Stanley Lifestyles Ltd (NSE: STANLEY) Q3 2026 Earnings Call dated Feb. 13, 2026
Corporate Participants:
Unidentified Speaker
Sunny Bhadra — Equity Research Associate
Sunil Suresh — Managing Director
J K Sharath — Chief Financial Officer
Analysts:
Unidentified Participant
Resha Mehta — Analyst
Madhu Rathi — Analyst
Manjeet Buaria — Analyst
Kaushik Poddar — Analyst
Sidharth Srikumar — Analyst
Arvind Arora — Analyst
Presentation:
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Sam. Ra.
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Sam.
Unidentified Speaker
It.
Unidentified Speaker
Ram.
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Sa.
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Sam.
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It.
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Foreign.
operator
Ladies and gentlemen, good day and welcome to the Stanley Lifestyles Limited Earnings conference call hosted by MK Global Financial Services Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your Touchstone phone. Please note that this call is being recorded. I now hand the conference over to Mr. Sunny Badra from MK Global Financial Services Ltd. Thank you. Over to you, sir.
Sunny Bhadra — Equity Research Associate
Thank you, Shruti. Good evening everyone. I would like to welcome the management and thank them for this opportunity. We have with us today Mr. Sunil Suresh, Chairman and Founder Mr. Venkatraman Gorthy, Managing Director Mr. J.K. sharat, Group Chief Financial Officer and Mr. Abhijit Sonath, Chief Executive Officer, Retail Business. I shall now hand over the conference to the management for the opening remarks. Over to you gentlemen.
Sunil Suresh — Managing Director
Good evening and thank you for joining us. This year marks three decades of Stanley of leather mastery, manufacturing excellence and brand building. As we complete this milestone year, we have taken a deliberate pause not to slow down but to strengthen the foundation of the next phase of growth. Our revenue trajectory remains stable. However, profitability for the quarter reflects conscious investment and structural transactions we undertook over the past three quarters. Let me explain this clearly. After almost three decades of founder led growth, we have initiated a structured transition towards institutional leadership. We inducted a joint Managing director and a new retail CEO.
Both among the strongest leadership talent for Stanley. These leaders represent the new generation for Stanley. For approximately three months there was an overlap in senior management roles to ensure continuity and seamless transfer of responsibility. This overlap has increased short term costs but was critical for long term governance strength. We believe institutionalization leadership is not optional. It is essential for sustainable growth. Store expansion and Investment phase Over the past three quarters we opened nine new stores including four four stores. Six additional stores expected to open in the next couple of months. We acquired franchisee operations in Hyderabad and Pune, converting them into company owned formats.
We have now expanded our Cocoa presence across the top six metros in India. However, stores under 36 months of operation yield significantly lower margins than matured stores. With a large number of recently opened stores in the system, this has temporarily diluted profitability. While our Cocoa stores have grown steadily this year, the franchisee channel experienced moderation partly due to broader demand softness and projected delays and project delays. Importantly, these investments have been deliberate. We have invested over 62 crores in expansion in the first three quarters. Yet our cash reserves remain at the same level as last year reflecting prudent financial management.
Strategic Sourcing BCC Best Cross Country Model we are working diligently to be more and more competitive through our strategic sourcing initiatives through our BCC model. This has started yielding good results for us and will continue to do so in the future too. Brand Architecture and Network Rationalization as part of our three decade reset, we undertake a comprehensive brand architecture review reviewing existing stores evaluating underperforming catchments paused certain expansion rationalization formats were required. Some stores had outlived their catchment potential. It was prudent to address this now rather than defer these difficult decisions. Market Environment and Demand Outlook Order execution during the year was impacted by residential project handover delays global macro uncertainties subdued discretionary demand in certain months.
However, traction has improved meaningfully from January onward. Data across the six metros where we are present now shows that the premium housing sales over the past three four years have been at historic highs. Delays in handover have created a pipeline of premium housing awaiting interior fit outs. We expect deliveries to accelerate starting 2026, unblocking significant demand for premium furniture. Stanley is now fully present in these markets and well positioned to benefit Regulatory Advantages BIS Certification we obtained our BIS certification this month on products covered under QCO among the early movers in the furniture segment. With the quality control order coming into effect this financial year, non certified importers and unorganized players will face restrictions in the Indian market.
We believe this structural shift will favor organized, compliant integrated players like Stanley Technology and Full Home Pivot. As we pivot from leather specialist sofa manufacturing company to Full Home luxury provider, we have paused selectively to integrate the right technology platforms, upgrade back end systems, recalibrate our kitchen and cabinetry vertical. With the experience we have obtained, order books remain robust and we are confident this integration will strengthen execution capability as we move towards FY27 closing outlook Premium housing and branded luxury furniture India remain in early stage of organized growth. To summarize again the reset after three decades organizational restructuring of leadership transition Brand architecture and network rationalization Cost optimization through strategic sourcing Efficiency and productivity improvements Business enablers through technology enhancement BIS Certifications Full Home Solutions the investments made this year have temporarily compressed profitability, but they have structurally strengthened the business.
We remain confident of delivering quality growth, improved margins and stronger return ratios in FY26 and beyond. I now invite Mr. J.K. sharat to walk you through the financial performance.
