Aditya Vision Limited — Q3 FY25 earnings call

Call held 30 Jan 2025

Management summary

Aditya Vision reported strong financial performance for Q3 and 9M FY25, driven by operational expansion and robust same-store sales growth despite a subdued consumption environment. Revenues for 9M FY25 grew 30% to INR 1,773 crores, with PAT increasing 29% to INR 89.51 crores. The company continues its strategic store expansion, reaching 167 operational stores as of the call date, and is optimistic about future growth, particularly in the Hindi Heartland.

Highlights

  • 9M FY25 Revenue: INR 1,773 crores, up 30% YoY from INR 1,367 crores.

  • 9M FY25 PAT: INR 89.51 crores, up 29% YoY from INR 69.22 crores.

  • Q3 FY25 Revenue: INR 508 crores, up 23% YoY from INR 413 crores.

  • Q3 FY25 EBITDA Margin: 9.16%.

  • Q3 FY25 PAT: INR 24.22 crores, up 9.25% YoY.

  • 9M FY25 Same-Store Sales Growth (SSSG): 15%.

  • Q3 FY25 Same-Store Sales Growth (SSSG): 13%.

  • Store Count: 161 at end of Q3 FY25, 167 as of call date.

Key financials

4 periods

Headline

  • Store Count (as on call date)
    167 stores

Q3 FY25

  • Revenue
    ₹508.45 Cr
    YoY +23%
  • Gross Margins
    15.6%
  • EBITDA
    ₹46.5 Cr
  • EBITDA Margin
    9.2%
  • PBT
    ₹31.2 Cr
  • PAT
    ₹24.22 Cr
    YoY +9.3%
  • SSSG
    13%

9M

  • FY25 Revenue
    ₹1,773 Cr
    YoY +30%
  • FY25 PAT
    ₹89.51 Cr
    YoY +29%
  • FY25 Gross Margins
    15.4%
  • FY25 EBITDA
    ₹161.75 Cr
  • FY25 EBITDA Margin
    9.1%
  • FY25 SSSG
    15%

end Q3 FY25

  • Store Count
    161 stores

What they filed

Q1 FY27: revenue up 26.9%, net profit up 40.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue376 508 487 940 458 +22%649 +28%625 +28%1,193 +27%
EBITDA30 47 42 90 35 +17%53 +13%51 +21%124 +38%
Net profit12 24 16 55 13 +8%27 +13%22 +38%77 +40%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentBiharJharkhandUttar Pradesh
Q3 FY25 Revenue Contribution79%13%9%
9M FY24 Revenue Contribution81%11%8%

Capital allocation

medium confidence
  • Capex Capex disclosed
    We are utilizing the cash; we are making new investment capex investments. Combination of both. We cannot invest it down only on the working capital. Otherwise, we have to make capex also. So, it is a mix of both things.
  • Debt Debt disclosed
    The second thing is you had raised around INR282 crores. And so out of that how much you have utilized? And because of that, the interest component should have gone down, but we can see year-on-year increase in terms of interest component as well. So, what's the reason for that? And how is the utilization for INR282 crores? We have already utilized INR282 crores and we have already filed all the details, you can find it from there.
  • Liquidity Liquidity disclosed Management stated that liquidity is not a challenge for the company.
    Our liquidity is not a challenge for us, absolutely not.

Guidance & targets

Store Count

  • Total Stores Store Count · by FY '26 · High confidence 200 stores
    We are confident to surpass the target of 200 stores by FY '26.

    — Yashovardhan Sinha

  • Additional Stores Store Count · by the end of financial year '25 · High confidence 8 to 10 additional stores
    In this financial FY '25 we have already opened 22 stores and surpassing our guidance, we are on track to open 8 to 10 additional stores by the end of financial year '25.

    — Yashovardhan Sinha

  • Total Stores Store Count · by end of FY '25 · High confidence 175 stores
    175 will be a definite possibility. And we are trying, in fact, so many stores are going under work in progress. So, 175, we are definitely going to achieve, and we are trying to, in fact, open more stores even more than 175 stores.

    — Yashovardhan Sinha

Profitability

  • EBITDA Margin Profitability · Medium confidence 8% to 10%
    Sustainable margin will be around 8% to 10%.

    — Yashovardhan Sinha

Revenue

  • Revenue Growth Revenue · Medium confidence 20% to 25%
    Yes, you can assume that, but we give our guidance that you can find our guidance in our investor presentation where we are very clear about it. We have been always surpassing our guidance.

    — Yashovardhan Sinha

What to watch in Q4 FY25

FY25 Store Expansion Target

By end of FY25
Current 167 operational stores (as of call date)
Target 175+ stores

Why it matters

To track the company's aggressive expansion strategy and its ability to meet its store opening targets.

In this financial FY '25 we have already opened 22 stores and surpassing our guidance, we are on track to open 8 to 10 additional stores by the end of financial year '25.

Risks & concerns

  • Sluggish demand and macroeconomic challenges (high inflation, high interest)

    medium

    Sluggish demand due to macroeconomic factors like high inflation and interest rates impacted Q3 performance, but expected to ease.

    Management acknowledged

  • Gross margin contraction

    medium

    Gross margins contracted in Q3 due to weak demand post-October festive season and inventory pressure, but expected to stabilize.

    Management acknowledged

  • Increased operating expenses from new stores

    low

    Operating expenses increased due to the opening of many new stores that are yet to mature and contribute fully to profitability, viewed as temporary.

    Management acknowledged

  • Disruption to store operations due to large events (Kumbh Mela)

    low

    Stores in Prayagraj were impacted by the rush of the Kumbh Mela, but other stores in UP performed well, and the event is expected to boost regional income.

