platform, also one of the major step to expand our digital platform. Margin improvement, we are giving the guidance to improving the margin every year comparatively. But the growth in terms of TPV, we have considered keeping all the macroeconomic fundamentals, how the other business and the economy is evolving. So right now, we have Board is not just throwing out the idea of coming into India, but right now our first focus is to expand our existing digital business what we have in U. S, U. K.

23:13 And Germany. Understood that we are expanding, but what I was saying that if management is very occupied in that, we can have a new leader in place and where he can explore that part and it can create a pivot and basically when the idea matures, we can scale it up rather than if you are not spending it today, then after five years also, we'll not be able to then there is always a delay, right, if you are not thinking right away. So I would suggest that we put some thoughts into it from a real shareholder perspective, I'm just sharing it for the future of Vaibhav Global. That's all. It's up to you. Okay, then. Yes. Thanks. Thank you, sir. The next question is from the line of P. Yogesh, an individual investor. Please proceed with your question.

24:03 Thanks. Good afternoon, everyone. Sir, can you break down the revenue growth between, let's say, how much we are benefiting due to currency of pricing and volume? Okay. Hi, Abhav. Our growth is largely driven by the currency in the current quarter. And part of it also driven the tariff response that we have received. So if you exclude that, our growth in terms of U. S. Dollar is largely flat. But the volume has increased as we are seeing traction on the lower price point. Our average ticket size in U. S. Is reduced from $50 to $46 But the volume, we are seeing good traction.

24:53 Okay. And what are the key drivers for U. S. Business? Let's say, I think we've done INR $5.30 crores. But what are the drivers in future? I rightly say, look, already mentioned in your opening remarks that U. S. Is something is now I think the consumer spending is changing slowly slowly. So what is our expectations? And how do we see that? What could the growth drive? Because see the cost of money and inflation going to be very high in U. S. In coming years also. So is it are we the obviously, we as a company, we also acknowledging that point. But how do we in future is our strategy basically and what to be the growth drivers?

25:40 Yogesh, this is Sunil Agarwal. I'll answer that question. So the key growth drivers for us, number one is the digital. We made investment over the last two, three years into talent development towards digital to becoming digital first. We invested in technology that is we went into from Salesforce, we went to Shopify enterprise platform for all our brands. And then we invested into AI tools across the business. And that is to enable us to become a digital first across all our brands, not just U. S. So the digital will be the key driver of our business. And there are two additional drivers. One is the OTT, where we connected television and we have presence into pretty much all platforms, whether it's Roku TV or Fire TV, Samsung TV, Apple TV.

26:33 So we have our apps on those OTT platforms, and we are having decent revenue growth and customer engagement on this platform. And the third, there is a small right now is a live streaming. So the TV, live programming is our strength. Over the last twenty years, we find that and right from storytelling to product identification to engaging content with 20 fourseven live programming. That we have launched on TikTok, on YouTube, on Instagram in U. S. And then we are getting customer engagement with that. This is small. It's still just about $2,000,000 business for us, but we see that as a growth driver for future for us.

27:23 So now again, to just summarize, number one, digital number two, OTT number three, live stream on e commerce social networks. All powered by AI. Okay. What's your initial basically, I won't say the feedback, but initially your observation, do you think what we are doing actually will showing a good results in future? Most definitely. As you see, our digital contribution is increasing. We are pretty we are almost 45% of the D2C revenue as a digital. We expect it to reach 50% by the end of this year. And we'll continue to grow and eventually we'll become predominantly digital in few years down the road because of investments and understanding of the business that we have acquired over the last few years. I'm fairly confident.

28:24 Is there a lab grown diabetes Sorry to interrupt Yogesh sir, may we request that you return a follow-up. Not question. There are lab grown diamonds contribution is increasing. So, Vaibhav, how do you see in next two, three years? And is there any big margin difference between the lab grown diamonds and our normal business? Yes. So lab currently is about 13% of our revenue. And I think it will increase somewhat more because still we are seeing good traction on digital properties for lab grown. So I don't know where it will go, but maybe it go 14%, 1516% in the coming years. And the margin is slightly better on lab grown than compared to the natural gemstone or gold jewelry or plain silver jewelry.

