Concall AI

Khadim India Limited — Q2 FY26 earnings call

Call held 11 Nov 2025

Management summary

Khadim India reported mixed demand trends in Q2 FY26, with revenue from operations at ₹101.6 crores and an EBITDA margin of 13.6%. While premium brands like British Walkers and Sharon showed double-digit growth, overall sales were impacted by cautious consumer sentiment and store closures. The recent GST cut for footwear under ₹2,500 is expected to drive demand and improve gross margins in the coming quarters, despite current challenges with high inventory and receivables.

Highlights

Revenue from operations for Q2 FY26 was ₹101.6 crores (INR 1,016 million).
EBITDA margin for Q2 FY26 stood at 13.6% (INR 137.9 million).
British Walkers and Sharon sub-brands are growing in double digits, indicating strong performance in premium segments.
Successful implementation of GST across the network, with benefits passed to consumers.
Partnership with Skechers is progressing well, expanding reach into premium and lifestyle footwear.

Concerns

Q2 FY26 PAT margin was low at 1.7% (INR 16.8 million).
H1 FY26 PAT margin was 1.3% (INR 25.4 million).
Q2 sales for COCO and franchisee stores were down YoY (₹101 crores this year vs ₹109 crores last year).
Gross margins did not improve QoQ due to discounts in July and August.
High inventory and receivables, with combined inventory plus receivables at ~₹340 crores.

Key financials

3 periods

Headline

Retail Footprint
893 stores

Q2 FY26

Revenue
₹101.6 Cr
Gross Profit
₹47.87 Cr
Gross Margin
47.1%
EBITDA
₹13.79 Cr
EBITDA Margin
13.6%
PAT
₹1.68 Cr
PAT Margin
1.7%

H1 FY26

Revenue
₹197.3 Cr
Gross Profit
₹93.5 Cr
Gross Margin
47.4%
EBITDA
₹26.12 Cr
EBITDA Margin
13.2%
PAT
₹2.54 Cr
PAT Margin
1.3%

What they filed

Q1 FY27: revenue down 18.7%, net profit down 38.8% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	161	110	94	96	102 −37%	86 −22%	84 −11%	78 −19%
Expenses	141	94	78	83	88	75	72	70
EBITDA	19	16	16	12	14 −29%	11 −31%	12 −25%	8 −37%
Margin	12%	15%	17%	13%	14%	13%	14%	10%
Other income	2	-1	-2	3	2	2	3	6
Interest	8	6	6	7	7	6	6	6
Depreciation	10	7	7	7	7	7	7	7
Profit before tax	3	2	2	1	2 −30%	-0 −110%	1 −5%	1 −52%
Tax rate	27%	37%	39%	42%	26%	-5%	48%	27%
Net profit	2	1	1	1	2 −28%	-0 −116%	1 −18%	1 −39%
EPS	1.27	0.63	0.50	0.46	0.91	-0.10	0.41	0.28

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

Debt Gross ₹120 Cr

Debt is around INR120 crores. No, actually we'll close nearly less than INR115 crores like last year.

Guidance & targets

Margin

Gross Margin Margin · Q3 FY26 and Q4 FY26 · Medium confidence 50-51%

Yes. Because the GST was implemented in the last 9, 10 days of this quarter. So this year -- this quarter, we'll have the full quarter of the GST thing. Yes, we expect a margin improvement from the first and second quarter in third quarter.

— Indrajit Chaudhuri

Volume

Footfall Growth Volume · November 15 - December 15, 2025 (marriage season) and winter season · Medium confidence Growth

we expect the footfall to grow in this month from 15th November to 15th December. And after that, there is a winter season coming up. And there also, we expect a good footfall.

— Indrajit Chaudhuri
Footfall Growth (Lower Category Market) Volume · Near term · Medium confidence Rise

Now we expect that footfall will rise in the lower category market.

— Indrajit Chaudhuri

Revenue

Revenue Growth (post GST cut) Revenue · Medium term · Medium confidence 7-8%

we expect that whatever growth we were used to do when the GST was 5%, that I have told you.

— Indrajit Chaudhuri
British Walkers Growth Revenue · Ongoing · High confidence Double-digit volume growth

We are really hopeful with our British Walker brand. And we have seen double-digit volume growth in British Walkers in -- if we compare against last year, this brand.

— Rittick Roy Burman
Sharon Growth Revenue · Ongoing · High confidence Double-digit ranges

And our Sharon, which is a premium ladies open footwear brand, that is also growing in double-digit ranges.

— Rittick Roy Burman

Market Share

Market Share (below INR 500 price range) Market Share · Ongoing · High confidence Regainment

we saw a good amount of what you call that market share regainment in the below INR500 price range of products. We saw a decent amount of growth in that. I would say double-digit growth below INR 500, okay?

