Sai Silks

Sai Silks (Kalamandir) Limited reported a robust FY26, achieving a 13.1% YoY revenue growth to INR1,654 crores and a significant 65% increase in PAT to INR141 crores. The company's EBITDA margin expanded by 128 basis points to 15.76%, while its Gross Margin improved by 30 basis points to 42.07%. This strong performance was delivered despite a mixed discretionary demand environment and increased competitive intensity in the consumer services sector.

In Q4 FY26, revenue grew 5.1% YoY to INR419 crores, and PAT saw a substantial 140% increase to INR32.65 crores. Gross margins remained healthy at 42.08%. However, EBITDA margins were impacted by higher advertisement costs, with some expenditures falling into Q4, and increased employee costs. This was primarily due to the majority of new stores (50-55% of 78,000 sq ft) opening late in the quarter, between December 15 and March 15, leading to a significant addition to employee expenses.

For FY26, Sai Silks expanded its footprint by adding 13 new stores and 1 extension, bringing the total network to 81 stores across 5 states, with a net retail addition of 69,000 square feet. Looking ahead to FY27, the company plans an even more aggressive expansion, targeting approximately 100,000 square feet of net addition, representing at least 20% more than the previous year. This expansion will be led by Varamahalakshmi, Kalamandir, and Valli formats, with a broad 60-40 split between Kalamandir and Varamahalakshmi.

The Varamahalakshmi format continues to be a strong performer, contributing 52% to overall sales. While Telangana experienced slower growth, largely attributed to the KLM format (which saw a ~3% decline and has 60-65% of its stores in the region), other formats are showing growth. Andhra Pradesh grew ~15% and Karnataka ~27%, primarily driven by new store additions. Management is implementing strategies, including capacity reduction in one store, to revive the KLM format and achieve positive same-store sales growth.

For FY27, Sai Silks anticipates revenue growth to be 'much better' than FY26's 13.1% and same-store sales growth to exceed 3%. The company has set an ambitious EBITDA margin target of 17.5-18% for FY27, up from ~16% in FY26. Strategic priorities include focusing on improving walk-ins in underperforming catchments, leveraging hyper-local marketing, and refining assortment. The company also plans to enter at least one new state outside its core markets in FY27, maintaining advertisement expenditure at around 4% of revenue.

Sai Silks maintains a debt-free status, with management confirming that the company possesses sufficient internal resources to fund its planned expansion for the next 2-3 years without needing additional borrowings. The company demonstrated improved capital efficiency in FY26, with ROE increasing from 7.78% to 11.78% and ROCE from 13.7% to 16.7%. Inventory management efforts also yielded positive results, with inventory per square foot reducing from INR11,533 to INR10,480.