Sai Silks — Q1 FY27 earnings call

Call held 16 Jul 2026

Management summary

Sai Silks reported a challenging Q1 FY27 with revenue remaining flat at INR375 crores and SSSG declining by 7.5-7.8%, largely attributed to the inauspicious Adhik Maas period and cautious consumer sentiment. Despite a 1% decline in EBITDA margins, gross margins held steady at ~42%. The company continued its expansion, adding 30,000 sq ft of retail space and remains debt-free, targeting 1,00,000 sq ft net addition for FY27 and expecting positive SSSG of 2-3% for the full year.

Highlights

  • Gross margins held up well, remaining close to 42% despite challenging environment, reflecting pricing discipline and merchandise mix management.

  • Added approximately 30,000 square feet of retail space during the quarter, taking the total store count to 83 and retail footprint to 8,14,000 sq ft.

  • Company continues to be debt-free, demonstrating strong financial discipline and prudent capital management.

  • Achieved 90,000 to 1,00,000 sq ft of additional retail area over and above the original IPO target using the same fund allocation, indicating efficient capital allocation.

  • Innerwear category is expected to show a 20% growth compared to last year.

Concerns

  • Revenue from operations was almost flat at INR375 crores in Q1 FY27 compared to INR379 crores in Q1 FY26, a degrowth of -1.05% YoY.

  • Same-store sales growth (SSSG) saw a degrowth of up to 7.5% to 7.8% during the quarter, primarily due to Adhik Maas and cautious consumer sentiment.

  • EBITDA margins declined by about 1% due to SSSG degrowth and fixed cost base spread over softer like-to-like volumes.

  • Weak consumption trends were observed due to Adhik Maas (May 17 - June 15) and cautious consumer sentiment across markets.

  • One KLM Fashion Mall store is being rationalized due to sustained degrowth, impacting the overall store count.

Key financials

  1. Revenue from Operations ₹375 Cr -1.1%YoY
  2. SSSG -7.5% -7.5%YoY
  3. Gross Margin 42%
  4. Employee Cost ₹52 Cr -1.9%YoY

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 1,00,000 square feet
    • Retail space addition 30,000 square feet
    We continued our expansion journey, adding approximately 30,000 square feet of retail space during the quarter, taking our total store count to 83. These additions further strengthens our presence in our key growth market, Karnataka, and reflect our confidence in the long-term potential of the organized ethnic wear retail segment. As of June 30, 2026, the company's total retail footprint stood at approximately 8,14,000 square feet across 83 stores and 4 states. Looking ahead, we are targeting a net retail space addition of approximately 1,00,000 square feet for this financial year.

Guidance & targets

Revenue

  • Revenue Growth Revenue · FY27 · High confidence 12-15%
    Ma'am, I think like we already discussed, broadly, the revenue guidance for the full year will remain between 12 and 15 percentage, like we've discussed in the last interactions as well.

    — B. Rachamadugu

Retail Space

  • Net Retail Space Addition Retail Space · FY27 · High confidence 1,00,000 square feet
    Looking ahead, we are targeting a net retail space addition of approximately 1,00,000 square feet for this financial year.

    — B. Rachamadugu

  • Potential Additional Retail Space Addition Retail Space · Q4 FY27 · Medium confidence 10,000 to 15,000 square feet
    but there are possible chances wherein in quarter 4, we might be able to add an additional 10,000 to 15,000 square feet, which I will be able to confirm once quarter 2 passes.

    — B. Rachamadugu

SSSG

  • SSSG Growth SSSG · FY27 · Medium confidence 2-3% positive
    This broadly will classify in at least 2% to 3% of SSSG positive plus whatever additional revenue that comes forward.

    — B. Rachamadugu

  • SSSG to cover inflation SSSG · FY27 · High confidence 3-4%
    Normally, we consider an improvement of approximately 3% to 4% on SSSG, which will cover the inflation rate plus any kind of increase in cost.

    — K.V.L.N. Sarma

Category Growth

  • Innerwear Category Growth Category Growth · FY27 · High confidence 20%
    So with respect to innerwear, I think month-on-month, Y-o-Y, it is showing growth. We are expecting a 20% growth compared to last year in the innerwear category.

    — B. Rachamadugu

Capital Allocation

  • Warehouse Fund Utilization Capital Allocation · September quarter 2 of 2026 · High confidence Completed
    Apart from that, I think the entire utilization will be completed, the target being September quarter 2 of 2026.

