Event Participants
Executives
2 Karan Bajaj (CEO), Premchand Devarakonda (CFO)
Analysts
9 Aditya Bhatia (Investec), Akhil Parekh (360 ONE Capital), Ankit Kedia (Phillip Capital), Deepak Poddar (Sapphire Capital), Devanshu Bansal (Emkay Global), Harshit Sachdeva (Columbus Capital), Manoj Gori (Equirus Capital), Rupesh Tatiya (Long Equity Partners), Zaki Nasir (Nasir Investments)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹2,419 crores | +39% YoY (₹1,739 cr in Q1 FY26); strongest quarter to date driven by exceptional AC season and strong demand across core markets |
| Gross Profit | ₹417 crores | +65% YoY (₹253 cr in Q1 FY26); driven by cooling product mix and price escalation advantage in IT products |
| Gross Margin | 17.2% | +260 bps YoY (14.6% in Q1 FY26); partly seasonal mix benefit; management guides 15-15.5% for FY27 |
| EBITDA | ₹239 crores | +118% YoY (₹110 cr in Q1 FY26); highest ever quarterly profit with operating leverage |
| EBITDA Margin | 9.9% | +360 bps YoY (6.3% in Q1 FY26); management guides 7.5-8% post-Ind AS for FY27 |
| PAT | ₹121 crores | +458% YoY (₹22 cr in Q1 FY26); highest ever quarterly profit |
| SSSG | 34.2% | Reflects maturing existing stores and exceptionally strong demand in core markets |
| Working Capital | 42 days | Down from 73 days as of March 2026; driven by tight inventory management and strong business through the quarter |
| Working Capital Borrowings | ₹97 crores | Down from ₹658 crores at beginning of quarter; pre-Ind AS operating cash flows ₹631 cr, post-Ind AS ₹671 cr |
| ROCE (TTM) | 20.1% | Improving return profile with lower debt and stronger store performance |
| ROE (TTM) | 11.9% | Improvement driven by higher profitability and lower leverage |
| Matured Stores (4+ years) | 96 stores | EBITDA margin of 11.2%; 83 in Q4 FY26 |
| Non-Matured Stores (<4 years) | 131 stores | EBITDA margin of 8.1%; picking up pace faster than originally modeled |
Geographic & Segment Commentary
South Cluster: Revenue grew 40% YoY with EBITDA margin of 10.9%; Andhra Pradesh grew 62% with SSSG of 49.1%, Telangana+AP grew 48% with SSSG of 40%, and Hyderabad grew 34% with SSSG of 32.3%. Market share gains of 4-12% depending on geography, with smaller towns seeing higher gains.
North Cluster: Revenue grew 29% YoY with record EBITDA margin of 4.9% (up meaningfully from even a couple of quarters ago). Weak AC season in NCR dragged cooling product sales; market was negative for north. As stores gain vintage and scale, productivity and margins expected to trend toward south cluster benchmark.
Store Maturity Split: 96 stores are matured (4+ years) at 11.2% EBITDA margin; 131 non-matured stores delivered 8.1% margin this quarter. This represents embedded margin improvement potential as stores mature.
Product Mix: Large appliances 48% of revenue (ACs leading, with washing machines and refrigerators contributing); mobiles 39% of revenue. Non-matured store clusters (like Andhra) have higher large appliance mix at 72-73% vs company average.
Company-Specific & Strategic Commentary
West Bengal Expansion: Entry into West Bengal is next step in cluster-based expansion strategy; 5 stores operational by Diwali, 10-12 by Q4 FY27 end. Total of ~30 stores planned over next 24 months, with ~₹50 crores for buying 11 properties in Kolkata over next two years. Kolkata property acquisitions to close in Q1/Q2 next year depending on building readiness.
Working Capital Discipline: Working capital reduced sharply to 42 days (from 73 days in March 2026); working capital borrowings down from ₹658 crores to ₹97 crores during the quarter. Pre-Ind AS operating cash flows of ₹631 crores and post-Ind AS cash flows of ₹671 crores.
