Monte Carlo Fashions Ltd (NSE: MONTECARLO) Q3 2025 Earnings Call dated Feb. 12, 2025
Corporate Participants:
Sandeep Jain — Executive Director
Unidentified Speaker
Rishabh Oswal — Executive Director
Analysts:
Mohit Dodeja — Analyst
Viraj Parekh — Analyst
Devanshu Bansal — Analyst
Yuvraj Kunwar — Analyst
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Monte Carlo Fashions Conference Call hosted by Emkay Global Financial Services.
We have with us today Vishabh Oswal, Executive Director; Sandeep Jain, Executive Director; RK Sharma, Chief Financial Officer; Dinesh Gona, Director; and Ankur Gauba, Compety Secretary.
As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing than 0 on a phone. Please note that this conference is being recorded.
I now hand the conference over to Mr Mohit Doreja from Emkay Global Financial Services. Thank you, and over to you, sir.
Mohit Dodeja — Analyst
Good morning, everyone. I would like to welcome the management and thank them for this opportunity. I shall now hand over the call to the management for the opening remarks. Over to you, gentlemen.
Sandeep Jain — Executive Director
Yeah, good morning. This is Sandeep Jan and thank you all for joining us for today’s earning call to discuss the performance of 3rd-quarter and year-to-date results of financial year 2025. Let me start by sharing the financial and operational highlights. For the 3rd-quarter under review, the consolidated revenue from operation was INR549 crore, registering a growth of 9% year-on-year. EBITDA was INR155 crore, representing a growth of 27% year-on-year. With EBITDA margin reported at 28.23%, net profit grew by 25% year-on-year to INR97 crores. For the nine months ended of financial 2025, the consolidated revenue from operations stood at INR895 crore, which increased by around 5% year-on-year.
EBITDA was INR181 crore, witnessing a growth of around 19% year-on-year with EBITDA margin reported at 20.21%, net profit stood at INR92 crore, representing a growth of 16% year-on-year. As the financial performance suggests, we had a strong revival this quarter, driven by our focus on strategic initiatives to drive sales and reduce cost. We continue with our endeavor to build a leading branded avail company with efforts to increase our distribution network and we were also committed to open 45 to 55 EBOs pan-India, including West and South. Our total number of EBOs have reached 469 across 23 states and four UTs. And we also present in 1,810 multi-brand outlets, 959 national chain stores and 467 SAS as well as various e-commerce platforms, our online sales-through our own website have picked-up, especially from our own website.
For brand Clock and, company has opened five EBOs in Q3, totaling to 10 EBOs as of 31st December 2024, and we plan to continue to open further in sizes of 500 to 1,000 square feet. We have also tied-up with quick commerce platforms like Blinkit, and Zepto for up to 30 minute delivery. Lastly, we have collaborated with Salesforce to streamline and enhance the company’s operational efficiencies and drive customer loyalty and experience.
With this, now we open the floor for a question-and-answer session.
Questions and Answers:
Operator
[Technical Issues]
Sandeep Jain
Hello, hello, the voice is not audible. Hello. Is there any connection issues? We are not able to hear you. Hello. We are not able to hear you. Can you please speak loudly? And is there any connection issue or you can reconnect again.
Operator
Hello, just yeah. Can you hear me, sir?
Sandeep Jain
Yes, I can hear you.
Operator
Yeah. 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 the touchtone telephone. If you wish to remove yourself from question queue, you may press the R in two. Participants are requested to use handsets for question. Ladies and gentlemen, wait for a moment while the question queue assembles. The first question is from the line of Viraj from Carmel Asset Managers. Please go-ahead.
Viraj Parekh
Good morning, sir. Am I audible?
Sandeep Jain
Yes. Yes, you’re audible.