    — K.V.L.N. Sarma

What to watch in Q2 FY27

Warehouse Fund Utilization

By end of September 2026 (Q2 FY27)
Current Unutilized, due diligence in process
Target Deal closed, funds spent

Why it matters

Indicates progress on capital allocation from IPO proceeds and operational infrastructure development.

Hopefully, we should be able to complete the deal by the end of September. And then that particular part of the amount for warehouse will be spent at that point of time. Apart from that, I think the entire utilization will be completed, the target being September quarter 2 of 2026.

Risks & concerns

  • Adhik Maas Impact on Consumption

    high

    Adhik Maas (May 17 - June 15) traditionally treated as inauspicious, leading to weak consumption trends, footfall, and spends in Q1 FY27.

    Management acknowledged

  • Cautious Consumer Sentiment

    medium

    Passive discretionary spending and cautious consumer sentiment across markets, reflecting broader weakness in retail.

    Management acknowledged

  • Impact of Rainfall on Agricultural Income

    medium

    Poor rainfall can impact demand in agriculture-dependent markets (AP, Telangana, Karnataka) in Q2 and Q3 FY27.

    Management acknowledged

  • Geopolitical Factors and Supply Chain Costs

    medium

    Rising fuel prices and increased dying costs due to geopolitical factors are impacting the entire supply chain.

    Management acknowledged

  • El Nino Impact

    medium

    Potential impact of El Nino on demand in Q2 and Q3 FY27, which is difficult to quantify.

    Management acknowledged

Q&A highlights

4 direct
FY27 Expansion Target Split and New State Entry Direct
So at present, it's majorly split between our existing territories, where Karnataka is taking the front lead in the overall expansion strategy. The formats in play majorly will be Kalamandir and Varamahalakshmi. Kalamandir will lead the majority of the effort. Additionally, in terms of locations, in quarter 4 or early quarter 1 of next financial year, in that time is where our entry to the new state will be. We are looking at closing down on final location of one in Pune in Maharashtra. And we are also actively exploring opportunities in Kerala.

Clarifies the geographical and format focus of the 100,000 sq ft expansion target and signals future market diversification.

Asked by Divyansh Jaju

Impact of Poor Rainfall on Demand Partial
So there are many cities in the existing territories within our 4 states, which have impact on direct agricultural income. So rainfall in nature will have a broad impact on the overall sense of having lesser demand. That is something that in the last couple of years, we have seen because of flooding and all of that happened. on the agricultural side, I think that is also something that we have to be worried about. But broadly, I believe in quarter 2 and quarter 3. See, things like these rainfall effects will not show immediate impact. These are things that might show impact probably in quarter 2 and quarter 3. I personally believe that there will be some impact, but it's tricky to quantify how much exactly it will.

Acknowledges the potential negative impact of poor rainfall on demand in key agricultural markets, indicating a risk for future quarters.

Asked by Resham Mehta

SSSG Degrowth and KLM Store Consolidation Direct
So our SSSG broadly was around 7.5 to 7.8 percentage. This was heavily driven by KLM's degrowth. And since KLM's majority of the contribution is coming from Telangana, so naturally, these numbers seem to be a little higher. And number two, as you already did mention, the higher base in last year is also one of the effects that we had. So yes, that is the reason why I think despite the continued efforts this, all these couple of quarters, we decided to consolidate one of the stores, and the store happens to be in Telangana itself.

Confirms the extent of SSSG degrowth and links it to KLM's performance and the decision to consolidate a store in Telangana.

Asked by Resham Mehta

Warehouse Fund Utilization Direct
Yes. Warehouse is one crucial part that we have to see exactly where it is to be located. For the 1 or 2 places that we have identified, due diligence is under process. So just for the sake of spending of the amount, we cannot conclude on any one place, and then, we will have a problem in shifting if necessary. We are closing one particular area where we wanted to put up the warehouse and discussing with them. Hopefully, we should be able to complete the deal by the end of September. And then that particular part of the amount for warehouse will be spent at that point of time. Apart from that, I think the entire utilization will be completed, the target being September quarter 2 of 2026.

Provides a clear timeline for the utilization of IPO funds allocated for warehouse development, addressing a long-standing query.

Asked by Resham Mehta

Q1 Revenue Degrowth despite New Stores Direct
Sir, there are broadly 2 reasons. One, we have a higher base in the last year Q1. If you look at last year Q1 versus the previous year, we showed a double-digit SSSG growth. So because we have a higher base, this year naturally seem to be shooting a little bit aggressively. That is one reason. And the second reason is a combination of 2 factors, which is one is SSSG degrowth, which is coming from Adhik Maas plus lower consumption. So these are the 2 factors why the negative SSSG is panning out.

