Credo Brands Marketing Ltd (NSE: MUFTI) Q3 2026 Earnings Call dated Feb. 10, 2026
Corporate Participants:
Kamal Khushlani — Promoter, Chairman and Managing Director
Rasik Mittal — Chief Financial Officer
Analysts:
Unidentified Participant
Gunit Singh — Analyst
Nilesh Doshi — Analyst
Rahel — Analyst
Deepan Sankara Narayanan — Analyst
Aditya Verma — Analyst
Ashi Atre — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Credo Brands Marketing Ltd. K Q3 and 9 months FY26 earnings conference call. 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 this conference call, please signal an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded.
This conference call may contain forward looking statements about the company which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and it may contain involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr. Kamal Kushlani, managing Director. Thank you. And over to you sir.
Kamal Khushlani — Promoter, Chairman and Managing Director
Thank you. Good afternoon everyone. I have with me Mr. Rasik Mittal, our Chief Financial Officer and SGA, our Investor Relation advisors. I trust you have received the Investor deck. If not, it is available on the Stock Exchange website and on our company website. In Q3 FY26, we continued to make steady progress on our Mufti 2.0 transformation journey centered around premiumization of the store experience, elevated merchandise and stronger brand storytelling. During the quarter, 12 stores under the new retail identity have already been opened and while it is still early in the journey, the initial consumer and trade response across these locations has been encouraging, reinforcing our belief in the direction of the transformation.
On a nine month basis, we have opened 27 new stores and closed 22 underperforming stores, reflecting our continued emphasis on quality of network over scale. The advertising and branding spend. For nine months, FY26 stood at approximately 5% of the revenue and we intend to increase this to 8 to 10% of revenue for the next year, even if it has a short term impact on profitability. Q3 FY26 was a muted quarter for the apparel industry, marked by cautious consumer sentiment and lower footfalls for MUFTI as well, the festive season did not meet expectations which impacted overall sales momentum during the quarter.
Against this backdrop, our revenue from operations for Q3FY26 stood at 146.1 crore with EBITDA of 33.5 crore translating into an EBITDA margin of 22.9%. Packed for the quarter was 7 crore. Gross margins during the quarter were temporarily impacted by by recent GST reforms as we consciously passed on tax benefits to customers on products priced below 2,500 while refraining from price increases on products above 2,500. This measured approach was taken to protect volumes and sustain consumer traction during a softer demand phase. However, while top line growth remained under pressure, we maintained gross margins of 56.5%. On the working capital front, we saw an improvement during the quarter.
Working capital days reduced to 179 days as of Q3FY26 compared to 217 days as of H1FY26 on a trailing twelve month basis reflecting stronger collections and tighter credit discipline across channels. While our working capital cycle remains structurally higher due to our deliberate risk absorption model where we retain inventory risk to ensure fresh merchandise and stronger partnership relationships every season while near term demand conditions remain subdued, we remain confident in Mufti’s long term growth strategy. Our strong brand recall, diversified channel presence, disciplined inventory model and continued focus on premiumization position us well to benefit from a recovery in consumption.
As we move forward, our priorities remain clear. Strengthening brand equity, scaling profitable growth across channels, expanding our premium store footprint and building long term value for all stakeholders. With this, I will now hand over the call to our CFO Mr. Rasik Mittal to take you through the detailed financial performance for the quarter.
Rasik Mittal — Chief Financial Officer
Thank you Kamal and good afternoon everyone. First I will give you the financial highlights for Q3FY26. Our revenue for the quarter stood at 146 crores as against 156 crores in Q3FY25 gross profit stood at 83 crores with a GP margin of 56.5% for the quarter. Our EBITDA for the quarter stood at 34 crores. Our EBITDA margin stood at 22.9%. Profit after tax for the quarter stood at 7 crores. PAT margin stood at 4.8% coming to 9 months FY26 performance revenue stood at 430 crores in 9 months. FY26 as against 465 crores in 9 months. FY25 gross profit stood at 250 crores with GP margin of 58.2% for the 9 months.
EBITDA for 9 months FY26 stood at 113 crores. Our EBITDA Margin stood at 26.2% PAT margin for 9 months FY26 stood at 32 crores with a PAT margin of 7.5%. ROCE and ROE as of 30th December 2025 basis stood at 13.7% and 11.2% respectively. Cash flow from operations for December 25th stood at 115 crores. With this we now open the floor for question and answers.