J K Sharath — Chief Financial Officer
Thank you Sunil Good evening everyone. Every investment we make today in stores, people and processes is aimed at reinforcing our position as India’s most admired luxury furniture company. For the nine month ended FY26 the company reported revenue from operation of 3,179 million reflecting a modest year on year growth of 1.4%. This relatively muted growth is largely attributable to evolving consumer preferences with a visible shift towards more value oriented products during this period. Encouragingly, gross profits grew by 6.2% compared to the corresponding previous last year supported by an improved product mix and continued operational efficiencies. EBITDA margins remained largely stable at 18.8% in 9 month FY26 as against 18.9% in 9 month FY25 demonstrating resilience at the operation level.
However, reported Pat stood at 136 million making a decline of 26.1% from 184 million in nine months. The reduction in profitability was mainly due to higher depreciation and finance cost arising from ongoing store expansion and strategic investments in growth infrastructure which we believe will support long term value creation. During the nine months we opened seven cocoa stores and are progressing on five additional cocoa stores. This resulted in higher depreciation and finance cost of 101 million due to lease related accounting impact. These are forward looking investments preparing us for the next phase of growth. For the third quarter December 31st, 2025, revenue from operations stood at 1038 million reflecting a decline of 5.4% year on year primarily impacted by near term demand softness.
After considering the impact of new labor loss, EBITDA margins moderated at 11.9% in Q3FY26 compared to 18.7% in Q3FY 2025 representing a contraction of 680 basis points largely due to operational deleverage and cost associated with recent expansion. During the quarter the company reported a marginal loss of 2 million at PAT level as against a profit of 89 million in the corresponding period last year. The decline in profitability was mainly attributable to higher depreciation and finance costs along with expenses relating to new store additions that are yet to reach optimal utilization and deliver commensurate returns. Higher amortization and finance cost from new store additions had a short term impact.
However, these strategic investments will strengthen our retail footprint and support future profitability. We will now open the floor for questions.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their Touchstone telephone. If you wish to remove yourself from the question queue you may press star and two participants are requested to use answers while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Resha Mehta from Green Edge Wealth. Please proceed.
Resha Mehta
Good evening and thank you for the opportunity. So you know the first is on the growth part, right? So if you look at, you know, your commentary, basically project handovers will accelerate only by the end of FY27. And also the consumer is shifting or down trading or you know, to more value oriented products. So with that then, you know, how do we look at growth internally for us as a company?
Sunil Suresh
So if you really look at how we have kind of, you know, moved from our typical home market and now have a clear presence in the top six metros, there is definitely a solid pipeline that is, you know, expected in terms of the previous premium homes and luxury homes that have been sold over the last three to four years, which normally take between four years to four and a half years to come for delivery. So we are very excited in terms of the number of projects that have already been sold, probably bit delayed and they’re all going to come to handover starting from FY26.
So while there has been a small little, you know, what you can call as a sentiment in terms of how things were in the last six months or so with global headwinds and also the project coming into delivery will definitely accelerate our offering to the market.
Resha Mehta
Sorry, my question was then how do we, what growth are we targeting, let’s say for the next, for FY27 considering the macro, consumer sentiment is not supportive and handover of projects only happen by the end of FY27. You know, while we’ve been articulating, you know, our aspiration of 20% plus kind of a revenue CAGR, but right now, you know, we are nowhere close to that. So just from a realistic standpoint, what would you be your revenue guidance for the next one financial year considering the macro situation?
Sunil Suresh
So for you to understand that actually our pivot towards full home solutions have turned out very positive. And if I look at how our KCD order book looks compared to December of last year. So basically when I say the kitchen business comes in first followed by loose furniture later. Last year, December, we had an order book of roughly about 12% of our total order book coming from kitchen and cabinetry. This year on December 31, it has gone up by 20%, so almost 30%. So the pipeline for us to do complete homes are increasing. So thereby the average Ticket size of each customer will jump almost six to seven fold.
So that is how we are pivoting from our loose furniture brand towards a complete home solution brand. So this will definitely kind of, you know what you can cascade into a much higher sales as we go forward.
Resha Mehta
Would you want to quantify your guidance for revenue growth overall at a company level for FY27?
Sunil Suresh
Basically, like I said, in terms of our approach, we are looking at a very healthy and profitable growth. So at this point in time we will not be able to give you a number as to what we are projecting because we are in the process of budgeting and we will probably give.
Resha Mehta
It to you by Q1 and on the store edition. So I think for the full financial year we would be at plus nine stores. Right? We would have added nine stores by.
Resha Mehta
The end of probably April, maybe not March, but by April I think we should be having all together 15 stores out of which we have 12 Coco and three popo stores coming in. Including yeah, 1212 Coco. Am I right?
Sunil Suresh
So we currently have no, no one.
Sunil Suresh
Third is talking about how many stores.
Resha Mehta
This this year total.
Sunil Suresh
Correct.
Sunny Bhadra
So nine we have opened till December. Already opened. We have another six in the pipeline in that five is coco and one is total cocoa. How many total coco is 12. Total cocoa is 7. 5. 75 makes it 13 12.
Sunil Suresh
So total coco stores will be 12 and 3, 4, 4 stores. So we have already opened nine out and the six are pending. I. We are they’re confident of doing between now and Q1 within the early Q1.
Sunny Bhadra
We will do it.
Resha Mehta
And you know lastly the employee expenses and the other operating expenses are growing at a much higher pace versus the revenue growth. Any comments there? And where do we see the quarterly run rate settling especially for the employee cost?