    Analyst acknowledged

Q&A highlights

7 direct
Reasons for Q3 demand moderation and future catalysts Direct
In my opinion, in fact, there has been a sluggish demand. This is only because of the macroeconomic in nature. In the sense with high inflation and high interest, this is the main factor. And I think in coming months, I think it is going to ease off.

Addresses the underlying demand environment and management's outlook on recovery, citing macroeconomic factors.

Asked by Devanshu Bansal

Impact of tight liquidity on the company Direct
Our liquidity is not a challenge for us, absolutely not.

Reassures investors about the company's financial health despite broader market concerns about liquidity.

Asked by Devanshu Bansal

Gross margin contraction in Q3 FY25 Direct
I will put in them that it was the sluggish demand, which brought it down a little bit. And the reason was also because every entire festive season was in the single month of October. And after that, the market became very sluggish... So of course, when all of a sudden you are with stock and market becomes flat, then gross margin will come down by a few bps.

Explains the reason for margin pressure, linking it to weak post-festive demand and inventory management.

Asked by Devanshu Bansal

Optimism for recovery and Q4 demand despite sluggishness Direct
Because, in fact, our presence in the entire heat prone area is now quite a lot... And the second, the biggest thing is that even we cannot discount the factor of Kumbh mela, which will bring a lot of crores and crores of money to UP.

Highlights specific regional factors (heat-prone areas, Kumbh Mela) driving management's positive outlook for upcoming quarters.

Asked by Chirag

Increase in operating expenses Direct
Yes, because of we have opened around the 30 stores between last quarter and this quarter. And so that has gone up. I think since we have opened many stores which have -- which are yet to mature. So, it is -- I think it is temporary in nature, opex getting up.

Clarifies that increased operating costs are due to new, maturing stores, suggesting it's a temporary effect of expansion.

Asked by Arpit Shah

Slower PAT growth compared to top-line growth Direct
Because operating costs are there because of many new stores... In time to come it is going to happen, but right now, of course, we have been opening stores and they will start contributing to our top line. And that will ease off our operating costs.

Explains the margin compression and slower PAT growth as a function of new store operating costs, with an expectation of future improvement.

Asked by Vivek Gautam

Impact of Maha Kumbh Mela on Q4 numbers and potential disruption Partial
No, I'll put it like this actually impact when such big events happen it's not only invigorated that area only. In fact, it drips to other areas... But I'll tell you like we are having 25 stores in UP out of that, 3 stores are in Prayagraj. Yes, they are impacted because of huge rush and all that, but other stores start performing well because of that.

Addresses concerns about potential disruption from the Kumbh Mela, acknowledging local impact but emphasizing broader regional benefits and performance of other stores.

Asked by Varun Singh

Seasonality of different product categories Direct
Yes, it is mixed apart from summer cooling products it is always mixed categories. In the sense that, yes, like washing machines will do very well in during monsoons or during winter, in winter heating products, heating products have a better sale like geyser and all that. But mostly, it is mixed only.

Provides insight into the seasonal demand patterns for various consumer durable categories beyond just cooling products.

Asked by Dagasha

2 min read 6 chapters

Detailed narrative

Strong Q3 and 9M FY25 Financial Performance

Aditya Vision reported robust financial results for Q3 and the first nine months of FY25. For 9M FY25, revenues surged 30% year-on-year to INR 1,773 crores, with Profit After Tax (PAT) growing 29% to INR 89.51 crores. Q3 FY25 saw a 23% increase in revenue to INR 508 crores, and PAT grew 9.25% year-on-year to INR 24.22 crores. The company maintained a healthy 9.16% EBITDA margin in Q3 FY25 and achieved an impressive 15% Same-Store Sales Growth (SSSG) for the nine-month period.

Strategic Store Expansion and Geographic Penetration

The company continued its aggressive store expansion strategy, opening 5 new stores in Q3 FY25, bringing the total count to 161 by the end of the quarter and 167 as of the call date. Aditya Vision is expanding beyond Purvanchal in Uttar Pradesh, with 8 stores operational in Central UP, including 4 in Lucknow. Management aims to open 8-10 additional stores by the end of FY25, targeting a total of 175+ stores, and is confident of surpassing 200 stores by FY26.

Demand Environment and Gross Margin Trends

Management acknowledged a sluggish demand environment in Q3 FY25, primarily due to macroeconomic factors like high inflation and interest rates, which impacted consumption post-festive season. This subdued demand, coupled with inventory management, led to a contraction in gross margins during the quarter, which stood at 15.58%. However, the company expects gross margins to stabilize in the coming quarters as demand is anticipated to ease off.

Capital Utilization and Operating Expenses

Aditya Vision confirmed the utilization of INR 282 crores raised previously, which was deployed for a combination of inventory build-up for the summer season and capital expenditure for new store openings. The increase in operating expenses was attributed to the significant number of new stores (around 30 between last quarter and this quarter) that are yet to reach maturity. Management views this as a temporary effect, expecting operating leverage to improve as these new stores mature and contribute more to the top line.

Optimistic Outlook Driven by Regional Factors

Despite the overall subdued demand, management expressed optimism for future growth, particularly in the Hindi Heartland. This positive outlook is supported by the company's expanding presence in heat-prone areas of UP and the anticipated economic boost from events like the Kumbh Mela. While local stores in Prayagraj experienced some disruption due to the Mela's rush, the event is expected to invigorate the broader region, benefiting other stores and contributing to a strong Q1 FY26.

Product Category Seasonality and Brand Performance

The company highlighted the mixed seasonality across product categories, with summer cooling products like ACs and refrigerators having the highest contribution. Other categories like washing machines perform well during monsoons, and heating products like geysers see increased sales in winter. Management noted that Korean brands maintain their share, and other leading brands like Whirlpool and Godrej are significant contributors, though specific revenue contributions by brand are not disclosed.

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