Page Industries Ltd (NSE: PAGEIND) Q4 2025 Earnings Call dated May. 15, 2025
Corporate Participants:
Unidentified Speaker
Nupur Jainkunia — Investor Relations, Valorem Advisors
V S Ganesh — Managing Director
Deepanjan Bandyopadhyay — Chief Financial Officer
Karthik Yathindra — Chief Executive Officer
Analysts:
Unidentified Participant
Sheela Rathi — Analyst
Videesha Sheth — Analyst
Shyam Sundar Sriram — Analyst
Devanshu Bansal — Analyst
Tejash Shah — Analyst
Gaurav Jogani — Analyst
Sameer Gupta — Analyst
Rishi Mody — Analyst
Naveen Trivedi — Analyst
Prerna Jhunjhunwala — Analyst
Alok Shah — Analyst
Sabyasachi Mukerji — Analyst
Aditya Gupta — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Q4 and FY25 earnings conference call of Page Industries Limited. As a reminder, all participant line will be in 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 0 on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Nupur Jainkunya from Ballarum Advisors. Thank you. And over to you ma’ am.
Nupur Jainkunia — Investor Relations, Valorem Advisors
Thank you. Good evening everyone and a very warm welcome to you all.
My name is Nupur Jain Kunya from Valeram Advisors. We represent the investor relations of Bage Industries Ltd. On behalf of the company and Valeram Advisors, I would like to thank you all for participating in the company’s earnings conference call for the fourth quarter and the financial year 2025. Before we begin, a quick cautionary statement. Some of the statements made in today’s earnings conference call may be forward looking in nature. Such forward looking statements are subject to risks and uncertainties which could cause actual results to differ from those anticipated. Such statements are based on management’s belief as well as assumptions made by and information currently available to management.
Audiences are cautioned not to place any undue reliance on these forward looking statements in making any investment decision. The purpose of today’s conference call is purely to educate and bring awareness about the company’s fundamentals, business and financial quarter under review. Now I would like to introduce you to the management participating with us in today’s earnings conference call and hand it over to them for opening remarks. We have with us Mr. V S Ganesh, Managing Director, Mr. Deepanjan Bantopadyay, Chief Financial Officer and Mr. Karthik Yatinda, Chief Executive Officer of the company. Without any further delay, I request Mr.
V S Ganesh to start with his opening remarks. Thank you. And over to you sir.
V S Ganesh — Managing Director
Thank you very much Nupur. And ladies and gentlemen, a very good afternoon and welcome to the earnings call for the fourth quarter of FY25. As Nupur told you in today’s call, I have Mr. Deep Panjan, our CFO and Mr. Karthik Yadhintra, our Chief Executive Officer. Along with me, I will briefly dwell into the past year before getting into the further details of the quarter. FY25 was characterized by rapid shifts in economic, geopolitical and technological tailwinds compelling us to remain agile and responsive. While inflationary pressures constrained consumer spending, particularly in the first half of the year, our ability to adopt was very evident in the overall strong performance of ours and especially in our e commerce channels.
We also responded proactively to the evolving landscape, aligning our product offerings with shifting customer needs expectations and this is reflected in our growth trajectory. In such a volatile environment, we continue to focus on enhancing the value to our consumers without passing on any price rise while maintaining tight control over expenses. We continue to invest strategically to to support the organization’s sustained growth objectives. In line with this, our digital transformation initiatives including advancements in the distribution management system, the transformation of SAP core and enhancements in consumer engagements are progressing as planned. The refresh jockey.in website and mobile app have been well received by our consumers.
This reflects our strong commitment to improving our users and consumers experience. Our new production facility in Orissa is now ready to begin commercial operations. Additionally, the broader adoption of the auto replenishment system has contributed to more effective inventory management. Coming to the quarter in Q4 which is typically our leanest of all the quarters, I am pleased to share that we have achieved a PAT growth of 51.6%, a robust revenue growth of 10.6% and this supported by stable fabric prices and optimized overheads have contributed to a healthy operating margin. For the full year we achieved a revenue increase of 8% and a profit after tax growth of 28%.
Our timely interventions in inventory management and efforts to enhance overall supply chain efficiencies have not only supported market growth but has also contributed to a strong and healthy financial performance. Our consumer reach through diverse sales channels continue to expand. At the close of FY25 we have a network of more than 111,000 multi brand stores, 1453 exclusive brand stores and 1803 large format point of sales. Our online network through jockey.in mobile app and in several online aggregators continue to expand. We express a sincere appreciation for your tremendous support and trust in our company. Mr. Deepanchan will now take you through the specifics of the quarters followed by this.
