Key highlights from Khadim India Limited (KHADIM) Q2 FY23 Earnings Concall
Q&A Highlights:
- [00:07:04] Abhishek Getam from Alpha Invesco enquired how has the portfolio evolved around sports and athleisure and its contribution and ASP in the segment. Namrata Chotrani CEO said that the sports category has done very well in 1H23, doubling the sales. The contribution is about 7-8% of total sales. Athleisure is also growing well.
- [00:09:27] Abhishek Getam from Alpha Invesco asked if the sports category can be propelled via the online strategy for Athleisure. Namrata Chotrani CEO said KHADIM is looking at growing extensively in the online business in sports category. And next year, KHADIM is looking at developing e-commerce focused sports shoe category also.
- [00:10:52] Abhishek Getam from Alpha Invesco asked how much formal leather would contribute in retail and distribution. Namrata Chotrani CEO replied that it will be around 5-7%. Leather footwear will be around 5%.
- [00:11:30] Abhishek Getam from Alpha Invesco enquired about the 1H23 volumes; retail and distribution. Namrata Chotrani CEO answered that it will be 8.19 million pairs for both retail and distribution.
- [00:14:10] Deepan Shankar from Trustline PMS asked about the price hike taken in retail and distribution business during 2Q23. Namrata Chotrani CEO answered that in 2Q23 in distribution there were no price hikes taken. In retail also there were no price hikes taken.
- [00:15:53] Deepan Shankar from Trustline PMS enquired if footfalls have been increasing at stores level across all regions. Namrata Chotrani CEO answered that footfalls have been almost equal to last year. The mass and economy is largely the impacted segment in the sector.
- [00:20:01] Deepan Shankar from Trustline PMS asked that at the current level of operating margins, if KHADIM is seeing further improvement vs. pre-IndAs period. Namrata Chotrani CEO said that next year KHADIM will be able to see that improvement. The company is hoping to sustain the existing margin in the coming quarter.
- [00:23:08] Gaurav Jogani with Axis Capital enquired how does KHADIM see margins panning out in the years ahead once inflation settles down. Namrata Chotrani CEO answered that Athleisure as a category will stay long and growth will come back in mass segment once inflation and RM issues eases.
- [00:28:18] Sachin Kasera from Svan Investment enquired about the revenue mix growth between realization improvement and volumes. Namrata Chotrani CEO answered that on the volume front there has been a degrowth of approx. 8% and an ASP growth of around 15%.
- [00:29:36] ] Sachin Kasera from Svan Investment asked if there is any significant difference in margins between various price points of INR500, INR1,000 or INR1,400. Namrata Chotrani CEO answered that the target margins set internally is almost equal, but margins are higher in the higher ASP items.
- [00:36:08] Rahul Jain from Credence Wealth asked if the company has some levers or improve GM going ahead. Namrata Chotrani CEO answered that on the retail side, the premiumization within the gamut of affordable fashion, the idea will be to try increasing the margins of higher price point item and try to increase the ASP that will drive higher GM. On the distribution side, it will be gradual increase.
- [00:37:30] Rahul Jain from Credence Wealth enquired about the movement on the avg. sales per store both on retail and distribution side. Namrata Chotrani CEO answered that average sales per store is approx. 1.5 crores and the trend is continuing that way. And the franchisee is approx. 90 lakhs to INR 1 crore.
- [00:38:36] Deepak Poddar of Sapphire Capital enquired that on the store count, what’s the plan for FY23 and FY24. Namrata Chotrani CEO said KHADIM is looking at growing by 70-80 stores in a yearly basis, out of which 10 will be COCOs and balance franchisees.
- [00:40:41] Rakesh Pal from Peace Wealth Capital asked about the same store sales growth and volume growth in retail side. Namrata Chotrani CEO answered that vs. last year, the volume overall has de-grown by about 8%. The value has been 15%. The SSG would be in the range of approx. 8% and balance coming from new store openings.
- [00:48:14] Rakesh Pal from Peace Wealth Capital asked about the sequential GM compression in retail segment vs. 1Q23. Namrata Chotrani CEO said that 1Q vs. 2Q, the reason is that in 2Q the company had the EOSS and had the entire impact of the promotional campaign done during the festive season coming in.