Brainbees Solutions Ltd (NSE: FIRSTCRY) Q3 2025 Earnings Call dated Feb. 09, 2025
Corporate Participants:
Anish Arora — Investor Relations
Supam Maheshwari — Managing Director and Chief Executive Officer
Gautam Sharma — Group Chief Financial Officer
Analysts:
Sachin Dixit — Analyst
Percy Panthaki — Analyst
Videesha Sheth — Analyst
Sudheer Guntupalli — Analyst
P S Rohit — Analyst
Raj Vyas — Analyst
Chintan Shah — Analyst
Presentation:
Anish Arora — Investor Relations
Good evening everyone. Welcome to Brainbees Solutions Limited Q3 and 9 month FY25 earnings call. This is Anish Aroda and I have with me Mr. Supam Maheshwari, Managing Director and CEO of the company and Mr. Gautam Sharma Group Chief Financial Officer of the company. Kindly note that this call is meant for analysts and investors of the company. We wish to highlight that the call is being recorded and by participating in this event you consent to such recording, distribution and publication. All participants have been muted as per the default mode and participants will be unmuted once we open the Q and A forum for the members to ask the questions after the presentation from the management concludes. We’ll be covering the presentation in the beginning of the call and we’ll thereafter open the Q and A forum. We would like to point out that some of the statements made in today’s call may be forward looking in nature and the disclaimer to this effect has been included in the investor presentation shared with you. Also there was some delay in uploading the presentation from our side due to some technical reasons. Apologies for the same with this. I request Mr. Super Maheshwari to take it over.
Supam Maheshwari — Managing Director and Chief Executive Officer
Good evening everyone and
Gautam Sharma — Group Chief Financial Officer
Hi good evening everyone.
Supam Maheshwari — Managing Director and Chief Executive Officer
Welcome again to our Q3 performance review earnings call. Appreciate your time on on the Saturday so we’ll take you quickly through some of the numbers and the qualitative journey of our OND quarter. We will now move to our first sort of a slide which talks about we have. Have been very delighted to highlight that this has been our best quarter in terms of profitability in last four years. We are happy to report a consolidated profit before tax of 69 million in Q3 and 941 million consolidated cash profit after tax and best over India multi channel adjusted EBITDA adjusted for esop cost at 11.2% and consolidated adjusted EBITDA as well of 6.4. It’s all all our all time high numbers, the best ever quarter in last four years for all of us and overall our adjusted EBITDA for the consolidated business has increased by 54% on a for the nine month basis compared to the nine month for the FY24. We will continue to work hard and we remain very optimistic for our journey forward to continue to improve both our top line as well as bottom line. Before we dive into our Q3 performance I would like to take you through our nine months snapshot as well. And so this is a slide which talks about a nine month snapshot continued growth momentum with improvements in profitability across our business segments. This is a console performance Annual unique transacting customers in India and Middle East 17% increase for the period ending December 20 at 4 visa vis period ending December 23 annual unit transacting customer. Likewise our GMV grew for 9 months over last 9 months 17% and net revenue from operation 19% to 5729 crores and consolidated adjusted EBITDA grew 54% over 9 months December ending from 9 months of FY24 December 23 to 293 crores and India multi channel as well grew 26% for the same 9 month period resulting into overall cash profit after tax of 47% increase for the similar 9 month to 139.7 crores. This is a 9 month performance and now we’ll take you through our journey for the Q3 performance and then we’ll go into the segment wise approach as well in the Q3 you know ond performance our you know overall growth, you know we’ll give you a little more color and summary over you know our. Business segment wise. But at a broad level we had seen advancement of seasonal spends both in India Multi Channel as well as in global Bees and therefore you are seeing some of our annual unit transacting customers continue to be robust. 17%. This is sort of a increase. If you look at our prior period for FY24 Q1 Q2 Q3 it has been continuously increasing from 12% which became 14% in Q1 then 16% in Q2. Now it has become 17% GMV increase in Q3 13% revenue. Net revenue from operations has increased 14% on Q3 over last Q3 of 24 and consolidated adjusted EBITDA increased by 30% Q3 over Q3 again to 138 0.5 crore and at an India Multi Channel level We grew by 20% resulting in roughly around 169 crores and a cash profit of around close to 94.1 crore which is a 25% increase from a Q3 to Q3 window. Now we’ll take you through a little bit more deeper dive into our segmental performance. First of all the key updates on India Multi Channel the growth in Q3 was moderated primarily because of advancement of festivals Dasher and Durga Puja which was in early October in 24 while in the prior period it was in late October and and in 23 and which essentially meant that we had some advancement in Q2 of this year and you should see our business in a Q2 Q3 way or a nine month way that will give you a true reflection. We also witnessed a delayed winter which resulted in moderation of some winter sales for us. And we also first time in our, you know history we have had done some cleanup of few coco stores that we have closed and this is the first time since we have started expanding into our cocoa stores and we’ll give you a lot more color as we sort of go along on. But these are the key updates that really happened from it. India Multi Channel which is a core business which resulted into a little bit of a moderation of growth in the Q3
Gautam Sharma — Group Chief Financial Officer
In terms of growth in annual unique transacting customers. As super mentioned, you know it’s continuously improving from 12% in FY24 improved to 14 then. 16 and for nine months the growth is 17% orders and GMV. In Q3 there is a slight, you know, lesser growth because of reasons, you know jisupam just explained which is advancement of festivals, moderation of winter wear and uh, closure of few go stores. However, if you see the growth for the nine months, uh in terms of orders it has grown by 17% year on year and on the GMB it has grown by again 17% on a year on year basis. Similarly, net revenue, a similar impact in the net revenue in Q3 for the three reasons mentioned earlier. But revenue for the nine months, again it’s 17% year on year. We continue to improve our adjusted EBITDA from 10.7% in Q3 FY24 we have improved this by 50bps to 11.2% which is a increase of 20% year on year for Q3. Similarly talking about the nine months adjusted EBITDA performance, we have increased this to 9.5% from 8.8% in nine months last year which is a absolute increase of 26% year on year. This is a snapshot of our, you know, a journey of EBITDA margins which you know you can see a clear improvement in the EBITDA margins. 6.2% in FY23, improving to 8.8% in FY24 and further to 9.5% for the nine months FY25.