We look forward to your questions and we’ll be more than happy to answer them. Thank you once again for joining this call today.
Deepanjan Bandyopadhyay — Chief Financial Officer
Thank you vsj Good afternoon and welcome to today’s earnings call. Let me share the results of Q4 and for full year of FY25. Touching upon the key financials for Q4 we recorded sales volume of 49.2 million pieces which was a growth of 8.5% year on year. Revenue in Q4 was 10,981 million rupees which was a growth of 10.6% year on year, EBITDA for the period was rupees 23. 52 million, a growth of 43.2%. Year on year, EBITDA margin was 21.4%. With stable raw material costs, sustained higher production efficiency and controlled operation operating costs, EBITDA margins were maintained within our planned range of 19 to 21%.
There has not been any price increase in the quarter. PAT for the period was for the quarter was 1640 million which was a growth of 51.6%. Year on year. Inventory days was 64 as against 93 days at the beginning of the year. Working Capital days was 60, 64 days against 75 days in the end of FY24. We continue to be debt free for annual FY25 sales. Volume was 219.6 million pieces which was a growth of 5.5%. Revenue was rupees 49,349 million resulting in growth of 8%. EBITDA was rupees 10,626 million which was a growth of 23.6%.
EBITDA margin in the full year was 21.5%. PAT was rupees 7,291 million resulting in growth of 28.1%. To summarize, our sustained focus to deliver value to consumers through product quality enhancements, communication and customer reach have resulted in good revenue and profit growth. We continue to make the right investment, including in technology, while remaining cost conscious. We can now take up your queries.
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 touchtone telephone. If you wish to remove yourself from the question queue, you may press STAR and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sheila Rathi from Morgan Stanley. Please go ahead.
Sheela Rathi
Thanks for taking my question. My first question was with respect to the volume growth.
The number has been at 8.5%. Much higher than what we have seen in the recent past. How would you evaluate this performance for this quarter? On the volume side, is it as per your expectations or it is ahead of your expectations?
V S Ganesh
Yeah. So the. For us, the volume growth. Yes. When we were looking at Q3 I can say Q4 was in line with the expectation. But if you look at it, overall retail environment continues to be tepid and therefore it has not reached the levels which we want it to be in. People still are not Buying as they used to. And especially now we, we feel next year things should improve with tax exemptions being given, a bountiful monsoon being projected. And we see that the retail inflation is at an all time low. If you look at the last six years and now this is the lowest.
So all these things are very favorable. So we expect going forward we should see better traction.
Sheela Rathi
Understood. And just to understand how should we think about the E Commerce growth for us this quarter and any insight in terms of the share of E Commerce as a part of the total revenue?
V S Ganesh
Sure. Karthik should be able to throw more light on that. Karthik.
Karthik Yathindra
Yes, thank you Mishela for the question. E Commerce continues to be ahead of the rest of the channels in terms of growth rates. We’ve seen handsome growth, handsome double digit growth as far as the E commerce business is concerned in terms of contribution to our business. A little over 10% of our business today comes from the E Commerce channel.
Sheela Rathi
Thank you. And my final question was with respect to the gross margin improvement that we saw this quarter, anything significant to call out here to showcase such a strong improvement in the margin?
Deepanjan Bandyopadhyay
I think there are two major factors. Definitely the stability in the raw material prices, especially fabric and other things has been very positively taken and positively impacted. And second thing is of course the production efficiency that we have been seeing the, that has been the higher production efficiency that has been sustained. So majorly contributing these, I mean combining these two factors has resulted in a higher gross margin.
Sheela Rathi
There’s something a level we can assume could continue for us if, you know, similar environment remains going ahead. Is that a right assessment?
Deepanjan Bandyopadhyay
Yes, Sheila, the similar environment definitely remains. I think we will be able to sustain it. But yes, I think we have to watch out if there’s any volatility in the cotton price maybe at the end of the year because of this evolving situation geopolitically. Otherwise as things stands now, I think we should be able to the gross margin.
Sheela Rathi
Thank you. Thank you very much.
operator
Thank you. The next question is from the line of Sridisha Sheth from Ambit Capital. Please go ahead.
Videesha Sheth
Yes. Hi. Thank you for the opportunity. My first question was again on volumes. If you could talk about which segment specifically led to this 9 odd percent growth. Was it led by Imaw? And just a second part on the volume was that 40, 45 days into the quarter. Can you elaborate if the growth momentum. Has more or less sustained or has there been, has there been any other shift? That’s my first question.