Sunil Suresh
Sure, I think I was quite clear about that in my commentary and actually as I told there has been a senior management change and there has been a transition period. So probably for almost three months we had an overlap and that will start settling down by the end of this quarter.
Sunil Suresh
Plus also because of the new labor code we had to take a one time hit in terms of employee benefits for gratuity and leave. And one time hit was there and plus also recurring it because of the change in the regulation has come and all these has hit our employee cost. It’s quite a large number actually close to 9 million.
Resha Mehta
Sure.
Sunny Bhadra
Thank you.
Resha Mehta
Thank you.
operator
Thank you. Ladies and gentlemen. In order to address questions from all participants in the conference, please limit your questions to three per participant. The next question is from the line of Madhu Rathi from Countercyclic Investment. Please proceed.
Madhu Rathi
Sir, I’m trying to understand that since we are in the luxury furniture space, what impact with quality control order have? Because I understand mostly the unorganized sector would be at the entry level cheap furniture stage. So are you really expecting some significant tailwind from the QCO order?
Sunil Suresh
Yes. As most of our competition is imported furniture and compulsory of making it BIS and QCO coming in. I think we will definitely be benefited because we already applied for and already got certain BIS certificates certifications done. So we are quite positive about the impact on our company with the QCO being implemented. While I think unorganized sector will find it fairly difficult, companies such as ourselves who are basically, you know, compliant and are already certified will probably have a couple of years lead ahead. We will remain very positive about that.
Madhu Rathi
Now sir, another question, basic question is on the top line which doesn’t seem to be growing from FY23 levels, we are stuck at around 400, 450 levels even though the net worth has significantly expanded thanks to the IPO proceeds. So all that capital, even though net worth has over doubled still when will it start showing in the top line?
Sunil Suresh
If you heard my commentary, I think we were quite clear. We have completed three decades in business now and this has been a small pause for us to kind of restructure do the entire brand architecture which I think we are almost completing by the end of this financial year. And we are very positive that you will start seeing a lot of growth. So in terms of also our store aging, if you really look at it, you know we have close to about 50%. 50% of our stores are under three years which are basically still at very young age in terms of the maturity.
So we expect that due course of the next financial year they will all, many of them will start coming to a higher profitability and maturity. So that’s how we are positioned right now.
Madhu Rathi
Now sir, we have over around 190 crores which is like 20% of our market cap. So and we remain debt free. So any plans to do a share buyback so that the future growth can get divided on a smaller base and EPS can increase?
Sunil Suresh
No, at this moment like I said, we are fairly busy and been very involved in doing the reset for the company. We are going to go ahead and do some good performance in the due course of next quarter and we’ll think about it later.
Madhu Rathi
And so what about the rupee depreciation since we are also importing quite a bit. So how Are our margins getting hit or have we taken some kind of price hike in recent times?
Sunil Suresh
Not really, but then I think our entire, you know, kind of pivot towards moving away from expensive European imports towards BCC or what we call as best country suitable or localization. Those things have started to play out and I think we are well positioned to kind of de risk ourselves from Forex volatility.
Madhu Rathi
Are we looking at exports to US and EU after the recent deals?
Sunil Suresh
At the moment I think we are very clearly focused. While our B2B business has been showing a lot of good enquiries and order book expansion, our focus will remain on B2C. And since we are investing in acquiring multiple, you know, franchisees in cities, we are going to be very focused as a B2C brand.
Madhu Rathi
Page number six of your presentation, it says 61% stores are Coco, 9% are 4 and 30% is others. Others meaning what?
Sunil Suresh
Others is basically B2B a mix of B2B and B2C. 70% of our revenue is B2B2C B2C which is a mix of cocoa and Fofo and 30% is B2B.
Madhu Rathi
Answer what are our CAPEX plans going ahead?
Sunil Suresh
So we have completed our, you know, CAPEX projection for this year and as I mentioned to you, despite investing 63 crores, our, you know, cash results are exactly the same where we were last year. So at the moment we are budgeting, I think we will basically be able to give you better clarity by the end of Q1.
Sunil Suresh
So all the funds that we have, 190 crore or thereabouts, it’s for working capital usage going forward.
Sunil Suresh
So it is, it will be a mix because as per the fund utilization we have raised in the ipo, we have partially utilized the proceeds which we have realized. The whole working capital requirement which was raised has already been utilized and consumed by us. The remaining will be for our new stores opening which we plan for the next couple of years. As per the prospectus, we have close to 78 crores which we still have as part of our IPO process which are yet to be deployed. And as per our IPO plan, we will be deploying it in the next couple of years.
Sunil Suresh
Out of the 190.
Sunil Suresh
Out of the 190, yes.
Sunil Suresh
Yeah.
Madhu Rathi
So lastly, I just wanted to understand that do we enjoy any, let’s say advantage in the production side? Is our cost of production lower than the competition? Let’s say Godrej Interior or whosoever is our competitor. Where do we have the edge? Is our Cost of production cheaper or I mean we are fully integrated. What would you say is our usp?
Sunil Suresh
So please understand that our segment where we are catering to is much higher than what others are playing. Other Indian organized players are actually playing. So for us the competition is primarily European imports and other Chinese imports and so on and so forth. So we don’t look at segment wise competition, direct competition with, with the companies that you mentioned. So I think we are mostly bespoke manufacturing and customization is our most important USP and we will continue to do it. We are not in the mass production, we are in what you call as handcrafted bespoke production.
