Sai Silks

Revenue from operations for Q3 FY26 stood at INR411.25 crores, a moderation from INR448.5 crores in Q3 FY25. This decline was primarily attributed to the shift in the festive calendar, with Dasara occurring in Q2 this year compared to Q3 last year, leading to lower footfalls and conversions. Despite this, gross margin improved by 40 basis points year-on-year to 42.2%, driven by pricing discipline and an improved product mix. Profit after tax for the quarter was INR38.4 crores, down from INR46 crores in the previous quarter.

For the nine-month period ending December 31, 2025, the company delivered robust performance, with revenue from operations growing 16.1% year-on-year to INR1,234 crores, up from INR1,063 crores in the prior year. Net profit for the same period increased by 50% year-on-year to INR108 crores, resulting in a PAT margin of 8.77%, a 200 basis point improvement from 6.7% in the previous year. This reflects improved operational leverage, better cost discipline, and enhanced operational efficiencies across the business.

The company is on track to meet its FY26 target of adding 60,000 to 65,000 square feet of retail space, having already added 54,500 sq ft across 11 new stores by 9M FY26. For FY27, the expansion plan is even more aggressive, targeting 80,000 to 85,000 sq ft. Over 50% of this expansion is expected to be in the Varamahalakshmi format, chosen for its capable format, better capital allocation, and margin profile.

Sai Silks is exploring new markets such as Maharashtra and Kerala, with initial plans to open 1-2 stores to understand consumer behavior before aggressive expansion. The expansion will primarily be driven by the Varamahalakshmi format, supported by Valli, focusing on sarees while also integrating kurtas, kurtis, and lehengas. The company maintains a strategy of not closing any stores, reflecting disciplined expansion and a total retail footprint of 7.7 lakh square feet as of December 31, 2025.

In Q3 FY26, the company consciously controlled advertisement and business promotion expenditures, shifting aggressive spending to Q2 due to the festive calendar. This strategy contributed to margin protection, with the target for advertisement and business promotion expenditure set to remain under 4-4.5%. The company confirmed that its FY27 expansion, estimated at approximately INR100 crores (including working capital), will be fully funded by internal generations, with no working capital borrowings anticipated until H2 FY28.

While 11 Valli stores have been operational for over six months, management is pausing further expansion in Q4 FY26 to build a robust operational model and enhance efficiencies. The goal is to make the Valli format attractive for a potential investor-friendly franchisee model within the next 12-15 months, ensuring it operates with similar unit economics to the Kalamandir format but with reduced capex and inventory levels. The unutilized INR22 crores from IPO funds, earmarked for two warehouses, are expected to be utilized by March 31.