Aditya Vision Limited — Q4 FY25 earnings call

Call held 9 May 2025

Management summary

Aditya Vision delivered a robust performance in Q4 and FY25, achieving significant revenue and profit growth driven by strong consumer demand and strategic expansion. Despite initial Q1 slowdowns due to unseasonal rains, management is bullish on recovery. The company proactively built up inventory to mitigate supply risks and capitalize on seasonal demand, while continuing its aggressive store rollout, particularly in Uttar Pradesh.

Highlights

  • FY25 Revenue surged by 30% to Rs. 2,260 crores, maintaining a 30% CAGR over 10 years.

  • FY25 PAT grew by 37% to Rs. 105 crores, up from Rs. 77 crores in FY24.

  • FY25 EBITDA Margin stood at 9%, with Gross Margins at 15.7%.

  • Q4 FY25 Revenue grew 30% YoY to Rs. 487 crores, making it the best Q4 in AVL's history.

  • Q4 FY25 PAT increased 104% YoY to Rs. 16 crores, up from Rs. 8 crores in Q4 FY24.

  • The company opened 30 new stores in FY25, reaching a total of 175 stores, with a significant focus on Uttar Pradesh.

  • Q4 FY25 Same-Store Sales Growth (SSSG) was 19%, and FY25 SSSG was 15%.

  • Inventory peaked at Rs. 698 crores by March end due to a strategic build-up for Q1 demand and compressor supply uncertainties.

Key financials

3 periods

Headline

  • Total Stores
    175 stores
  • Inventory (March end)
    ₹698 Cr
  • Average FY25 Inventory
    ₹494 Cr

Q4 FY25

  • Revenue
    ₹487 Cr
    YoY +30%
  • PAT
    ₹16 Cr
    YoY +104%
  • EBITDA Margin
    8.7%
  • SSSG
    19%

FY25

  • Revenue
    ₹2,260 Cr
    YoY +30%
  • PAT
    ₹105 Cr
    YoY +37%
  • EBITDA Margin
    9%
  • SSSG
    15%

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
Q4 FY25 Revenue Contribution77%13%10%
FY25 Revenue Contribution80%12%8%

Capital allocation

medium confidence
  • Capex Capex disclosed
    • Opening larger format stores (average size increased from 4000 sq ft to 4500 sq ft), requiring more products on display.
    There are so many factors, Devanshu. So in fact what you said that the biggest contributor is that we are opening larger format stores. So stores have now, average store size has become 4500, which was 4000 previously. So obviously more CAPEX is required, more products on display is required, so working capital is also required in that. So this is the reason for that rise. And off course inflation is there, of course. So these are all because of which we are. But the major reason will be that our format of store has increased.

Guidance & targets

Store Expansion

  • Annual new store additions Store Expansion · annually · High confidence 25-30 stores
    No, our guidance will be definitely from 25-30 stores. But looking into the very bright picture around, we may like to increase. Later on, in later quarters, we will update you.

    — Yashovardhan Sinha

  • Total stores in Uttar Pradesh Store Expansion · 2-3 years · Medium confidence 200 stores
    If Bihar can accommodate 112 stores, Vijay, so we can fairly well assume that in next, let us say, 2-3 years then we can have 200 stores in UP, the size and the kind of population it is, we will definitely aim to have double our store count in UP compared to Bihar because that is the potential for UP.

    — Yashovardhan Sinha

Profitability

  • EBITDA Margin Profitability · ongoing · High confidence 8-10%
    So it has come down, but still we will maintain that our EBITDA margin will be something between 8% and 10%.

    — Yashovardhan Sinha

Sales Growth

  • Same-Store Sales Growth (SSSG) Sales Growth · going ahead · High confidence double digits
    I think our SSSG will be in double digits. This is all I can say, Vijay, very firmly that SSSG will be in double digits because what we have seen in past and what we are in fact, what is happening right now is we are having high double digit SSSG. So if you will ask me, then I will tell you that it will be definitely in double digits.

    — Yashovardhan Sinha

  • Q1 FY26 April Growth Sales Growth · April 2025 · High confidence single digits
    That will be not proper for me to say exactly what type of growth we have got in April because we have not disclosed it. The only thing I can tell you is that, yes, growth is there, of course in single digits, growth is in single digits.