Supam Maheshwari — Managing Director and Chief Executive Officer
So now we’ll move to the international business. International business. There were some key Updates there in Q3OND specific period number typically is our biggest month typically for the year as well as we have two, you know the industry has two sales which is, you know, singles day and Black Friday. And in that there were two new horizontal entrant into the market which has recently entered into the Middle Eastern market and they had some elevated promotional activities by these two horizontal E commerce players. And we consciously stayed away from this elevated promotional activities and we wanted to continue. To focus on our achieving sustainable growth by improving our margins through our moats that we have built and we continue to build as we have done in India. So for the shorter duration it has definitely impacted some of our growth especially in the you know the key month of November which witnesses to big events in the region. So that’s what we wanted to highlight for the key update for the for the Middle East.
Gautam Sharma — Group Chief Financial Officer
So again in this business which is KSA and UAE annual unique transacting customers continue to grow a 17% growth end of December 24 over end of December 23 orders Q3 as Subam mentioned because of the two, you know, you know the the promotional activities and my the two, you know new entrants it has slightly impacted the the growth in orders and the GMV. So the growth in orders in Q3 is 9%. Similarly the GMV growth for the Q3 is 11% nine months. If you see the growth in orders is 8% while the GMB growth is 15%. Again I would like to you know mention here this that there is also impact of Q1 here in the international business. As mentioned in the earlier calls the Q1 also got impacted because of advancement of festivals and the floods in UAE. This is the revenue growth a 13% revenue growth in Q3 and 15% revenue growth for the nine months on a year. On a year basis adjusted EBITDA. You can see you know we we continue to focus on. While the growth is lesser in Q3 we continue to focus on improving our you know EBITDA performance. You can see a clear improvement, you know year on year, quarter on quarter from 16% negative EBITDA in Q3 FY24 end of December we have improved this to minus 15%. And if I talk about the nine months performance it is down from 20% in nine months FY24 to 17% in nine months FY25
Supam Maheshwari — Managing Director and Chief Executive Officer
On the global base front are the key highlight for this is as you will remember you know this business is generated a lot on the marketplace platforms and where again the impact of the advancement of. Marketplace sales promotion that happens on an annual basis during around the festivities and which was impacted in Q2. In Q2 if you remember we had a growth of around close to 55% and because of the advancement of those promotional festivities by the platforms and in the Q3 we were expected to be moderating on that. And if you look at on a nine month window it is, it is on 29%.
Gautam Sharma — Group Chief Financial Officer
Yeah. Similarly you know, you know a continuous improvement in EBITDA performance for Global bees from 0.6% in Q3FY24 we have improved this to 1.4% in Q3FY25 a jump of 2.6x for the 9 months performance we have improved this to 1.6% in 9 months FY25 compared to 0.4% in 9 months FY24 again a jump of you know, 5.9x. So this is continuously improving. Before we talk about the the console financial performance, there is a fourth business segment which largely consists of our franchisee preschool business. So you know, as of today we have close to 350 franchisee preschools and with with more than 16,000 students. We started this journey two years back, only two and a half years back. In terms of their performance the growth in nine months is around 35% on a year on year basis and the growth for Q3 is around 33%. EBITDA for the nine months is around 23%. EBITDA for Q3 is around 22%. So nine months EBITDA is a 71% year on year increase compared to the nine month in FY24. On the console performance the revenue growth is is 19% for the nine months. And the revenue growth for Q3 for the reasons you know mentioned earlier for Global Bees International and India Multichannel Business the growth in Q3 is 14%. You can see a continuous improvement in the gross margins from 34.5% in Q3FY24 we have improved this to 37% in Q3FY25. Similarly for the nine months the gross margins has improved to 37 point. 3% compared to 35.4% in nine months FY24. This is also reflected in our EBIT console ebita performance a 5.6% improving to 6.4% in Q3 FY25 a jump of 30% year on year and the 4% consol ETA in 9 months FY24 has increased to 5.1% for the 9 months FY25 which is a increase of 54% year on year. This is again, you know the EBITDA journey on a console basis. A significant improvement in EBITDA as a result of the improvement in EBITDA in all the four business segments. India multi channel business continuously improving. Global V’s business, you know becoming profitable. Then education business profit continuously improving and international business the losses continuously going down. So as a result you know 1.5% adjusted EBITDA in FY23 has now reached to 5.1% for the nine months FY25.