Store Expansion Pace: 25-30 stores planned for FY27 across existing geographies and Bengal; capex of ~₹100 crores (plus/minus ₹5-10 crores) for upcoming stores. NCR expected to add 8-10 stores; South ~5 stores. All funded through internal accruals — no inorganic or rapid expansion.
New Category Initiatives: Launched audio products, accessories (screen guards, headphones), and built-in appliances; low-value, high-volume categories contributing to bill cut growth. Company follows "pool brands" strategy — top 3-4 brands per category (8 for ACs), no private labeling.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth (FY27) | 18-20% | Management "conservative" target; Q1 benefited from weak base and strong summer; festive Q3 expected strong; Bengal to add flavor by year-end |
| Gross Margin (FY27) | 15-15.5% | Q1 margin of 17.2% not sustainable; cooling product mix and one-time price hike benefits contributed to Q1 upside |
| EBITDA Margin (FY27, post-Ind AS) | 7.5-8% | Management rejected 8-9% as "too optimistic"; embedded margin improvement from store maturity expected |
| Finance Costs (FY27) | ~₹144 crores | Approximately ₹10 crores lower than last year (₹154 crores) |
| Store Additions (FY27) | 25-30 stores | ~₹100 crores capex plus ₹50 crores for Kolkata property purchases; funded through internal accruals |
| Kolkata Store Target | 5 stores by Diwali; 10-12 by March 2027 | 30 stores total over next 24 months; expansion to Darjeeling and Siliguri next financial year |
Risks & Constraints
| Risk | Context |
|---|---|
| Margin Normalization | Q1 gross margin of 17.2% benefited from cooling product mix (seasonal) and one-time price hike advantage on IT products. Management expects normalization to 15-15.5%; EBITDA margin guidance of 7.5-8% post-Ind AS reflects this. |
| North Cluster Underperformance | NCR AC market degrew this season; north cluster margin at 4.9% lags south's 10.9%. Management views as long-term play, not quarter-to-quarter number. |
| Inventory Price Risk | New BEE rating regulations required replenishing AC inventory from January; old stock was liquidated by April-May. Chip shortages require building 50-60 days inventory for some SKUs (vs. 30-day average), increasing working capital requirements. |
| New Market Execution Risk | Bengal entry is untested for EMIL; property acquisition timeline (11 properties) depends on building readiness. Management anticipates faster payback than north based on market study. |
| Price Hikes on Volume | Drastic price increases in mobile and laptop categories (memory chips up 4-5x) could impact consumer demand; management believes premium positioning helps navigate this. |
Q&A Highlights
Revenue Guidance & Conservatism
- Question: Is the 18-20% revenue guidance too conservative given Q1 strength and expected price hikes? (Manoj Gori, Equirus)
- Answer: Growth is driven by both value and volume. Drastic price increases limited to mobile/laptops; other categories saw single-digit price hikes. Premium positioning helped capture AC demand that smaller players missed. Q4 seasonality is crucial — if summer starts early, could exceed 20%. (Karan Bajaj)
Gross Margin Sustainability
- Question: Is the 260 bps gross margin expansion sustainable? Is 15-15.5% doable for FY27? (Devanshu Bansal, Emkay)
- Answer: Q1 FY25 had a weak base; vs. that, only ~100 bps of improvement is structural. Q1 FY27 benefited from cooling product mix (higher margin) and one-time price escalation advantage on IT products. Guidance of 15-15.5% for FY27 is achievable if trend continues. (Premchand Devarakonda)
AC Inventory & Margin Outlook
- Question: How much low-cost inventory aided margins? Will gross margins normalize from Q2? (Ankit Kedia, Phillip Capital)
- Answer: Old BEE rating AC stock was liquidated by April-May; everything is fresh now. Low-cost inventory benefits are limited (100-200 laptops at old pricing). Q2 numbers should look better than last year because of cooling product category performance, but the process is an ongoing cycle without precise internal numbers available. (Karan Bajaj)