    — Yashovardhan Sinha

Sales Outlook

  • Q1 FY26 May and June Performance Sales Outlook · May and June 2025 · Medium confidence bullish
    When summer starts slowly, it again builds up later in the quarter. So we are quite bullish about this second-half of May and the full next month.

    — Yashovardhan Sinha

What to watch in Q1 FY26

Q1 FY26 Revenue Growth

Next quarter
Current Single-digit growth in April, market slow due to unseasonal rains
Target Strong growth for May/June, leading to overall strong Q1 performance

Why it matters

Q1 is traditionally the strongest quarter for the company, and recovery from an initial slowdown is crucial for meeting annual targets.

Yes, you are very right, Devanshu. There has been unseasonal rain so far, but market has been slow. But despite that we are in growth and major part of the quarter is still around there and we hope that we are going to recover whatever growth, which company is looking forward to.

Risks & concerns

  • Unseasonal Rains Impacting Q1 Demand

    medium

    Unseasonal rains led to a slow start in Q1 FY26 (April), potentially impacting initial summer sales, though management is bullish on recovery in May/June.

    Both acknowledged

  • Gross Margin Pressure from New Store Operating Expenses

    medium

    Gross margins dipped in Q4 FY25, partly due to initial operating expenses from a significant number of new stores (14 out of 30 annual additions) opened in the quarter.

    Both acknowledged

  • Compressor Supply Uncertainties

    low

    Industry-wide compressor shortages and government restrictions led to a strategic, temporary inventory build-up in Q4 FY25 to ensure readiness for Q1 demand.

    Management proactively addressed

Q&A highlights

5 direct
Q1 FY26 Growth Outlook amidst Unseasonal Rains Partial
Yes, you are very right, Devanshu. There has been unseasonal rain so far, but market has been slow. But despite that we are in growth and major part of the quarter is still around there and we hope that we are going to recover whatever growth, which company is looking forward to.

Analyst questioned the impact of unseasonal rains on Q1 growth, a critical period for the company, and management acknowledged a slow start but expressed optimism for recovery.

Asked by Devanshu Bansal

Increase in Working Capital and Inventory per Store Direct
There is one more thing was there in this Q4. Actually, we were, in fact, manufacturer was short of compressors and there were some restrictions for compressors from the government as well as there was definitely, industry was facing shortage ahead of it. So we were slightly more proactive in acquiring inventories, which we as you know will be selling it out in Q1. So this has been the reason for slightly increase in inventory and these increase in inventory is very temporary in nature as you know. It does reflect on our books on 31st March, but later on, within a month or so it becomes very reasonable.

Analyst highlighted a significant increase in inventory per store. Management explained it as a strategic, temporary measure due to industry-wide compressor shortages, crucial for Q1 readiness.

Asked by Devanshu Bansal

Gross Margin Dip in Q3 and Q4 Partial
I have always been talking that we do not talk about any region or any state or as such. Actually, we believe in a basket way of gross margins and gross margin in this Financial Year has gone down by 22 bps. And we think that for the quarter it has come down by slightly more, but please do understand that most of our, in fact, around about I will tell you the exact figure, 14 out of 30 stores that has been opened in Q4. So entire almost 50% of our new stores has started in Q4, so most of the operating expenses have come in for these stores. However, these stores were started in this quarter itself. So it has come down, but still we will maintain that our EBITDA margin will be something between 8% and 10%.

Analyst questioned the gross margin decline. Management attributed it to initial operating expenses from a large number of new stores opened in Q4, while reaffirming the EBITDA margin guidance.

Asked by Devanshu Bansal

Increase in Staff Cost in Q4 Direct
And coming to your first question, staff cost going up, as I told you just now that almost 50% of our store addition was in Q4. So obviously operating cost, employee cost, all the costs were coming in quarter 4. So that was the reason for rise in staff cost.

Analyst pointed out a material increase in staff costs. Management directly linked it to the significant store expansion in Q4, explaining it as a natural consequence of new store operations.

Asked by Aniruddha Joshi

Potential Increase in Store Addition Guidance Direct
No, our guidance will be definitely from 25-30 stores. But looking into the very bright picture around, we may like to increase. Later on, in later quarters, we will update you.