Anish Arora — Investor Relations
Thank you Sukhavan Gautam. We can open the Q and A forum now.
Questions and Answers:
Anish Arora
I request participants to raise hands for asking questions. We will unmute you and you will have access to the mic. Please introduce yourself and name of the organization you represent. The participants are also requested to limit their questions to maximum two. For a follow up question you may join the queue again. First question is from Mr. Sachin Dixit.
Sachin Dixit
Hi Superman. Gautam. And thanks for this opportunity. Congrats on turning PBT positive. My first question is with regards to gross margins. Obviously on a console level we are seeing a decent jump. Can you provide some color on gross margins on India multi general business and the parts of it.
Gautam Sharma
So Sachin, gross margin in all the four business segments continue to improve. You know India multi channel business is our core business which is 70% of the total revenue. So the gross margin in the core business has to improve to improve the overall gross margin in the console business. So it’s improving in all the business segments Sachin
Supam Maheshwari
And the reasons remain the same. Sachin which is. Improvement in our you know home brand sort of a share improvement in cogs, reduction in our home brand negotiation with third party brands, our improvement in our category mix and you know and the share of the cocoa sales as well. This is just for the India multichannel and likewise same story and same playbook is being reflected in the Middle east as well from a gross margin expansion window and as we have mentioned in past Global Bees is also a young company so there is also a gross margin expansion there as well. So while our education business is anyway doesn’t have much so it’s a, it’s a very, it’s a small revenue so not worth talking about it from that perspective. But all our businesses have been expanding our gross margins and as Gautam said largely impact of our core India multi channel business
Gautam Sharma
And we are not reached steady state as we have been saying in the past we will continue to improve our gross margins even going forward.
Sachin Dixit
My coming to Middle east or international business right obviously Q1 we saw floods which were unfortunate. Q3 we see some horizontals becoming aggressive and it continues to I mean more or less being a legard compared to the overall sort of thesis how we should have envisioned playing it out. Do you, do you still feel that this is, this is a battle worth fighting for or do you have a right to win considering the impact that we are seeing so far
Supam Maheshwari
This is the same story that we have played out in India where we had sort of multiple sort of horizontals. It’s just the new two new recent entrants that have come horizontal ones not a focus baby and kids sort of a player. It’s very hard for a horizontal to play mother’s baby and kids sort of a vertical play with all kinds of modes that one has to build. So it is just, it is the comparative intensity has definitely increased so we will continue to play out our game even more in a fine tuned way. But this is a very long journey and we will continue to improve play out with our modes and we’ll continue to improve our sort of bottom line performance as we go along. But we can’t just take a view just because of 1/2 performance because we have exactly played out that in India and we feel very confident of playing out that in the entire region over a slightly longer journey. So we remain confident about it.
Sachin Dixit
But just quick follow up on this one if I can squeeze that in. Have you proactively launched your own. Home brands in Middle east region or they are still in a nascent stage? That’s the last question.
Supam Maheshwari
Thanks. So we definitely have our in. I mean the home brands that we have in India and we have, we have, we have launched special home brands for the Middle east market as well. So there will be a mix of both that we have launched in the Middle east and that story will pan out over a period of time as consumer young parents, you know, adapt and use those brands and, and as the network effect of the word of mouth sort of goes around and more and more usage of those brands across categories and subcategories and product types, they continue to buy more and more. So it’s exact. Is this exactly how that story played out in India? It is what will play out in the Middle east as well.
Sachin Dixit
Got it. Thanks so much and all the best. Thank you.
Supam Maheshwari
Thanks, Sachin.
Anish Arora
Thank you, Sachin. Next question is from Percy.
Percy Panthaki
Yeah. Am I audible? Yeah. Yes. Yeah. So, sir, on the India margins, although there is an expansion there, I think our ambition was to expand about 150 basis points plus per year for the next few years. We are taking tracking below that level. So what is the reason that we are tracking below that and also what would be required or why do you think that we will come back to that level and by when?
