Electronics Mart India Limited — Q1 FY26 earnings call

Call held 5 Aug 2025

Management summary

Electronics Mart reported a challenging Q1 FY26 with revenue at ₹1,739 crores and PAT at ₹22 crores, primarily due to unseasonal rains impacting cooling product sales and resulting in a negative 18% like-to-like sales growth. Despite this, the company maintained an EBITDA margin of 6.3% and continued its expansion, adding 8 new stores. Management expressed optimism for the upcoming quarters, driven by a strong festive season, new product launches, and improving unit economics from maturing stores.

Highlights

  • Revenue of ₹1,739 crores reported for Q1 FY26.

  • EBITDA stood at ₹110 crores, with an EBITDA margin of 6.3%.

  • PAT was ₹22 crores (₹30 crores excluding exceptional items).

  • Like-to-like sales growth for the quarter was negative 18% due to unseasonal rains.

  • Added 8 new stores in Q1 FY26, contributing to 44 new stores in the last 12 months.

  • North cluster MBO sales grew 21% YoY to ₹159 crores, with EBITDA margins improving to 3.6%.

  • AC inventory is higher by ~₹250 crores, planned for liquidation by December 2025.

  • Capex for Q1 FY26 was ₹56 crores.

Concerns

  • Unseasonal weather impacting seasonal product demand

Key financials

2 periods

Headline

  • Revenue
    ₹1,739 Cr
  • EBITDA
    ₹110 Cr
  • EBITDA Margin
    6.3%
  • Pre-Ind AS EBITDA
    ₹75 Cr
  • Pre-Ind AS Margin
    4.4%
  • PAT
    ₹22 Cr
  • PAT (excl. exceptional items)
    ₹30 Cr
  • Like-to-like sales growth
    -18%
    YoY -18%
  • Annualized ROCE
    13.4%
  • Annualized ROE
    7.7%
  • Working Capital Days
    60 days
  • Pre-Ind AS Cash Flow from Operations
    ₹390 Cr
  • Total Borrowing (31st March)
    ₹983 Cr
  • Capex
    ₹56 Cr

Q1 FY26

  • Total Borrowing
    ₹689 Cr

What they filed

Q1 FY27: revenue up 39.1%, net profit up 450.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,335 1,805 1,664 1,739 1,591 +19%1,940 +7%1,913 +15%2,419 +39%
EBITDA82 102 107 110 82 +0%118 +16%129 +21%239 +117%
Net profit23 34 27 22 16 −30%30 −12%40 +48%121 +450%
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

  • North Cluster
    ₹159 Cr MBO Sales3.6% EBITDA Margin
  • South Cluster
    6.7% EBITDA Margin
  • Large Appliances
    48% Contribution to Sales
  • Mobile Phones
    40% Contribution to Revenue

Guidance & targets

Store Expansion

  • New Stores Store Expansion · FY26 · High confidence 25-30
    Looking ahead, we plan to open 25-30 new stores in FY '26, while continuing to optimize the supply chain, enhancing inventory efficiencies and strengthen our footprint in both existing and emerging markets.

    — Karan Bajaj, CEO and Promoter

  • NCR Stores Store Expansion · next 2 years · High confidence 50-55
    So. if you add all these, sir, 50-55 stores will be there for the next 2 years. That is the plan.

    — Karan Bajaj, CEO and Promoter

  • Orissa Stores Store Expansion · High confidence 2-4
    Apart from that, in Orissa, there will be 2-4 stores. So, that is the main market that we are looking at right now.

    — Karan Bajaj, CEO and Promoter

Profitability

  • North Cluster EBITDA Margin Profitability · end of FY '27 · High confidence 5%+
    But eventually by, say, next year, we should be looking at least a 5% plus EBITDA margin in that cluster.

    — Karan Bajaj, CEO and Promoter

  • EBITDA Margins Profitability · balance 9 months · Medium confidence 6%
    That is how we are hoping to pan out in the coming quarters as well. We are quite optimistic on that as well.

    — Karan Bajaj, CEO and Promoter

Sales

  • North Cluster Sales for South-like Margins Sales · next year · High confidence ₹1,000 crores
    It will become Rs. 1,000 crores. Then it reaches Rs. 1,000 crores by next year. That is when this number will be in line with what we do in Hyderabad.

    — Karan Bajaj, CEO and Promoter

Revenue

  • Topline Growth Revenue · FY '26 · High confidence 15%+
    100% sir, because the stores that were in pipeline, especially in the clusters in AP and Telangana are moving towards the matured store trend. They are delivering. All categories are performing well.

    — Karan Bajaj, CEO and Promoter

  • Revenue Growth Revenue · Q2 FY '26 · High confidence higher double digit
    So, we are quite optimistic on how things are shaping up in the quarter 2. And we are going to look at least higher double digit growth this quarter.

    — Karan Bajaj, CEO and Promoter

Inventory

  • Inventory Days Inventory · by 31st December · High confidence <60
    So, that number of inventory days anyway, organically by 31st December, it will come down to an organic number less than 60 days.