And our customer base is normally homes with more than 2 to 3 crore investment in their residential project. We don’t cater to, you know, homemakers below 3 crores of residential budget.
Madhu Rathi
So since our competitors are a foreign companies like Gautier of France etc, so with the recent EU FTA deal, I hope the, I mean they will not be flooded with European furniture imports and.
Sunil Suresh
No, no, no. So basically that is the, that is exactly the, you know, the touch point that you have to understand the VA certification and QCO is doing exactly what it did to footwear and toys five, six years ago. If you realize that same QCO was applied on footwear and toys and now it’s being applied on furniture. So it will definitely block certain imports. And as we look at it, as we expand our base and are able to kind of give the similar quality, we believe that, you know, when we have a higher end competition we normally win because our speed to market we are able to deliver our loose furniture in four to six weeks whereas they take almost four to six months.
So that’s the kind of advantages we have. So as the market is getting more and more premiumized, our business is going to thrive. That is how we are positioning ourselves.
Madhu Rathi
And so lastly in Bangalore, sir, what percentage of our revenue is coming up with this? If the, the IT sector gets disrupted then I mean we can might get hit because after all they are the highly paid white collar segment which is our customer base. So any thoughts on that?
Sunil Suresh
So again I think when you look at, I understand your concern in terms of IT getting disrupted but actually even in our value premium segment it is typically the CCXO level of it that actually start with it. So we are not in the market segment where the typical IT employees are our customers. When we look at our customer profile it is a very, it Normally starts with CXOs but we cater to lot of HNIs. We cater to a lot of our mix is very, very large. We have smse, sma, SME owners. We have a very huge mix in terms of bankers and you know that corporate onshores actually we don’t cater to normally.
I could say in a way that for you to understand, 90% of our customers are employers and not employees.
Madhu Rathi
Thank you very much.
Sunil Suresh
Thank you.
operator
Thank you. The next question is from the line of Manjit from Samia Advisors. Please proceed.
Manjeet Buaria
Thank you for taking my questions. Sir. I just wanted to again touch upon ones on a revenue growth in a slightly longer time frame. When I look at March 2023 end, we had about the store count then and the store count now. Our store count has gone up by about 33% whereas our B2C business has grown by about 10% in this roughly three years now. So why is this revenue growth lagging the store count group with such a wide margin? I’m not able to understand that.
Sunil Suresh
Oh, that’s exactly what you know, if you look at our store aging normally, as we have always mentioned that we require about between 24 to 36 months for our stores to come to maturity. Currently when we, when we looked at FY23 probably we had stores that were fairly matured. But Today more than 50% of our stores are under 24 months. So we are still in the process of maturity. So this you will see the, you know, what you call as result unfold due course of the few quarters going forward.
Manjeet Buaria
So sir, then look, is my understanding correct that the 35 stores which you have shown as more than three years old, which are our mature stores, have these stores been bigger? Do they have negative fssd?
Sunil Suresh
So some of them probably have because like I have mentioned that we are looking at there were some very legacy stores which have outlived their catchment area. So we are doing what we call as either we are changing the brand from probably a lower medium from our premium to our value premium brand or we are relocating the store. And also the picture pivot is happening in the company as far as you know, we are moving from Loose furniture to a complete home solution provider. So that’s a changing process at this point in time.
Manjeet Buaria
And sir, on this point of moving from loose furniture to a full home solution, I think you give some statistics. I think I missed that in terms of what percent of an owner who could now become a full home sort of a, a more composite order than just a loose producer order. Did you mention any mix over there?
Sunil Suresh
Yeah. So essentially like I mentioned to your other question earlier if you look at December 24, our order book position, our you know what you call as full home orders or our cabinetry order was only 12% and our loose furniture order was 88%. And this year FY25 it is grown by 20%. So we have our KCD and pullover book is at 37% versus 12% and we have grown by 20%. So thereby we are very clear that once we get into the house with kitchen and cabinetry the loose furniture also will start following. So that is the shift that we are you know we aim for and we are getting there.
Manjeet Buaria
And sir are employee expenses. I understand there has been sort of investments right now to strengthen the corporate team. The 19 crore quarterly number we see in Q3 is this. The new employee will settle lower.
Sunil Suresh
Sorry we missed your voice.
Sunil Suresh
Can you repeat it again?
Sunil Suresh
It was not clear.
Manjeet Buaria
Of employee expenses. We see in Q3 quarter you mentioned that there has been some over investment right now for the transition. So 19 crores settle going ahead.
Sunil Suresh
So primarily what happens this increase constitutes of 23 items. One key item which is increased is more of the labor code impact which has come. Overall we have an impact of about 9 million in the quarter which we have taken because of the new labor code which has come under the past service liability which we have taken. The second key impact item is because of the new stores which we have opened. There is a increase in the employee expenses which has come because we will have employees also being coming in each of these new stores which has come.
And the other key piece is the transition which Sunil spoke about because we had onboarded new leadership team. We had in the quarter both to both old CEO, new CEO working new md, old MD over there because of which the salary is you know sort of higher in this quarter which over a period of time will sort of even out.