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. Ladies and gentlemen, to ask a question please press Star and one now. Participants who wish to ask questions may please press Star and one now. The first question is from the line of Gunit Singh from Countercyclical pms. Please go ahead.
Gunit Singh
Hi sir. Thank you for this opportunity. So I just have a question regarding the increase in advertisements spend on the strategy behind it. So for the previous nine months we have increased expense to about 5% of the revenues but we haven’t seen any. But they don’t reflect in the numbers. The venues have gone down despite stores opening and all that. But we plan to take it up to about 8 to 10% of total revenues. So I would like to understand number one, this will be contracting our margins going forward. So when you planned about increasing the spends, I mean what kind of results did you.
What were the underlying results of your plan for this? That you expect revenues to grow by about 2030% by increasing the spends to about 8 to 10% of the revenues, number one. And number two, is it so that we will continue to spend about 8 to 10% of revenues or is it that we will cap the spends to say about once we reach marketing spends about 40cr or 50cr or so on, do we have a number that despite revenue growing we will cap the marketing expense to a given number? Or is it the strategy that even if our say revenues double in the next two years we will continue to spend about 8 to 10%.
So I just want to understand like. I mean is this strategy well thought and what outcomes you expect from this?
Kamal Khushlani
So Guneet, the thing is that the brand has undergone transformation again and is moving towards a premium position in the market and it is important that the consumers are. There is enough awareness that is created among these consumers regarding the new position that the brand is taking in terms of elevated merchandise, elevated store experience and the way the experience at the store will be curated for them in future. So to do that, it’s at a stage where we have to make these investments which is going to be in line to keep the brand salient and competitive in the environment which is ever evolving.
So this is something which is necessary for the long term health and future and sustainability for the brand. So for the next couple of years for sure we are going to be spending 8 to 10 odd percent of our revenue. However, these are decisions which are taken keeping in mind the longer term growth which I’m unable to project right now that when we hit the 20, 30% number, but for the next couple of years we’ll be spending heavily in investing and all the changes that we are making. It’s a little early in the journey to say much about it, but there are already positive signs that we see from trade as well as from consumers. With a little bit of whatever kind of interactions that we have had with consumers.
Gunit Singh
What kind of positive signs are we seeing? Because I mean if we consider our business earlier, where the spend were limited, not the 8 to 10 different levels we were growing year on year, we were having comfortable margins. So I mean, why the pivot to such high spends where even after nine months the venues are falling and obviously we’ll take a long hit on the profitability as well. So why, I mean, what’s the rationale for, I mean transitioning to this? I want to understand basically, I mean, what was the main idea behind it? Because everything is going well till now, if I’m not wrong.
Kamal Khushlani
Sure, Gunit, it is certainly going well and we will still be spending from our profits only. It’s not that we are going to hit our bottom line or take it into the negative. The thing is that as the market keeps changing and market keeps evolving, there is new brands, new things that come into the market. So to stay relevant you have to change your course. You cannot just continue to do what you were doing in the past. So keeping the future in mind and keeping the current competitive scenario in mind, these are the steps that we are taking which we believe are going to help sustain the growth for the brand in future.
Gunit Singh
All right, sir, I wish you all the best and I hope that these will come to fruition soon. Just that our share has fallen about 75% from the all time high. So I just hope that, I mean these decisions work well for us.
Kamal Khushlani
Sorry, your voice was muffled.
Gunit Singh
So I’m saying that, I mean if we look at the bottom line, the profitability has gone down. The share has fallen about 70, 75% from all time high. So I just hope that, I mean in future we are able to create some value for the investors as well from the decisions that they take. I wish you all the best. Thank you very much.
Kamal Khushlani
Thank you Guneet. Thank you.
operator
Thank you sir. Ladies and gentlemen, to ask a question please press star and one now. Participants who wish to ask questions may please press star and one at this time. The next question is from the line of Nilesh Doshi from Prospero Tree. Please go ahead.
Nilesh Doshi
Thanks for the opportunity sir. We are changing the strategy. We are opening the new format store or the premium store and we are spending 8 to 10% of the revenue for the advertisement. By spending that much money and by opening the premium store will be will the company achieve the earlier revenue and profit or it will be much more higher than the earlier profit.
