Concall AI

Electronics Mart India Limited — Q2 FY26 earnings call

Call held 10 Nov 2025

Management summary

Electronics Mart reported a mixed Q2 and H1 FY26, with strong revenue growth in some clusters but overall margins impacted by rapid store expansion and initial GST rate volatility. While mature stores perform strongly, newer stores are still in ramp-up phase, affecting consolidated profitability. Management remains optimistic about H2 performance, driven by festive season sales, maturing new stores, and supportive macro factors, expecting margin improvement and continued expansion.

Highlights

Q2 FY26 Revenue stood at ₹1,591 crores, with an EBITDA margin of 5.1%.
H1 FY26 Revenues reached ₹3,330 crores, achieving an EBITDA margin of 5.8%.
PAT for Q2 FY26 was ₹16 crores, and for H1 FY26, it was ₹38 crores (both including exceptional items).
Same-store sales growth (SSSG) was 11.4% for Q2 FY26 but -4.8% for H1 FY26.
The company operates 215 stores, with 84 mature stores (>4 years old) contributing ₹2,254 crores in H1 FY26 at a 6.8% EBITDA margin.
131 newer stores (<4 years old) contributed ₹933 crores in H1 FY26, operating at a 3% EBITDA margin.
The NCR cluster showed strong revenue growth of 38% and 11% SSSG in Q2 FY26, with an EBITDA margin of 1%.
Management expects to achieve low double-digit revenue growth for FY26 and company-level EBITDA margins around 6%.

Key financials

2 periods

Headline

Revenue
₹1,591 Cr
EBITDA Margin
5.1%
PAT (incl. exceptional)
₹16 Cr
SSSG
11.4%
Working Capital Days
76 days
Pre-IndAS Cash Flow from Operations
₹209 Cr

H1

Revenue
₹3,330 Cr
EBITDA Margin
5.8%
PAT (incl. exceptional)
₹38 Cr
SSSG
-4.8%
ROCE (annualized)
9.8%
ROE (annualized)
4.8%

What they filed

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

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	1,335	1,805	1,664	1,739	1,591 +19%	1,940 +7%	1,913 +15%	2,419 +39%
Expenses	1,253	1,703	1,557	1,629	1,509	1,821	1,785	2,180
EBITDA	82	102	107	110	82 +0%	118 +16%	129 +21%	239 +117%
Margin	6%	6%	6%	6%	5%	6%	7%	10%
Other income	2	2	2	-7	17	0	6	2
Interest	22	30	36	37	39	38	40	37
Depreciation	31	30	35	37	38	40	41	42
Profit before tax	31	44	38	29	22 −29%	39 −11%	53 +39%	162 +459%
Tax rate	25%	24%	29%	25%	25%	25%	26%	26%
Net profit	23	34	27	22	16 −30%	30 −12%	40 +48%	121 +450%
EPS	0.61	0.87	0.69	0.56	0.42	0.77	1.03	3.14

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

Mature Stores (>4 years old) - H1 FY26
₹2,254 Cr Sales6.8% EBITDA Margin
Newer Stores (<4 years old) - H1 FY26
₹933 Cr Revenue3% EBITDA Margin
Hyderabad Market - Q2 FY26
15% Revenue Growth12% SSG
Telangana Country Market - Q2 FY26
23% Revenue Growth16% SSG
Andhra Pradesh Market - Q2 FY26
29% Revenue Growth8% SSG
NCR Cluster - Q2 FY26
38% Revenue Growth11% SSG1% EBITDA Margin
Southern Cluster
6% EBITDA Margin
Large Appliances Category - Q2 FY26
38% Revenue Contribution
Large Appliances Category - H1 FY26
43% Revenue Contribution
Mobiles Category - Q2 FY26
48% Revenue Contribution
Mobiles Category - H1 FY26
44% Revenue Contribution

Guidance & targets

Revenue

Full Year FY26 Revenue Growth Revenue · FY26 · Medium confidence low double-digit

Previously 15% → low double-digit

For me, I think we need to revise that. But still, we are quite confident of reaching low double-digit growth in this financial year.

— Premchand Devarakonda, CFO
Delhi NCR Revenue Revenue · FY26 · High confidence ₹650-700 crores

From ₹480 crores (last year) today

Sir, last year, we did around INR 480 crores of revenue in those stores apart from the new store that we opened up in Delhi NCR. So, this is a Delhi NCR, we would be very comfortably on track of doing around INR 650 crores to INR 700 crores of revenue this financial year.

— Karan Bajaj, CEO & Promoter
Delhi NCR Revenue Growth Revenue · FY27 · High confidence at least 25%

There is aspiration, aspiration with the new stores opening up and the stores getting mature in that region, we should at least grow at least 25% over that number.