Karthik Yathindra
Thank you for the question. In terms of rain specific volume growth, it actually remained more or less consistent. Of course, at this point in time, since we are reflecting primary numbers, it’s also a function of the inventory levels in the channel. Given that Innaware at this point in time is showing marginally higher growth rates when compared to at leisure, and so is the case with accessories, which is our socks, hand coaches, towels and caps. Business is showing slightly higher volume growth when compared to at leisure.
But that I would believe is largely a function of the inventory levels that we are carrying in the channel. In terms of your second question, without sharing too much in the current quarter, retail has remained consistent to what we witnessed in the last quarter.
Videesha Sheth
Understood that was helpful. And the second question was, I mean, probably the budgeting exercise for the year. Would have been done. So any planned price hikes for FY20 that you’d like to call up?
Deepanjan Bandyopadhyay
As things stands now, we don’t see any requirement of any price increase yet. So in the near quarters, we definitely don’t see any requirement of price increase.
Videesha Sheth
Got it. I have a few more questions. I’ll join the team.
operator
Thank you. The next question is from the line of Shyam Sundar from Franklin Templeton. Please go ahead.
Shyam Sundar Sriram
Yeah. Hi, good evening. Thanks for taking my question. My question is on this focus categories of women and kids. How has been the progress there? How does it reflect in terms of revenue, momentum and any color you can share in terms of the salience of the women and kids category in our business? Thank you.
Deepanjan Bandyopadhyay
So the kids category in specific has grown above average to the brand growth rate. We’ve also seen after considerable stabilization in the previous year. After the pandemic season, the kids category is back into decent growth rates in relative terms. In terms of the women’s business, again, it’s split between innerwear and outerwear. Our innerwear business seems robust and strong in terms of growth momentum, clocking growth rates at par with our men’s business. Outerwear is where I think we are holding higher inventory in the channel, which as reflected in slightly lower growth rates when compared to Innovate.
Shyam Sundar Sriram
Thank you. Thank you. That’s helpful. The other question is we continue to see very healthy improvement in EBITDA margins consistently over the last few quarters. This quarter, we have seen both gross margin expansion as well as healthy volume growth in our business. What are the choices or trade offs we make between volume and margins? What are some of the business choices we make on an ongoing business? You did talk about favorable RM tailwinds, but are there any other choices that we have to make to keep up both the volumes and margins at very healthy levels.
Thank you.
V S Ganesh
No, I feel, you know, we are actually reaping the benefits of the actions which we had taken over the last few quarters and it takes time for us to see those benefits flowing in. And that is what we are seeing. And what we were doing is we took a lot of lot of initiatives in improving the overall supply chain efficiencies. We have taken so much measures to have a much better demand planning and demand sensing and resulting in improved demand accuracy. Now this along with supply chain efficiencies, good control over expenses, the action which we took on inventory controls and to bring inventory to normal or acceptable levels, all this has helped us to improve the bottom line.
And I feel as far as the distribution is concerned, the benefits of ARS is yet to fully kick in. You know, it will, as I keep telling in every call, it takes time for us to get the full benefit. We are seeing continuous improvement and there is much more to come on that front. So it is a combined effort of all these things falling in place and also sweating assets, controlling overheads. All this has really helped us. Deepanjan, you would like to add anything more to it?
Deepanjan Bandyopadhyay
I just wanted to add that our business philosophy has always been balanced profitable growth and we are always driven by volume growth. So as MD said, given the fact that all these initiatives has taken we have started seeing the benefits of these initiatives and given the fact that the expenses are quite under control, that sort is reflecting in a very healthy EBITDA margin. So we do expect that the EBITDA margin will be continued to maintain in this range of 19 to 20, 21%.
Shyam Sundar Sriram
Understood sir. Thank you. Thank you very much. I’ll fall back in the queue.
Thank you.
operator
Thank you. Ladies and gentlemen. In order to ensure that the management is able to address questions from all the participants, please limit your question to two per participant. If you have a follow up question, I would request you to rejoin the queue. The next question is from the line of Devanshu Bansal from MK Global. Please go ahead.
Devanshu Bansal
Hi sir. Thanks for the opportunity. You indicated that there were no price hikes in Q4. So wanted to better understand this 2% increase in realizations. Is it like due to better growth in online channel? For us.
Deepanjan Bandyopadhyay
It’s a combination of largely three factors. Definitely there is premiumization which we are seeing within the categories as well as across categories. When I say across categories once the growth has kicked into athleisure that’s also helping us to reflecting in the higher realization. And definitely the increase in share of E Commerce where there’s a mix of I would say better margins as well as the full price sales that is helping in increasing the overall ASP as well. So there is no price increase. But these two factors is giving a natural push to the average realization.
