Sai Silks — Q1 FY26 earnings call

Call held 26 Jul 2025

Management summary

Sai Silks reported a strong Q1 FY26, with significant revenue, EBITDA, and PAT growth, primarily fueled by a favorable wedding calendar and robust consumer demand. The company achieved a 29% SSG for mature stores and maintained healthy gross margins. Management outlined plans for continued store expansion, including a new compact, low-priced format called Valli Silks, and aims for long-term EBITDA margin expansion and inventory optimization.

Highlights

  • Revenue of ₹379 crores, up 42% Y-o-Y, driven by strong consumer demand and a favorable wedding calendar.

  • EBITDA of ₹57.13 crores, a growth of 200% Y-o-Y, with EBITDA margin at 15.07%.

  • PAT of ₹30 crores, reflecting a growth of more than 1,300% Y-o-Y.

  • Same-store sales growth (SSG) for mature stores stood at 29%, indicating robust footfall recovery.

  • Gross margin improved to 42.07% from 41.26% last year, attributed to better product assortment.

Concerns

  • Small delay in store openings for FY26 due to rains in Andhra and Telangana, though management expects to catch up.

  • The market sentiment post-IPO has not been favorable, impacting growth expectations compared to initial aggressive targets.

Key financials

  1. Revenue ₹379 Cr +41.9%YoY
  2. Gross Margin 42.1%
  3. EBITDA ₹57.13 Cr +200.7%YoY
  4. EBITDA Margin 15.1%
  5. PAT ₹30 Cr +1,400%YoY
  6. SSG (Mature Stores) 29%

What they filed

Q1 FY27: revenue down 1.1%, net profit down 13.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue347 449 399 379 444 +28%411 −8%419 +5%375 −1%
EBITDA55 79 58 57 72 +31%70 −11%61 +5%52 −9%
Net profit24 46 14 30 40 +67%38 −17%33 +136%26 −13%
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.

Capital allocation

high confidence
  • Capex 65,000 square feet majorly possible through our internal accruals
    • New store additions (Varamahalakshmi Silks format)
    • Expansion of Valli Silks format (20-25% cheaper capex)
    I think the plan is to open at least 8% to 10% of retail square feet addition every year. we are targeting not just for this year, but the next years also, we still have plan to open a similar amount of square feet addition. This is going to majorly be possible through our internal accruals.

Guidance & targets

Revenue

  • Top line growth Revenue · FY26 · Medium confidence 15%
    The overall growth, you might take around 15% compared to last year should be the top line growth that we are internally targeting.

    — R. Bharadwaj

  • CAGR Revenue · next 3 to 5 years · Medium confidence 15%
    15% growth year-on-year should be possible, not just for this year, but the next 3 to 5 years also, this is the kind of growth we should be able to expect.

    — R. Bharadwaj

Store Expansion

  • Retail square feet addition Store Expansion · FY26 · High confidence 65,000 square feet
    I think we are still on track to open the target of about 65,000 retail square feet addition for the whole year.

    — R. Bharadwaj

  • Retail square feet addition Store Expansion · every year (long-term) · High confidence 8% to 10%
    I think the plan is to open at least 8% to 10% of retail square feet addition every year.

    — R. Bharadwaj

Profitability

  • Gross margin Profitability · sustainable · High confidence 42%
    42% will be a sustainable gross margin.

    — R. Bharadwaj

  • EBITDA margin Profitability · FY27 · Medium confidence 20%
    And our target for FY '27 should be in the range of about 20%.

    — KVLN Sarma

Sales

  • SSG (normalized) Sales · normalized year · High confidence 4% to 5%
    our goal is to add 10% of retail square feet addition and SSG-wise, 4% to 5% is what we should be able to get on a normalized year.

    — R. Bharadwaj

Inventory

  • Inventory days Inventory · by FY27 · High confidence 130 to 135 days
    the goal is approximately 130 to 135 days, which we think is the optimum level below which, again, there might be a business detriment. So to that extent, we will achieve once we complete the expansion and once these stores are matured, we should be coming to approximately by FY27

    — KVLN Sarma

What to watch in Q2 FY26

FY26 Store Expansion Progress

next quarter
Current 1 new store opened, 2 in pipeline for next 15 days, 28,000-30,000 sq ft remaining for Q3 FY26
Target Progress towards 65,000 sq ft addition for FY26, specifically Q2/Q3 openings

Why it matters

Timely store expansion is key to achieving revenue growth targets and demonstrating execution capability.

I think we are still on track to open the target of about 65,000 retail square feet addition for the whole year. ... But we have about 2 stores that we have in pipeline in the next 15 days. ... we are left out with around close to 30,000 square feet or 28,000 square feet, which we intend to complete by Q3 of this year itself.

Risks & concerns

  • Unfavorable market sentiment post-IPO

    medium

    The market has not been favorable since the IPO, impacting growth expectations, but management believes this year is a 'normal' year for growth.

    Management acknowledged

  • Delay in store openings

    low

    Small delay in opening planned stores for FY26 due to rains in Andhra and Telangana, though management expects to complete the target.

    Management acknowledged

Q&A highlights

7 direct
Store Opening Delays and Future Expansion Pace Direct
I think we are still on track to open the target of about 65,000 retail square feet addition for the whole year. ... But we have about 2 stores that we have in pipeline in the next 15 days. ... we are left out with around close to 30,000 square feet or 28,000 square feet, which we intend to complete by Q3 of this year itself.