Viraj Parekh
Hi, sir. Good morning. Congratulations on a good set of numbers. Just a few questions from my end. Firstly, sir, I would just want to understand on a cotton and segment, volumes have been flat more or less. I mean, mean has grown by 1.6% in cotton, de-grown by 3.6% in volume terms. But however, in absolute value, we’ve seen — we’ve seen like a 5% growth in cotton and a 13.4% growth in. So that just highlights that we’ve increased the average realization for our products in these segments. So can you please elaborate more on that?
Sandeep Jain
Yeah. Thank you, Viraj. So I think you have rightly pointed out, so there have been a increase in the realization of cotton and. The reason being is that because we took creative action as we suggested in last con-call also regarding the discounts. So the discounts have gone up, discounts have sorry gone down. So that has improved the realization in cotton as well as in. So that is the prime reason.
Viraj Parekh
So sir, I mean, earlier we were a bit more skeptical about the demand environment per se. And at the company-level, we are focusing more on profitability. With the increasing competitiveness in this industry and you know-how sustainable are these price realizations? I mean, I think my second question is also on the lines of our gross margins, which has come at 46.8% this quarter, which is a significant rise and that has eventually contributed to a healthy profitability this quarter. So I wanted to more understand on the sustainability of these margins and realizations going ahead for our main two segments.
Sandeep Jain
Thank you. Thank you. Thanks for asking this question. So I would be happy to state that the — there is now a chance of improvement in the margins going-forward. The reason being is that we have taken a price rise also and the raw-material price is almost stable. So we’ll be having a trade show right now going on as far as pre-winter booking is concerned, which is showing us a very good response and our full winter trade show is going to happen in Delhi in next one month. So already we have taken a price rise. But as far as raw-material is concerned, all the raw-material what we are using in cotton fabrics and wooden and wooden yarn, they were all stable. So they have not gone up. So there is every chance of improvement in the margins going-forward also next financial year.
Viraj Parekh
And sir, would you speak a bit more on the competitive intensity we are seeing in this space? I mean, eventually if we are sustaining these realizations and we’re talking about margins being increased, will it eventually take a hit on our volumes or how are we planning growth going ahead, if you could highlight that roadmap?
Sandeep Jain
No, it will not take — it will not take a hit on our volume. So last year, we consciously produced less goods because we wanted to focus more on the profitability. And the reason being was that we were stuck with the inventory also. So that was the reason we were very cautious last year, but this year now the inventory issue has been sorted-out and there have been expansion in EBOs as well as SIS as well as online platform, which is doing very well. So we are very confident that as far as our company is concerned, I can’t talk about other companies. But as far as our companies are concerned, definitely will be — we see that the worst is behind us now. So going-forward, I see even the next quarter going to be better as compared to last financial year quarter and next year should be — I would say, we are open with a very optimistic note as compared to last year which we opened.
Viraj Parekh
Right. Sir, will it be possible to give us an idea of in December ’24, what was our inventory levels at the channel? I mean, if you can just highlight a number of days as well, if we keep an active number, what are the inventory days at our channel level right now?
Sandeep Jain
Just a minute.
Unidentified Speaker
So inventories we are having INR476 crores as it against 428.
Sandeep Jain
So it’s 476 as against 428.
Viraj Parekh
So last two questions before I get back-in queue. Firstly, I saw that we’ve opened exclusive outlets for our home textile segment. And I feel early of two years ago, we were doing pretty good in that segment. And I think the momentum has picked-up going into this year. So we’ve done around INR53 crore kind of quarterly sale. I think it’s the highest in the last seven, eight quarters that I see in terms of home textiles. So can you speak more on your strategy for home textiles and how much revenue you’re seeing? And if you can break-up in terms of unit economics in terms of revenue per square feet for the stores we are opening.
