Revenue growth solid, but EBITDA margin shortfall masks headwinds

Revenue from operations ₹445.7 Cr (+14.4% YoY); other income ~₹22 Cr includes ~₹6–7 Cr mark-to-market gains on investments

EBITDA margin 8.6% vs 14% guidance (150 bps retail drag expected = 12.5% floor); actual miss is 380 bps, suggesting core margins also under pressure

49 stores now (30 ZECODE + 19 DEVO). Q1 retail revenue ₹30 Cr; FY27 guidance ₹160 Cr implies 5× run rate, dependent on 21 new stores in 9 months

Management withheld specific unit economics, citing need for 100–125 stores >1 year old to assess. Sample size (10–12 old stores) too small to validate claimed positivity

Q1 at 8.6% (380 bps below target). Margin gap 2× larger than expected 150 bps retail drag. Requires material Q2–Q4 improvement; residential project cost drag (~₹24.6 Cr booked in Q1) ongoing

FY27 retail revenue now ₹160 Cr (vs ₹80 Cr FY26); implies ₹130 Cr incremental or 100% growth. Q1 achieved ₹30 Cr. Aggressive but management confident.

Q1 EBITDA margin 8.6% vs 14% target. Prior guidance assumed 150 bps retail drag = 12.5% margin floor. Actual 380 bps miss suggests core margins also eroding or retail drag underestimated.

Approvals obtained, construction starting Q1. 24-month to completion, ₹80 Cr revenue expected. ₹24.6 Cr cost already recognized; reversal pending revenue.

18 months into ZECODE, stores not yet mature. 1.5–2 years to store profitability. Some stores EBITDA positive but sample too small. Fast-fashion market large and growing; we have unique USP and are very positive.

Company generates positive free cash flow. Capex ₹100 Cr (₹40–50 Cr retail) planned this year. Will use capital prudently; store expansion rapid only after stability/mature store model proven.

150 bps EBITDA drop indicated annually. Hope to be well within that. Don't look quarterly; core business seasonal. Some ZECODE stores EBITDA positive; not just 1-year old stores. Growth in store-to-store performance in Q1.

Q1 retail ₹30 Cr. FY27 expectation ₹160 Cr (doubling prior year's ₹80 Cr).

EBITDA stable. Land expense is inventory-to-expense reclassification with net effect nil. EBITDA/margin same. Don't exclude; it's seasonal, model on annual basis.

Business seasonal, driven by Diwali and weddings. Diwali pushed 3 weeks; expect delay in demand. Sentiment very positive; everyone hopeful year goes as planned. We're positive on reaching guidance.

Last 1–2 quarters saw volatility (global scenario). We balance old and new materials. As brand, we pass some cost to customers gradually. Q1 saw some pass-on. If materials stay high, more pass-on. Confident in 14% EBITDA guidance with retail drop.

Q1 buildup normal for seasonal business; festive season Q2–Q3 requires planning. March-to-March is better indicator. Retail expansion adds inventory to balance sheet, will continue as stores increase.

Franchise is established model in fast fashion and ethnic wear. Not considered yet. Focus now on operational efficiency and internal capital. Franchise an option once model proven and returns materialized.

Cluster-based approach; ZECODE hub in Bangalore (Gen Z, IT, students). Use AI tools, target high-footfall areas. Evolved from 4,000 sq ft to 7,000 sq ft avg; larger format shows better results.

Approvals obtained, tendering partly done. Construction expected to start Q1, 24-month timeline to completion.

Full tax in hands of investor. Treated as dividend income at redemption. Capital gains treatment if sold before redemption.

Reiterated from prior call. Q1 achieved 14.4% (but inflated by base effect; Adhik Maas in Q1 FY26 was weak). Annual guidance assumes seasonal recovery in Q2–Q4.

Implies 12.5% floor EBITDA margin. Q1 achieved 8.6%, 380 bps miss. Management confident to 'be well within' 150 bps retail drag, but core margin pressure is larger than anticipated.

Fully funded from internal accruals. Retail capex to support ~70 store buildout. Core business capex minimal. On track.

Q1 EBITDA margin 8.6% vs 14% FY27 guidance (380 bps shortfall). Exceeds expected 150 bps retail drag. Input cost inflation, mix shift to lower-margin retail, and core business pricing pressure all contributors.

49 stores now, target 70 by end FY27. Only 10–12 stores >1 year old; sample too small to validate profitability model. Competitive fast-fashion market with many players; unit-level margins uncertain.

₹24.6 Cr land development charges booked in Q1 P&L, but no revenue recognized yet. 24-month project timeline creates extended earnings headwind. Project cost overruns or revenue delays would further compress margins.

Business highly seasonal (Diwali, weddings). Diwali delayed 3 weeks in FY27, creating timing uncertainty. Consumer spending remained value-conscious in Q1 (Adhik Maas impact). Macro slowdown or discretionary spending pullback in H2 could miss guidance.

Q1 other income ₹22 Cr includes ~₹6–7 Cr mark-to-market gain on investments (~30% of other income). Non-recurring, quarter-on-quarter variable. PAT inflated by this gain; operating earnings lower.