Credo Brands Marketing Ltd (NSE: MUFTI) Q1 2026 Earnings Call dated Aug. 01, 2025
Corporate Participants:
Unidentified Speaker
Kamal Khushlani — Promoter and Managing Director
Analysts:
Unidentified Participant
Nilesh Doshi — Analyst
Presentation:
operator
Please wait while you’re joined to the conference. The conference is now being recorded. IT SAM. IT. SA. SA. IT. Ladies and gentlemen, please stay connected. The conference will begin shortly. Sat good day and welcome to Credo Brands Marketing Limited Q1 FY26 earnings call. As a reminder, all participant lines will be in lesson 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 conference is being recorded.
I now hand the conference over to Mr. Kamal Khoslani, promoter and MD of Credo Brands Marketing Ltd. Thank you. And over to you sir.
Kamal Khushlani — Promoter and Managing Director
Thank you. Bhavya Good morning everyone. I have with me Mr. Rasik Mittal, Chief Financial Officer and SGA, our investment relation advisors. I hope you all received the Investors deck. If not, you can view them on the stock exchange or the company website. The retail industry in India has been undergoing a significant transformation shaped by evolving consumer preferences, rapid digital adoption and rising aspirations for premium experiences. One of the most notable shifts has been the substantial increase in spending on branding and marketing as companies strive to build stronger emotional connections with consumers and enhance brand recall in an increasingly competitive landscape.
Additionally, there is a clear trend towards premiumization with brands focusing on elevating the customer experience through superior store design, curated product offerings and enhanced service standards. We’ve broken down this speech that I’m about to give into five or six different pieces, so I’ll start with the Mufti retail transformation. We at Mufti are entering into a phase of transformation which is anchored by our vision to position the brand firmly within the premium segment of the Indian apparel market, recognizing the evolving preferences of today’s consumers who are increasingly seeking experience led shopping over transactional retail. So we are reinventing our stores, redefining the brand experience and reigniting the spark for the brand.
Coming to product evolution, we are looking to elevate the fashion relevance. Mufti has sharpened its fashion sensitivity to align with the evolving tastes of the new Indian consumer. We continue to introduce trend sensitive product strategy featuring seasonal collections with contemporary silhouettes, expressive color palettes and elevated fabric choices targeted to enhance Mufti’s appeal among style conscious consumers and reinforce its positioning in the premium menswear segment, ensuring the brand remains influential and aspirational. Now coming to the digital marketing, Mukti began its strategic partnership with Google and Meta for last year to strengthen its digital marketing capabilities and amplify brand storytelling.
This collaboration is now reaching an inflection point. As we scale both our content creation capability and marketing investments to communicate Mufti’s transformation effectively, we will continue to leverage these platforms to connect with consumers across multiple touch points. This digital push supports our omnichannel retail strategy, enabling seamless discovery and conversion across both online and offline channels. With hyper targeted campaigns and rising consumer engagement, digital sales through Mufti’s website have more than doubled over year on year, underlining the impact of these initiatives. This also validates our belief in our capability to scale up the brand in the D2C space in future.
Be an omnichannel player coming to our retail footprint strategy to make Mufti’s brand transformation visible and experiential for consumers, we have developed an entirely new store design and identity to deliver a shopping experience that enables customers to experience the style and quality of the Mufti brand in a more premiumized environment. As part of this strategy, we are accelerating the transformation of our retail footprint by opening 20 odd premium stores, some of them flagships in FY26 located in premium malls and premium high street across India and closing underperforming stores as well. So this may not increase the store count, but it will improve the productivity of our retail network.
In parallel, we are investing in refurbishing some existing outlets. This retail network transformation and rationalization will be continued in FY27 also. These initiatives are planned to drive higher footfall, deepen brand engagement and reignite consumer excitement around Mufti and enhance the salience of the brand, ensuring we remain competitive and influential again in a rapidly evolving market. Coming to the investment in brand building and the impact it will have on Mufti’s cost structure and long term profitability. We are making deliberate investments to position and strengthen the Mufti brand within the premium fashion segment to realize the full potential of this opportunity.