Supam Maheshwari
Sure. I think if you look at it, you know, the reasons that we had Talked about in Q3, we believe that we could have grown a little higher than what we grew in Q3. And if you would have got because of, you know, the winter sale got, you know, we had a delayed winter in the country and you know, usually that would have actually led to a slightly, you know, I would say a higher, you know, proportion of even fashion as a category for us and winter sale, which would have meant more growth and given us more operating leverage and more bang for our buck for our marketing spend. And, and also we had a few cocoa stores that we cleaned up. So if we, and, and because of some of these reasons, we believe that we have left out some expansion that we could have had. You know, being able to pocket, which is not reflective in our numbers and hoping that in the subsequent quarters and in the coming quarters we’ll be able to recoup that. But in a long journey of next four to five years, you will continue to see our margin expansion because our levers for margin expansion pretty much remain the same. If you look at our AUTC growth, it is the highest ever we were at. 12% for the FY24 became 14% for Q1, 16% for Q2 and now 17% for Q3. Had we not had had this winter sort of an impact, maybe we would have had a higher sort of a cohort leading to more higher sales and more growth, given us more operating leverage, more bank for our sort of a marketing cost and therefore you would have seen a little higher impact on the bottom line as well. So that’s what I would summarize more of. I would say a short term impact. But, but we still have grown 90 bips, you know, on a, a nine month basis and we will continue to improve our gross margin, you know, marketing efficiency, operating leverage, resulting into our core India multi channel adjusted EBIT over a long period of
Percy Panthaki
Supam. Would you say that over a three year period, 500 basis points EBITDA margin expansion in India is a reasonable sort of number for us to go with.
Supam Maheshwari
While I’ll not be able to specifically point out any specific number that, you know, would that be a 500bps or X number of bips, but you should continue to see us performing every quarter on quarter, on a year, on year basis here when we meet every quarter and you should be able to see that performance improvement.
Percy Panthaki
Sure. My second question is
Supam Maheshwari
That we feel comfortable that we have not reached to our steady state, you know, adjusted a bit.
Percy Panthaki
Got it, got it. My second question is on the international business. With the increase in competition, do you think it needs us to revise our assumptions of what the medium term growth rate can be and how long we take to break even in this business or this is just something pertaining to 1/4 and it doesn’t require a revision in our sort of three year forecast of either top line or profitability.
Supam Maheshwari
But see, it’s a difficult question because we don’t know that heightened sort of competitive activity will mean how long they will operate at that level in India over a long period of time we have seen, you know, everything becomes sober beyond a point in time. Everyone becomes capital efficient, everyone tries to sort of become senior on that front. This was definitely a recent two new entrants which of course splurged and created a lot of emotional activity. How long it will continue, we’ll have to see it as we go along. But we believe that the modes that we have created being a niche mothers, baby and. Kids vertical player that will remain, that will continue to deliver superior value to young parents like it does in India, to the Middle Eastern market as well. So while it is very difficult for us to forecast in terms of exact, you know, impact of this competitive intensity, but we believe that our modes will play out in the longer run. So very difficult to sort of really give you a very specific answer of time frame, but we feel very confident about our modes and how we will play out as we go along.
Percy Panthaki
These new players, are they sort of just adding the child care category to existing product portfolio that they have or they are completely new sort of players in all respects,
Supam Maheshwari
Completely new in all respect.
Percy Panthaki
I see, I see.
Gautam Sharma
And per se, we believe in consistent growth, you know, so we will continue to grow consistently and you know, keep on improving our margins.
Supam Maheshwari
For us, bottom line is more important per se. We will, you know, we want to be ensuring our bottom line performance improvement is not being compromised. While we will have an eye on as well on the top line in terms of how we have to manage to bring a balance between the two. But you should continue to see our improvement.
Percy Panthaki
And last question from my side. What is the number of stores that we have closed and what are the net store openings both on a nine month basis? If you can give that
Supam Maheshwari
We had close to 508 store as of December 24th. In terms of cocoa, for which out of which we have closed 38 stores. This is the first time that we have done this cleanup because we have never ever close even a single store prior to this. We believe that. And the reason for sort of closing these as well. We see the metric at an omnichannel way where two things are important for us. One is a footfall and second is the wallet share of the customer in that catchment. We have a certain expectation at a multi channel level, the wallet share of the customer as well as the footfall. We had reasons and data to believe that in those 38 stores we were not to the level that we would have wished and we are not exiting any particular city or location per se, but we will be, you know, sort of. We had to close down to be able to optimize our location or our, you know, size and so on, so forth, to be able to optimize, you know, the performance of those at a multi channel way so that we, you know, it solves our objective. Obviously it will indirectly help to improve our profitability as well.
Percy Panthaki
And got it. 38 stores have closed down and have there been any additions in the nine months of the year? Or.
Gautam Sharma
Of course. So Percy, we have on a net basis we have added around 73 stores. 73 Coco stores in last nine months. Which. Which effectively means roughly around 150, 15 stores have been added in last nine months on a gross basis.
Percy Panthaki
Got it. Got it. That. That’s all from me. Thanks Gaurav and Supam.
Supam Maheshwari
Sure. Thank you Gautam. Sorry.
Anish Arora
Thank you. Next question is from Vidisha. Vidisha, please unmute yourself.
Videesha Sheth
Hi, good evening. Thank you for the opportunity. Just two small questions from my side. One is on the growth of home brands. If you could just elaborate on that. How has that been versus the overall India business growth of 17% even any indicative sense whether it’s materially high or small. Mar,
Supam Maheshwari
Can you introduce yourself? Sorry, we could.
Videesha Sheth
I’m so sorry. Yeah. Hi, this is Vidisha Sh from Ambit Capital. Shall I repeat my question?
