Concall Highlights:
- Market Challenges: Ethnic wear market facing slowdown due to factors like cyclone impact and reduced purchasing power in Andhra Pradesh, Telangana and Chennai due to water clogging.
- Store Expansion: Company added 4 new stores and plans for more, indicating growth despite market challenges. In Chennai plan is to have from 2 to 20 stores. In Karnataka only have store in Bangalore. Kerala is not discovered. Andhra and Telangana can still accommodate 20 to 25 stores. 100 stores in Southern states are possible.
- Financial Performance: Last year’s revenue was 378.6 crore with a gross margin of 39.80% and a net profit after tax (PAT) of 31.3 crore (8.28% margin).
- Customer Base: Approximately 50% of customers are repeat buyers, highlighting brand loyalty and value proposition.
- Gross Margins: Gross margins vary from 25% to over 60%, averaging 40%, reflecting a diverse product mix and pricing strategy.
- Sales Growth Target: Targeting 3-4% like-to-like sales growth, indicating a focus on improving operational performance.
- Geographic Expansion: Focus on expanding in Tamil Nadu, with plans to increase stores from 2 to 20, tapping into the lucrative silk sarees market. Additionally, potential for significant store additions in Kerala, Telangana, and Andhra Pradesh.
- Market Dynamics: Chennai market commands a 15% premium over Hyderabad, indicating potential for higher margins.
- Competition: Transitioning from unorganized to organized competition in Tamil Nadu, with 30% currently organized, suggesting opportunities for market share gains.
- Market Size: Total addressable market (TAM) estimated at 50,000 crores for Tamil Nadu, indicating significant growth potential.
- Marketing Strategy: Planning to increase marketing spend by 3-4%, suggesting a focus on brand awareness and customer acquisition.
- Same Store Growth: Slightly negative on a blended basis, indicating the need for improved performance in existing stores.
Store expansion and revenue growth to be seen in numbers. Total Address Market is huge.
Disclosure: Invested
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