— Rittick Roy Burman

Profitability

Distribution Business Profitability Profitability · Next financial year · Medium confidence Profitable

So this year, we are expecting from the next financial year, the distribution business will also be a profitable business.

— Indrajit Chaudhuri

What to watch in Q3 FY26

KSR Footwear Limited Listing

Next quarter (within November 2025)

Current Pending, expected early next week

Target Listed on exchanges

Why it matters

Successful listing of the demerged entity is crucial for unlocking value and strategic focus.

It is very near to listing, maybe early next week, it will be listed. We are very close to the listing thing.

Risks & concerns

Mixed demand trends and cautious consumer sentiment
medium

Consumer sentiment remained cautious in certain regions due to persistent inflationary pressures, leading to mixed demand trends.

Management acknowledged
Volume degrowth in past years
medium

The company has experienced volume degrowth in previous years, which they are now trying to arrest with new strategies.

Management acknowledged
Impact of store closures on sales
medium

Closure of approximately 30 loss-making COCO stores impacted Q2 sales, contributing to the YoY decline.

Management acknowledged
High inventory and receivables
medium

The company has a long inventory and receivable cycle, with combined inventory and receivables at ~₹340 crores, impacting working capital.

Analyst acknowledged

Q&A highlights

6 direct

Delay in KSR Footwear Limited listing Direct

No, firstly, the delay in the last con call, I have already told that there was a shift of this authorized capital from Khadim India to KSR. So that took time from the ROC and also from the Ministry of Corporate Affairs. So that took around 2 to 3 months' time for that transfer. Otherwise, there was an expenditure in relation to the increase of authorized capital in KSR. And after that, then it took time from the NSE and BSE coming up with some queries. So hope all the queries has been met. And we have also published in the newspaper. Early next week, we will be able to get the listing done in both the stock exchanges.

Explains the specific reasons for the significant delay in the demerger and listing of KSR Footwear, providing a clear timeline for resolution.

Asked by Deepan S. Narayanan

Gross margin improvement post-GST cut Partial

Mainly, we have given discount in July, August also. In September, we have pulled out the discount in the Eastern region. But in other regions, the discount continued because of the low muted demand. So that's why the margin remains same. But in the third quarter, it will definitely improve.

Clarifies why gross margins did not improve QoQ despite the GST cut, attributing it to continued discounting in other regions and the late implementation of GST in Q2, while promising improvement in Q3.

Asked by Arnav Sakhuja

Footfall trends after GST cut Partial

Till now, I mean, during the Puja time, there was footfall. But after Puja in the Eastern part of the country, we have not seen the better footfall in the Diwali times and all here. But however, during this -- this month is the season of marriage, we expect the footfall to grow in this month from 15th November to 15th December. And after that, there is a winter season coming up. And there also, we expect a good footfall.

Provides an update on immediate post-GST footfall trends, indicating mixed results but expressing optimism for upcoming seasonal demand (marriage and winter).

Asked by Arnav Sakhuja

Performance of COCO and franchisee stores in Q2 Direct

Q2, more or less the sale if compared to last year, the sales has come down. both in COCO and franchisee. So last year second quarter, we have done around INR109 crores compared to INR101 crores this year. So there is a challenge. There was also store closure during this last year, around 30 COCO, the loss-making COCOS has been closed. So that has also impacted the lower sales in this quarter. But if you compare the Puja to Puja, we are almost at par with our last year Puja sales.

Quantifies the YoY decline in sales for both COCO and franchisee channels in Q2 and attributes it partly to the closure of loss-making COCO stores.

Asked by Deepan S. Narayanan

High inventory and receivables cycle Direct

See in the debtors, we have also our institutional debtors of around INR32 crores to INR35 crores, so which is in -- there is no sale of institute because we have stopped sale. So that debtors is included here, which is not a part of the sale compared to you. And also, definitely, the stock level and debtors level is high because as you have seen in the first 2 quarters, we have reduced the stock by giving discount and flushing out the obsolete stock. Now the stock level has come down. ... This is 90 days stock, 90 days debtors and 90 days creditors. So overall, my working capital cycle is 90 days.

Acknowledges the high working capital cycle and explains the components (institutional debtors, obsolete stock) while outlining the target for a 90-day cycle.

Asked by Devanshu Bansal

Growth trends and competitive landscape post-GST cut Direct

Definitely, with the GST coming to 5% and till INR2,500, we expect that there will be demand coming back because in a lot of sectors, the demand was muted. So hopefully, means once this quarter pass, we'll have a clear picture on the demand thing. And also in regard to your we have also -- from the last year, we are trying to reduce the prices to make our product competitive in the market. ... Yes, now since the GST is 5%, so there will be definitely the bridge between the unorganized and organized will be lower, and we can see better demand in both the -- in retail market and also in the distribution market.