Manjeet Buaria
Okay, one last question was you know has it Bangalore cohort overall, you know shown equivalent performance to other city stores or has Bangalore been more subdued than the, you know non Bangladesh. That was my last question.
Manjeet Buaria
Thank you.
Sunny Bhadra
He’s asking how has been our growth in each of the.
Sunny Bhadra
So actually when you look at it just about 24 months ago almost I would say 66 to 67% of our entire business was dependent on Bangalore. But after acquiring our partners in Hyderabad and also now expanding in Chennai and Hyderabad and Pune, we acquired our partners. So Pune has grown by almost 250 odd percent compared to last year. Hyderabad has grown by almost 30 35% and Chennai has grown by about 35%. No. Hyderabad has grown more.
Sunil Suresh
Chennai 50%. Chennai 30%.
Sunil Suresh
Chennai has grown by 35%. So we see that in the due course of the next three to four quarters I think our business will be fairly evenly spread among Hotel 5 of the 6 metros. Because in Bombay we still struggle due to non availability of real estate. Other than that I think we have expanded in all the other metros so it will even out. And we are hoping to have a more even play across the six metros in the due course of next three to four quarters.
Manjeet Buaria
Okay, thank you sir for taking my questions.
Sunil Suresh
Thank you.
operator
Thank you. The next question is from the line of Kaushik Pawdar from KB Capital Markets. Please proceed.
Kaushik Poddar
See two things. I think sometime back you had said that in three years you’ll be reaching a figure of thousand crore. Is that intact? And number two with the number two question is the furniture control order. Do you see the import of furniture coming down with that?
Sunil Suresh
Yes, let me articulate that once again. So we had always mentioned that it would be thousand working days. So that’s technically you know what it was anyway. Nevertheless, I think we are definitely keyed into getting towards that number. There is no change of course like I said, there has been a small little pause in the last couple of quarters to realign our entire brand strategy. And looking at how the winds are favoring us, we are very positive that with the QCO and everything, the imports coming down, I think we are probably one of the few companies in India who are well positioned to cater to the premium and luxury demand that is emerging.
Kaushik Poddar
And the quality control order, the import coming that you see import coming down.
Sunil Suresh
Absolutely, absolutely. I think basically like I said, the BA certification process has already started. They are one of the first early guys to have already got certain BA certifications done. So I think that is really going to favor organized players in India.
Kaushik Poddar
Now. The thousand crore in thousand days, I mean right now has the period been prolonged by say another 200, 300 days or where is it?
Sunil Suresh
Like I mentioned to you, we have done this structural change. Our intentions are very clear. We have to get to that milestone and we have definitely working towards that. You know we have seen that in the last six, seven, eight months there has been major global headwinds that kind of played out with tariffs being implemented on Indian sentiments in our customer profile was a bit slow. They have you know I think postponed high ticket purchases. I think those winds are once again changing. I think January we have seen a more potential walk ins in our stores and we remain very positive about that.
Kaushik Poddar
And my last question, what is your prognosis of gross profit margin and operating profit margin in another say another two years, say FY29?
Sunil Suresh
I think with all the developments in terms of our purchasing and scale coming into the business, we believe that we are positioned to kind of. Of course I think we have to look at how the aging of the stores play out because we still have a lot of young, younger stores as we call. But eventually our vision is very clear that with the premium and luxury positioning we need to have a premium margin.
Sunil Suresh
Gross profit margin. My last question, the gross profit margin around 55 to 60% and operating profit margin around say 20%.
Sunil Suresh
So the gross profit margin currently whatever we have is, we have also mentioned earlier is something which is sustainable. That’s where you will see that because of our lot of efforts in localization, product mix and changes in the operational efficiencies which we have bought in as a strategic effort over a period of time, you see a very consistent and more, more recurring kind of a benefit coming in. That’s where these numbers which we have are more sustainable numbers. And we are confident we continue to have it or maybe slightly better it as we go. Depends on the various other parameters.
Operating profit, like Sunil said, it’s more a factor of how our new stores perform. And what is the mix of our new store versus also like currently we have 50% of our stores which are less than 3 years and 50% more than 3 years. We are currently looking at all the stores which are underperforming. And plus we are also opening a lot of new stores in the current year. So this mix will play a lot of, what do you say, influence a lot of margins which will be there. And so because we are making lot of investments and you would see the investments are initially getting recognized but over a period of time, once this amortization, interest, cost, etc, which is an accounting matter, under lease accounting is sorted then you will have a much better financial position which will get reflected.
Kaushik Poddar
So you’re not committing anything on the operating profit margin?
Sunil Suresh
No, we don’t give any guidance on future numbers.
Kaushik Poddar
Okay, thank you. Thank you. Thank you.
Sunil Suresh
Okay.
operator
Thank you. The next question is from the line of Siddharth from. I thought pm. I thought. Please proceed.
Sidharth Srikumar
Hi sir. So my first question is like what kind of margins do you earn on Coco retail versus FOFO versus the B2B business?
Sunil Suresh
Our margins more or less remain same the way we work in Coco business. I’ll first take the FOFO business, Fofo business is a franchisee owned, franchisee operated. It is a cash and carry business. We sell to them and immediately that comes to our revenue and it increases our overall profitability. In a Cocoa model we have our own stores where we incur the rentals, where we incur the store people and it is more monitored by U.S. net net. Our focus has been on our Cocoa model and our COCO margins are higher provided we have an operating operating leverage which we achieve over a period of time which is what we are trying to work on and get to that level.