Sandeep Jain
See, first of all, the stores which we have opened are basically only adjacent to our EBOs. It’s not the — I would say the standalone stores, like if we are operating on-the-ground floor and first floor is available, so we took that first floor because it’s outright sale. It’s not a consignment sale and all the six CBOs have been opened as outright sales only. And it’s not that if you’re opening standalone stores, it’s basically adjacent stores or like if a space is available near the stores, we are taking it up and opening it up. And as far as Home Tesla is concerned, see this year-earlier we guided that we should be having a flat revenue growth, but I’m happy to state that we should be ending by, I think 13% to 15% value growth in-home textiles and even next year also, we are projecting the same growth. Or maybe again it depends on the trade show, it can be more because right now, I think that this year, we should be having around 13% to 15% of growth in the home textiles in this financial year over the last year.
Viraj Parekh
And the strategy would be to open company-owned company-operated stores in this segment, right? We won’t go for the FO for model.
Sandeep Jain
It’s through distributor agent and MBO business only. We are not focusing much on the standalone stores in-home furnishing. We are only opening those areas where we get additional space in our EBOs or some adjacent spaces available where our EBOs can easily a person can operate. So it is just added advantage to EBO also, it improves their profitability. Otherwise, we are not opening standalone stores of home for machine.
Viraj Parekh
Right. Sir, last question, just if you can — I know it’s a little bit more forward-looking, but if you could just get a flavor of the quarter-four because I believe like in this last calendar year-on an interview, you spoke about good order for summer booking, which highlights a good Q4 for us. So I mean, last year we was quite bad for us Q4 because of multiple reasons. How do you see this Q4 panning as across as compared to last Q4 in terms of profitability, a ballpark?
Sandeep Jain
See, as of now, we are fully confident that the last quarter should be better than the last year’s quarter, because inventory is less and the discountings have been less and the summer dispatches have been happening even started earlier as compared to last year. So we are confident going-forward in the next quarter that it will be better as compared to last year’s quarter.
Viraj Parekh
So any guidance you want to give on annual profitability?
Sandeep Jain
Yeah. We already guided for a flat revenue and improving in margins. We are maintaining their guidance. And we actually surpassed our guidance because we guided for flat revenue growth for this financial year and we’ll be ending with single-digit growth. And we also guided that we will be having a better EBITDA and better margins. So definitely we have seen in nine months already the margins have been better as compared to last financial year. So on full-year basis also, it will be better as compared to last financial year.
Viraj Parekh
Right. Thank you so much, sir. All the best. Thank you.
Operator
Thank you. Are you finding all participants, you may please and one to ask question come down sir. Thank you. The next question is from the line of Devanshu Bansul from Emkay Global. Please go-ahead.
Devanshu Bansal
Hi, sir. Thanks for the opportunity and congratulations on a very good profitability performance in Q3. Sir, there is this tax reduction in the union budget that has been announced plus our base is also low, right? So in FY ’25, we will see almost like a single-digit growth. So any outlook that you can sort of give us for FY ’26 because already you are seeing very good momentum in the trade shows for both summer and winter offering. So what kind of growth in profitability should we expect for FY ’26?
Sandeep Jain
Okay. See, one thing which I can assure you is that the next year should be better as number to this financial year. The full-year guidance, we normally given our 4th-quarter con-calls. So please wait for the 4th-quarter con-call. We’ll come with a guidance for the next financial year also. And please note that whenever we have gave guidance, we try to give a very accurate guidance. So in March, we are having a trade show, which is going to happen in around 20th of March. So we’ll have a full, you know, the targeted growth for the next financial year as we have the bookings in our hand in our trade show. So please wait for the 4th-quarter con-call and we’ll give a guidance for the next financial year as well. But one thing which is very evident is that the stock inventory is less and it’s looking to be great year going-forward in next financial year.
Devanshu Bansal
Understood. Sir, just a small follow-up. When you say ’26 will be better than FY ’25, so is it like growth in FY ’26 should be better than growth in FY ’25 or you are just mentioning that FY ’26 absolute revenue should be better than FY ’25 absolute revenue?
Sandeep Jain
Both revenues and both margins will be better in financial ’26 as compared to financial ’25, this is what I can guide.
