Khadim India

Khadim India reported Q4 FY25 revenue of ₹149.1 crores, marking a 3.8% year-on-year increase, driven by volume growth and better cost control. The gross margin for the quarter improved by 62 basis points to 46.9%. For the full fiscal year 2025, revenue increased by 1.4% to ₹623.7 crores, with the gross profit margin expanding by 130 basis points to 46.7%. Despite these improvements, Q4 FY25 Profit After Tax (PAT) declined by 10.1% year-on-year to ₹0.92 crores, reflecting a challenging macroeconomic environment and muted consumer demand.

A significant milestone was the successful completion of the demerger process, transferring the distribution business into KSR Footwear Ltd., effective May 1, 2025. This strategic move aims to enable a sharper focus on both the retail and distribution segments, with KSR Footwear targeting breakeven in FY26 and profitability in FY27. The retail business will continue to drive performance through value-focused pricing under the Khadim brand and premiumization of sub-brands.

The company plans to open approximately 50 new retail stores in FY26, including 7-8 company-owned (COCO) and the remainder as franchisee stores, primarily in Eastern, Northeastern, and Southern India. As of FY25, the retail network stood at 886 stores. Khadim is also launching a new athleisure segment in the upcoming spring/summer season, which will expand to 50-75 stores and eventually all company-owned stores by the end of the year, aiming to increase value sales without significant fixed cost increases.

While gross margins for the retail segment are anticipated to be slightly lower in the first two quarters of FY26 due to strategic MRP reductions in the Khadim brand, management expects margins to 'bottom out' during FY26. The primary objective of these price adjustments is to stimulate volume growth, which saw its degrowth arrested in FY25. The company is optimistic for overall volume growth and Same Store Growth (SSG) in the coming quarters, supported by new product introductions and store renovations.

Khadim India has implemented cost efficiency measures, including shifting e-commerce warehouse operations to Ekart Logistics, which is expected to reduce costs by 20% by converting fixed overheads to variable costs. The company is also upgrading its warehouse management system to Microsoft D365 WMS for improved stock management. The retail business currently carries approximately ₹100 crores in debt, which management plans to reduce based on cash flow generation and profitability.

The company is actively pursuing the recovery of approximately ₹32 crores from the Punjab Government, with the matter currently before the High Court and expected to be realized within the current financial year. All dues from the UP Government have already been received. For the retail operations, the effective tax rate is projected to be 25.2% for FY26 and FY27, as past losses from FY20 and FY21 have been fully adjusted.