# 1. Financial Performance ## A. Key Figures * **Revenue:** **₹1,591 Cr** Q2 FY26 · **₹3,330 Cr** H1 FY26 * EBITDA: ₹82 Cr Q2 FY26 (5.1% margin) · ₹192 Cr H1 FY26 (5.8% margin) * Pre-IndAS EBITDA: **₹46 Cr** Q2 FY26 (2.9% margin) · **₹122 Cr** H1 FY26 (3.7% margin) * **PAT (incl. exceptional items):** **₹16 Cr** Q2 FY26 · **₹38 Cr** H1 FY26 * ROCE / ROE: 9.8% and 4.8% annualized for H1 FY26 ## B. Revenue & Growth * **High Double-Digit Expansion:** Business growing at strong double-digit pace, with robust momentum in Q2 despite weak summer and tough base, driven by new store ramp-up. * **Significant Scale-Up:** Revenue base has expanded substantially versus prior year, reflecting rapid scaling and market penetration. ## C. EBITDA & Margins * **Margin Pressure from Expansion:** Operating leverage currently diluted by rapid store rollout and IndAS 116 lease costs, with fixed cost absorption lagging. * **Underlying Profitability Resilient:** Pre-IndAS margins indicate core EBITDA strength at **9% in Q2**, despite reported margin compression to 1%. * **Regional Volatility:** North cluster margins declined sharply QoQ due to GST uncertainty and adverse weather, highlighting exposure to external shocks. ## D. Cash Flow & ROCE * **Healthy Cash Generation:** Pre-IndAS operating cash flow reflects solid underlying cash conversion, supporting reinvestment capacity. * **Capital Efficiency in Development Phase:** ROCE and ROE at **8%** annualized, indicating early-stage returns aligned with expansion trajectory. --- # 2. Store Expansion & Maturity ## A. Key Figures * **Total Stores:** **215** (84 mature, 131 non-mature) * **Product Sales Revenue:** ₹2,254 Cr from mature stores · ₹933 Cr from newer stores * EBITDA Margin: 6.8% from mature stores · 3% from newer stores * SSSG: 11.4% in Q2 FY26 · -4.8% in H1 FY26 * **Average Throughput (12+ months stores):** ₹27 Cr in FY25 → expected ₹29–30 Cr ## B. New Store Additions * **Strategic Divestment:** Exit of **4 IQ Apple Stores** under EBO framework to sharpen focus on core retail operations. * **Controlled Expansion:** Plans to open **30 new stores** by end-FY or early next FY, with **organic rollout across Telangana, Andhra Pradesh, NCR, and Hyderabad**. * **Cost Pressure:** New store ramp-up driving **higher fixed staffing costs**, weighing on margins before operational maturity. * **Geographic Strategy:** No immediate entry into Southern hubs like Bangalore or Chennai; expansion review to begin next quarter. ## C. Mature vs New Stores * **Divergent Margin Profile:** Mature stores deliver **materially higher EBITDA margins** than newer units, highlighting the value of store maturity. * **SSSG Rebound Expected:** Despite weak H1 performance, Q2 saw **positive same-store sales growth of 4%**, with guidance for **high single-digit SSSG** for the full year. * **Maturity Pipeline:** Majority of **131 non-mature stores expected to mature within 24 months**, paving way for margin expansion and stronger contribution. * **Throughput Normalization:** Average revenue per store depressed by rapid expansion, but **12+ month stores show rising throughput trend**, expected to reach ₹29–30 Cr. ## D. Revenue per Store * **Regional Pressure:** Andhra Pradesh and Telangana show **declining average revenue per store** due to surge in new openings, a temporary effect from denominator expansion. --- # 3. Product & Category Mix ## A. Key Figures * **Large Appliances Revenue Mix:** **38%** Q2 FY'26 · **43%** H1 FY'26 * **Mobiles Revenue Mix:** **48%** Q2 FY'26 · **44%** H1 FY'26 * **Mobiles Mix Shift:** Decreased from **51%** to **48%** (Q2 FY'26) ## B. Large Appliances * **Recovery & Premiumization:** Large appliances rebounded with strong double-digit growth in Q2, led by home entertainment, refrigerators, and washing machines, supported by rising demand for premium and new categories like dishwashers. * **Growth Runway:** Low penetration of large-screen televisions presents a structural growth opportunity, reinforcing momentum in the segment. * **Strategic Focus:** EmMbp, the core multi-brand retail platform, is being optimized to enhance scalability, operating leverage, and capital efficiency across key growth verticals. ## C. Mobiles & AI Devices * **Growth Catalysts:** Mobile segment growth outlook remains positive, driven by next-generation AI-enabled devices, tech upgrades, and enhancements boosting both ASP and volumes. * **Margin Pressure:** Despite favorable revenue mix shift toward large appliances, gross margins declined YoY in Q2, signaling cost or pricing headwinds. ## D. Air Conditioner Sales * **Recovery Expected:** Air conditioner performance remains pivotal; management expects return to growth trajectory in FY'27, even amid potential weather-related headwinds. --- # 4. Geography & Cluster Performance ## A. Key Figures * **Revenue Growth:** **15%** Hyderabad (+12% SSG) · **23%** Telangana (+16% SSG) · **20%** Andhra Pradesh (+8% SSG) * **NCR Revenue Growth:** **38%** (11% SSG) with **1% EBITDA margin** * **Northern Cluster FY26 Target:** **₹650 Cr** revenue * **Delhi NCR Current-Year Revenue Projection:** **₹630–700 Cr** (from ₹480 Cr prior-year base) ## B. Southern Cluster Performance * **Broad-Based Recovery:** Strong double-digit revenue growth and positive SSG across all core Southern markets, signaling sustained demand recovery. * **Margin Resilience:** Maintained healthy ~6% EBITDA