Devanshu Bansal
Understood. Understood. Second question is on price hike and realization — realization. So what I could gather from your commentary was that you indicated that discounts have reduced, which have led to this realization gain? And in another comment, you also mentioned that you have taken some price hikes as well, right? So in Q3, this improvement in realization is entirely because of reduction in discounts or there is a component of price hike also that has helped us.
Sandeep Jain
It’s basically for both the factors. There have been a price hike also and there have been reduction in discounts also. So both the sectors contributed in increasing the realization.
Devanshu Bansal
And for Q4, we have taken further hikes or the hikes were what we have taken during Q3.
Sandeep Jain
So the price hike has already been taken in the winter products in the month of when we start the production around August and September. So only we are trying to be having a lower inventory, which will definitely improve our profits and also lower discounts. So that will improve the realizations.
Devanshu Bansal
Last question, sir, there has been some debt increase, sir. So we — I just wanted to better understand as in what is driving that? And from a ROE perspective, ’24 was sort of very muted. It was like 8%, 9%. So what are the initiatives that are — that we are taking to improve the return profile of the business.
Sandeep Jain
So we have a zero long-term debt. It’s only the working capital debt which has gone up because of higher inventory and higher planning for the next summer. And it will come down in the March quarter.
Devanshu Bansal
So on a Y-o-Y basis, you’re saying that INR200 odd crore debt that was there in ’24, it should broadly be similar, right, at FY ’25 end?
Sandeep Jain
Yes.
Devanshu Bansal
Okay. Okay. And anything on initiatives that we are taking to improve the return profile of the business?
Sandeep Jain
And return profile means…
Devanshu Bansal
ROE, ROE, return-on-equity.
Sandeep Jain
So that will definitely be better as profitability has improved, so that will be definitely be better.
Devanshu Bansal
Okay. Any initiatives on the working capital optimization that may happen in the business or it will remain stable?
Sandeep Jain
Working capital will remain same. We don’t see any difference — there can be a marginal difference, but we don’t see any significant difference as far as working capital is concerned.
Devanshu Bansal
Understood, sir. Thanks for taking my questions. This is really helpful. Thank you.
Operator
I remind to all participants, you may press char in one to ask questions participant may press star N1 to ask thank you. The next question is from the line of Mohit Dudeja from Emkay Global Financial Services. Please go-ahead, sir.
Mohit Dodeja
Yeah, hi, sir. Congratulations for a good set of numbers. I just wanted to know-how is the broader…
Sandeep Jain
Hello, can you please repeat it?
Mohit Dodeja
Yeah. Hi, sir. I just wanted to know-how is the broader demand environment.
Sandeep Jain
See, I think there are now two things — two, three things which we are witnessing in last, you know, last month, which is helping us to understand that there should be good quarters going-forward, basically the Q1 and Q2. The reason being is that there have been a tax reduction in the budget, which will definitely boost the consumer sentiments and consumer spending. So that is one area. And second, I think RBI has just taken a step to reduce the interest-rate also that will further boost the sentiments. So I think that it might take three, four more months, but definitely the sentiments are improving and we will see this fact coming in the next financial year. But as far as on today is concerned, yes, the situation has not changed much, but it has started improving.
Mohit Dodeja
Okay. So across channels, is there a growth difference?
Sandeep Jain
If you see that the online segment, I would ask Mr to speak on the online segment, which has performed very, very well. And I have already told that the home furnishing segment has seen a growth. Otherwise, the rocket is also have performed very well. It has grown almost 40% to 50%. So Mr can speak on that.
Rishabh Oswal
So hi, good morning. So I think it is fairly visible from the numbers also that there is a difference in the growth percentage of each vertical. So newer channels like online and large-format continue to grow at a faster pace than what the other channels are growing. MBO SAS are growing at single-digits and we foresee they’re growing at the same pace. South so yeah, so I think rocket also has doubled almost this year and we foresee because of very small base, they should be growing at a faster percentages than the rest of the company.