But yes, we are also working towards getting a better mix of COCO and Fofo because some of the cities we have seen that FOFO model is what works better than a Cocoa model. But in the six metros we have. Yeah, but our focus on the six major metros to continue to remain remain as a Coco and we continue to invest in these in the Cocoa format and we see a lot of benefits coming out of this because also the we work on the tailwind of the RARA and the housing, this one, the luxury means the more than one and a half crores housing which are launched plus also which are expected to come for deliveries in the next couple of years.
You will see in this six cities, six major cities there is a big spike which is expected in the next two years for deliveries in these cities. So that way we look forward to a lot of growth in these COCO stores.
Sidharth Srikumar
Understood.
Sidharth Srikumar
But like if I am correct me.
Sidharth Srikumar
If I am wrong, does the Coco.
Sidharth Srikumar
Stores require lesser working capital for you guys? Yeah, absolutely right.
Sidharth Srikumar
So the way it works is while we manage the branding, store positioning, etc.
Sidharth Srikumar
Etc.
Sidharth Srikumar
And provide all the support to the four, four stores we we don’t make any investment in the cost, employees, etc.
Sidharth Srikumar
Etc.
Sunil Suresh
And it’s also cash and carry completely. It’s a more cash and carry business where we sell it to them and they based on the order stock it and then they sell it to the end customers. So you can in a sense say that I have less working capital and a capex spend in fourfour model. Yeah.
operator
Thank you. Next question is from the line of Devanshu. You may proceed.
Unidentified Participant
Hi sir.
Unidentified Participant
You’ve been talking about this QCO thing for a while and thankfully it has come to fruition. Now just couple of things here. One, you indicated that a part of BIS certification has been achieved for your operations, right? So what exactly that mean? And for full certification as in by when are you expecting our factory premises to be fully bis?
Sunil Suresh
Yeah, so it is. We have a lot of different SKUs and quite a lot of SKUs have already been certified. We are in the process and we are very confident that in the due course of next one or two months we should be able to get almost 90% of our SKUs certified under BIS. And probably we are one of the first guys to also kind of, you know, get our certifications.
Unidentified Participant
Okay, so by Q4 the full BIA certification should be achieved. Right? Or Maybe say by Q1. Q1, FY27.
Sunil Suresh
Also is, I would say completely choco block with hundreds of people approaching them. And the government is very clear that first they want to clear the Indian manufacturing before even looking anything at, you know, foreign manufacturers. So I think it’s going to be a long drawn process. We are expecting definitely to complete almost 90% by hopefully end of Q4 itself. And I don’t see any impact on that coming into play for us.
Unidentified Participant
Okay, okay. And last bit from my end, typically whenever there are such implementations, the channel sort of sees huge flooding of inventory. Right. Just to save themselves from an expected BIS implementation by the government. Are you noticing the such a trend? Because we have seen such things happening in the footwear space where typically the channel was flooded with excess inventory and it took some a good amount of time first to sort of liquidate that challenge and maintain. Then the benefits of BIA sort of started to come to fruition. So do you also anticipate such things to happen in your industry as well?
Sunil Suresh
So you are right, actually probably this QCO thing has been in the market for the last, I would say at least two to three quarters. And we have seen some amount of, you know, inventory buildup with importers because they were concerned and now the gazette is passed, everything is awaited. So there has been an impact I think which is behind us. I don’t see that ahead of us. And since we have passed through this, I think we are going to see better quarters coming forward. And we are also told that already the customs have started, you know, blocking the import.
So there are challenges for importers going.
Sunil Suresh
Forward, so that’s fair.
Unidentified Participant
But whatever has been imported, so they will have some stock existing in the channel. Right. So will that take some time to get liquidated?
Sunil Suresh
It could be. I wouldn’t want to really comment on that, but because I said there’s always been there for the last three, four quarters and I think there was a lot of inventory build up, I’m not too sure. And also the market being a bit subdued, I think what we realize is most of the importers are still stuck with some unsold inventories and are finding it bit difficult so I wouldn’t really be in a position to give you the. But it won’t be such a unlike in footwear and other things these are very bulky products so they also need a lot of storage spaces.
So you know I don’t think they are going to be impacted like how the footwear industry importers were impacted.
Unidentified Participant
Fair enough sir, thanks for taking my question.
Sunil Suresh
Thank you.
operator
Thank you. The next question is from the line of Arvind Arora from A Square Capital. Please proceed.
Arvind Arora
Hello, am I audible?
operator
Yes sir.
Arvind Arora
So sir, what’s your change in your.
Arvind Arora
Strategy that you are focusing that the whatever milestone that we are setting like 1000 crore we will be able to achieve And Sunil specifically for you like.
Arvind Arora
What will be your role going forward.
Arvind Arora
Since there is a change in the management that we can see.
Sunil Suresh
I don’t know whether you heard me speak in my commentary so we are in that little pause space where we are actually structuring ourselves much better and as I mentioned this was very crucial. After three decades of our presence we realized that this was an essential investment to do in terms of getting the top management and in terms of doing a bunch of I would say brand architectural changes which is all going on as we speak. So while our intentions are very clear and our targets remain the same we had to go through this little phase.
