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    Electronics Mart

    EMILGood
    Consumer Services·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

    8

    • 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

    1

    • Unseasonal weather impacting seasonal product demand

    What Changed1

    vs Q2 FY26

    Guidance items16 → 10 (-6)
    Key financials

    Metrics

    15

    Periods

    2

    Headline

    14
    • Revenue
      ₹1,739 Cr
    • EBITDA
      ₹110 Cr
    • EBITDA Margin
      6.3%
    • Pre-Ind AS EBITDA
      ₹75 Cr
    • Pre-Ind AS Margin
      4.4%

    Q1 FY26

    1
    • Total Borrowing
      ₹689 Cr

    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
    List

    Guidance & targets

    10
    CategoryTargetPriority
    Store Expansion
    New Stores
    25-30
    		High
    Store Expansion
    NCR Stores
    50-55
    		High
    Store Expansion
    Orissa Stores
    2-4
    		High
    Profitability
    North Cluster EBITDA Margin
    5%+
    		High
    Profitability
    EBITDA Margins
    6%
    		Medium
    Sales
    North Cluster Sales for South-like Margins
    ₹1,000 crores
    		High
    Revenue
    Topline Growth
    15%+
    		High
    Revenue
    Revenue Growth
    higher double digit
    		High
    Inventory
    Inventory Days
    <60
    		High
    Inventory
    AC Inventory Liquidation
    liquidate
    		High

    Risks & concerns

    3
    RiskSeverity

    Unseasonal weather impacting seasonal product demand

    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

    high

    Initial margin pressure from rapid store expansion

    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

    medium

    High AC inventory due to weak Q1 sales

    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

    medium

    Q&A highlights

    3

    “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

    2 min read5 chapters

    Detailed Narrative

    01

    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 item📎s). 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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.