29:17 Okay. Thank you very much and all the best. Thank you, Vaibhav. Thank you, sir. The next question is from the line of Navin Bed from Nuvama AMC. Please proceed with your question. Yes. Thank you for the opportunity. In your medium term guidance, if you like you are hoping to get to almost INR 5,500 crore of revenue over the next four years, Can you just sort of throw some light on how much is your assumption on the currency side? Currency, the past twenty years is roughly depreciating around 3% and similar kind of depreciation we expecting in upcoming years. Okay. So out of 12% sort of growth, if you are expecting 3% is what you've factored it on account of currency, right?

30:09 Yes. Okay. The other thing is in terms of our gross margins, what is the difference in gross margins when it comes to the digital side of the business and the traditional television side? So gross margin on the native digital pure e com is higher than the our TV business margin as it requires the higher spend on the social media marketing or the other paid mediums. So, paid so maybe digital gross margin is higher than our TV margin. Okay. And as I mean for the past couple of years, we've been at almost 20% in terms of our ad spends and you have maintained that as our mix is shifting more towards digital, those spends will continue. Do you see those spends getting capped somewhere and at what point do you think that the benefits will start to accrue to us and the spends can be sort of much lesser in terms of growth versus what the digital revenue can grow?

31:16 How we internally look, we look that how much these have been spent to this paid media and then how much ROI we are generating through that. As long as they are giving us a good margin, double digit our margin lines, we continue to invest on that. So the hiring may not be right that it will get somewhere, but definitely all the spend, whatever we are doing, will result positively in our profitability. And typically, what is the ROAS that is your hurdle rate when it comes to digital spending? So, ROAS is roughly around right now currently at two, and we expect it to expand to over three in coming years.

32:08 Okay. Got it. Thank you. So that is for the new customer acquisition. Now overall, ROAS for the business is much higher because we have cloudy customers also coming in through digital platforms. So overall, ROAS is substantially more. When you at digitally the acquired customer, the guidance is between 2% to three is for those pure digital customers. Got it. And with our 67% margin, at the 67% margin, that too, they becoming profitable. Got it. Got it. Thank you. Thank you, sir. The next question is from the line of Pulkit Singhal from Dalmas Capital Markets. Please proceed with your question.

33:02 Thank you for the opportunity. First question is, can you just quantify the amount of refunds that we've received this quarter? Hi, Praveen. Our refund, we have received around crores in the current quarter. And the part of it went to the inventory as we keep online the earlier stock and the part has gone to the our P and L. So how much is part of the revenues or where does it figure in the P and L? Can you help us to Yes, it's the other operating revenue, it is INR25 crore in other operating revenue and INR13 crore is in our inventory. So I should subtract INR 25 crore. Okay.

33:49 Understood. And that INR 25 crore will flow entirely to your gross profit and EBITDA and PBT? Yes. Right. Okay. Because if I were to then remove that then the financials, I mean, they suggest way less kind of growth in terms of profits. Still decent leverage on that due to the revenue. But last year, we had good financial gain. This year, we didn't have the foreign exchange gain in other income. Last year, we have around INR 8 crores of foreign exchange gain, which came to almost nil mainly because of the at the end of the quarter, currency appreciated much faster, but then now become again depreciated.

34:45 So that the gain in Yes. Discount you're saying is kind of has been lower because of that. Yes. Secondly, I mean, we talk about the consumer sentiment being lower in The U. S, but then U. S. Census is reporting data. There is at least 4% to 5% kind of retail sales growth across different categories on a Y o Y basis. And for us to be doing flat even in this environment just suggests something else. So can you help us understand because now this is consecutively reflecting low constant currency growth and we are just putting it on macro. How do we understand what the management is doing to pick this up? Yes.

35:31 Let me take that. So U. S. GDP growth is driven by two factors. One is the AI investments, a lot of CapEx investment into AI. And the second is the gasoline prices have gone up. So gasoline and gross sales. So they continue to have a larger portion of consumer discretionary amount. So let me take it back. So larger consumer income is going to gas and groceries and leaving less amount for discretionary income. So when you look at the discretionary spend, they have gone lower for major retailers. When you look at the Target, or JCPenney, or Kohl's, all their revenue growth, they have not had grocery first retailers.

36:20 So they're having the impact of their revenue. Walmart or Amazon, they are different space, a lot of AWS, a lot of other structurally advantage they have. So they are getting the most of the growth in the market. But the major retailers are not getting much growth at all. So in that environment, we are completely discretionary, jewelry or accessories. In that environment, we are also seeing the lower price points that are having better traction. And we are seeing the lipstick effect into all these economies, where lower price point is getting better traction. So that to me reflects the consumer pullback from discretionary spend. Understood, I would suggest that because while you're talking about certain customers, the whole category wise data in U. S.