Mohit Dodeja
Okay. Thank you, sir.
Operator
Thank you. A reminder to all participants, you may press char N1 to ask question the thank you. The next question is from the line of Yuraj Gunwal from Emkay Global. Please go-ahead.
Yuvraj Kunwar
Hello, sir, good morning. So I would like — I would like to ask what is your expectations for capex for the next year.
Sandeep Jain
It will be normal capex of INR15 to INR20. That’s what we perceive. Otherwise there is no major capex is planned.
Yuvraj Kunwar
Okay, sir. Thank you.
Operator
Thank you. A reminder to all participants, you may best chance in one to ask questions. The next question is from the line of Diwanshu Bensal from Emkay Global. Please go-ahead.
Devanshu Bansal
Thank you for the follow-up opportunity, sir. I just wanted to better understand your comments around demand, right? So obviously, while your performance has been relatively better versus whatever trends we are seeing. In other companies, these channels, be it MBO, LFS, obviously there is one large partner which is struggling and that is sort of leading to good amount of challenges for brands. So from that perspective, while EBOs, etc., are doing well, there is these other channels, MBO, LFS, etc., which are not sort of doing well. So according to you, as in, can we see some amount of growth improvement in these challenged, I would say, source of channels also or how should we see that?
Rishabh Oswal
Yeah. So hi, this is Vishit and I’d like to answer this. So I’ll go channel by channel. So when it comes to MBU SIS, last year, as you know, we had a lot of inventory that was left over across all channels and that included SIS. And due to our financial working, we build the products that are left over to the SIS outright. Therefore, the overall buying for these SAS was quite less as compared to last year. But if I compare the secondary sale, which is not reported in the numbers, it is much higher than what we did last year. Going-forward, we foresee this number growing at a faster pace when it comes to MBO. Online, as you’ve already noticed, it has grown at 40% this year. We for — we target a growth of 25% to 30% for the next year as well for the online segment.
And when it comes to national chain store, as you rightly said that there is, you know right now a restructuring happening in the national chain store-level. A lot of retailers are refiguring out their format if they would want to go the way or they want to premiumize that. But I would like to mention that Monte Carlo across all our channel partners hold a very significant and very important part. You know it is not because of a strong monopoly in certain categories, these retailers you tend to keep us — and we would be one of the last brands to be affected by this demand. In fact, last week only we have our pre-winter bookings going on.
Last week, only we had meetings with all these retailers and all of them are very bullish on Montecallo and everyone is trying to increase the revenue that they get from Monte Carlo. The only thing that we have to figure out going-forward is to ensure the profitability as the cost structure in national chain stores is much higher as compared to the other channels?
Devanshu Bansal
And lastly, sir, can you discussed MBO Online National. So EBO also, if you could just lay down what’s your growth expectations as in just ballpark numbers there, both in terms of store additions and SSG.
Sandeep Jain
Yeah. So as far as EPOs are concerned, we did almost INR465 crores as compared to INR435 crores. But as far as like-to-like growth is concerned, it is almost flat. So the growth came only from the new EBOs, which we opened in this financial year. But going-forward, we look-forward to having a like-to-like growth of around 5% to 7%. And also with the addition of new EBOs, which we have planned around 40 to 50 ABOs next financial year. So definitely it will be a segment which will be growing for us.
Devanshu Bansal
Understood. And sir, just one small follow-up here. Since like-for-like growth have been sort of muted over last couple of years, so are you seeing some downgrade in confidence from franchisee investments perspective or that enthusiasm from franchisee investments perspective continues. So your comments on that.
