Aditya Vision Limited

Aditya Vision reported a robust Q2 FY26 with revenue growing 22% year-on-year to INR458 crores. Profit after tax increased by 4.2% YoY to INR13 crores, while EBITDA stood at INR35 crores, translating to a margin of 7.6%. The company's gross and net margins remained stable, supported by an optimized product mix and tight cost control, contributing to a respectable growth in sales.

The quarter faced several external challenges^🌐, including extended monsoons, subdued demand during the Shradh period, and delayed implementation of revised GST slabs. These factors led to softer demand for cooling products and kept customers from purchasing for most of August and September. However, the last 9 days of the quarter saw a strong rebound in demand, particularly for big-size televisions and ACs, coinciding with the festive season onset and revised GST slabs.

The company continues its retail footprint expansion with a cluster-based approach, adding 9 new stores in Q2 FY26, bringing the total to 188 stores as of September 30, 2025. Aditya Vision aims to cross the 200-store milestone within FY26, with plans to add 30-35 new stores overall for the fiscal year, primarily in H2. This expansion, focusing on larger showrooms in bigger cities and towns in UP, has led to elevated capex, which is funded through internal accruals.

As of September 30, 2025, inventory stood at INR676 crores, reflecting a deliberate stocking strategy for the ongoing festive period, including Dussehra, Navratri, Dhanteras, and Diwali. This strategic buildup ensured adequate product availability across key categories to meet peak consumer demand. Management expects inventory levels to normalize by December end, also noting a foreseen 6-8% increase in AC prices from January 1, 2026.

Management highlighted several policy initiatives expected to boost consumption. The INR10,000 direct transfer under the Mukhyamantri Mahila Rojgar Yojana in Bihar (totaling INR13,000 crores to 1.30 crore women) and the free electricity scheme are expected to increase household liquidity and discretionary spending. Additionally, salary revisions linked to the 8th pay commission and personal tax relief in the Union Budget 2025 are anticipated to further enhance purchasing power, benefiting retail demand for products like refrigerators, mobiles, and laptops.

Gross margins remained steady at 15.1% in Q2 and 15.2% in H1 FY26. However, Q2 EBITDA margin was 7.6%, lower than H1's 8.9%. This was attributed to muted sales of higher-margin cooling products (ACs) due to unfavorable weather conditions, as the percentage of AC sales dropped from 48% last year to 34% in H1 FY26. The company aims to maintain an EBITDA margin in the 8-10% range going forward^⏳, supported by an optimized product mix and tight cost control.

The company's working capital days have consistently increased from FY20 to H1 FY26. Management clarified that this is primarily due to aggressive expansion, as inventory needs to be purchased in advance to stock new stores. They indicated that working capital days would stabilize or decrease once the pace of store expansion moderates, reflecting a growth-driven working capital requirement rather than operational inefficiency.