37:14 Is, as you know, is available on a monthly basis. And you would realize that various discretionary categories are still growing out there including clothing etcetera. So and we've also talked to some of those players. But I think the best thing is just to look at macro data. The reason I'm constantly mentioning this is because if we kind of look at that and be comfortable with the constant currency growth of flat, then how would we kind of try to outperform? Because there's in a way macro is what it is, but the TAM is also a lot bigger, right? I mean, we are a very small player in this whole space. So how do you get comfort that things are going to improve for you going ahead in terms of purchases? It's fair point, Punjeet. My comfort and my confidence is in our investments we made in digital over the last two, three years.

38:05 Finally, we just moved on to Shopify. We are still into the full integration. The initial hiccups are there for last couple of months. And once we go with those hiccups, we are fairly confident that our learning will get us to much higher momentum given that our vertical supply chain, our storytelling abilities and our cost advantage. I'm fairly confident. Just one last suggestion. From a presentation standpoint, it would be great if the management can very transparently disclose some of these aspects which are impacting the quarter like for instance INR25 crores is a big amount to flow through the P and L to not quantify.

38:51 Secondly, constant currency growth rates for every country that we are operating in should be very confidently disclosed in the presentation. I don't know why we have to constantly ask on the call for this. Think previously we used to have lot more disclosures around some of these things, but I am noticing that the call is more about asking for data points, whereas they should be just be present in the presentation. Puneet. Well, these disclosures are in the accounts and the notes we have done our disclosure in accounts, all the notes are there. But we'll discuss that what data points are missing, but I think that notes are there for tariff and other impact. Okay. Let me reiterate on that. From our point of view, we are a highly transparent company.

39:42 We have never hidden any data from anybody. So it could be that we may have to disclose some more to your comfort. We'll take that as an advice. But as a principal point of view, we've always been highly transparent in sharing the customer data point, the financial data point more than pretty much any other company in our space. Yes. Understand. I'll just take it offline with the IR as well as to what can be added. Sure. Thank you. Thank you, sir. The next question is from the line of Shreyanj Jain from Swan Investments. Please proceed with your question. Yes. Hi. Thanks for the opportunity.

40:27 Sir, if I were to remove the INR25.5 crores of the refund, the EBITDA growth obviously is not as per our expectations. And obviously, the margins also tend to just improve by about 40 odd bps. My second question around this is when you're seeing volume growth, but when I'm just looking at your presentation and trying to match the two, digital, we have sort of grown by 20% overall. But when I just look at the volumes in the ASP, ASP has grown by 10%, but volumes are down, largely flat maybe 0.7%. So, the other question is, presentation you also mentioned you've added about 3.5 flat new users in the trailing twelve months on the digital business. And your repeats you're seeing at 23.

41:14 So ideally this number should have increased in terms of volumes, So my point is either two things are happening. Your existing customers are not buying as much. They're not doing repeats Or the thing is you're adding new customers, but they aren't buying? So can you just help me sort of understand this point? Actually, it's Nitin here. So in terms of volume, our TV volume has a good jump from 1,300,000 to 1,370,000 compared to last quarter same time. For digital, as we are moving towards more on lab grown side as the consumer traction and lifetime value of those customers are high. So digit size from those digital medium has increased from $33.8 to $37 Resulted that we have grown in digital, but the volume is largely flat, point one three million to 1,130,000.

42:13 And the 21% growth is the large part coming from the currency conversion around eleven and the 10% is coming from the our the local currency growth U. S. Dollars, which is mainly because of the average ticket sizes in print. So sir, if lab grown diamonds is 13% of your business and the ASP is about $202.50 dollars so then the ASP increase should have been far higher than 3%, 4%, right? But last year was 11 So from 11% to 13%.

43:00 Okay. And so just wanted some clarity on this lab grown. So I'm trying to understand how are customers buying lab grown diamonds? I'm just trying to understand our ASP historically used to be $25 to $45 Now for a customer who's shopping on our sites, he's used to these price points. And obviously, you compete with a lot of jewelry retailers doing lab grown diamonds, right? So I'm just trying to understand how does Vaibhav Global differentiate for a customer to come to VGL and buy these lab grown diamonds? Do you have better SKUs, higher number of SKUs in that sense, better designs? Because when I look at The U. S. Market, 60%, 70% of engagement rings are now lab grown, right? So just on that part, there'll be a lot of players and in that sense to be able to increase your lab grown by 200 bps, just some sense there. Obviously the customer is not used to paying $200 on your app or your website, right? So how what has led to this change?