Addresses concerns about slower-than-expected store rollout and provides clarity on the FY26 target and long-term expansion strategy.

Asked by Bala Murali Krishnan

KLM Brand Performance and Future Strategy Direct
I think we have seen footfall increase in KLM compared to last Q, and we have seen SSG growth also. ... We don't have any negative SSG. SSG has been positive. ... in the near to medium term, probably we will not look at expanding to new KLM stores.

Clarifies that the KLM brand is performing positively and will be optimized rather than expanded in the short-to-medium term, addressing potential investor concerns about its viability.

Asked by Bala Murali Krishnan

Resolution of Tax Overhang Direct
No. Tax hangover part is completely closed in respect of the company. So there will not be any additions or any further requirements of tax provisions of the previous years henceforth. ... On the promoter side, promoters have appealed on the issue and then they will take care of those issues and that the company is not at all affected by that.

Provides assurance that the tax issues, including the INR58 crore promoter tax, are resolved and will not impact the company's financials going forward.

Asked by Raj

Sustainability of Long-term Growth and Margins Direct
15% growth year-on-year should be possible, not just for this year, but the next 3 to 5 years also, this is the kind of growth we should be able to expect. ... 42% will be a sustainable gross margin.

Confirms management's confidence in achieving sustained double-digit revenue growth and maintaining healthy gross margins over the medium term.

Asked by Garvit

Inventory Optimization Targets Direct
the goal is approximately 130 to 135 days, which we think is the optimum level below which, again, there might be a business detriment. ... by FY27, we should reach to those levels.

Outlines a specific, measurable target for improving working capital efficiency by reducing inventory days, which is critical for capital allocation.

Asked by Sarvesh Gupta

Long-term EBITDA Margin Aspiration Direct
And our target for FY '27 should be in the range of about 20%.

Sets a clear, ambitious long-term target for EBITDA margin expansion, indicating management's focus on profitability improvement.

Asked by Ankit Gupta

New Valli Silks Format Details and Strategy Direct
Valli Silks is exclusively going to be women's wear, especially in the low-priced silk as well as low-priced fancy items. ... capex requirements, it will be 20% to 25% cheaper than the rest of the other formats capex. ... compact store formats where we currently have, 3,000 to 4,000 square feet kind of a format.

Provides crucial details on a new growth avenue, including target segment, cost efficiency, and operational model, which could drive future expansion.

Asked by Ankit Gupta

2 min read 6 chapters

Detailed narrative

Q1 FY26 Performance Overview

Sai Silks (Kalamandir) Limited reported a strong start to FY26, with revenue growing 42% year-over-year to ₹379 crores. This growth was primarily driven by a favorable wedding calendar and robust consumer demand in the ethnic retail market. EBITDA saw a significant increase of 200% to ₹57.13 crores, resulting in an EBITDA margin of 15.07%. Net profit (PAT) surged by over 1,300% to ₹30 crores, reflecting strong operational leverage and improved customer sentiment.

Store Expansion and New Format Strategy

The company added 1 new Varamahalakshmi Silks format store in Q1, bringing the total retail presence to 7.27 lakh square feet across 69 stores. Despite minor delays due to rains, management remains on track to achieve its FY26 target of adding 65,000 retail square feet. Long-term, Sai Silks aims for an 8-10% annual increase in retail square footage, primarily funded through internal accruals. A new compact format, Valli Silks, targeting low-priced women's silks and fancy sarees, is also being launched with 20-25% lower capex and a digital-first engagement approach.

Product Assortment and Brand Focus

Sarees continue to be the flagship product, especially within the wedding and occasion wear segments, which are less susceptible to online disruption. The Varamahalakshmi Silks format is contributing to stronger saree sales. While the company is exploring adding kurta and kurti sections, the overall product offering remains saree-dominant. The Kalamandir brand, while considered lower-end compared to Varamahalakshmi, has shown positive SSG and will focus on stock and assortment improvements rather than immediate expansion.

Margin and Profitability Outlook

Gross margin expanded to 42.07% in Q1 FY26 and is expected to be sustainable at 42%. Management sees scope for further EBITDA margin improvement, targeting 20% by FY27. This will be supported by operational leverage from 4-5% normalized same-store sales growth and continued optimization efforts. The addition of Varamahalakshmi Silks stores, which generally have higher margins, is also expected to contribute positively to overall company-level margins.

Inventory Management and Efficiency

Sai Silks is actively working on inventory optimization, particularly for the Varamahalakshmi format, which previously demanded high inventory levels. The company has already seen inventory levels increase by only ₹100-125 crores despite a 110,000 square feet expansion. The long-term goal is to reduce inventory days to approximately 130-135 days by FY27, which management believes is the optimal level without negatively impacting business.

Taxation and External Factors

Management confirmed that the tax overhang, including the promoter tax issue of ₹58 crores, is completely closed for the company, with no further tax provisions expected. They assured that the company is taking precautions to avoid future issues. The favorable wedding calendar and early onset of festivals like Dasara are expected to drive strong performance in Q2 and Q3 FY26, with management remaining optimistic about the Indian ethnic wear market.

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