Skip to content

    Khadim India

    KHADIM
    Consumer Durables·16 Feb 2026
    Management Summary

    Khadim India reported a challenging Q3 and 9M FY26 with significant revenue and EBITDA declines, primarily attributed to a subdued demand environment, strategic inventory reduction, and higher employee costs. Despite the downturn, the company is focusing on premium sub-brands, athleisure expansion, and omnichannel growth, with an improved gross margin in Q3 and positive outlook for FY27 margins and profitability. Working capital management, particularly inventory and debtors, remains a key focus.

    Highlights

    5

    • Partnership with Skechers progressing positively, with sequential doubling of sales and strong consumer acceptance.

    • Athleisure portfolio witnessing steady consumer interest and selective distribution expansion.

    • Walkers delivered a healthy year-on-year growth of 9.9% in men's formal and semiformal categories.

    • Sharon maintained stable performance with refreshed designs and improved in-store merchandising.

    • Gross margin improved in Q3 compared to the first two quarters, with a target of 49-50% for FY27.

    Concerns

    8

    • Q3 FY26 revenue declined 21.8% year-on-year to INR 86.2 crores.

    • Q3 FY26 EBITDA declined 31% year-on-year to INR 11.1 crores.

    • Company registered a minor loss of INR 0.2 crores during Q3 FY26.

    • 9M FY26 revenue declined 12.5% year-on-year to INR 283.5 crores.

    • 9M FY26 EBITDA declined 24.5% year-on-year to INR 37.2 crores.

    • PAT decline in 9M FY26 primarily due to higher employee-related costs from revised Labor Code implementation.

    • Gross margins for 9M FY26 declined to 48.2% from 53.1% last year due to discounting and price cuts.

    • High institutional debtors (INR 35-36 crores) and slow payment cycles impacting working capital.

    Key financials

    Metrics

    8

    Periods

    2

    Q3 FY26

    4
    • Revenue
      ₹86.2 Cr
      YoY-21.8%
    • EBITDA
      ₹11.1 Cr
      YoY-31%
    • EBITDA Margin
      12.8%
    • Loss
      ₹0.2 Cr

    9M FY26

    4
    • Revenue
      ₹283.5 Cr
      YoY-12.5%
    • EBITDA
      ₹37.2 Cr
      YoY-24.5%
    • EBITDA Margin
      13.1%
    • Gross Margin
      48.2%

    Capital allocation

    2
    medium confidence
    CategoryHeadline
    Debt

    Net ₹110 crores

    Liquidity

    Liquidity disclosed

    Company is focusing on reducing working capital by optimizing inventory and debtors days.

    Guidance & targets

    8
    CategoryTargetPriority
    Profitability
    Gross Margin
    49-50%
    		Medium
    Profitability
    EBITDA Margin
    14-14.5%
    		Medium
    Profitability
    PAT Margin
    2-2.5%
    		Medium
    Revenue
    Top Line
    INR 350 crores
    		Medium
    Working Capital
    Inventory Days
    105-107 days
    		High
    Working Capital
    Debtors Days
    120 days
    		Medium
    Product Mix
    Premium Sub-brands Contribution
    20-25%
    		Medium
    Channel Mix
    Online Sales Contribution
    10%
    		Medium

    Inventory Days Reduction

    next quarter
    Current117 days
    Target105-107 days

    Why it matters

    Indicates effective working capital management and inventory optimization.

    Inventory, we have reduced the inventory, as I told from inventory days of 131, it has come down to 117 days now. And by next quarter, we'll be landing up around 105 to 107 days.

