Vaibhav Global

Vaibhav Global reported Q4 FY25 revenue of ₹850 crores, a 7.7% year-over-year increase. For the full fiscal year, revenue grew 11.1% to ₹3,380 crores from ₹3,041 crores in FY24. Gross margins remained strong at 62.1% for Q4 and 63.1% for the full year. Profit after tax saw significant growth, up 62% YoY to ₹34 crores in Q4 and 21% YoY to ₹153 crores for the full year.

The digital business now accounts for 41% of total sales, demonstrating strong growth of 15% year-over-year in Q4. The company is on track to achieve a 50% sales mix from digital businesses by FY '27, driven by strategic investments in omni-channel capabilities. Management noted that while initial digital purchases are not immediately profitable, customers become profitable within 90-180 days, with efforts to shorten this timeframe.

In Q4, the US market grew 1% in local currency, while the UK saw 2% growth. Germany stood out with 18.7% growth and achieved EBITDA breakeven in Q4, a faster turnaround than previous market entries. Both Ideal World and Mindful Souls acquisitions are performing well, with Ideal World showing over 40% growth in Q4 and Mindful Souls delivering a 7% PBT margin. Germany is expected to achieve positive EBITDA in FY26, and Ideal World an EBITDA margin of around 1%.

For FY '26, Vaibhav Global expects revenue growth in the range of 8% to 12%, with mid-teens growth projected for subsequent periods. Gross margin guidance for FY '26 is maintained at 62% to 63%. The company anticipates operating leverage from optimized HR and SG&A costs, partly due to AI implementation and talent initiatives. Content broadcasting costs are expected to be 18-19% of business in FY26, with digital marketing being a key area of investment.

The company's TV network reached 127 million households in Q4, and its unique customer base grew 21% YoY to 710,000. New customer acquisition stood at 410,000 in Q4, with a retention rate of 44%. Vaibhav Global also highlighted its commitment to sustainability, achieving an ESG rating of 72 from ICRA and generating 1.1 million kWh of solar energy in Q4, covering 100% of manufacturing unit power needs. The target is to achieve carbon neutrality by 2031.

Management acknowledged ongoing macroeconomic uncertainties and weak consumer sentiment, particularly in the US and UK, which influenced the revised FY26 revenue guidance. The company proactively shipped advance inventory to the US in anticipation of tariff disruptions, holding 3-4 months of stock. While hopeful for an India-US trade agreement, management stated that VGL is well-positioned to compete due to its vertically integrated model, even without a favorable treaty.

Receivables of approximately ₹300 crores are primarily attributed to the 'Budget Pay' EMI option, which constitutes 39% of total B2C sales and has an outstanding period of 30-33 days. The company manages this risk with robust internal procedures, maintaining bad debts at a consistent 1-1.5% of budget pay sales. This financing option is a key driver of retail revenue, allowing customers to purchase in installments.