Electronics Mart India Limited — Q3 FY25 earnings call

Call held 10 Feb 2025

Management summary

Electronics Mart reported a mixed Q3 FY25 with revenue growth of 6% YoY but a 14% decline in EBITDA and negative SSSG of -2.8%, primarily impacted by a slowdown in the mature Hyderabad market. Newer clusters like Delhi-NCR and Andhra Pradesh showed strong growth but are smaller contributors. The company remains optimistic about demand recovery, especially with an early summer season, and expects to achieve 15% YoY revenue growth for FY25 and FY26, supported by aggressive store expansion plans across existing and new regions.

Highlights

  • Q3 FY25 Revenue: ₹1,885 crores, up 6% YoY.

  • Q3 FY25 EBITDA: ₹99 crores, down 14% YoY, with a margin of 5.2%.

  • Q3 FY25 PAT: ₹32 crores, a 30% decline from ₹46 crores in Q3 FY24.

  • Q3 FY25 Same-Store Sales Growth (SSSG): -2.8%, primarily due to a slowdown in Hyderabad.

  • 9M FY25 Revenue: ₹5,246 crores, up 10% YoY.

  • 9M FY25 EBITDA: ₹337 crores, down 2% YoY, with a margin of 6.4%.

  • Store Expansion: 14 new stores opened in Q3 FY25, bringing total to 191 by Dec 2024.

  • FY25 Store Additions: Expected to be ~40, surpassing the 200-store milestone.

  • FY26 Store Pipeline: 35 stores already signed up for the next financial year.

Key financials

3 periods

Headline

  • Working Capital Days (Dec 2024)
    52 days
  • Total Borrowing (Dec 2024)
    ₹530 Cr
  • Secured Working Capital Loan (Dec 2024)
    ₹322 Cr
  • Unsecured Working Capital Loan (Dec 2024)
    ₹1.9 Cr
  • Term Loan (Properties)
    ₹200 Cr

Q3 FY25

  • Revenue
    ₹1,885 Cr
    YoY +6%
  • EBITDA
    ₹99 Cr
    YoY -14%
  • EBITDA Margin
    5.2%
  • PAT
    ₹32 Cr
    YoY -30%
  • SSSG
    -2.8%

9M FY25

  • Revenue
    ₹5,246 Cr
    YoY +10%
  • EBITDA
    ₹337 Cr
    YoY -1%
  • EBITDA Margin
    6.4%
  • PAT
    ₹129 Cr
    YoY -10%
  • SSSG
    3.8%
  • ROCE
    16.4%
  • ROE
    11.2%
  • Dealer Buy-down
    ₹51.5 Cr
  • Incentive Income
    ₹199 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

SegmentRevenueEBITDA Margin (pre-IndAS)
Hyderabad City (Q3 FY25)₹1,079 Cr7.4%
Telangana Upcountry (Q3 FY25)₹272 Cr8.2%
Andhra (Q3 FY25)₹247 Cr—
Delhi NCR (Q3 FY25)₹128 Cr20%
9M FY25 Revenue Contribution——

Guidance & targets

Store Count

  • Q4 FY25 Store Additions Store Count · Q4 FY25 · High confidence 10-12 stores
    Gross store opening in Q4 are expected to be between 10 to 12 stores, taking the total count beyond the 200-store milestone at the pan-India level.

    — Karan Bajaj, CEO

  • FY25 Total Store Count Store Count · FY25 · High confidence Beyond 200 stores

    — Karan Bajaj, CEO

  • FY25 Total Store Additions Store Count · FY25 · High confidence Around 40 stores
    So, this year, we would end up, FY '25 closing, we would end up in addition of around approximately 40 stores...

    — Karan Bajaj, CEO

  • FY26 Store Additions Pipeline Store Count · FY26 · High confidence 35 stores
    whereas for the next year, FY '26 also we have 35 stores that are already getting ready for us.

    — Karan Bajaj, CEO

  • FY26 Total Store Count Store Count · FY26 · High confidence 225-230 stores
    So, to take the count up to almost 225 to 230 stores in the next financial year, that is the idea for the company for the addition of stores...

    — Karan Bajaj, CEO

  • Delhi NCR Total Stores Store Count · FY27 · Medium confidence At least 50 stores
    So, we would look at Delhi NCR shaping up at at least 50 stores by FY '27. That is the plan.

    — Karan Bajaj, CEO

Revenue

  • FY25 Revenue Growth Revenue · FY25 · High confidence 15%
    I think that should be in line with the numbers. So, the growth is around 10.5%, 10.6% to be precise for the first nine months. And then we are looking at a decent growth coming in in Quarter 4. So, in line with what we were expecting, so that should be there.

    — Karan Bajaj, CEO

  • FY26 Revenue Growth Revenue · FY26 · High confidence 15%
    I think a 15% Y-on-Y growth should be quite comfortable for us to achieve next year as well.

    — Karan Bajaj, CEO

  • Q4 FY25 Revenue Growth (Summer Category) Revenue · Q4 FY25 · High confidence 21-22%
    But to what it is going on right now, we are looking at a trajectory of at least 21-22% right now of growth coming in with that category at least.

    — Karan Bajaj, CEO

Profitability

  • FY26 EBITDA Margin (post-IndAS) Profitability · FY26 · High confidence 6.8-7%
    I think that should be the number that we are looking at, sir, around 7%, 6.8 to 7% comfortably.

    — Karan Bajaj, CEO

Same-Store Sales Growth

  • Hyderabad SSSG Normalization Same-Store Sales Growth · Going forward · Medium confidence 2-3%
    So, even if it comes down to 2-3% kind of a level, it is good enough for us. This is in line which we see that, it is going to happen going forward.

