Key takeaways of the call

The company during H1FY19 has added 5 stores taking the total count to 134 stores. In comparison the total number of stores in corresponding previous period stood at 118 stores. Total area of stores as end of Sep 2018 stood at 565202 sft (up 12% from 505000 sft as end of March 31, 2018) as compared to 441103 sft in H1FY2018. Average rental cost per month was up 11.1% to Rs 18.4/sft in H1FY19 up from Rs 16.6/sft in H1FY18.

Retail sale in H1FY19 was up 37.3% to Rs 745.2 crore and accounts for about 52% of total revenue. But the retail margins stand at about 10% for H1FY19 down from 10.8% in H1FY18. However EBITDA per store has increased by 12.2% to Rs 0.557 crore in H1FY19. The enterprise and channel sales in H1FY19 grew by 23% and 8% to Rs 452.6 crore and Rs 231.3 crore. Of the total sales of Rs 1429.1 crore in H1FY19, the share of owned products was about 61.1%.

Sales growth of Upgraded Stores (opened on or before 31st March, 2017) stood at 25%.

Of the retail sales in Q2FY19 about 44% is from own products. Retail segment EBIDTA margins for Q2FY19 stood at 9.7%

Floods and heavy rains, especially in Kerala & South Karnataka, have impacted performance in Q2FY19. Kerala revenues were down 40% Q-o-Q and 15% Y-o-Y. Inventory loss in Kerala was about Rs 1.83 crore.

Overall Inventory worth Rs 3.14 crore was damaged due to floods and post Sep 30, 2018 there was an auction of flood damaged floods and realization out of it was Rs 1.3 crore and balance Rs 1.83 crore was written off in Q3FY19 with claims pending with insurance companies.

Kerala sale has fallen from about Rs 94 crore in Q1FY19 to about Rs 57 crore in Q2FY19. The company had inventory of about Rs 11.5 crore in Kerala during floods and of it the damage is for the tune of Rs 3.14 crore, largely the stocks at Kochi.

Lower processing margins of 4.1% in Q2FY19 compared to 5.6% in corresponding previous period have impacted consolidated gross margins. Lower processing margin is due to increase in material cost and could not pass on the same to customers due to sluggish market conditions.

Lower credit sale has decreased the debtor days from 61 days as on Mar-18 to 47 days as on Sept-18. Overall debtors have reduced by Rs 58.8 crore from Mar-18 to Sept-18.

The company has 2-3 acquisition opportunities in pipeline and the company is evaluating it.

Of the current 134 stores about 65 stores are upgraded. Looking for addition of another 5 stores in H2FY19.

Receivables over 90 days stand at about Rs 27 crore.

Increased inventory levels in due to new product category additions across locations.

Comparable sales growth of the retails stores of the company in H1FY19 was about 18.3% and expects that growth momentum to continue in second half as well.