We recognize that this transformation will impact our cost structure as we build the capabilities required for sustained growth. These efforts will also lead to an increase in rental costs for premium locations. Our early success in some locations, however in some premium relocated locations and the digital engagement activity has reinforced our confidence in the brand’s initiatives through initiatives of enhancing our digital brand presence and building our retail footprint with premium flagship stores, we expect our advertising and marketing spend to increase to 6 to 7% in FY26 and grow up to 8 to 10% in FY27. While these initiatives may create a short term pressure on profitability due to higher operating costs, we consider them to be strategic investments essential for driving sustainable long term growth and profitability.
We anticipate the benefits of these efforts to begin materializing from FY28 onwards, by which time the advertising and marketing spends are expected to stabilize. This will enable us to achieve the desired outcomes in terms of both revenue and expansion and improved profitability. Coming to the Quarterly Performance Overview during this quarter revenues remained steady at approximately 120 crores, reflecting the continued softness in discretionary spending, particularly across Tier 2 and Tier 3 markets where consumer sentiment remains muted. Despite these headwinds, we achieved a notable improvement in gross margins, Expanding by 290 basis points Year on year. This margin growth underscores the enduring strength of the Mukti brand and the sustained consumer preference for our differentiated offerings in quality, fit and comfort.
The broader apparel industry is currently navigating through a phase of macroeconomic uncertainty and cautious consumer behavior. Nevertheless, MUFTI is resilient and positioned for long term success. Our strategic initiatives for premiumization and digital acceleration are expected to enhance brand equity and drive sustainable growth and profitability. We are also encouraged by the recent budget’s emphasis on boosting middle class purchasing power through tax relief measures which we believe will positively influence consumer sentiment and and stimulate demand in future. Looking ahead, we are confident in our long term strategy and committed to our vision of establishing MUFTI as one of India’s leading premium menswear brands, resonating with the modern consumer across both physical and digital touch points.
With this brief, I’d like to hand over the call to our CFO Mr. Rasik Nittal for the update on the financial performance. Thank you everyone. Thank you Kamal. Good morning everyone. I will give you financial highlights for Q1FY26. Revenue for the quarter stood at 119.9 crores. Gross profit stood at 73.8 crores with a GP margin of 61.6%. For the quarter, EBITDA stood at 31 crores. Our EBITDA margin stood at 25.9%. Profit after tax for the quarter stood at 6.3 crores. Our PET margin stood at 5.3% for the quarter.
With this we will now open the floor for question and answer. Thank you.
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 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles participants to ask a Question, you may press star and one, if you wish to remove yourself from the question queue, you may Press Star and two, the first question is from the line of Nilesh Doshi from Prospero 3 Financial Services.
Please go ahead.
Nilesh Doshi
Thanks for the opportunity. Am I audible, sir?
Kamal Khushlani
Yes, you are.
Nilesh Doshi
Thank you. Thank you sir. Just you mentioned that you are reinventing the stores and design. So what did the Capex plan for the reinventing the design store and how many stores are you going to reinvent or redesign and within what time it will be completed?
Kamal Khushlani
So. Nilesh, right?
Nilesh Doshi
Yes sir.
Kamal Khushlani
So these are new stores that have just been planned and they are in the pipeline and we got very encouraging responses when the first time we put it up at Digital Retail Congress where we met all our trade partners, mall partners, landlord partners. So currently they are in the working but roughly they are expected to be about 30% higher in cost than what we were earlier. Earlier our capex cost was around 25 lakhs. So this is roughly expected to be in the range of 32 to 35 lakhs.
Nilesh Doshi
Yes, but is there any number of stores to be reinvented? Have you planned anything? Will it be only from the internal accrual or do we require to raise any debt?
Kamal Khushlani
We don’t need to require any raise any debt. We will be able to do it from our internal accruals. And currently we have about 20 odd stores in the pipeline to open in this year and similar number to even close. What we are looking to do is reduce the tail at the end and close some underperforming stores and replace them with opening better and new stores in more premium and influential markets. In the past we have been a little conservative as retailers, but as the times are changing today, what we see is that there are some important markets to strengthen our position and to put a foothold as a premium brand in the market.
There are some malls and some retail sites that we must be present and we must make a larger statement. So there are some flagship stores also that we will open and we will also renovate between this period and this year. I think we will also renovate between 10, 15 to 20 stores. But these are not things that we decide today we’re going to take them. We look at the season and the period which is slightly lean because that’s the time we use to renovate it. So we will test the stores that we are opening now, see them and we will renovate stores in the month of March, roughly 15 to 20 stores also we will end up renovating.