Analyst sought clarification on store addition guidance. Management indicated a potential upward revision from the stated 25-30 stores, signaling stronger expansion plans.

Asked by Aniruddha Joshi

Strategic Rationale for Larger Stores in Uttar Pradesh Direct
This is in fact optimism, rather, Devanshu that these places are going to do very well because of the population. And again, when we are going to a new state, we are going to a new city, we want to give that experience to our customer which no other showroom is able to give. So this is our primary strategy.

Analyst questioned the strategy of opening larger stores in UP, given potential margin and investment implications. Management clarified it's driven by optimism for UP's population and a strategy to offer a superior customer experience.

Asked by Devanshu Bansal

Increasing Payables and Working Capital Management Direct
No, you can read it very straightforward, Devanshu, so that as I have told you before also that even when you are on Cash 'n' Carry basis, you get sufficient time from the manufacturer to get the products delivered to your store. So that is the gap which reflects on the date of the balance sheet. It is not about going up because we were high on inventory, so higher was the sundry creditors. But these are reflected only because since now GST is there. So most of the products we are in fact buying from manufacturers on IGST basis, so these products are built from the company and it takes some time to reach our stores and our payable time kicks in from the time we receive our products.

Analyst inquired about a significant increase in payables. Management explained it as a timing difference related to GST and the supply chain process, not a deviation from their cash-and-carry model or a concern.

Asked by Devanshu Bansal

2 min read 7 chapters

Detailed narrative

Robust Q4 and FY25 Financial Performance

Aditya Vision reported a strong Q4 FY25, achieving its best Q4 in history with revenue growing 30% YoY to Rs. 487 crores and PAT increasing 104% YoY to Rs. 16 crores. For the full year FY25, revenue surged 30% to Rs. 2,260 crores, maintaining a consistent 30% CAGR over the past decade. PAT for FY25 grew 37% to Rs. 105 crores, with an EBITDA margin of 9%.

Strategic Inventory Build-up for Q1 Seasonality

The company strategically built up inventory in Q4, peaking at Rs. 698 crores by March end, to prepare for the traditionally strong Q1 demand for cooling products. This proactive measure was also influenced by uncertainties surrounding compressor supply and industry shortages. Management expects this high-velocity inventory to be liquidated quickly in Q1, returning cash flow to positive territory by the end of the summer season.

Aggressive Store Expansion and Geographic Focus

Aditya Vision opened 30 new stores in FY25, bringing its total store count to 175. A significant portion of this expansion focused on Uttar Pradesh, where 34 stores are now operational, including 6 in Lucknow. The company aims to further expand in UP, targeting 200 stores in the state within 2-3 years, which would be double its presence in Bihar.

Gross Margin Dynamics and Operating Expenses

While Q4 FY25 gross margins stood at 17%, the full-year gross margin was 15.7%, a dip of 22 bps. Management attributed this decline, particularly in Q4, to the initial operating expenses associated with opening 14 new stores during the quarter, which accounted for almost 50% of the annual additions. Despite this, the company reiterated its commitment to maintaining an EBITDA margin within the 8-10% band.

Q1 FY26 Demand Outlook and Seasonal Volatility

The company experienced a slow start to Q1 FY26 in April due to unseasonal rains, with growth in single digits. However, management expressed bullishness for the second half of May and the full month of June, expecting a rebound in consumer demand as summer intensifies. They highlighted that such demand fluctuations are common, and the market typically recovers later in the season.

Uttar Pradesh Expansion Strategy and Future Potential

The strategy for Uttar Pradesh involves opening larger format stores, with the average store size increasing from 4000 sq ft to 4500 sq ft. This is driven by optimism for the state's high population density and the goal to provide a superior customer experience. Management clarified that the assumption of lower margins in UP is incorrect, emphasizing that the strategy is to offer a comprehensive showroom experience to compete effectively in high-density areas.

Working Capital Management and Payables

The increase in working capital and payables (Rs. 90 crores) was explained as a timing difference rather than a fundamental shift. Management noted that under the GST regime, products procured from manufacturers on an IGST basis take time to reach stores, and payable terms kick in upon receipt, leading to a gap reflected on the balance sheet date.

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