Key takeaways of the call

In Q1FY19 the company has added 3 stores taking the total count to 132 stores. Number of stores as end of corresponding previous period ended June 2018 was 112 stores. And the total store area of stores as end of June 2018 stood at about 548000 square feet (sft) up from 505000 sft with average store size now stand at 4150 sft.

The ongoing process of upgradingü stores continues with additional 5 stores have been put on the upgrade path. In total 65 stores of 132 is upgraded and have spectrum of products.

Low rentals and efficient spaceü utilizations helps us to achieve the breakeven per store faster.

Q1FY19 revenue registered a strong growth of 33% (to Rs 785.2 crore) driven by 49% growth in retail to Rs 401.9 crore, 33% growth in enterprise to Rs 254.2 crore and 1% in channel to Rs 129.2 crore. Retail segment accounts for 51% of revenue in Q1FY19 up from 46% in Q1FY18. The EBITDA margin declined to 6.2% for Q1FY19 compared to 6.6% in Q1FY18.

Of the overall sale of Rs 785.2 crore about 58.5% is from own products.

Comparable sales (Sales of stores that have completed at least 12 months of operations) growth for the retail segment stood at 29.6% for the quarter.

Sales growth of upgraded stores (opened on or before 31st March, 2017) stood at 41%.

Average ticket size of the retail stores in Q1FY19 was Rs 30336 (up from Rs 22971 in Q1FY18) and the average rental cost per month is Rs 18.6/sft up by 11.5%yoy from Rs 16.6/sft.

Steel/structural products which accounts for 80% of retail sales registered a growth of 30% in Q1FY19.

The business of two acquisitions i.e. Vaigai Sanitation in Chennai and JP Sanitation is getting stabilized with key synergy for the company being new customer base. The staffs are getting used to the enlarged product offerings to market.

Processing volume in Q1FY19 was 78500 tonnes (73000 tonnes in Q1FY18) and that is 94% capacity utilization.

Channel business – looking to do more cash business and reduce credit.

There is a gap between cash sales and credit sales in certain part of the business of the company that is impacting when credit sales is reduced. This puts pressure on margin.

Margin on own processing segment has come down.

Capex for Sankara was about Rs 30-35 crore largely for retail and warehousing in FY19. Capex on processing side is Rs 30 crore.