    How to verify

    capital_allocation.debt.net_debt

    Risks & concerns

    5
    RiskSeverity

    Subdued demand environment and pressure on discretionary spending

    Q3 FY26 marked by a relatively subdued demand environment, particularly in value-driven segments, impacting overall consumption trends. — Management acknowledged

    high

    Impact of revised Labor Code and government norms on costs

    PAT decline in 9M FY26 primarily attributed to higher employee-related costs and compliance adjustments due to new regulations. — Management acknowledged

    medium

    Franchisee margin pressure

    Franchisees are experiencing margin pressure due to reduced sales, though the company is working to improve secondary sales and cost efficiency. — Management acknowledged

    medium

    High institutional debtors and slow payment cycle

    Around INR 35-36 crores of institutional debtors are outstanding, with some being more than 6 months old, impacting working capital. — Management acknowledged

    medium

    Challenges in athleisure rollout due to store infrastructure

    Small store sizes and lack of changing rooms in many outlets hinder aggressive expansion of the athleisure segment, particularly for ladies' products. — Management acknowledged

    low

    Q&A highlights

    8

    “Around 7% to 8% decline is because of the store closure. And also here, as Rittick pointed out, the creditors days has come down from 131 days in September 2025 to 117 days. So we are -- by March end, we will again reduce the working capital with creditor and inventory days. So we have consciously done this.”

    Analyst sought a detailed breakdown of the 21.8% YoY revenue decline, which management attributed to strategic inventory reduction, store closures (7-8%), and working capital optimization efforts rather than just price/volume.

    asked by Riya Malik

    2 min read6 chapters

    Detailed Narrative

    01

    Subdued Demand and Financial Performance

    Khadim India faced a challenging Q3 FY26, with revenue from operations declining by 21.8% year-on-year to INR 86.2 crores. EBITDA for the quarter also saw a significant drop of 31% to INR 11.1 crores, resulting in a minor loss of INR 0.2 crores. For the nine months ended December 31, 2025, revenue decreased by 12.5% to INR 283.5 crores, and EBITDA fell by 24.5% to INR 37.2 crores, with the PAT decline primarily attributed to increased employee-related costs from revised Labor Code implementation.

    02

    Strategic Focus on Premium Brands and Athleisure

    Despite the overall market slowdown🌐, the company's premium sub-brands, British Walkers and Sharon, showed positive traction. Walkers achieved a 9.9% year-on-year growth in men's formal and semiformal categories, while Sharon maintained stable performance with refreshed designs. The Skechers partnership, a pilot project, saw a sequential doubling of sales, contributing INR 1.5-2 crores and expanding to 20 stores. Management aims for premium sub-brands to contribute 20-25% of total revenue in the next 3-4 years, up from the current 60% for all sub-brands.

    03

    Inventory and Working Capital Management

    A key focus for the company was disciplined inventory management, with inventory days reduced from 131 to 117 days, targeting 105-107 days by the next quarter. This strategic reduction in inventory contributed to the Q3 sales decline but is expected to improve working capital. The company is now also prioritizing the reduction of high institutional debtors, which currently stand at INR 35-36 crores, aiming to bring debtors days down to 120 days in FY27.

    04

    Omnichannel Strategy and E-commerce Growth

    Khadim India is intensifying its omnichannel presence, with online sales currently contributing 3-4% of total revenue. The company aims to increase this to 10% next year, focusing on its own websites (khadims.com, britishwalkers.com) for better margins (10% vs 1-2% on marketplaces). New product lines are being developed specifically for online channels to ensure profitable sales, and the company is streamlining its online operations through third-party logistics like Ekart.

    05

    Store Network and Expansion Plans

    As of Q3 FY26, Khadim India's retail footprint included 864 stores, comprising 195 company-owned outlets (COCO) and 669 franchise-operated outlets. The company has closed unprofitable stores in the past two years, contributing to the sales decline. Future expansion will primarily be through an asset-light franchisee model, with new COCO stores opened only in strategic, profitable locations. East and South India remain the primary regions for expansion, with West India being de-focused.

    06

    Margin Outlook and Cost Management

    Gross margins for 9M FY26 declined to 48.2% from 53.1% due to discounting and price cuts, but Q3 saw an improvement compared to earlier quarters. Management projects a steady-state gross margin of 49-50% and an EBITDA margin of 14-14.5% for FY27, driven by a higher contribution from premium products and disciplined cost management. The company also targets a PAT margin of 2-2.5% for FY27, aiming for a top line of INR 350 crores.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.