Kamal Khushlani
In future. It will certainly be aspire and aim to get it to a higher level mid term, on short term for the next couple of years. Definitely our profit will be impacted.
Nilesh Doshi
Sir, the profit may be impacted maybe due to the advertisement cost but our CP margin is lower and our revenue is also de growing on quarter. On quarter, Sorry, on a yoy basis. So if we are opening a premium store, naturally we are selling the premium product which is higher than the average sale price. So why our revenue is not growing, why our GP margin is not maintaining and why our profit is down.
Kamal Khushlani
So at this you should be looking at our business on a quarter basis. I have even said that in the past by the end of the year this should. The EBITDA should come to around 25 odd percent by end of Q4 and also our GP margin will be sustained. It’s not that it’s going to be terribly lower.
Rasik Mittal
Margin has gone down because there have been changes in the GST. Rates and as we have explained in. The presentation in the Q3, we have not increased the MRPs to take care of the higher GST. However, we have passed on the benefit of the lower lower GST to the consumer. So that’s why the GP margin has been impacted slightly. But however, going forward we are confident we will be able to maintain our GP margins.
Nilesh Doshi
So what about the revenue will be maintained from quarter four onward? Can we maintain the revenue as earlier or further? It will go down?
Kamal Khushlani
No, no it won’t further go down but by the end of the year we we might be 5 to 6% lower than last year.
Nilesh Doshi
So because the investors Are little bit worried. At least the investor like me. Because last three to four quarters every time the price really or everything from the company is informed that there is a market condition is not good and the demand is not good. So the revenue is down. Now we are spending the money on opening a new store. At the same time we are spending the money on advertisement to establish our premium brand. I think this strategy will work for the company in the future. Because currently it does not seem that our revenue is growing because we are opening the store.
Then why the revenue is down? I don’t understand. Because we are closing the some non performing store and opening the new store. So I think the revenue must be maintained. At least because of the advertisement expense, our operating expenses is higher and EBITDA margin should suffer, not the GP margin and revenue. That’s. That’s my understanding. I may be wrong, but it is my understanding, sir.
Kamal Khushlani
But these stores have just recently reopened and it’s a game of patience, Nilesh. Over the future, definitely the business will grow and we are confident about that as the demand picks up. But these stores have just now been opened and underperforming stores have been closed. They take some time to pick up and these are investments that are necessary to keep the salience of the brand going forward.
Nilesh Doshi
Okay? Okay. All the best. Thank you. From Q4 onwards, at least we see the revenue growth. At least not the profit growth, but the revenue growth.
Kamal Khushlani
Thank you.
operator
Thank you, sir. The next question is from the line of Rahel from Sapphire Capital. Please go ahead.
Rahel
Hi sir. Good afternoon. Kenyan.
Kamal Khushlani
Yeah.
operator
Yes, sir.
Rahel
Yes. Hi sir. So firstly, I would really like to, you know, applaud you and commend you for so I for the journey of taken upon. You know, I can really see the change. I recently passed by one of your stores in one of the malls. Mufti 2.0 stores. I also recently visited your website. Right. So I can see the vision which you had in a portal in front of investors that you want to premium as a brand. It’s really working. My only concern is in today’s time, you know, since COVID so many small brands have come up, right? And they are also targeting the young generation who.
Who want, you know, those fancy names and the logos from the market and they want to wear that. How will you make Mufti an overnight sensation? So for example, recently I’ve been hearing a lot from friends and other people that they are into rare rabbit and, you know, similar brands. So Mufti has been in the market for such a long time and Now I see that, okay, the quality is there, the whole image has changed. But how will you insert in your mind that okay, mufti is something I want to go for against the likes of Jack Jones, la Coste, Superja, etc.
Kamal Khushlani
So this is exactly what we are looking to do. People have a overhang of the brand from the past and with whatever changes that we are making, it’s important to communicate and change people’s perceptions about the brand because there’s a certain rate at which the physical stores will change. There are many factors that come into play when we are changing or renovating new stores. Also, even while renovating a store, we have to keep in mind how much of the lease is still pending. Whether the lease is ending in two years, then those kind of stores can’t be renovated because then you have to amortize the depreciation over just two years and things like that.
So this will happen at a certain pace. However, we will do it prudently at the fastest pace possible. But that’s the reason why we are changing the brand. Because as the environment and the retail landscape keeps changing, we have to keep changing. There are times when there are some ups and downs but it does not impact the long term sustainability of the brand. But whatever we are doing right now is keeping in mind that what competition is doing, what we have to do, how we will have to navigate through this period where we are able to come back on a growth path and rekindle the demand for the brand.