44:06 Let me answer this. Is Srinivas. This is Srinivas. Are two aspects. On digital when we reach to the customer through social media or Google. So Google is intent based platform where the customer is already looking for and our product appeal to them from price point being vertical into jewelry manufacturing ourselves and our own retail in U. S. Unlike many most other players in The U. S, there's a separation between the two. So we are of better price than most of our pretty much every other retailer. Second advantage we have is once we acquire a customer on the lab room, we are able to sell them other types of jewelry, whether it's the color stone jewelry or green metal jewelry or even other products, which other jewelers cannot.

45:01 So we can afford to pay a little bit higher to the customer equation than others can. So that's our advantage. On television side, it is selling lab grown to customers who watch us and who are loyal to us for many, many years. They trust us. They engage with our host. They have loyalty to our programming and our talent. And they would trust us to buy live games from us rather than from another player that is new to them. So for TV is more to trust. On ecom, it is our pricing that is competitive than others. Got it. Sir, just last question. You have written somewhere, I think page 15, that the take rates for marketplace on primary channels are 0%.

45:52 So how are we able to do that? Can you help us understand that? I got it. It's a marketplace sales from right now, it is hardly anything we do in the marketplace. Pretty much all of the sales coming to our own proprietary website and mobile apps. So it's a miniscule number, less than 0.5%, is why it is coming as a zero. Got it. Got it. And just last final question, this INR 25.5 crores of tariff fund, ideally, when you would have paid this, which entity would have paid this and what would have been the accounting treatment for this?

46:38 So I'm assuming India and rest of the world is the manufacturing base, right? So how does this like the Indian entity adds this tariff to its COGS and then sells it to VGL U. S? Or can you just explain to us? So for Indian entity, it is not a prepaid duty. All the duty and tariffs have been paid by our U. S. Entity. U. S, we have also a sourcing unit and also our retail. So both units had paid last year that 50% tariff and the both unit has received that report in U. S. Only. Got it. Got it. Thank you and all the best.

47:26 Thank you, sir. The next question is from the line of, an individual investor. Please proceed with your question. Yes. Question of mine would be, I think the company has set a revenue target of 5,500 crores by FY 'thirty. So given the current top line growth of 9.2% in FY 'twenty six, organic growth are prioritized to bridge this gap? Sorry, your voice is still a little bit breaking, so couldn't hear your question well.

48:12 Aditya, sir, can you please use your help? Yes, hello. Yes, sir. Please proceed. Yes, ma'am. Am I audible now? Yes, sir. So the first question is that the company said that with a target of INR 5,000 crores to INR 5,500 crores by FY 'thirty, given the current top line growth of 9.2% in FY 'twenty six, what specific organic and inorganic levers are prioritized to bridge this gap? So one major lever, as Sunil mentioned earlier, is our digital growth. We have multiple mediums from our own websites to paid marketing to OTT to live TV from TikTok, whatnot and other places.

49:01 These are the major levers we have. We have done our presence very little in this platform. And now with the new platform we have from Shopify, we can expand our presence much faster compared to early. So that are the largest medium to fill the gap and achieve over the guidance number. Okay. Great. Great. So my second question is so the second question is that, when you look currently accounts for 12% of the B2C revenue mix and is noted as a fastest growing segment.

49:47 Are there specific European markets under evaluation for the next field of expansion? So our focus is to mainly to expand our existing digital markets from paid media to different sales platform. In organic side, we are open to have any opportunity if it comes with a very good price, but our main focus right now is to expand our existing business. Okay, okay. So the next question is that with the $2.96 crores in net cash and strong free cash flow, what are the strategic criteria for future M and A, particularly following the successful integration of Mindful Souls and Ideal World?

50:43 Yes. This is Sunil, Victor. For any acquisition that we make in future should be complementary organization, not just for the EBITDA accretion, but also strategic fit for our business. If there is a fit and we can have a synergetic benefits to the overall business, we will do that. But any M and A for us, we will wait till we have achieved double digit EBITDA growth in all our markets. We want to make sure that we are robust in every market before we do that. Okay. Great. Great.