Management confirms the expectation of demand recovery and a shift from unorganized to organized players due to the GST cut, which will improve competitiveness.

Asked by Devanshu Bansal

Strategy for premium product line (British Walkers) Direct

We are really hopeful with our British Walker brand. And we have seen double-digit volume growth in British Walkers in -- if we compare against last year, this brand. And British Walker is a brand where you get shoes starting from INR2,000 to it goes up to even INR6,000, INR7,000 now. So previously, we were more populative in INR2,000 to, say, INR4,000 range not even INR4,000, you can say INR2,000 to INR2,999 range. ... We want to build this brand by creating zones within our stores itself so that it gets a separate sort of a highlight.

Highlights the success and strategic focus on the British Walkers brand, including its double-digit growth, expansion into higher price points, and plans for dedicated in-store visibility.

Asked by Nachiket Kale

Distribution business performance and profitability Direct

With distribution business, where we have taken some strict calls regarding to working capital on this -- and we are really able to do good in that sense. Distribution business has clocked a turnover of around INR100 crores. So this year, we are expecting from the next financial year, the distribution business will also be a profitable business.

Provides current turnover figures for the distribution business and sets a clear target for profitability from the next financial year, indicating improved operational focus.

Asked by Ankit Shah

3 min read 6 chapters

Detailed narrative

Q2 and H1 FY26 Financial Performance

Khadim India reported Q2 FY26 revenue from operations at ₹101.6 crores (INR 1,016 million), with a gross profit of ₹47.87 crores (INR 478.7 million) and a gross margin of 47.1%. EBITDA for the quarter was ₹13.79 crores (INR 137.9 million), reflecting a 13.6% margin, while PAT stood at ₹1.68 crores (INR 16.8 million) with a 1.7% margin. For the first half of FY26, revenue was ₹197.3 crores (INR 1,973 million), gross profit was ₹93.5 crores (INR 935 million) at a 47.4% margin, EBITDA was ₹26.12 crores (INR 261.2 million) at 13.2%, and PAT was ₹2.54 crores (INR 25.4 million) at 1.3%.

Impact of GST Reduction and Demand Outlook

The recent implementation of the GST cut for footwear under ₹2,500 is expected to significantly boost demand, especially in the lower and mid-category markets. Management anticipates a margin improvement in Q3 FY26, targeting 50-51%, as the full effect of GST and reduced discounting takes hold. Footfalls are expected to grow during the marriage season (November 15 - December 15) and the subsequent winter season, with a projected demand growth of 7-8% in the medium term, similar to pre-COVID levels.

Brand Performance and Product Strategy

The company's sub-brands, British Walkers and Sharon, demonstrated strong performance with double-digit volume growth. British Walkers is expanding its range to higher price points (₹2,000-₹7,000) with new designs, including handcrafted leather shoes and wide-fit options. Sharon is also focusing on premium comfort and lightweight EVA soles, with plans to increase its design lines from 50-60 to a higher number. The Athleisure range, launched last quarter, is gaining traction and is being scaled up.

Retail and E-commerce Channel Strategy

Khadim India's retail footprint stands at 893 stores, comprising 210 company-owned outlets and 683 franchise-operated outlets. The company is strategically closing loss-making COCO stores, with approximately 30 such closures impacting Q2 sales. E-commerce sales are performing decently, contributing around 4% in Q2, and the company has partnered with an agency to enhance its online operations. The focus is on building a balanced and scalable retail network while deepening brand relevance.

Working Capital Management

The company is addressing its high inventory and receivables, which combined are approximately ₹340 crores. Institutional debtors account for ₹32-35 crores. Management is actively working to reduce stock through discounts and flushing out obsolete inventory, and to improve collections from franchisees. The target is to achieve a working capital cycle of 90 days, comprising 90 days of stock, 90 days of debtors, and 90 days of creditors.

KSR Footwear Demerger and Listing Update

The listing of KSR Footwear Limited, the company's distribution subsidiary, is expected to occur early next week. The delay was attributed to the transfer of authorized capital from Khadim India to KSR, which required approvals from the ROC and Ministry of Corporate Affairs, taking 2-3 months. Subsequent queries from NSE and BSE also contributed to the timeline. The distribution business clocked a turnover of approximately ₹100 crores in H1 FY26 and is expected to become profitable from the next financial year.

This is an AI-generated summary of a publicly available earnings call transcript.

View original transcript