Sunil Suresh
No, I understood setting up a target is a one thing and then taking steps like I understood that and I heard you clearly that there is a change in the management but if you can throw some light because these things we are listening from last 12 years. Correct. But if we see the revenue numbers and everything so the moments are not visible. So if you can throw some lights like a little bit in detail so that we investor can understand like what’s going on so that would be easy for us.
Sunil Suresh
So basically like I mentioned, you know I think we are focusing on this six major, you know change implementation. One is basically organizational restructuring, leadership transition after our three decades of play brand architecture, network rationalization, cost optimization, strategic sourcing, efficiency and productivity improvement because we realized that with scale our profitability will improve. So we are doing that, you know in terms of getting our productivity and efficiency improved, business enable through technology that was something that was missing. So we realized that it would be dangerous to scale without getting the technical implementation done. That’s also being done of course BI certification and we are pivoting mostly towards full on solution actually and we have started to see the trend because if I look at what we were having as an order book on December 2024 versus 2025, our order book has improved 20% in terms of full solution and that will actually lead to more sales as we go forward.
So that is the pivot that is playing out.
Arvind Arora
And Sir, I remember 15 months back there was an order that you announced that we are supplying to an airport like for some seatings or some materials. So I haven’t heard anything in last one year. So is there any change in the strategy or how like we are not focusing on that part or how it is if you can throw some light on that part.
Sunil Suresh
So these are things we keep doing. We already supplied to our Bangalore airport long time ago. We are recently also supplied to the business and first class lounge in Delhi. So wherever there is a brand connect for us and we have a HNI clientele movement, we take up such such order. It is not something that we are not a B2B brand so we don’t go behind corporate orders and hospitality orders. We are a very B2C residential furniture, full home suppliers. But however when we get such opportunities we definitely take it up and we execute them.
So in the Delhi T2 in the business and first class lounge we have already supplied our furniture.
Arvind Arora
And sir, is it like we are losing our market share in Bangalore because you mentioned we are. Our revenue is increasing in Hyderabad, Pune and other cities. But if I see at a total level the revenue is flat. Correct. So is it like we are losing at a Bangalore location?
Sunil Suresh
Bangalore I think has been less likely flattish for us primarily because like I said we are doing multiple changes. Bangalore has been our oldest market in terms of cluster expansion. We started in 2017 so the cluster expansion worked for about five to six years. We are making certain changes now and that’s how I think Bangalore has been slightly flattish. But I think we have expanded our business and reached out to the other metros which was very important as a Pan India player.
Arvind Arora
Okay, so last one sir, last in the last quarter we discussed there was a new product that you were launching. So what’s traction on that? Like oh yeah, Hilkar, I think you’re.
Sunil Suresh
Talking about the license of a German company. What we have taken here so that I think we are just about starting and we will have our pilot store going live probably by end of this quarter and we will have certain budgeting done for that for next year which we have not yet budgeted. But the first pilot store is going to go live by end of this quarter.
Arvind Arora
How Much revenue we can expect from.
Sunil Suresh
Them working on the collection for almost one year. There were German designers who have come and made the collection. The collection is fully ready. We are also started sending, we sent out one small container as a sample container to Germany. So we are awaiting results of that. Plus also like I said, the pilot store is being made and end of this quarter we will have the first pilot store ready.
Sunil Suresh
But nothing think it’s such as in like other than the sample or pilot project, nothing is being materialized. As a discussion like how much revenue potential that project would have.
Sunil Suresh
Not yet. Not yet. So this we will budget by probably end of this quarter and have something, you know, for next year coming up. It’s a, it’s a process. It has taken more than one year to get where we are and we are now just about ready to get margin ready.
Arvind Arora
Understood. Okay sir, all the best. I know this time will help us and we will be like will definitely cross this 1000 milestone. All the best, sir. Thank you.
Arvind Arora
Yes sir, thank you very much.
operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to do for participants. The next question is from the line of Sidharth from Ithought. Please proceed.
Sidharth Srikumar
Hi sir, I just have one more question. You’ve been talking about like brand restructuring and with the new leadership team, how are you actually going to build this brand in the future?
Sidharth Srikumar
What is the strategy?
Sunil Suresh
Yeah, it’s a good question. So basically if you really look at how we were evolving in the last few years, so we did not have the quantum of premium and luxury houses coming into the market between 2015 and 2020 or for that matter even between 2020 and 2025. But when I look at what the actual RERA report and the quantum of luxury and premium houses that are sold in the last four years, which are historical high number, these are the homes that are going to come to the market mostly in the six major metros of India.
Almost, you can say 85% or 90% of India’s premium and luxury housing is going to come into play in these six metros of India. So we are actually very steadily but slowly moved from our home market of Bangalore, acquired partners in other cities such as Bombay, Chennai. Now recently we also acquired after IPO we acquired our Hyderabad and our Pune partner. So we have actually started putting up our cocoa stores and that is already starting to show growth there. The new management team which is coming on board is more institutionally oriented. For three decades we were promoters, we were driving this business and we had a legacy team who probably were not capable of taking the company to the next level.
So we had to go through those change implementation tech implementation is also happening. So various things are in the pipeline and that is how we believe that we will be able to grow substantially going forward. I hope I have answered you correctly.
Sidharth Srikumar
Thank you sir.
Sidharth Srikumar
That’s it.
operator
Thank you. The next question is from the line of Manjit from Samya Advisors. Please proceed.
