Womancart Q1 FY27 earnings call

Womancart Ltd reported a robust Q1 FY27, with revenue from operations reaching INR32.56 crores, marking a 52.1% year-on-year growth. EBITDA for the quarter stood at INR6.47 crores, growing 32.9%, while PAT saw a significant 75.7% increase year-on-year to INR3.7 crores. The company's PAT margin improved to 11.5%, reflecting enhanced earnings conversion and operating leverage, despite a sequential revenue degrowth compared to Q4 FY26 due to seasonal factors.

The company's strategy revolves around product and category expansion, currently boasting 31,350 SKUs across high-demand categories. A key strategic development is the growing contribution of own brands, which now account for 51% of the business. This focus provides greater control over pricing, inventory, and customer experience, while also offering the potential for stronger unit economics and margin improvement as the business scales.

Womancart has introduced a technology-led 2-hour quick delivery platform, currently operational in Delhi NCR and Jaipur. This platform offers customers real-time order visibility and delivery tracking, aiming to improve fulfillment efficiency and transparency. Additionally, a 'try and buy at home' proposition is available in Delhi NCR, allowing customers to evaluate products before purchase, addressing a key challenge in online fashion and lifestyle shopping.

The company strategically focuses its marketplace presence on in-house brands like Kattly, Heeley, and Blluex, which offer better revenue and pricing control. Management noted that the recent shift to 0% commission on marketplaces for low-value products has been favorable for their in-house brands, allowing for increased spending and a drastic rise in orders. Womancart also has a presence on Meesho and is onboarding international brands like CeraVe and The Face Shop, alongside collaborations with Just Organik.

Womancart's business exhibits seasonal patterns, with Q1 and Q2 typically being slower, while Q3 and Q4 benefit from festival and wedding seasons, leading to higher consumer spending. Management explained that Q1's sequential degrowth was partly due to this seasonality and a strategic pricing policy where they absorbed increased costs in Q4 FY26 to acquire customers, then implemented a reasonable price increase in Q1 FY27 which customers accepted.

Analysts raised concerns about the business model's high working capital needs, high inventory days, and receivables, and the business not generating sufficient cash. Management acknowledged these challenges, stating that inventory days would improve as brand rotation increases and that banks are supporting them. The company has no plans to raise funds this year, citing sufficient internal funds for expansion and a desire to avoid promoter share dilution, with any potential fundraising to be considered after December.

Womancart aims to reach 10,000 orders per day in the current year and plans to progressively expand its quick delivery proposition to additional cities. For FY27 and FY28, management anticipates a top-line and PAT growth of 20-25%, with potential for up to 50% growth if customer confidence continues to build. The company also confirmed that the tax rate for the year is expected to remain consistent with Q1 levels.