Devanshu Bansal
Understood. And sir, you mentioned that it’s not. Of 10% now what was it last year or maybe the growth in the E Commerce channel, if you can call that out.
Deepanjan Bandyopadhyay
I think last year our overall yearly growth in E Commerce was also in the range of 41% or so and at an annual level. So the growth momentum has been sustained.
Devanshu Bansal
Okay. And second question on margin. So we have been delivering upwards of 19 to 21% EBITDA margin band and. We sort of talked about sustaining the. Higher gross margin levels if conditions remain stable. So I wanted to check any thoughts around revision to this band?
Deepanjan Bandyopadhyay
No, I think see the way things are, it’s not, I mean there were always inflationary pressure, there will be salary increase, there will be wages increase. So those things will happen. We are also in a very aggressive phase of digital transformation which is which has started to be getting more aggressive this year. So all these, I would say the overheads and the input factors will result in increase in cost per share at the same time. As I said, given the fact that raw materials are quite stable at this point of time and we are not expecting any price cost increase in the near future.
So while we are not planning for any price increase at the same time, the cost will increase. So given these two factors, we are still confident that the margin will be in this range of 19 to 21%.
Devanshu Bansal
Can you call out this mix of digital and marketing spend for this year and what is expected next year? Any increase or whatever, in whatever way. You can help us understand that .
Deepanjan Bandyopadhyay
We Typically spend 4 to 5% every year on marketing including digital and that’s what will continue.
Devanshu Bansal
And it spends.
Deepanjan Bandyopadhyay
It spends typically has been historically less than one person. But yes, I think the past year that is FY25 and even FY26 it will be something in the range of 1.25 to 1.5%.
Devanshu Bansal
Got it. Thanks for taking my questions.
operator
Thank you. The next question is from the line of Tejish Shah from Avendus Park. Please go ahead.
Tejash Shah
Hi, thanks for the opportunity and congrats on good set of numbers. Also sir, just wanted to know. In a very tough environment we have been able to drive a very strong premiumization. So was this one thing what click for us was this a product mix change or Channel mix which contributed significantly.
V S Ganesh
Tejas. Yeah, go ahead please.
Deepanjan Bandyopadhyay
No, I think I was telling Karthik to take it. But yes, Tejas, to answer your question, I think it has been a national premiumization which is happening across our consumer base. So people are scaling up given the fact that the purchasing power has been increasing. So within the categories also people are scaling up to higher price point products which I think given the product features that we have, which is much more enriched, there is a preference for scaling up. So that is the premiumization within the categories. And E Commerce definitely has a play because one, as long as we are selling to D2C that is a marketplace and jockey.in we have the full price advantage there.
So that’s also kind of pushing up the average realization.
Tejash Shah
Got it. Second, listening to hearing your commentary so far you seem to be very confident on revenue growth, premiumization, gross margins. Then do you see an upside risk to your margin guidance on 19 to 21?
Deepanjan Bandyopadhyay
You mean upside risk or upside possibility?
Tejash Shah
Both. Basically upside possibility on that number.
Deepanjan Bandyopadhyay
No, as we have said earlier, even now we are telling the same thing. We are comfortable in that range of 19 to 21. So while you have not taken any pricing fees over last three years, I mean this is a third year continuously. It’s not that we do not have inflationary pressures in our inputs cost that’s there. But given the fact that with better sales the overheads are much better leveraged and we are sustaining the production efficiency. So without even price increase, we are quite confident that the margin range will be maintained. But at the same time, since the additional expenses will happen, we don’t see the margin going beyond this range.
Tejash Shah
Okay, and last one if I may. Odisha plant, will it bring some tax benefits or soaps to us?
Deepanjan Bandyopadhyay
The Odisha plant within the overall production capacity, that still is a minor portion. We do have tax benefits there. When I say tax benefit, government subsidies, state government subsidies are there in terms of wages subsidy. Then there are some capital subsidy. So it is there. But at an overall company level it is not significant that it will affect the margin.
operator
Sorry to interrupt, sir, I would request you to rejoin the queue for your follow up question. Thank you. The next question is from the line of Gaurav Jokani from JM Financial. Please go ahead.
Gaurav Jogani
Thank you for taking my question, sir. So my first question, you know is. With regards to the Q4 performance now this year we also had a benefit of earlier error. So does that in any sense has helped us to, you know, have a better primary sales and which probably could have an impact on the Q1 numbers.
