Credo Brands Marketing Limited

Credo Brands reported a robust Q4 FY25 with revenue growing 15% YoY to ₹153 crores and EBITDA increasing 33% YoY to ₹41 crores, achieving an EBITDA margin of 26.8%. For the full fiscal year 2025, revenue grew 9% to ₹618.2 crores, and EBITDA increased 12% to ₹179.7 crores, with a full-year EBITDA margin of 29.1%. PAT for FY25 stood at ₹68.4 crores, marking a 15% YoY growth, while Q4 PAT surged 96% to ₹13.8 crores.

The company successfully reduced its inventory days to 67 days as of March 31, 2025, a 10-day reduction from the previous year. Management highlighted its unique merchandise life cycle, where unsold stock is efficiently cleared through online channels and factory outlets, ensuring profitability even from previously unsold items. This disciplined approach contributed to a strong operating cash flow of ₹165.9 crores for the year, with ROCE at 18.9% and ROE at 18.2%.

Management acknowledged challenging market conditions in FY24 and FY25, characterized by subdued consumer demand due to rising interest rates and inflation. Despite this, the company remains confident in its ability to navigate these cycles, aspiring for mid-teens revenue growth in FY26. However, this growth will be pursued cautiously and profitably, with a focus on sustainable expansion rather than aggressive, unprofitable growth.

Credo Brands is actively working on strengthening its digital footprint and premiumizing its brand identity. The company's own website has more than doubled its turnover in FY25. Plans include upgrading several flagship stores to reflect a premium positioning, with an estimated 30 stores to be renovated in FY26. Brand-building investment is projected to remain around 5% of revenues for FY26, aiming to establish Mufti as a leading premium apparel brand.

In FY25, Credo Brands opened 16 new stores on a net basis, bringing the total count to 441 stores across 247 cities. For FY26, the company plans to open 20 to 25 new stores and renovate approximately 30 existing stores. The estimated capex for FY26 is between ₹12 crores to ₹15 crores, which will be funded entirely through internal cash flows, maintaining an asset-light business model.

The company expects to maintain its annualized gross margins in the range of 56% to 58%. For EBITDA, management guided for a sustainable range of 28% to 30% for FY26. This confidence stems from effective cost control measures and the ability to liquidate inventory profitably, even during muted market conditions, ensuring steady profitability.