Supam Maheshwari
No, no, no. This question was very clear. So via. We as we have mentioned, you know in our prior calls as well, our home brand share is quite material in our business because of very fragmented brands out there in the mother’s baby and child category. Although we have 8,000 brands on our platform. But most of the brands are not that big and fairly fragmented in terms of size. So our home brand share is quite meaningful and it has been growing for on a year, on year basis at a much higher clip than our overall India multi channel. If I talk about at India multi channel growth our home brand share has been going at a higher KEGR than the India multi channel CAGR for many many years in the past. So that has been compounding higher sort of a share. And we have multiple brands that we have shared in the rhp. If you will recall we have brands that are catering Baby hug like it is one of it is the India’s largest mother’s baby and kids product brand by GMV that was shared in the rhp. We believe that it continues to be the leading and the top, you know mother, baby and kids multi category product brand. It also happens to be as was stated in the RSP was the largest product assortment brand in Asia Pacific excluding China. We continue to believe it is the case even now. But as per the factual statement was stated in the rsv. So we believe with that we will continue to increase our assortment what we can deliver better to our customers as we continue to learn from our analytics to be able to. To find the products that with customer, you know, behaviors and customer changing trends and patterns what we need to bring and we continue to innovate in our in house team which develop these products and we design and develop all of these products, you know, domestically and abroad and that’s how we will continue to do so. Our home brand share will continue to improve and that’s for India and even for the Middle east as someone asked, I think this was a question asked by Sachin. We continue to deliver. We have built specific home brands even for the Middle east market. We will continue to. This is a journey, it will take us time because in the prior period before us like in KSA we have been there for only two and a half years now. So it’s just. It takes time for a consumer to change patterns, change behavior and build comfort and trust with a brand. So as we go along on a longer time frame as we have built our product range while our India home brands have gone to Middle east and the specific home brands catering to that market also will continue to deliver in that market. So over a longer period of time our home brand share will continue to improve and that is, that is why it gives us great confidence that we will continue to improve our overall gross margin. One of the factors, key factors to improve our gross margin as overall India multi channel and in even in Middle east market
Gautam Sharma
And Vidisha. The growth in our home brands historically has always been disproportionate to the growth in the India multichannel business. And that will continue to happen. This is what, what we believe.
Videesha Sheth
Sure, sure. Thanks for that. And the second question was if you can just talk about how is the response for the older age segment of 6 to 12 years or 8 to 12 years and how many stores are you looking to open there?
Supam Maheshwari
So we have a very handful stores. We have not opened any stores in six to 12 in the last, I would say, you know, quarter or so or last sort of a couple of quarters. We have few handful of stores that we had opened. We are fine tuning our merchandise from a offline perspective and but online I think we are doing fairly well. That assortment has turned out quite nice as we’ve expanded our assortment and it has and the cohort of the customers actually is quite nicely compounding there from as we progress from six months to six years to seventh year and eighth year and ninth year as this, this tale will get formed over a longer period of time because as customers move from 6th year to 7, 7 to 8, 8 to 9, so this will this funnel will be complete in another couple of years when there’ll be a fully loaded, pregnant, sort of a base of customers who would have transacted from 6 to 12. So this is work in progress, but it has turned out quite well. We’re quite happy with. The progress of Pine Kid, which is our home brand and several other third party brands that we sell to our brand partners. We’re doing quite well on 6 to 12.
Videesha Sheth
Got it. So a net net growth for this, each cohort would be led by the online channel.
Supam Maheshwari
Yes, yes, of course.
Videesha Sheth
Thank you. Thank you. I’ll get back in the queue. All the best.
Supam Maheshwari
Thank you.
Anish Arora
Thank you. Visha. Next question is from Mr. Sudhir.
Sudheer Guntupalli
Hey. Hi Supam. Hi Gautam. This is Sudhir from Kotak Mahindra amc. Thanks for the opportunity and congrats on decent set of numbers. So first question you mentioned 38 cocoa store shut down. So I mean while you said that the customer wallet share expectations are not being met, can you elaborate what has led to this? Is it these 38 stores are more impacted by let’s say competition from Commerce Place or the unorganized players being more aggressive in those micro markets. And if you can give some color on where are these 38 stores? Are they in the top cities or tier 2, tier 3 towns? Some color and slicing and dicing of that data will help.