Rahel
Okay sir, I just. I just want to wish you all the best. I really wish that people are able to see what you have to offer. Now I recently purchased from. Yeah, even for that matter the website and the overall everything is looking. You know, there is a drastic change in your presentation as well. So. And if I have to pick out of the bunch all the stores in the mall, I think I will go to Mukhti first. From what I’ve seen from afar. So I think it will work. I think it is working and I.
Kamal Khushlani
Wish you all the best for that so much Ram.
operator
Thank you sir. The next question is from the line of Deepan Shankara Narayan from Trust Line Holdings Private Limited. Please go ahead.
Deepan Sankara Narayanan
Good afternoon everyone. Thanks a lot for the opportunity, sir. Firstly, how do we see the growth profile of the company changing over next three years considering the substantial increase in ad promotion and spend strategy. So do we see the growth profile changing over long term?
Kamal Khushlani
Certainly, certainly we see it changing over the long term. But however, as we have mentioned earlier for the next couple of years. We are not going to commit on numbers that this is what we’ll do. This is what we do. Typically we believe in under committing and over delivering. So it’s certainly we should start seeing growth from next year onwards. But after the next couple of years we’ll definitely be back on track.
Deepan Sankara Narayanan
Okay. Okay. So is this changing strategy is mainly due to huge competition coming from these D2C companies which are being funded by private equity guys and they have been aggressively growing. So this is reflective of that to stand holding position in the competitive market environment?
Kamal Khushlani
Partly yes. Partly yes.
Deepan Sankara Narayanan
Okay. Okay.
Kamal Khushlani
Ever changing market scenario, you know you have to keep changing with the market.
Deepan Sankara Narayanan
Okay. Yeah, sorry, go ahead. Sorry
Kamal Khushlani
I said we have to stand the test of time. That only time will tell us in hindsight.
Deepan Sankara Narayanan
Okay, okay. So specific to this quarter, what is the kind of graphics growth we had seen adjusting for sales return discounts and with BSE impact, what is the kind of gross sales growth we have?
Rasik Mittal
Deepan, we have not seen any growth in the revenue. In fact in the quarter.
Deepan Sankara Narayanan
Six percent. Okay. And can you throw some light on the GSE impact on this gross margin per sale?
Rasik Mittal
So GST impact has been only in the third quarter when the. Because on the 23rd of September the new GST rates got applicable. Basically so as a company we had taken call to pass on the benefits of the lower GST rate to the consumers and not increase the gst, the MRP for the higher price GST rate basically for the governments. We took the hit in the company, took the hit. We didn’t want to disturb the consumer sentiment in between the season.
Deepan Sankara Narayanan
Okay, okay. Okay sir, thank you. I’ll get back in the queue.
operator
Thank you. Sir, the next question is from the line of Aditya Verma from Synergy Investments. Please go ahead.
Aditya Verma
Yeah. Good morning. Good afternoon. Sir, my question is on the quarter four now we are already sitting in mid of February. How do you see the sales happening and is there some improvement from the previous quarter?
Kamal Khushlani
So as I mentioned earlier Aditya, at the end of the year we should be at about 5 or 6% lower than last year’s sale number. So it continues to be muted. However, the improvements and changes that we have made in the merchandise etc, hopefully from spring, summer 26 they should start paying dividends.
Aditya Verma
Okay. Okay. My. I had other questions but I think most of them are answered by previous. Thank you.
Kamal Khushlani
All right.
operator
Thank you. Sir, the next question is from the line of Ashi from Maryhorn Investment Advisors. Please go ahead.
Ashi Atre
Hi sir. Thanks for this opportunity. I had a few Questions on the store opening plans, I wanted to understand how do what are the plans going forward in terms of the number of stores being open, planned to be open, opened in the coming few quarters and the closing as well.
Kamal Khushlani
So Ashi, currently we have, in nine months we have opened 27 new stores and closed 22 stores. That’s a net addition of five. However, in the next quarter we shall be, we shall be closing 21 stores and adding 15 new doors, adding six new doors in the season. So for the year FY26 we would be at minus 10, which is 431 odd stores. And out of these 20 stores will be of the new retail identity. And going forward in the next year, we intend to close about 2025 odd stores and open 25 to 30 odd stores. We are not going to chase scale, we are going to chase quality for the next year.