Nilesh Doshi
Okay sir, so. So can I say that we are presenting ourselves in the premium mall and premium. I see. To showcase our premium product or we would like to create our brand as a premium brand amongst the youth. Is it the right understanding?
Kamal Khushlani
Absolutely right.
Nilesh Doshi
Thanks. Sir, you have also mentioned that you are going to increase the marketing expenses from by 2, 6 to 7% in current year and in next year 7 to 8%. Okay, that’s fine. We are increasing the reinventing cost, we are increasing the marketing cost. But do you not expect any revenue increase? Because on the one hand our GP margin is increased by almost 3% and so if there is a revenue growth, we can generate the higher GP and so that that higher GP will match the desired cost and so there will be no effect on the PBT level.
Is it the right understanding or do you the expenses will be higher than the GP growth?
Kamal Khushlani
The expenses will certainly be higher, but it will not be higher than the GP growth. The GP that you’re seeing higher. Please don’t look at our GP on a Q. On Q basis. By the end of the year this will get rationalized to the normal GP that we make which is around 57, 56%. So this will come down to that. Quarter on quarter is a reflection because this year, looking at the market conditions and how the market was going, there were footfalls were very low in the market. So our discount sales started two weeks later.
Hence the GP seems to be higher. And it did not make sense to start putting discounts earlier because even though we would put discounts, we would have ended up losing margins but we were not getting the footfalls. We couldn’t see that happening. So therefore, in line with the competition and how the market moves, we delayed our discounts by 2 weeks. Therefore it looks like that this GP will get rationalized by the end of the year. Now coming to your sale part, when you start making these investments, particularly in the digital space etc. It takes some time for them to start paying back.
It’s not a call to action investment where if you put a put out an advertisement saying that I’m flat 50% off, come and buy two and get two. These are advertisements which give you immediate responses. They are call to action advertisements. However, when you are premiumizing a brand, it requires a certain reach that we reach enough number of people. Hence we have to increase the spend and create awareness of just say mufti 2.0 mufti in the new version that people should experience. So we have to increase the reach and once we reach then we have to Frequently hit them X number of times before a consumer gets to realize the changes and that starts driving footfalls.
Hence we are being little conservative and practical. We don’t want to put any kind of high expectations. However, from FY28 onwards as we say we certainly see that we should start these investments should start paying back.
Nilesh Doshi
Sir, I’m not an industry person so my next question is like that there is a Zurio which are selling the product very cheap.
operator
Interruption. Sorry to interrupt, sir. Mr. Doshi, there’s a echo from your line.
Nilesh Doshi
Okay, so hello now is it? Oh, okay.
Kamal Khushlani
Yeah, we can.
Nilesh Doshi
Hello.
Kamal Khushlani
Yeah, it’s okay.
Nilesh Doshi
Okay. Okay. Okay. Thanks. What I would like to say that I am not an industry person. So there are the Zodia Zoodio is opening more and more number of stores. There is a trend from the Reliance industry. Reliance retail. So are we facing any tough competition from these two major retail chain because it is very difficult to classify the premium product amongst the economy product or because they are offering a higher discounting there some new scheme? Are we facing any tough competition from these two guys or anything like that from in the industry?
Kamal Khushlani
Nilesh brands like Zudio and retailers like them are very different and trying to appeal and cater to a different audience. Maybe for some time, you know, these brands could offer, you know, have some kind of impact on, you know, other brands. But there is no relation between. We are trying to build a completely different brand from what Zoodio is doing. Zoodio is at a completely different price point for a completely different consumer and it’s not us. We are very, very confident about the brand and the future potential that the country holds and how people’s aspirations rise.
And as people’s aspirations rise, people want to wear brands which are premium and more aspirational and not necessarily go for economy brands or products. However, at all times there will be consumers who will get attracted to economy. But at the same time there will always be enough consumers who have aspirations rising in India to consume more and more premium products. So we are readying ourselves for that. However, currently the macroeconomic conditions have been challenging. So that’s what we are facing in the mid premium to premium space at this time. But we are very confident that we should be able to face this very very strongly in the future and be able to grow the brand and put our foothold very strongly.