— Karan Bajaj, CEO & Promoter

Profitability

Q3 FY26 EBITDA Margin Profitability · Q3 FY26 · Medium confidence impressive, better than last couple of quarters

Definitely in Q3, the margins will be better than what we have seen in the last couple of quarters.

— Premchand Devarakonda, CFO

Margin

North Cluster EBITDA Margin Margin · FY26 · High confidence around 3%

From 3-4% today

I mean we will be, it is definite that we are going to reach the targeted EBITDA contribution coming in from NCR. ... Yes. Yes.

— Premchand Devarakonda, CFO
Company-level EBITDA Margin Margin · FY26 · High confidence around 6%

This financial year, yes, it will be around that. EBITDA margins will be around 6%.

— Premchand Devarakonda, CFO
Company-level EBITDA Margin (early summer) Margin · FY26 · High confidence 6.3-6.5%

And if summer sets in early, so it will slightly improve. It may go up to, I mean, that, it might improve by another 30 to 50 bps. ... Yes

— Premchand Devarakonda, CFO

Capex

Capex for next 6 months Capex · next 6 months · High confidence ₹25-30 crores

So those, I mean, for the rest of the period, you may consider another INR 25 crores to INR30 crores of capex in the next 6 months.

— Premchand Devarakonda, CFO
FY27 Capex (30 stores) Capex · FY27 · High confidence ₹75 crores

Apart from that, for the next financial year, we will be adding, as of now, we are planning to add 30 more stores. So, on 30 stores, we'll be investing about INR 75 crores.

— Premchand Devarakonda, CFO

Store Expansion

New Store Additions Store Expansion · rest of FY26 · High confidence 30 stores

For the rest of the financial year. 30 more stores

— Premchand Devarakonda, CFO

SSSG

Mature Stores SSSG (>10 years) SSSG · historical · High confidence 3-5%

the stores aging more than 10 years will have around 3% to 5% SSSG sir. That was the historical performance.

— Premchand Devarakonda, CFO
Mature Stores SSSG (4-10 years) SSSG · historical · High confidence 9-10%

See the stores between aging 4 and 10 will have at least 9% to 10% SSSG

— Premchand Devarakonda, CFO

Category Growth

Large Appliances Category Growth Category Growth · future · High confidence close to 10%

So, we can expect close to 10% growth in this category. That includes the air conditioners.

— Premchand Devarakonda, CFO
Mobiles Category Growth Category Growth · future · High confidence roughly 15% Y-o-Y

And coming to mobiles, so that will be roughly around 15% to, 15% year-on-year. That is the conservative estimate.

— Premchand Devarakonda, CFO

Store Throughput

NCR Average Store Throughput Store Throughput · FY26 · High confidence ₹30+ crores/store

And this year, we are quite confident of reaching around INR 30-plus crores per store in NCR.

— Premchand Devarakonda, CFO

Store Maturity

Newer Stores Maturity Store Maturity · next 24 months · High confidence next 24 months

Yes. Sir, these stores will mature in the next 24 months, most of these stores.

— Premchand Devarakonda, CFO

Risks & concerns

Seasonal Demand Volatility (AC Sales)
medium

A bad summer season impacted AC sell-out, leading to INR 200+ crores of AC inventory, with liquidation dependent on the upcoming summer season.

Management acknowledged
New Store Ramp-up Costs
medium

Rapid expansion (75 stores since H1 FY24) has led to higher fixed costs (employee, marketing, financing, depreciation) that are not yet fully absorbed, impacting PAT margins.

Management acknowledged
GST Rate Cut Impact on Margins
low

Initial volatility and deferment of purchases following GST rate announcements led to increased discounting in Q2, marginally reducing gross margins.

Management acknowledged

Q&A highlights

3 direct

Gross Margin Decline and GST Impact Direct

what happened since the GST rate cut announcement came in, it led to a total slowdown. There was drastic degrowth in the sale of the large appliances category. So, during that period, we have to just push some sales by offering additional discounts that has marginally reduced the margins, gross margins during this period, sir.

Revealed the direct impact of GST rate changes and subsequent discounting on gross margins, explaining a key profitability challenge in the quarter.

Asked by Yash Sonthaliya, Edelweiss Public Alternatives

High AC Inventory and Liquidation Strategy Direct

So, AC inventory in spite of GST rate cut, there is no traction, I think, in the AC inventory because of the off season. So, season was, I mean, even the weather was not supporting our AC sales, still we are carrying INR 200-plus crores of air conditioner inventory, which we thought that it will get liquidated in the festive season, but we didn't see any demand. So, we have to wait and see the upcoming summer season, which will start sometime in the second week of February.