Ashi Atre
Understood. Another thing I wanted to get a understanding on was that there was a mention about inventory optimization as well in these stores. Could you dwell a little deeper on that as well?
Kamal Khushlani
Inventory optimization? I don’t know what exactly you’re referring to, but this is something that we consistently do. It’s the business model that we follow. Ashi is a business model where we take risk of the entire inventory. We provide it to all channel partners and whatever is left over at the end of the season, we take it back. Since the season has been impacted and the performance, performance has been low, the goods will be coming back to us. However, historically we have always managed to clear these goods at a profit. We don’t end up making losses.
We take our own time to do it, which impacts our working capital days. But we don’t end up eroding the brand by giving extra discounts and trying to liquidate it in a hurry.
Ashi Atre
Understood. Yeah, this was around the point that was mentioned about the working capital cycle going down. Just wanted to get an understanding on that. So thanks for that. Also, there is a mention quite frequently about the market momentum being quite slow in the coming in the past few quarters and in the coming few quarters as well. Wanted to understand, how do you see this market momentum? Of course we expect that the company would be able to recover the invested value, say by December 26th. But how do you see the market moving in this particular segment going forward?
Kamal Khushlani
We are hopeful that the demand should pick up given the reforms that the government has made. And for the last few quarters it’s been, it’s been muted. We are hoping that the demand should pick up from spring, summer 26 onward.
Ashi Atre
Understood. Thanks A lot sir, I just wanted to point out that I happen to visit one of the stores in the city I live in and it’s commendable that even the store staff is very well watched by the strategy 2.0 that you guys have implemented. Just wanted to point that out as well. Thanks a lot for your time.
Kamal Khushlani
Thank you Ashi. Thank you.
operator
Thank you ma m. The next question is from the line of Tanmay from Growth Infinity. Please go ahead.
Kamal Khushlani
Could you come closer to the mic and speak because your voice is pretty low.
Unidentified Participant
Am I audible now?
Kamal Khushlani
Yeah, better.
Unidentified Participant
Sir, I was asking that in the last means from Jan only. I have started to observe that there is a means large number of views coming towards Your advertisement on YouTube and on Instagram as well. So are you able to see some means green sprouts coming up? And with those advertisement, the large number of views that are coming, are they converted into real time sales on websites or on offline basis?
Kamal Khushlani
Yes, at the website our business has grown by 87% over the last year same quarter and definitely we are seeing an improvement in that and from whatever we get in interactions from trade. Also, like I said, the response is very positive and people are noticing that something has happened. Even on the website it looks a lot more premium, the stores look a lot better. But however, Tanmay, these are not things because it’s not like a call to action advertisement that you know, you’re just promoting discounts and you’re getting people to your stores.
These are investments made for the longer term so they take some time to pay off and there’s a certain amount of frequency with which we have to hit the consumers along with the reach that we have to, you know, for it to bear fruit. Hence we say that for the next couple of years at least we will have to make huge investments in advertising and post that looking at the market scenario and the performance, we will take decisions on how we want to invest going further.
Unidentified Participant
Okay sir, answer one more question that as for now we have 12 premium stores. So by the end of quarter four can we expect it to reach by 20 or 1516 in the number 20?
Kamal Khushlani
Okay sir, end of Q4 there’ll be 20 new new identity stores out of which 15 will be new stores and 5 will be renovated stores.
Unidentified Participant
Okay sir. Answer do we have something big collapse coming up with online creators as well or collapse and means you are expanding the advertisements spend as well. So are you expecting some big collapse between some creators or the industry collapse as well?
Kamal Khushlani
That’s constant work in progress but we are not looking at big celebs, but certainly we are looking at content creators as collaborators with the brand.
Unidentified Participant
Okay, sir, thank you.
Kamal Khushlani
Welcome, Tanmay.
operator
Thank you, sir. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to management for closing comments.
Kamal Khushlani
Thank you. I’d like to thank everyone for being a part of this call. We hope we’ve answered your questions. If you need more information, please feel free to contact us or sga, our investor relations advisors. Thank you once again and have a good day.
operator
Thank you, sir. On behalf of Credo Brands Marketing Ltd. That concludes this conference call. Thank you for joining us. And you may now disconnect your lines.