51:29 So another question is that as Vaibhav Global launches 100 new products daily and 14,000 to 15,000 new jewelry designs annually. So how do you manage the inventory risk and yield SKU profile associated with such high SKU churn? Good question, Aditi. We have multiple levers for exiting the tail inventory. We have our on our TV special platform, we do one clearance in a quarter to exit the tail inventory. Apart from that clearance and the other section that we have on our website and the other mediums that we do, But the most important thing is that we have a rising option model in our website where customer comes and bids and fight against each other to win that tail inventory.

52:25 So that is kind of very engaging platform we have and customer loves that program and bid against each other. So that is not only exiting our tail inventory, but also increased customer lifetime value repeat and the omnichannel presence with us. So these are the medium to exiting our tail inventory. Okay. Okay. And my next question is that the company reports a 60% gross margin compared to 40% for typical importers. As you scale toward FY 'thirty, is there further room to optimize the supply chain to expand this margin gap? The evolving world, actually, there will be always opportunity to improve our margins, not only from supply chain, but also having a good storytelling and better designs of the product. There is a good opportunity.

53:27 And we are expanding more on digital side. Our target is to increase our gross margin even further. So there is always opportunity. Companies keep on looking through multiple AI initiatives we have done internally, better sourcing models, product designs, what is going viral right now on a TikTok or other medium. So that we keep on looking and improving not only just our storytelling but also sourcing capabilities. Okay. I have only one last question that how is generative being used specifically to scale ad creatives and SEO content to lower the customer acquisition costs for digital shoppers?

54:20 Very good question, Aditi. And I believe most of the retailers are doing, but we are also using generative AI in all of the other meta marketing that we do from ad creation to lending pages optimization to images and customer reviews and trust builders. So, all of those things we have over internal tools, CR Genius and the other. We keep on optimizing our different landing pages, images, meta marketing through that and many other upcoming tools are also coming to get the best of these AI knowledge. Aditya sir, are you done with your question?

55:17 So the line for the current participant has been dropped. We'll move to the next question. Thank you sir. The next question is from the line of Dilip Sahoo, an individual investor. Please proceed with your question. Yes. Hi. Can you hear me? Yes, sir. Yes. Sunil, I have been an investor in Vaibhav Global for ten years. And for the first time in ten years, I had to really struggle to kind of correlate revenue, gross margin profitability by reading the presentation. So I had to go back and read the notes of the accounts and then figure out that you have actually adjusted INR25 crores to the gross margin and hence the spike in gross margin.

56:04 Like the previous participant was saying that I was it's not that you are trying to hide anything, but I think I was expecting a kind of default transparency, which was not there in this time. So this is just an input. Coming to your guidance, Nitin is assuming that the rupee will depreciate at 3% over maybe longer time. But in the last two years, rupee has depreciated by 20%. So that essentially means that next three years, the depletion might be zero. So what happens to the 10% guidance then if assuming that rupee deficit is zero for next three years that to that 10% guidance, will it come down to 7%? So first of all, Taliji, thank you for pointing it out. We take pride in our disclosures.

56:55 If we have aired inadvertently, we'll make sure that going forward, disclosures are even furthermore forthcoming. So thanks for feedback. Next question about the guidance. We believe that the long term depreciation is around 3%. And even if there is not enough depreciation for next till FY 'thirty, we've given a wide range of 5,000 to INR 5,500 crores revenue with leverage. So that is a very comfortable range for us to achieve, and we are confident to achieve that number. Sure. So 10% is a given irrespective of rupee movements. That's what I take it from.

57:43 And you have been in our last couple of calls very confident about digital, the work that has gone into digital and hence the confidence to grow at 10%. Can you kind of break it down into these four Rs you talked about, which R is digital going to really impact the most starting from registration to retention to repeat and all? Can you just take it through that bucket so that we understand where exactly the impact is going to come from? Because last three years, digital has helped us with the growth in flat in our core markets, right. So what will change? Yes, good question. So the key area it helps is the customer acquisition registration.

58:32 The TAM for digital is pretty large, much, much larger than television. There is a pure digital customer. So the customer acquisition is going to be the number one leverage for us. The retention and the repeat on digital is lower than television. So those two will take a hit when we accelerate our digital journey. Therefore, our we've been investing in digital for almost ten years now, but we've shortened the period of our customer becoming profitable over the period of last two or three years. The current profitability of our customer comes around ten months, nine to ten months.