Addressed the significant inventory overhang in ACs, its cause (bad summer), and the reliance on the next summer season for liquidation, highlighting a potential working capital and margin risk.

Asked by Yash Sonthaliya, Edelweiss Public Alternatives

New Store Profitability and Expansion Plans Direct

Yes. Sir, these stores will mature in the next 24 months, most of these stores. And the sense they will start contributing to the EBITDA margins. Coming to the expansion plan for the rest of the financial year. In Telangana, we are planning to add 4 more stores in Andhra, 4 stores, in NCR, 3 stores and in Hyderabad, 2 stores. These stores are going to be operational by end of this financial year or latest by April of this, in the next financial year, sir.

Provided clarity on the timeline for newer stores to become profitable contributors and detailed the specific store expansion targets for the remainder of FY26, crucial for future growth projections.

Asked by Siddarth, Vittae Money

3 min read 8 chapters

Detailed narrative

Q2 & H1 FY26 Financial Performance Overview

Electronics Mart reported Q2 FY26 revenue of ₹1,591 crores with an EBITDA margin of 5.1% and PAT of ₹16 crores. For the first half of FY26, revenues reached ₹3,330 crores, yielding an EBITDA margin of 5.8% and PAT of ₹38 crores. While Q2 saw a positive SSSG of 11.4%, the H1 SSSG was -4.8%, reflecting early-period challenges. The company also reported an annualized ROCE of 9.8% and ROE of 4.8% for H1 FY26.

Impact of GST Rate Changes and Store Expansion on Margins

The quarter's performance was affected by volatility following GST rate announcements, which initially deferred purchases and necessitated additional discounts, marginally reducing gross margins. Operating margins were further impacted by rapid store expansion, with 75 new stores added since H1 FY24. Fixed costs like employee expenses, marketing, and financing costs from IndAS 116 lease accounting are not yet fully absorbed, contributing to lower PAT margins.

Store Portfolio Dynamics and Profitability

The company's portfolio comprises 215 stores, with 84 stores over 4 years old classified as mature, and 131 stores less than 4 years old. In H1 FY26, mature stores delivered sales of ₹2,254 crores with a strong EBITDA margin of 6.8%. In contrast, the newer stores contributed ₹933 crores in revenue but operated at a lower EBITDA margin of 3%, indicating the ramp-up phase's impact on overall profitability.

Geographical and Category Performance Highlights

In Q2 FY26, Hyderabad recorded 15% Y-o-Y revenue growth with 12% SSG, while Telangana's country market grew 23% with 16% SSG. Andhra Pradesh saw robust revenue growth of 29% and 8% SSG. The NCR cluster demonstrated significant scale-up, achieving 38% revenue growth and 11% SSG, with an EBITDA positive margin of 1%. Large appliances contributed 38% to Q2 revenue (43% in H1), and mobiles accounted for 48% (44% in H1).

Inventory Management and Seasonal Challenges

The company is currently holding over ₹200 crores of AC inventory, with approximately ₹100 crores considered excess, due to a weak summer season. Management expects this inventory to be liquidated during the upcoming summer season, starting in February. While inventory levels were high at the end of September due to festive season buying across categories, they anticipate a significant reduction by December 31st, excluding ACs.

Revised FY26 Outlook and Margin Expectations

Management revised its full-year FY26 revenue growth guidance from 15% to low double-digits, acknowledging the H1 miss. However, they expressed confidence in Q3 margins being better than previous quarters and expect company-level EBITDA margins to be around 6% for FY26. If the summer season starts early, margins could improve by an additional 30-50 bps, potentially reaching 6.3-6.5%.

Future Expansion and Capex Plans

Electronics Mart plans to add 30 more stores in the remainder of FY26, with specific additions in Telangana (4), Andhra Pradesh (4), NCR (3), and Hyderabad (2), aiming for operational status by April next year. For these additions, a capex of ₹25-30 crores is projected for the next six months. Looking into FY27, the company plans to add another 30 stores, with an estimated investment of ₹75 crores.

Supportive Macro Environment and Growth Drivers

The broader economic environment is seen as supportive, with reduced interest rates, GST rates, and income tax slabs expected to boost disposable incomes and consumption. Management also highlighted that several categories in their portfolio remain unpenetrated, offering significant growth potential. They anticipate approximately 10% growth in large appliances and 15% Y-o-Y growth in mobiles, driven by new technologies and upgrades.

This is an AI-generated summary of a publicly available earnings call transcript.

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