14% revenue growth masks 3.7% PAT growth; margin pressure persists

Delivered ₹3,398.5 Cr, 14.0% YoY growth confirmed

Delivered statutory PAT ₹157.9 Cr, only 3.7% growth — ₹14.1 Cr gap

Net profit margin 4.6% — margin compression vs prior 5.4%

Not independently verified in delivered result, but internal consistency claimed

18-20% revenue from lower price points, pricing selective on premium tiers

26 stores Q2 (15 South, 5 North), 53 H1. Prior Q1 (27 stores) matched. Clear momentum on execution vs prior call's plan.

Q2 pilot store; trading area 1.41 Cr sq ft. Targets young, affluent metro customers. Merchandise conversion 50%+ into store. Learning phase; no scale guidance.

781 stores across 532 cities, 1.5 Cr registered users. Prior call (no detail on QC). Channel now material.

Gross margin 28.7% sustained. Prior call: no specific guidance. Q2 NPM 4.6% vs 5.4% prior shows pressure. Full-year margin expansion via EBITDA leverage not yet visible.

Actual SSSG 5.4% (9% adjusted). Q3 will have higher growth due to shifted festivals. Goal to achieve double-digit for full year; depends on Q3 and Q4 performance.

18 small format stores now (2 added Q2, in UP and Haryana). Still learning. Will clarify guidance only once opportunity is validated. 3,000 large format universe nationally much bigger priority.

No price increases at opening price points (most vulnerable customers). Mid-price very few increases. Higher price points absorbing inflation. 75% revenue from own brands gives pricing power; will only tinker premiums post-festive.

No significant renegotiations. New stores opened in Tier 2/3 cities showing rental growth. Inventory: no material change except festival shift impact (3-week shift Q2 to Q3).

No further margin decline expected. Gross margin supported by cost re-engineering. Apparel mix shift (20 bps down from Q2) temporary. Belong & Co. feedback very positive; customers loving merchandise, repeat purchase intent 50%+.

Target 100+ stores every year, beating prior year count each time. On margins, EBITDA leverage possible as growth outpaces cost inflation (6-7% expected). Operating leverage reinvested into product quality, not immediately visible in OPM but supports growth.

26 store breakdown: 15 South (Kerala 6+, others), 5 North (UP, Haryana, Himachal), balance East/West. South priority but will expand into states like Maharashtra, Gujarat faster. New cities disproportionately focused, but all-India strength maintained quarterly.

Deliberate decision. Kerala doubled stores due to geography (non-aggregated large state) but downsized each store. Gujarat/Maharashtra small pilot (newer markets) opened smaller stores. Large format stores (18,000 sq ft) remain primary. Strategy fits catchment; not density saturation.

Minimum wage increase in Q1 (no further increase Q2). New store openings drive employee cost growth. Identified levers (productivity, scheduling) being deployed. Expect 8-10% SSSG to offset this. Q2 impacted by new store startup; margin normalization later in year.

18-20% revenue from lower price points (no hikes). 50% from mid-price points (very few hikes). 24-25% from premium (hikes taken selectively). Committed to protecting opening price points. Stable pricing environment with no further tinkering if inflation peaks.

H1 achieved 16.4% growth; Q2 14%, so full-year double-digit likely. But no FY27 end-number stated; inherently low specificity.

Achieved this quarter via pricing (lower tiers protected, mid/premium absorbed inflation). Willing to take further price hikes if inflation persists.

Growth expected double-digit, cost inflation 6-7%. Leverage math implies 30 bps EBITDA improvement annually if maintained. Q2 showed compression, so execution risk evident.

Q2 showed 3.7% PAT growth vs 14% revenue growth. Gap attributed to festival shift. Full-year profit growth expected to improve H2 (festive payout shift).

Q2: 26 stores, H1: 53 stores; run rate on track. Commissioned fully automated warehouse North India. Quick-commerce expansion underway. Belong & Co. learning phase.

Pilot ongoing Delhi NCR. East India next, then South, finally West. No scale date given; capability-building in progress.

Employee costs +25% YoY; store count +14%; SSSG only +5.4% (9% adjusted). PAT growth 3.7% vs revenue 14% signals inability to leverage scale. Q2 NPM 4.6% vs prior 5.4% shows compression trend.

SSSG fell from 7.7% H1 to 5.4% Q2 (9% adjusted for festival shift). Suggests underlying momentum slowing. Management cited no demand moderation but attributed growth to market share; if share gains plateau, SSSG will deteriorate further.

Belong & Co. apparel pilot Q2; 1 store, very early stage. Quick commerce 781 stores but unproven path to profitability. If learnings negative or scale slower than expected, capital deployment becomes non-productive.

Crude oil at ₹100 ('as mentioned on call'); wages, rent, logistics all elevated. Pricing strategy protects opening price tier but relies on premium tier absorption. If consumer demand softens (macro slowdown), price increases at premium may not stick.

Q2 impacted by Puja/Dussehra/Navratri moving from September to October. Inventory buildup Q2, paydown Q3, resulting in 39% QoQ PAT decline. Recurring seasonal timing risk.