59:17 Our aim is to take it to three months. And if you take the three months, then we can scale the spend quite rapidly and get the customer acquisition coming. Now that will impact our retention and repeat, but the acquisition will the velocity of the acquisition will offset the impact on retention and repeat for us, because we are looking at three months profitability. So the first two hours will get impacted you are saying, how do we monitor that as an investor? Mr. Gurip, whether it's clear? Yes, yes. I understood that. Hello, can you hear me? Yes, sir. Operator, line is still open.

1:00:10 Yes, Sunil, hello. Hello. I can hear. Vaibhav, are you there? Sunil sir, I can hear you. Hello. Yes, my pleasure. Yes, sir. I can hear you. Dilip sir, are you on the line? Yeah, I'm on the line. I can hear Sunil quickly. Okay, sir. Proceed with your question. Yes. So I think somewhere so you are explaining how the four hours getting impacted to digital investments, right? Yes. So I explained I do not know maybe I dropped off on the middle. I was explaining that the customer registration that is the second half or the new customer acquisition will be the biggest impact positive impact in the digital journey.

1:01:02 So that will accelerate quite a bit, but the retention and repeat will go down because the digital customers' lifetime value is lower than a typical CV customer. But currently, our PC customer is profitable in about nine to ten months. Our effort is to get its profitability within three months. If you can get to that level, it will improve over the time within the next few months or a couple of quarters. And once we do that, we can scale the spend and acquire a good number of new customers into the digital the different product streams. So Lab Gone is one, the Gold is another one, the Mobility product that is doing well for is another one, the color gemstone jewelry is another one.

1:01:49 They are all having promising stream. Even $1 rising auction is a good stream that we are seeing good traction. So we are investing into different streams to acquire the customer profitably and improve the profitability period from current nine to ten months to three months. Sure. Sure. So going forward, in the last two, three years at least most of our growth has come either through acquisition or investment in new geographies like Germany. So how is that going to look like in next three years, like we had Mindful Soul or Ideal World? Are we like this question has already been asked, but I'm just trying to figure out.

1:02:39 One is, of course, organic digital investment, which I think we are on track. How is the other piece going to shape up in terms of inorganic business, either in terms of geography or acquisitions? Yes. So good question. As I mentioned earlier also, we are creating cash flow for potential acquisition opportunity or potential greenfield opportunities as well. So but we want to acquire the company when we acquire not for just EBITDA addition, but for strategic fit with the group, where we'll have leverage benefit also our supply chain, vertical supply chain that we have, if there'll be a leverage of cost benefit after acquiring, we will look at the acquisition.

1:03:35 Or if there will be product category that we are not yet strong in, for example, beauty or supplement and we want to get into that product category where we have leverage for our existing business, for example, for television business, we want a supply chain strength of a vertical retailer on the supplement of beauty, which can support our television channels, then we'll look at it. But there has to be synergy for our business when we acquire a new company. For greenfield, we may look at India or Japan as a future growth potential, but we want to come there once we have the digital humming and continuously giving good growth for digital itself and overall for the business.

1:04:28 And for Germany to become bad positive for us at a decent number. So these are the two qualifying criteria for us before coming into New Zealand. Great, great. That will that makes a lot of sense. My question to Nitin is that this INR25.5 crores which is shown as other operating income doesn't have any cost element attached to it, right? That means it flows completely to the gross margin. That's how I understand it. Is it correct? Yes. It flows completely to the gross margin in the bottom line. If you exclude the impact, as I mentioned in my commentary, the margin is 67% gross margin. Sure. My suggestion is that since most of our business comes from outside in dollar or pound or euro terms, don't convert everything to rupee because takes away a lot of information and we get we then use our imagination to backward calculate all the regional performances.

1:05:31 So I think it will be great if you can give a dollar U. S. Revenue, pound UK revenue and Euro German revenue and then maybe give a unified rupee revenue that's fine. No, that's it. Yeah. Thank you so much. Thank you, sir. Ladies and gentlemen, in the interest of time, that was the last question for today. I would now like to hand the conference over to Sunil sir for closing comments. Thank you everybody for your participation and great set of questions. If you have any further question, please feel free to reach Vaibhav Global or Sumed of ERF and we'll take care of your questions.

1:06:18 Thank you very much. Thank you, sir. On behalf of Auryant Capital Markets Limited and VAIBHAVGBL Limited that concludes this conference call. Thank you for joining us and you may now disconnect your lines. Thank