Manjeet Buaria
Thank you for giving me a follow up. Sunil, one question was as Abhijit has taken over as CEO on a day to day basis, have you taken a backseat or are you operationally involved?
Sunil Suresh
Even now I can’t hear you.
operator
I think you’re too close to the mic. If you can just. I think this is coming a little ruffled here.
Manjeet Buaria
Sorry, is this better? Sunil? Hello? Am I audible?
Sunil Suresh
Okay, so yeah, in fact what I’m really going to do is basically in fact take a further front seat. I don’t think I’m going to take a back seat. That’s not correct. In terms like I said we had to get certain professionals to kind of address certain areas which are very important. Of course there will be a, you know, slow process of succession that is going to happen but in terms of our involvement as the promoters we are very much involved in this, in this business and it continues to be our. Yeah, it’s a strategic changes that we are implementing.
Manjeet Buaria
Okay. And soon as the RA reports which you mentioned for the six metros over the next three years what is the volume or the number of houses which will be delivered as per these reports? These six metros with our key target market. Do you have any number that the premium houses which are your target audience?
Sunil Suresh
Yes, we have and it is very, very interesting for you to note that the spurt is actually going to start coming from now and in 2027 and 2028 it’s going to peak. From our collection of data we will have close to 101 lakh 9,000 homes coming into play above the value of 1.5 crores in 2026. That’s going to almost 1.5 lakhs in 2027 and 1 63,000 in 2028.
Sunil Suresh
Those are the kind of home delivery.
Sunil Suresh
Home deliveries? Yeah, home delivery is coming for pick out. This is something which we have calibrated, this is where it is. You know in for example in 2025 it was less than 60,000. So technically the home deliveries that are going to come to the market is almost doubling and it’s going to start in 2026 and peak up to 2028. That’s the data we have collected.
Manjeet Buaria
Very helpful. And last question Sunil was you know when we defined premium, let’s say a house which is more than 1.5 crores. I’m guessing the household income of that family would be probably annually about 30.
Manjeet Buaria
Lakhs or you know maybe 40 lakhs.
Manjeet Buaria
30 lakhs maybe.
Manjeet Buaria
So is that really our customer segment? My understanding is we would be catering to sort of a higher segment than the 1.5 crore sort of house value.
Sunil Suresh
You can say that our so far then more start catering to that. But actually when you further break down 1.5 to 5 crores is the what they call as the. In the residential business they call that as a, you know, premium value. Premium. 5 to 10 crores is where they call it as premium. And above 10 crores is what is considered luxury. So the split currently is almost even between all the three. But the trend of what is really selling is more of premium. Of course Bombay is a different consideration. Bombay, everything is 2x. So don’t consider Bombay.
When you look at the six metros the way the premium and luxury demand is continuing to grow. In fact that’s the fastest growing segment. If you look into what is happening on either a JLL report or Anara report or even RARA report.
Manjeet Buaria
Very clear. Can I just ask one more question? Sorry.
Sunil Suresh
Yes please.
Manjeet Buaria
Okay. So you mentioned to one of the questions in response that you know, Bangalore cohort of stores which started in 2017 are going through a certain sort of reshift in a way now my thought was typically retail outlets which once established go on for 15, 20 years in the same location. You know, so this is like a seven year journey for the stores you mentioned. So why is it happening so fast? Because typically what they see is retail. You know, especially large retail formats typically stay in the same area for anywhere between at least 12 to 20 years.
Sunil Suresh
I will explain this in a very simple and clear manner so that you can understand the geography is in our cities are very different. For example if you look at Delhi there are very clearly two or three furniture markets that have emerged there. You can continue to do business for decades because they are established as furniture market. Whereas cities like Bangalore which have been there is no restriction of any ocean or anything and it has been growing all over. So the old stores the catchment has completed. So there is a new catchment coming up. So that is having a micro market effect.
So those are Very rapid changes happening in certain cities like Bangalore, Hyderabad, where Mumbai and Delhi is more I would say defined because you already have markets that are established. So I think it’s a bit challenging for organized retail play. We have to keep our ears to the ground, we have to understand where the fill up is happening. So we tend to follow RERA to understand where the next big inventory for pulums are going to come. So I think this will continue for, I would say for some more time to come because in fast growing cities like Bangalore, Hyderabad, even Pune, you have a lot of new micro markets coming.
So we have to be a bit cautious and unfortunately like I said, there is no clear established marketplace, you know, or a high street for furniture or a marketplace for furniture. So this is the kind of situation we face and I think we are definitely getting a little more matured in terms of identifying and putting up our largest store formats going forward. Hope I have answered you.
operator
Thank you. Due to time constraints, that was the last question. I now hand the conference over to the management for the closing comments. Over to you sir.
Sunil Suresh
Thank you everyone for joining us today. We remain confident that the strategic investments we are making today will lay a strong foundation for sustainable long term growth. While this phase reflects calibrated investment and transition, we believe we are approaching an inflection point where operating leverage, localization benefits and store maturity will more meaningfully reflect in margins. We sincerely appreciate your continued support and engagement for the future queries. Please reach out to our investor relations partner, ADD Factor. Thank you once again and we look forward to speaking with you on our next quarter results.
operator
Thank you on behalf of MK Global Financial Services limited That concludes this conference. Thank you for joining us and you may now disconnect your lines.
operator
Thank you.
Sunil Suresh
Thank you.