Electronics Mart India Limited — Q4 FY25 earnings call

Electronics Mart reported a Q4 FY25 revenue of ₹1,719 crores, a 13% year-on-year growth, with an EBITDA of ₹114 crores (up 6% YoY) and a margin of 6.6%. However, PAT for the quarter declined 22% YoY to ₹32 crores. For the full fiscal year FY25, revenue grew 11% to ₹6,965 crores, while EBITDA remained flat at ₹451 crores, resulting in a 6.5% EBITDA margin. The company's Pre-IndAS EBITDA margin for FY25 stood at 4.7%, and PAT for the year was ₹161 crores, down from ₹184 crores in the previous year.

In FY25, Electronics Mart significantly expanded its retail presence by adding 44 new stores, bringing the total store count to 200 across 82 cities in four states. This expansion included 18 multi-brand stores in Telangana, 18 in Andhra Pradesh, and 8 in the National Capital Region (NCR), where the company now operates 29 stores. For FY26, the company plans to open an additional 25 to 30 stores, with 6-8 specifically targeted for the Delhi NCR region. Management noted that approximately 50% of the total stores are still under a 24-month maturation period, with the 44 new stores expected to mature in 12-15 months.

Large Appliances were the primary revenue driver in FY25, contributing 45.4% to total revenue and growing 12% YoY, largely fueled by strong demand for cooling products. Mobile Phones constituted 42% of total revenue, showing an 11% YoY growth. Management acknowledged that ASPs for certain categories like mobiles and televisions have seen muted or declining trends over the past 2-3 years, requiring higher volume growth to maintain overall value. However, for FY26, they anticipate an 'upside' in ASPs for large appliances and air conditioners, driven by new technology additions like AI.

The company incurred approximately ₹350 crores in CAPEX during FY25, with around ₹250 crores allocated to purchasing land and building for new stores, primarily in Delhi, and ₹80-100 crores for leasehold improvements. Management clarified that this was a strategic decision for long-term security in key markets like Delhi, while future expansion in other clusters will predominantly be through lease agreements. Despite total debt nearing ₹1,000 crores, management expressed comfort, noting that the working capital loan had been reduced from ₹679 crores to ₹450 crores, and the net debt-to-EBITDA stood at 2.1x.

Hyderabad, the company's largest cluster, showed a positive absolute business value growth of 4% in Q4 FY25, despite being flattish or negative in earlier quarters. Management expects Hyderabad revenue to be 'much bigger' than the ₹4,000-4,200 crores range in the next two years, with volume growth projected at 5-10%. The Delhi NCR region demonstrated a 'remarkable turnaround', with Q4 FY25 SSSG at 33.8% and full-year SSSG at 50%. Management is optimistic about continued strong performance in Delhi NCR for FY26-27, targeting a Pre-IndAS EBITDA margin of around 3.5% for the North India Cluster in FY26.

Despite unseasonal rains impacting cooling product sales in May, management assured that inventory levels are in line, with no stress or need for additional discounting. They anticipate the AC season might extend until August. The company is optimistic about India's economic outlook, citing projected GDP growth of 6.2%-6.8% and personal income tax relief (₹1 lakh crores) expected to boost consumer spending, particularly in the consumer durable sector. This favorable environment, coupled with strategic expansion and brand partnerships, is expected to support a recovery in margins and overall profitability.