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    Credo Brands Marketing Limited

    MUFTI
    Consumer Services·10 Nov 2025
    Management Summary

    Credo Brands reported a challenging Q2 and H1 FY26 with revenue declines attributed to soft demand, muted footfalls, and temporary supply chain disruptions. Despite these headwinds, gross margins improved, and digital sales saw significant growth. The company is undergoing a 'MUFTI 2.0' transformation, investing in premium stores and marketing, and anticipates a flattish revenue trajectory for the next 1.5 years before returning to growth. Working capital days increased but are expected to normalize.

    Highlights

    4

    • Gross margin for H1 FY26 improved to 59%, up 200 basis points year-on-year.

    • Sales through the company's website more than doubled year-on-year in H1 FY26.

    • EBITDA margin remained robust at 28% for H1 FY26 and 29.4% for Q2 FY26.

    • No bad debts incurred in the company's history, with receivables fully secured.

    Concerns

    5

    • H1 FY26 revenue declined to ₹284 crores from ₹310 crores in H1 FY25, a 8.39% YoY decrease.

    • Q2 FY26 revenue declined to ₹164 crores from ₹186 crores in Q2 FY25, a 11.82% YoY decrease.

    • Temporary supply chain disruption from Bangladesh impacted Q2 FY26 revenue by approximately ₹20-25 crores.

    • Working capital days increased to 217 for H1 FY26, up from usual levels of 170-180 days.

    • Profitability is expected to be lower in the forthcoming year due to increased marketing expenditures.

    What Changed1

    vs Q3 FY26

    Guidance items6 → 10 (+4)
    Key financials

    Metrics

    13

    Periods

    3

    Headline

    2
    • ROCE (Sep 2025)
      16%
    • ROE (Sep 2025)
      14.5%

    Q2 FY26

    5
    • Revenue
      ₹164 Cr
      YoY-11.8%
    • EBITDA
      ₹48 Cr
    • EBITDA Margin
      29.4%
    • PAT
      ₹19 Cr
    • PAT Margin
      11.5%

    H1 FY26

    6
    • Revenue
      ₹284 Cr
      YoY-8.4%
    • EBITDA
      ₹79 Cr
    • EBITDA Margin
      28%
    • PAT
      ₹25 Cr
    • PAT Margin
      8.9%

    Guidance & targets

    10
    CategoryTargetPriority
    Revenue Growth
    Revenue Growth
    flattish
    		High
    Revenue Growth
    Revenue Growth
    flattish like FY '25
    		High
    Revenue Growth
    Revenue Growth
    expect to see growth
    		Medium
    Revenue Growth
    Revenue Growth
    flattish
    		High
    Marketing Spend
    Marketing Spend as % of Sales
    between 6% to 7%
    		Medium
    EBITDA Margin
    EBITDA Margin
    27% to 30%
    		High
    Store Count
    New Store Openings
    more than 20 stores
    		Medium
    Store Count
    Store Closures
    about 23 stores
    		Medium
    Store Count
    Net Store Count
    store count may not go up
    		Medium
    Profitability
    Profitability
    lower
    		High

    Revenue Growth Trajectory

    After 1.5 years
    CurrentFlattish for FY26 and next 1.5 years
    TargetReturn to growth trajectory

    Why it matters

    Core to the investment thesis, as management is undertaking a transformation for future growth.

    So we hope that in the next year onwards, we are going to accelerate our investment into marketing even more... So that should come about in about 1.5 years.

    How to verify

    guidance_and_targets[category='Revenue Growth'][target_period='year after FY26']

    Risks & concerns

    4
    RiskSeverity

    Soft demand and muted footfalls

    Operationally, the first half of the year, we continued to face soft demand and muted footfalls. — Management acknowledged

    high

    Temporary supply chain disruption from Bangladesh

    The decline in revenue was largely due to a temporary supply chain disruption from Bangladesh, which delayed product availability for the quarter. — Management acknowledged

    high

    Increased working capital days

    Our working capital days stood at 217 days for H1 FY '26. This increase is purely a reflection of our business model and current market conditions and not a structural change. — Management acknowledged

    medium

    Lower profitability in the forthcoming year

    Profitability would still be lower in the forthcoming year because we will be enhancing our expenditures on marketing. — Management acknowledged

    medium

    Q&A highlights

    8

    “So Jay, we have faced muted footfalls in this season. And this is ridden on the changes that we are making and some of the stores that we are looking to close, the inefficient ones and open the new stores. And in the earlier calls, the guidance that we had given for this year is that we would remain flattish in this year because these are the changes that we intend to make.”

    Addresses the core concern about the company's performance relative to the market and provides a timeline for recovery.

    asked by Jay Laddha

    2 min read6 chapters

    Detailed Narrative

    01

    Overall Performance & Challenges

    Credo Brands faced a challenging first half of FY26, marked by soft demand, muted footfalls, and temporary supply chain disruption🌐s. Revenue for Q2 FY26 stood at ₹164 crores, a decline from ₹186 crores in Q2 FY25. Similarly, H1 FY26 revenue was ₹284 crores, down from ₹310 crores in H1 FY25, representing an 8.39% year-on-year decrease. The company anticipates a flattish revenue trajectory for FY26 and the subsequent 1.5 years before returning to growth.

    02

    MUFTI 2.0 Transformation & Strategic Investments

    The company is actively pursuing its 'MUFTI 2.0' transformation, aiming to deliver a more premium retail experience and strengthen brand storytelling. As part of this, 5 new premium flagship stores were opened in H1 FY26 in high-potential locations. Investments in advertising and digital marketing have increased, with spending expected to rise from 5% of sales in H1 FY26 to between 6% and 7% by the end of the year, to enhance brand visibility and consumer engagement.

    03

    Supply Chain & Inventory Management

    A temporary supply chain disruption🌐 originating from Bangladesh significantly impacted Q2 FY26, delaying product availability and shifting approximately ₹20-25 crores in sales to Q3. This disruption was due to geopolitical issues and logistical challenges, requiring goods to be routed through Nhava Sheva. The company also proactively refreshed its inventory ahead of the festive season, retrieving unsold stock, which further shifted some revenue out of the quarter.

    04

    Financial Highlights (Q2 & H1 FY26)

    For Q2 FY26, Credo Brands reported revenue of ₹164 crores, gross profit of ₹94 crores (57.1% GP margin), EBITDA of ₹48 crores (29.4% EBITDA margin), and PAT of ₹19 crores (11.5% PAT margin). For H1 FY26, revenue was ₹284 crores, gross profit was ₹167 crores (59% GP margin), EBITDA was ₹79 crores (28% EBITDA margin), and PAT was ₹25 crores (8.9% PAT margin). ROCE and ROE as of September 2025 were 16% and 14.5% respectively, with cash flow from operations at ₹32 crores for H1 FY26.

    05

    Growth Outlook & Store Strategy

    Management projects a flattish revenue year for FY26 and the subsequent 1.5 years, with a return to growth trajectory expected thereafter. The store strategy involves closing approximately 23 underperforming stores by year-end (13 already closed) and opening a similar number of new stores, resulting in a flattish net store count for the next couple of years. The focus is on consolidation and changing consumer perception about the brand.

    06

    Working Capital & Receivables

    Working capital days increased to 217 for H1 FY26, up from the usual 170-180 days. This increase is attributed to softer demand and the company's support for its franchisees and MBO partners. Despite the rise, management emphasized that receivables are fully secured, and the company has never incurred a bad debt. They expect working capital to revert to usual levels as sales momentum normalizes.

    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.