Supam Maheshwari
Sure. So Sudhir, appreciate your question. Look this. So first of all we have our internal benchmark. I would outrightly clarify that you know, for our offline stores, quick Commerce is not like a sort of a, you know, I would say not, not a right comparison because I mean we have a very different assortment and this is a, this is largely set of baby hug stores out of the 38 stores that we are talking about. And the reason are, you know, multiple fold, you know, the footfalls get impacted, you know, sometimes also by the impact of lot of construction activity happening in the country which goes on for two, two years, you know, three, three years in terms of the, you know, sort of the metros that are getting constructed and which impacts the footfall. And at the same time sometimes while we get the data from online that this is the pin code that is the most suited in terms of opening up a store. And that’s how the science that we have built in terms of opening a store but at the same time, you know, a pin code in India is actually quite, you know, wide in terms of the physical territory of you know, a particular town or a city. And if you and the availability of the right catchment sometimes becomes a, also a challenge and within that constraint the size of the store as well. So some of these things has led to a suboptimal outcome in terms of the footfall expectations that we had from the store from our online data source that told us. Like in this particular PIN code, you can open comfortably a store and, you know, usually, you know, I would say 95 % of the time we will be, you know, bang on. But this particular 38 stores we felt that we had a suboptimal outcome in terms of both footfall as well as the wallet share of the customer that we expect both from an online offline perspective. The offline customers going online or an online customer going offline had not resulted into an enhanced sort of a wallet share and leading us to believe that we should nail this and not coming. So this is not a representative that we will, as I mentioned earlier that we will come out of those cities or those towns. That’s not what we are saying. It is just maybe, you know, we don’t want to call it replace, you know, relocation and all of that but we will ultimately find a new, you know, fresh sort of a. We are not exiting any particular territory or location or the city, not at all. And this is, this is not one territory or one region, one south, north, west, east or one city or a one town where we have, you know, exited all of this. So this is not an impact of local store. This is not like one phenomena. This is just an internal benchmark that we have had which has resulted in for us to take this decision. And going forward I can just sort of share that you know, this is not like a, you know, we will, you know, we will, you know we hope that our you know, churn rate even for a cocoa store will be lower than our four, four sort of a churn rate that we have, that we have demonstrated in past for so many years. So, so we are very comfortable on that. It will only mean it will improve our customer experience, our expectation of footfall, our wallet share leading to an over optimum outcome on the profitability as well as top line.
Sudheer Guntupalli
Sure Supam. So if I understand your response right you are essentially saying the real estate suitability in a particular catchment or micro market is the bigger reason than any competition or sort of an angle.
Supam Maheshwari
Absolutely.
Sudheer Guntupalli
Fair enough. And in the overseas business, right you mentioned about the two horizontal plays impacting in this quarter. So what is our strategy of defense here? And assuming because they are newly entered horizontals might be private equity funded, don’t care about profitability, have a lot of cash to burn while we have to be defensive on the profitability front also in line with your stated objective. So how do you ensure that you don’t lose big market share to these horizontals at least in the next 1, 2, 3 quarters?
Supam Maheshwari
No very relevant question Sudhir. Look, it is a balance of growth and, and our laser focus on our improvement on profitability to reduce the burn. So we will try and balance out through the modes that we have built, specifically modes on enhancing quality of the customers that we acquire, quality of our home brands. That we are delivering out and expansion of those home brands as quickly as we can get out there to the consumers, proliferating that and improving the network effect of that to all our audiences both in the UAE and the ksa and overall improving our merchandising and our sort of a tech platform operational leverage in terms of, you know, personalization. So I think some of these things will enable us to deliver a superior sort of a performance from a discerning customer view. And we believe both UAE and KSA have as discerning customers as in India. And while we have been able to battle it out in our initial journey of maybe five, seven years back when we had a lot of these horizontals in 2013-2016 in India and like we will be able to battle it out in a very, you know, balanced approach of sort of a, you know, burn prudence while balancing the growth and the market share. But it’s yet to play out. We’ll be very focused, balance monitor situation on a day to day basis. It will play out as it will play out. You know, mostly most horizontal players are decently funded, decently decent backgrounds with lot of capital. But I think over a period of time they all have their way of showing performance to their end, sort of investors or you know, shareholders as well. So this will all balance out. Maybe we’ll have some rough ride for maybe a few quarters is what probably it might mean. But again, as I said, we will ride it out in a very, I would say prudent way as we have done in the past.
Sudheer Guntupalli
Fair enough, sir. That would be from me. All the very best.
Supam Maheshwari
Thank you Sudhir.
Anish Arora
Thank you Sudhir. Next question is from PS Rohit.
P S Rohit
Hi Gautam and Subham. Good evening. This is Rohit from Claypond Capital. So my first question is that I noticed that you know, the GMV, both the GMV and the order growth for nine months year on year has been 17% which could indicate that the, you know, order values are sort of stagnant. Any levers that could be at play there to improve them in the future.
Supam Maheshwari
So Rohit, you know, I think we would, we believe that, you know, there were a couple of reasons why our expectation on Q3 internally was slightly higher than what we delivered and we could have done better. As I said, there are a couple of reasons. One reason being, you know, we had, of course the festive environment had which is a Q2 and Q3 is a balanced way that you should see. But more importantly. Winter was delayed in the country usually, you know, in mothers, baby and kids, you know, because of the size issue. Every child or every family literally has to change their winter garments every year. Because I mean you, your children will grow and you have to buy which had a delayed impact of winter. So order frequency could have been slightly better. Even AOVs could have been slightly better which could have led to a higher growth in the Q3 which could have meant that 9 months growth could have been slightly sort of a better. So that’s how we believe. And even also the cocoa stores sort of a closure also had a minor impact as well. So if all of these reasons would have played out, you know, you know, positively which is just this particular quarter, I don’t think it’s a natural phenomenon. We believe over a longer period of our journey our modes remain absolutely strong. IOTC growth is absolutely strong which we have been growing only 12 FY24 to 14, 16 and 17 Q1, Q2 and now Q3. So which will result into a superior growth and it should reflect in the coming quarters or in the subsequent quarters and as we taken some corrective actions in the cocoa as well. So all of this will mean we are our core business India multi channel should continue to deliver a strong outcome. So you should be able to see some of these numbers subsequently over a longer period of time. Here and there one or two quarters does happen because some of these things like winter is not in our control. And this cleanup exercise was just one time. I hope Rohit that was. That gives you comfort in terms of.