Sandeep Jain
So market sentiments are bad. So it’s not only bad for us, it’s bad for everyone in the market. So franchisees also understood that the market for everyone is bad, but still we are outperforming as far as our competitors are concerned, if you see, you know, even in this tough period also, our EBITDA and profitability has grown and that is only because of our franchise working hard. So there are some tough times which everybody knew that, but as going-forward in this financial year and we see that key improvement is happening and all our franchisees are also very confident because the one reason is that they have a low inventory right now as compared to last financial year. So that is giving us the confidence that the next year should be better as compared to this financial year.
Devanshu Bansal
Very encouraging, sir, very encouraging. And just last question from my end. So since we have been through a challenging period, are you seeing some consolidation on — from the competition perspective, are there brands which were like very aggressive now sort of either sort of vanishing or seeing challenges. So from that perspective, if you could highlight your views?
Sandeep Jain
Definitely. We have been getting offer of some of the brands which are on-sale because of — they are not able to survive. So definitely there is — there will be some consolidation in the market as the market is actually, you know, as of today, the market is very tough. So I think that some brands which are not able to survive and also the funding is now not easily available for basically for the garments and basically for the retail. So that is posing some challenges to the existing brands which are basically more leveraged than other companies, but there are only few companies who are basically sitting on the cash, otherwise mostly some mostly company government is sitting on the debt. So that is making them — making it difficult for them to survive. So yes, yes, you have rightly said that there are some challenges as far as some brands are concerned. And also because of low demand, it is creating more challenges. So that is — that is why I’m saying that some of the brands there are offers from the market that they are on the sale.
Devanshu Bansal
So are we open to consider, yes, sir, growth will be more organic in nature.
Sandeep Jain
We are open to acquisition if any good opportunity comes to us because we are sitting on a cash, if any good proposition which comes to us, which can increase our shareholder values and which can increase our — which can match our EBITDA. So we are open to those kind of acquisitions.
Devanshu Bansal
I understood. Last to complete this discussion, sir, any broader guidelines as in — so I’m asking from the perspective that since you talked about shareholder value-creation, so we are already sort of present in the physical retail online is also sort of doing well. So what are the gaps, key gaps in the portfolio that we would like to address from acquisition perspective? That is one. And secondly, from a channel perspective also, are there any visible gaps that you can address with such acquisitions?
Sandeep Jain
I think there are areas where we are not present, basically in Southern and Western India and also there are some categories where we are not present or where we don’t operate at all. And also some premium segment we are right now, we don’t have a brand which can you add value from 15,000 to 20,000 these kind of prices. So those are the opportunities if available, definitely will look into it.
Devanshu Bansal
Great, sir. Thank you for taking my questions. It is really helpful. Got it. Thank you.
Operator
A reminder to all participants, you may press R in one to ask this question participants may star and one to ask question the next question is from the line of Shreyash Jain from 3A Financial Services. Please go-ahead.
Unidentified Participant
Hello. Hello, am I audible?
Sandeep Jain
Yes, sir. Are you audible.
Unidentified Participant
Sir, you recently-announced the revival of. So how do you look on that deal? Does it — will it affect your business?
Sandeep Jain
See, can you please repeat it again? Hello.
Unidentified Participant
Yeah.
Sandeep Jain
Can you please repeat it what you’re saying?
Unidentified Participant
Yeah. So Reliance recently I announced the revival of Sheen. Sheen okay. Yeah. So how do you look on that deal and would it affect your business?
Sandeep Jain
No, no, it’s basically Sheen operates in a low economy segment and our is upper premium segment. So there is no direct competition from Sheen as far as Monte Carlo is concerned.
Unidentified Participant
Okay. Thank you so much, sir.
Sandeep Jain
Yeah.
Operator
Thank you. One to ask question you. So there are no questions in the queue. Should we close it or you want to continue?
Sandeep Jain
Yeah, we can close. Yeah, we can close it. Thank you very much for participating in this earnings con-call. I hope we have been able to answer all your questions satisfactorily. If you have any further questions or would like to know more about the company, please reach-out to our IR managers at Advisors. Thank you very much.
Operator
Thank you. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.