    — Karan Bajaj, CEO and Promoter

  • AC Inventory Liquidation Inventory · by December this year · High confidence liquidate
    So, almost Rs. 250 crores of AC inventory is a little higher, which we plan to liquidate up till December this year.

    — Karan Bajaj, CEO and Promoter

Risks & concerns

  • Unseasonal weather impacting seasonal product demand

    high

    Q1 FY26 was one of the coolest summers, with widespread rainfall in April and May, significantly impacting AC and air cooler sales, leading to negative like-to-like growth.

    Management acknowledged

  • Initial margin pressure from rapid store expansion

    medium

    Addition of 44 new stores in the last 12 months (20% of network) led to fixed-cost absorption lag and softer margins, particularly in the South cluster.

    Management acknowledged

  • High AC inventory due to weak Q1 sales

    medium

    AC inventory is higher by ~₹250 crores compared to last year, with ~89,000 units needing to be sold, planned for liquidation by December.

    Management acknowledged

Q&A highlights

3 direct
Low EBITDA margin in North cluster and path to maturity Direct
North as a cluster is a very new cluster that we started off 3 years back. So, if you look at the total number there, the productivity of store throughput per store is divided between all the new stores that we opened up. We are expanding in that periphery... usually, we take around 3 years plus for a store to get matured...

Reveals the strategic rationale behind lower margins in a growth region and the expected timeline for profitability improvement, crucial for evaluating expansion strategy.

Asked by Subhanu from 3Head Capital

Impact of unseasonal rains on gross margins and inventory Direct
it was mainly because of the reduced throughput coming in from the cooling products, mainly air conditioners and coolers... this year, the gross margin got impacted. So, that was the main reason... AC inventory is a little higher by around Rs. 250 odd crores for air conditioners majorly... which we plan to liquidate up till December this year.

Explains the primary driver of margin pressure and provides specific figures for excess inventory, indicating a potential future impact on pricing or working capital.

Asked by Yash Sonthalia from Edelweiss Public Alternatives

Sustainability of depreciation growth and future store expansion strategy (owned vs. leased) Direct
Correct. Because the last two financials, if you see, we have added up the majority of the properties in NCR at a very big cost. So, that definitely is going to impact. But going forward, if you see, as you correctly said, the major addition from depreciation going up would be from the Ind AS adjustment and not from buying properties.

Clarifies the shift in capital allocation strategy for store expansion, moving from property acquisition to leasing, which has implications for future depreciation and balance sheet structure.

Asked by Rupesh Tatiya from Shree Rama Managers PMS

2 min read 5 chapters

Detailed narrative

Q1 FY26 Performance Impacted by Unseasonal Weather

Electronics Mart reported a revenue of ₹1,739 crores and an EBITDA of ₹110 crores, translating to a 6.3% EBITDA margin for Q1 FY26. PAT stood at ₹22 crores (₹30 crores excluding exceptional items). The quarter was significantly impacted by unseasonal and widespread rainfall in April and May, leading to a negative 18% like-to-like sales growth. Cooling products, particularly ACs and air coolers, which typically contribute 40% to the topline, saw a substantial drop in sales, affecting overall gross margins.

Strategic Expansion and Regional Performance

The company expanded its retail footprint by adding 8 new stores in Q1 FY26, contributing to 44 new stores in the last 12 months, representing nearly 20% of its current network of 208 stores. This rapid expansion, especially in newer clusters like North, led to initial margin pressure due to fixed-cost absorption lag. While the South cluster's EBITDA margin was 6.7%, the North cluster showed robust MBO sales growth of 21% YoY to ₹159 crores, with EBITDA margins improving to 3.6% from 2.6% last year.

Inventory Management and Outlook

Due to the weak summer season, AC inventory increased by approximately ₹250 crores, with around 89,000 units in stock. Management plans to liquidate this excess inventory by December 2025. Despite the Q1 challenges, the company is optimistic about the upcoming quarters, expecting July to be an 'exceptionally great month' for ACs and other categories. They anticipate higher double-digit growth in Q2 FY26, driven by new mobile launches (iPhone 17, Z Fold 7) and the festive season starting in September.

Financial Health and Capital Allocation

The company's debt position improved, with total borrowing decreasing from ₹983 crores on March 31st to ₹689 crores in Q1 FY26, with ₹250 crores allocated to land and building. Working capital days stood at 60 days. Capex for the quarter was ₹56 crores. Management confirmed that the phase of buying properties in NCR is largely over, with future expansion primarily focusing on leased stores, which will shift the depreciation impact more towards Ind AS 116 adjustments rather than direct property purchases.

Long-Term Growth and Margin Targets

Electronics Mart maintains its guidance for 15%+ topline growth for FY26, expecting to achieve this through strong performance in the remaining three quarters. They aim for North cluster EBITDA margins to reach 5%+ by the end of FY27, requiring sales of ₹1,000 crores in that cluster to align with South cluster profitability. The company plans to open 25-30 new stores in FY26, focusing on improving per-store unit economics and expanding into new regions like Orissa and Tier-3/4 towns in AP and Telangana.

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