    — Karan Bajaj, CEO

Risks & concerns

  • Slowdown in Hyderabad region impacting SSSG and overall growth

    medium

    Hyderabad cluster, a major revenue contributor, saw flat to negative 1-2% growth and contributed to a -2.8% SSSG for Q3 FY25.

    Management acknowledged

  • Margin dilution due to increased expenses and promotional activities

    medium

    Gross margins diluted by 0.75% and expenses up by 0.6-0.7%, impacting the bottom line. Employee costs increased by 29% YoY due to new cluster expansion.

    Management acknowledged

  • Real estate market slowdown impacting demand for certain appliance categories

    low

    Water heaters and room heaters saw single-digit growth in Hyderabad, partly due to a slower real estate market, but expected to improve.

    Management acknowledged

Areas of evasion (1)

  • Specific PAT target for FY25

Q&A highlights

2 direct
Muted sales performance compared to brands and Hyderabad slowdown Direct
our matured stores, majority of them are in the Hyderabad cluster, which is at a flat or negative growth by 1 or 2% for us... Whereas our newer clusters like Telangana country market, Andhra Pradesh, Delhi-NCR have outperformed and done really good. But unfortunately, what happens is that these clusters are really small on the total overall contribution...

Reveals the core challenge of the quarter – reliance on a mature, slowing market (Hyderabad) masking growth in newer, smaller regions, and confirms no market share loss despite the slowdown.

Asked by Manoj Gori

Impact of discounts on gross margin and accounting Direct
the sales promotion activities or cashback offers, we roll out during the festive season, that will be adjusted against the revenues. As a result, the net sales realization will come down. So, that will obviously reduce the gross margin.

Clarifies the accounting treatment of promotions, explaining the gross margin compression seen in December, which is crucial for understanding profitability trends.

Asked by Yash Darak

FY25 PAT outlook given margin dilution and FY26 guidance Partial
Sir, it will be too early for me to comment on that [PAT]. But yes, definitely, obviously, if you compared to the previous quarters that we have delivered, there has been a decline. So, I can't deny that fact that there was a decline in the PAT levels. But we are trying to improve them. But obviously, you know, we won't be able to surpass with a very big growth number in terms of the PAT margins this year.

Highlights management's cautious stance on PAT for the current year, acknowledging a decline and indicating that previous PAT levels might not be surpassed, despite maintaining revenue growth guidance.

Asked by Saumil Shah

2 min read 6 chapters

Detailed narrative

Q3 FY25 Performance and Hyderabad Slowdown

Electronics Mart reported Q3 FY25 revenue of ₹1,885 crores, a 6% YoY increase, but faced significant profitability challenges with EBITDA declining 14% YoY to ₹99 crores and PAT dropping 30% to ₹32 crores. The company's Same-Store Sales Growth (SSSG) was negative at -2.8%, primarily due to a slowdown in the Hyderabad region, which contributes 60-65% of total revenue and saw flat to negative 1-2% growth. Despite this, management stated no market share loss in Hyderabad.

Nine-Month FY25 Financial Overview

For the nine months ended December 2024, Electronics Mart achieved a revenue of ₹5,246 crores, reflecting a 10% YoY growth. However, EBITDA for the period saw a slight degrowth of 2% YoY to ₹337 crores, with margins at 6.4%. PAT for 9M FY25 was ₹129 crores, a 10% decline from the previous year. The overall 9M FY25 SSSG stood at 3.8%, indicating that growth from newer stores and other regions offset the Hyderabad slowdown.

Aggressive Store Expansion and Regional Focus

The company continued its aggressive expansion, adding 14 new stores in Q3 FY25, bringing the total count to 191 stores by December 2024. For the full FY25, Electronics Mart expects to add approximately 40 stores, pushing the total store count beyond 200. Looking ahead to FY26, 35 new stores are already in the pipeline, with plans to reach 225-230 stores. The expansion strategy focuses on existing clusters like Delhi-NCR (targeting 50 stores by FY27), Andhra Pradesh, and Telangana upcountry, while also exploring new markets such as Orissa and Western UP.

Category Performance and Margin Pressures

While large appliances like refrigerators, washing machines, and televisions experienced single-digit volume growth without significant price increases, categories such as air conditioners, mobile phones, and small appliances performed strongly. Gross margins were impacted by sales promotion activities and cashback offers, which reduced net sales realization. Dealer buy-down charges, related to consumer finance options, increased to ₹51.5 crores for 9M FY25, further contributing to margin pressures. Employee costs also rose by 29% YoY due to team expansion in new clusters.

Debt Management and Working Capital

As of December 31, 2024, the company's total borrowing stood at approximately ₹530 crores. This included a secured working capital loan of ₹322 crores (down from ₹429 crores) and term loans for property purchases amounting to around ₹200 crores. Working capital days were 52, reflecting efficient inventory management. Management indicated that debt levels are expected to be less than ₹500 crores by March end, with debt primarily driven by working capital needs for seasonal inventory build-up.

Outlook and Future Guidance

Electronics Mart maintains its FY25 revenue growth guidance of 15% YoY, anticipating a strong Q4 FY25 with 21-22% growth in summer-led categories due to an early summer. For FY26, the company projects a comfortable 15% YoY revenue growth and aims for post-IndAS EBITDA margins of 6.8-7%. Management expressed optimism for demand recovery, particularly in the summer season, and expects Hyderabad's SSSG to normalize to 2-3% going forward.

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