P S Rohit
Yeah, yeah it does. Just one more follow up question. You know, we’ve seen that, you know the GM for this particular quarter has sort of gone down slightly. And while that’s A over Q2, while that’s A phenomenon that typically happens over the previous years as well where Q3 GMs are slightly lower than Q2. Would that mean that. Do you see. You would see like a meaningful jump going into Q4 where you know, some of that is some of the prior quarters reversed and then some added.
Supam Maheshwari
So Lohit, you should not see actually quarter on quarter GMs you should see GMs year on year only because there are certain seasonality in our business. So like Q2 and Q3 typically because of this Diwali, the Shaira and Durga Puja ah you know, festivities lot of there is a fashion sale and fashion gives us a slightly higher gross margin than other categories and therefore some of these this particular so quarter on quarter you should not really see that you should see a year on year basis and if. If you look at our year on year gross margin we have improved by 250 bips from the last year at a console level. Obviously India Multi Channel, which is our core business has to deliver a very meaningful steep higher number to be able to deliver 250bips increase at a consolid level.
Gautam Sharma
So trend remains more or less same, you know between the margin difference in Q2 versus Q3 for both the years and we’ll continue to improve the gross margins going forward.
P S Rohit
Got it. Got it. Thank you. This is really helpful and all the best.
Supam Maheshwari
Thank you.
Anish Arora
Thank you Rohit. Next question is from Raj.
Raj Vyas
Yeah hi. Thanks for the opportunity. I’m Raj Vyas from TM Investment Technologies Private Limited. So I have question regarding like how do you plan to sustain and further accelerate the profitability? Like as we can see the losses have narrowed down. So how do you plan to improve the profitability going ahead for a consolidated business and the India Multi channel segment in the upcoming quarters especially in the terms of cost efficiency, revenue generation and market expansion.
Supam Maheshwari
So Raj, if you will see our first slide of the presentation, first, second, third slide of our presentation you will see we have been able to report sort of the best, sort of a quarter or a best performance both in terms of your you know adjusted EBITDA performance for at a console level which has gone to 6.2% and also at India Multi channel which has gone to 11.2% which is you know last four years at the best ever and and year on year basis as well it has continued to increase. We believe as I we’ve been saying it, you know and Gautam mentioned that our you know, you know if you just see our business in four segments, India Multi channel business hasn’t reached to a steady state across different parts of our. If you look at a business from a gross margin perspective, our operating perspective efficiency, our marketing efficiency, our operating leverage, all of these levers will continue to deliver us outcome to you know, optimize and increase our you know ebitda. Adjusted EBITDA for India Multi Channel meaningfully going forward in many quarters and years to come. Our international business obviously has to become profitable as we have improving and reducing our sort of, you know, negative ebitda. And there’s a, there’s a journey there as well which will overall impact our console sort of a performance bottom line performance and global bees is a very young business. And less than a three and a half year sort of a track record right from inception, the company has delivered quite a meaningful performance both on the top line and bottom line. And as I said it’s a young business. So there is a lot more to happen in terms of the steady state, both top line growth as well as the adjusted ebitda. So overall and preschool business is still very young. Again it’s an asset light model although at a 22% adjusted a bit. But if you look at our first three businesses, all of them will improve on a longer period. You should be able to see improvement across all our businesses therefore leading to more superior outcome across different metrics that you would want to see and resulting into more capital efficiency, marketing efficiency, operating leverage, gross margin improvement which will remain in the business for a longer period of time. So those not like one time sort of performance indicator which will vanish. So we feel very confident about that.
Gautam Sharma
In fact, while this is our third earnings call after listing we have published the segment wise number from FY22, you know in our prospectus. If you see and you will see that you know we have improved our margin performance in all the four business segments year on year 2023 is better than 22, 24 is better than 23 and so is nine months FY25. So you will see a continuous improvement both in gross margins as well as the EBITDA performance. And that we believe it that it should continue to happen going forward.
Raj Vyas
So any ballpark number that we are looking for in terms of revenue or margins or profitability because some bit of any like that we can like put the numbers in our mind as well going forward.
Supam Maheshwari
We really admire companies like Page Industries. That’s something that we believe that is a very admirable company from a management perspective to aim aspire to be at the bottom line level.
Raj Vyas
And any sort of challenges to make first as a Page Industries. Any sort of challenges that you will be looking and how can you overcome those challenges?