Explains the reasons behind the revenue degrowth in Q1 FY27 despite new store additions, attributing it to a high base effect and specific demand challenges.

Asked by Nilesh Doshi

Comparison with Jewellery Sector Growth Partial
See, when you look at jewellery as a segment, there's a lot of investment value and metal appreciation value. All of that is also something that we have to consider. I'm not trying to decode the jewellery business model here. But if you compare us with any ethnic wear or wedding-related purchases, this is going to be a phenomena across anything in this industry. Unfortunately, or fortunately, we are the only player in this space, and that's the reason why we are not able to give you a relative point of view. But more than El Nino, more than geopolitical factors, the real reason of the degrowth in this particular quarter is on account of Adhik Maas.

Management differentiates its business model from the jewellery sector, highlighting the investment aspect of jewellery and reiterating Adhik Maas as the primary reason for its Q1 performance.

Asked by Nitin Jain

3 min read 8 chapters

Detailed narrative

Q1 FY27 Performance Overview

Sai Silks reported an almost flat revenue from operations of INR375 crores in Q1 FY27, compared to INR379 crores in Q1 FY26, representing a -1.05% year-on-year degrowth. Same-store sales growth (SSSG) experienced a significant degrowth of 7.5% to 7.8% during the quarter. EBITDA margins declined by approximately 1%, primarily due to the SSSG degrowth and fixed costs spread over lower volumes. Despite these challenges, gross margins remained resilient, holding close to 42%, attributed to continued pricing discipline and effective merchandise mix management.

Impact of Adhik Maas and Consumer Sentiment

The weak Q1 FY27 performance was largely influenced by the Adhik Maas period, which fell from May 17 to June 15, traditionally considered inauspicious for major purchases like weddings and griha praveshams. This led to weak consumption trends, reduced footfall, and cautious discretionary purchasing behavior across markets. Management noted that this broader weakness in consumer demand is an industry-wide trend, not specific to Sai Silks.

Expansion Strategy and Store Footprint

The company continued its expansion, adding approximately 30,000 square feet of retail space during Q1 FY27, bringing the total store count to 83. As of June 30, 2026, the total retail footprint stood at 8,14,000 square feet across 4 states. For the full FY27, Sai Silks is targeting a net retail space addition of approximately 1,00,000 square feet, with potential for an additional 10,000-15,000 sq ft by Q4. The expansion is primarily focused on existing territories, with Karnataka leading, utilizing Kalamandir and Varamahalakshmi formats.

Store Rationalization and New Market Entry

As part of ongoing efforts to optimize performance, Sai Silks plans to rationalize one KLM Fashion Mall store in Telangana that has shown sustained degrowth. This action reflects a commitment to disciplined capital allocation. Looking ahead, the company is actively exploring new market entries in Pune, Maharashtra, and Kerala, with these entries anticipated in Q4 FY27 or early Q1 FY28.

New Categories Performance

The innerwear category is showing positive momentum, with management expecting a 20% growth compared to last year. The fashion jewellery category, recently introduced in two new Kalamandir stores and now being phased into KLM stores, is still in its early stages. The strategy involves reallocating existing store space to accommodate these new categories and improve productivity.

Warehouse Fund Utilization Update

Management provided an update on the utilization of IPO proceeds earmarked for warehouse development, which have been unutilized. Due diligence for identified locations is underway, and the company expects to close the deal and complete the entire utilization of these funds by the end of September 2026 (Q2 FY27).

Full Year Outlook and Guidance

For the full financial year FY27, Sai Silks maintains its revenue growth guidance of 12% to 15%. While Q1 saw negative SSSG, management expects positive SSSG of at least 2% to 3% for the full year, aiming to cover inflation with a 3-4% SSSG improvement. EBITDA margins are also expected to improve through the year, supported by SSSG improvement and operating leverage from maturing new stores. Gross margins are targeted to be maintained at current levels.

Comparison with Jewellery Sector

In response to an analyst's question comparing Sai Silks' performance to the high growth seen in the jewellery sector, management clarified that jewellery benefits from investment value and metal appreciation, which is not applicable to ethnic wear. They reiterated that for ethnic wear, the primary driver of Q1's degrowth was the Adhik Maas, impacting consumer behavior for wedding-related purchases.

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