Market Share Gains & Growth Drivers
- Question: How much growth is from market share gains vs. category growth? (Aditya Bhatia, Investec)
- Answer: Both factors at play. In NCR (low base), market share gains were significant. In south markets, AC category itself grew — last year ~20,000 units in first six months, this year ~26,000-27,000 units with similar store count. Unorganized players moving out, benefiting organized players across retailers. Market share gains: 4-12% depending on geography. (Karan Bajaj with clarification)
EBITDA Margin Outlook
- Question: Is 8-9% post-Ind AS EBITDA margin fair to model for FY27? (Rupesh Tatiya, Long Equity Partners)
- Answer: 9% is too optimistic; around 8% plus, with 7.5-8% easily achievable based on current trends. Matured stores at 11.2% margin; non-matured stores improving faster than modeled. (Karan Bajaj)
Capex & Funding for Bengal
- Question: What is the capex for West Bengal and how is it funded? (Manoj Gori, Equirus)
- Answer: ~₹100 crores (plus/minus ₹5-10 crores) for 25-30 stores in FY27 across existing geographies and Bengal; additional ₹50 crores for buying ~11 properties in Kolkata over next two years. All through internal accruals with comfortable cash position. (Premchand Devarakonda)
Kolkata Store Economics
- Question: Will Bengal overtake the north market? (Zaki Nasir, Nasir Investments)
- Answer: North cluster is much bigger in value and volume. However, Bengal likely to see faster turnaround/payback than north. Bengal state is one-third the size of NCR by numbers, but payback period should be sooner. (Karan Bajaj)
Store Payback & Store Economics
- Question: What is the payback period and store economics across geographies? (Harshit Sachdeva, Columbus Capital)
- Answer: South: payback under 10-11 months, breakeven in ~1 month (30-40 days). North: payback 16-18 months, breakeven ~2.5 months. Capex ~₹2,500/sq ft; on 10,000 sq ft store = ₹2.5 crores capex + ₹2 crores inventory. Opex benchmarked under 8-9%, rentals under 3%, manpower under 1%, marketing under 1%. Target 10-12% SSG from year three onwards. (Karan Bajaj)
Capital Allocation Discipline
- Question: How do you ensure you don't squander the strong cash position after paying down debt? (Akhil Parekh, 360 ONE Capital)
- Answer: No rapid expansion — will maintain calculated pace of 25-30 stores (not 20 becoming 100). Studying other geographies; might start something in Q4 FY27 or Q1 FY28, but nothing before that. Prefer deepening existing clusters where infrastructure is set (Delhi NCR, AP/Telangana) before new markets. (Karan Bajaj with clarification from Premchand Devarakonda)
Key Takeaway
Electronics Mart India delivered its strongest quarter ever in Q1 FY27, with revenue up 39% YoY to ₹2,419 crores, EBITDA up 118% to ₹239 crores (9.9% margin), and PAT up 458% to ₹121 crores, driven by an exceptional AC season, strong volume growth (SSG 34.2%), and market share gains of 4-12% across geographies. Working capital discipline was a clear highlight, with borrowings cut from ₹658 crores to ₹97 crores during the quarter, setting the company up for internal-accrual-funded expansion. Management guides a conservative 18-20% revenue growth for FY27, with EBITDA margin of 7.5-8% (post-Ind AS) as seasonal benefits normalize, acknowledging Q1 margins were flattered by cooling product mix and price hike benefits. Strategic focus centers on West Bengal entry (5 stores by Diwali, 10-12 by March), NCR deepening (8-10 stores), and continued store maturity driving embedded margin expansion — non-matured stores already at 8.1% EBITDA margin vs. 11.2% for matured stores. Key watch points include margin normalization in H2, Bengal execution with property acquisitions, and price-sensitive demand in mobile/laptop categories amid chip-driven price increases.