Supam Maheshwari
Just focused execution. Not much strategy work is required. It’s more of very very you know I would say detailed execution on a focused execution by the entire you know First Cry team and Global Beast team together. All of us have to really continue to be at it to be able to deliver. There are no. I mean and obviously there are certain factors that are not in our control like Winter some of these factors that come into play or general sort of narrative around this slowdown and all of. That although we are we don’t believe that as much there is a little bit of a. There’s so many factors are there which macros may will make difference but we believe we have enough internal modes to continue to focus to be able to deliver the superior performance. But yes we we got to be lucky as we go along in some of the external environment situations and we always have believed that as long as you are in the game and you are doing your best and you are delivering the best in the industry, luck will be your side as well while external when facing external situations and thereby reaching to your goal post as I just mentioned.
Anish Arora
Thank you. Next question is from Mr. Chintan. Please note that this will be the last question.
Chintan Shah
Hi Hi Superman. Gautam, this is Chintan here from JM Financial Family office. So I had two questions. One is on growth. So if you look at on a nine month basis we have delivered a growth of around say 17% y. So my question is, you know there is this organized growth and the key thesis for us has been the shift from unorganized to organized for a player like us. So I wanted to understand slightly from a longer term perspective this number of 17% does it indicate that the shift that ideally we expect to happen from unorganized to organized is not happening? And if that’s. If that’s the case then could you highlight I mean what could be the few reasons for it to play out? Is it the price points or it’s just the customer behavior? That is my first question and second one I would say is more so from an online platform perspective. If you could help us, you know with a few variables like the repeat purchase in terms of customers. How many repeat purchases happening? If you give throw some that number that would be helpful to gauge the performance. Those are my two questions.
Supam Maheshwari
I think the first question answer is actually very simple Chintan. If you look at our industry report which was part of the RHP the unorganized industry is roughly around close to 84% at the time of listing that we had the industry report had mentioned. And the overall industry is growing between 13 to 14%. So we are and this is also you must remember this is a KEGR for next four to five years. There can always be certain sort of a blips in between. So this 13 to 14% is the industry growth as stated by the industry in the industry report by Red Sear. And we have been compounding at a far higher clip than that. And our internal obviously AIM is slightly higher than even what we have but we have gone through the reason, so I want sort of go through them again. But relatively speaking we are obviously converting unorganized to organized. And as India, you know, you know, as I would quote, you know, our finance minister has said over the next four to five years as our per capita income, you know, sort of will double up over a period of next few years, so growth of the unorganized to organized has to happen. And being the largest sort of a, you know, multi channel, multi category mothers, baby and kids, you know, sort of a player, we believe that we will be the biggest beneficiary in that journey. So I think that’s how I would put it that so far we have been tracking nicely whether you know it’ll, it’ll compound faster, slower. I would say, you know, we have seen the environment around us in that which is where we are but it is compounding far more better than the industry growth which is also a little longer horizon. You can’t say 13, 14% every quarter industry report this is over a four or five year kegr. That’s exactly what will happen to us as well that our KEGR might be slightly superior. And over a longer. If you look at our four years kegr past and going forward it definitely can be different than what we have just shown for the nine months which is 17, 18. So that’s the answer to your sort of a first question.
Chintan Shah
So just if I may just want to follow up on this. So the message that I’m getting from this is clearly two points. One is we don’t see any factor say in terms of price point and customer behavior that is stopping the shift from unorganized to organized. That is one. And secondly, the growth that we are looking at is you know, much higher than the 17% that we have delivered in the nine months. Is that the right understanding?
Supam Maheshwari
So the Q3 was impacted I would say for us because of the delayed winter. We, we’ve gone through the reasons and you should see your business in Q2, Q3. I would not try to say that you know, you should benchmark like you know a very steep growth curve from where do we stand? You should see in the backdrop of the overall industry, retail industry as well. While there will be a conversion from unorganized to organized without doubt and that’s happening in the market and being a very large online domination in our multi category approach. As you can see it’s almost 78% of our multi channel business. The online is 70 sort of a, you know, it’s, it’s a significant part. And there if you will see as well I, you know, autc growth has been stronger. So you will be able to see see a superior sort of a performance as we sort of go along. But industry is 1314. We should we are compounding at a much higher clip. Gives us the confidence that we are doing the right things. Yes, we as management, we remain hungry, we remain unhappy. We want to deliver more, but. We don’t want to promise more, so we will deliver more is how I would sort of put it.
Gautam Sharma
And being the largest, you know, demand aggregator in terms of the largest, you know, platform destination in India and being the largest supply aggregator, which is Baby Hack is the largest home brands in India. I think, you know, both these factors, you know, put together, you know, should give, you know, anyone a sufficient comfort that we’ll continue to grow better than the industry growth.
Supam Maheshwari
Our long term modes are absolutely intact and compounding all the key modes that we have built in the business. They’re all compounding and generating a strong defensibility, strong foundation for our future growth. I think you should be able to see it over a period of next couple of years.
Anish Arora
Thank you. That was the last question I handed over back to Superman Gautam for any closing remarks.
Supam Maheshwari
No, I. I would like to thank you everyone for all of you taking time out on a Saturday and we were really appreciate and looking forward to seeing you in our next quarter which will be a completion of the annual fiscal year.
Gautam Sharma
Thank you so much everyone.
Supam Maheshwari
Thank you once again.
Operator
Thank you.