margin despite aggressive expansion of **60 new stores** in Andhra Pradesh and Telangana over two years. * **Market Leadership:** Firm holds #1 position in Hyderabad and Telangana up-country, #2 in Andhra Pradesh, with stable share despite competitive pressure in Hyderabad. ## C. Northern & NCR Cluster Outlook * **NCR Scaling Momentum:** Robust revenue growth and improving operating leverage, with confidence in achieving **₹30+ Cr per store** this year and **₹65 Cr+** aspirational throughput in 3–5 years. * **Festival-Driven Upside:** Optimism around achieving **at least ₹650 Cr** in NCR during festival season, though Q4 growth will be seasonally muted post-April. * **Next-Year Growth Pipeline:** Delhi NCR projected to grow **at least 25% YoY** driven by new stores and maturation of existing network. --- # 5. Inventory & Supply Chain ## A. Key Figures * **AC Inventory:** **₹200+ Cr** (high levels) · **₹100–110 Cr** excess (incl. displays) * **Total Inventory:** **₹1,200 Cr** (+₹100 Cr YoY) * **Working Capital Days:** **76 days** (as of 30-Sep-26) ## B. AC Inventory Buildup * **Elevated Cooling Stock:** High AC inventory persists due to weak summer demand, lack of GST-driven traction, and adverse off-season weather. * **Insurance Recovery:** Full claim amount received for **₹8 Cr** fire-related inventory loss, mitigating cash flow impact. * **Excess Beyond Core Stock:** Additional ₹100–110 Cr reflects non-saleable display units (~15,000 units across 215 stores) and operational buffers. ## C. Liquidation Strategy * **Clearance Timeline:** Targeting full liquidation of surplus AC stock during upcoming summer, starting **second week of February**, with confidence in pre-year-end resolution if season starts early. ## D. Working Capital & Category Trends * **Stable Efficiency:** Working capital days held at **76 days** despite elevated inventory, supported by strong turnover in TVs and mobiles. * **No Broad Overhang:** Excess stock confined to air conditioners; other categories show balanced inventory-revenue alignment. --- # 6. Demand & Seasonal Risks ## A. Key Figures * **Growth Target:** **14%–15%** annual growth requiring **INR 100–150 Cr** incremental AC sell-out in March * **Cluster Growth:** **>25%** growth in Northern cluster in H2 ## B. Summer Weather Impact * **Weather-Dependent Recovery:** AC sell-out weakened in H1 due to poor summer conditions, though Q4 demand is expected to rebound seasonally. * **Growth Sensitivity:** Full-year growth hinges on early summer onset and **strong March cooling demand**, with management highlighting narrow timing risks. * **Margin Exposure:** EBITDA margins remain materially exposed to summer performance, though no quantified downside was provided. ## C. Festive Season Demand * **Selective Strength:** Festive sales drove robust category performance outside ACs, supporting **strong H2 cluster growth**, but air conditioners saw insufficient demand despite inventory buildup. * **Inventory & Timing:** Post-festival inventory now below historical averages except for ACs; extended non-festive period (60 days) may pressure near-term turnover. * **Promotional Pressure:** Pre-festive discounts were necessary to sustain store traffic, **marginally compressing gross margins**, with relief expected post-GST benefits. * **Expansion Leverage:** Newly opened stores and festive momentum are expected to drive second-half performance acceleration. ## D. GST Rate Volatility * **Demand Disruption & Recovery:** GST-related uncertainty in September caused temporary demand deferral, particularly in large appliances, followed by **strong rebound post-rate cut**. * **Macro Tailwinds:** Lower GST rates, reduced interest rates, and tax reforms are seen as durable drivers of **higher disposable income and consumption growth**. --- # 7. Guidance & Outlook ## A. Key Figures * **Revenue Growth Guidance:** **Low double-digit** full-year expectation (revised from ~15%) · **20%–25%** Q2 implied growth * **EBITDA Margin Guidance:** **~6%** expected for current year · **3%–4%** targeted for North cluster by FY26 · **30–50 bps** potential upside if early summer * **Capex & Stores:** **₹25–30 Cr** over next 6 months for ~30 stores · **₹75 Cr** planned for **30 new stores** in FY26 ## B. Revenue Growth Forecast * **Downgraded Full-Year Outlook:** Revised to low double-digit growth after first-half miss, with H2 recovery supported by strong festive demand and **20%–25% implied growth in Q2**. * **H2 Inflection Expected:** Rebound trajectory hinges on seasonal strength and improving execution, signaling recovery momentum. ## C. Margin Expectations * **Path to Margin Recovery:** Gradual improvement expected as new stores ramp and under-penetrated categories drive scale, leading to **progressive margin normalization**. * **Near-Term Profitability Uptick:** Q3 margins anticipated to improve sequentially, reinforcing confidence in **sustained profitable growth** despite H1 headwinds. * **Incentive Discipline Maintained:** No risk to margin from incentive outflows, as schemes were upfront and not contingent on sell-out targets. ## D. Capex & Store Plans * **Accelerated Expansion:** Capex of **₹75 Cr** allocated for **30 new stores in FY26**, with **₹25–30 Cr** already committed over the next six months. * **Scalable Store Model:** Pipeline of ~30 stores reflects confidence in unit economics and long-term network buildout.