Karthik Yathindra
So early E has definitely helped in retail performance. I wouldn’t say necessarily for primary sales. Better retail throughput is what you generally see. But again, EID from the overall scheme of things affects select markets. There are parts of the country that get better traction because of eid, which is something that we’ve obviously leveraged in quarter four.
But in the overall scheme of things, given the contribution of these select markets to the overall business, we don’t see a big swing which we in a way advanced from Q1 to Q4.
Gaurav Jogani
Sure, sir. And so my second and last question is with regards to these efficiencies, you know, especially on the employee cost and other expenses side, you know, over the past couple of years because post the, the COVID era we were also having. A lot of inventory which got utilized. Over the next two years and hence. You know, we were not in need. Of replacing the, the, the attrition. But now since the volume growth has picked up, do you see costs now also coming back on this front?
V S Ganesh
Gaurav? Actually overall, you know, manufacturing efficiencies have gone up. It has actually improved by around 18% to 20% of what it used to be. So that is one piece. And secondly, we have been working quite a lot on lead time reduction. So today we can manage and service our customers with less inventory. And that’s where you are seeing that continuous reduction which you are seeing and in the inventory side. So yes, there will be expansion of capacities, but it will be in line with the top line growth which we are expecting. So the costs will be commensurate with expanded sales or revenue.
And we also have other initiatives which we have put in place to have a much better overhead utilization or absorption. That’s where Deepanjan was coming from. You know, looking at the budgets and the expenses and the top line revenue growth, we are very confident that we can maintain the 19 to 21% range.
Gaurav Jogani
So just a follow up here, you. Know, my question was other way around. You know, given that you are already driving so much of efficiencies and if the cost, you know, also increase bit in line with your top line growth. So shouldn’t you be able to, you know, actually surpass the 21% kind of a margin that you are already 21 and a half percent margin is what you’ve already done in FY?
V S Ganesh
No, because you know, there are also inflationary pressures as Deepanjan rightly said. There are salary increases, there are wage increases which is to be accounted for. There is also A renewed investment on IT side. We need to continue to invest on the R and D side of it. In fact, one of the good things we have done last year is to come with very exciting products and we need to continue to invest on that. And I will attribute quite a lot of our growth to having the right product at the right place at the right time thanks to our RD team or the product development team and the ars.
So we need to continue to have those investments. So that’s where I said we bake all that in our budget. And if I go by what we are planning in our budget, we are well within this targeted range of 19 to 21 without much, without any price increase unless there is a big challenge as far as the input costs are concerned, which we don’t expect.
Gaurav Jogani
Sure, sir. Thank you. That’s all from you.
operator
Thank you. The next question is from the line of Sameer Gupta from IIFL Capital. Please go ahead.
Sameer Gupta
Hi sir. Good evening. Congrats on a good set of numbers and thanks for taking my question. Firstly sir, you mentioned the channel inventory on Athleisure is still a little on the higher side. So just wanted some color. Where are we right now in terms of distributed days in Athleisure and where would we like to be on a normal basis and just a relative term, how was this number pre Covid?
Karthik Yathindra
Thank you Sameer for that question. Specifically on At Leisure, thanks to the ARS and the efforts that we’ve done that we’ve brought down our inventory days by about seven days from when we started the year. We still feel there is a potential to bring it down by another seven to eight days. As far as the partner inventory is concerned in terms of prior to Covid days, we are still ahead higher than what we used to carry prior to Covid days. It’s during the COVID period that we saw ballooning of inventory significantly across the value chain, which is what we are looking to moderate now.
Sameer Gupta
Just a follow up here. So when you say seven days, this is overall or this is just for athleisure. And if you can give the number as to where it is right now, is it 45 days? 40 days.
Karthik Yathindra
So overall we are at little over 50 days as far as outerwear inventory is concerned. And the seven days that I mentioned is strictly for outerwear, which is athletic.
Sameer Gupta
Got it, got it. This is helpful. Secondly, sir, I noticed the dividend for the overall year is around 900 rupees per share and this implies around 135% kind of a payout. Capex. This Year has been very normal, around 80 crore. So with growth coming back. Just wondering how to read this Dividend payout number. Is there enough capacity for the foreseeable future? How do we read this?
Deepanjan Bandyopadhyay
As a policy we typically pay out up to 60% of our PAT. That’s. That’s as a policy but together with it we also assess what is our fund’s position. So given that this has been a reasonably good year especially compared to the earlier years, we have enough funds and that’s what we are.
We are declared higher dividend. But yes, I will not read too much into it as to whether this will be a trend in future or it can be a reason for predicting future. It will definitely be that yes, if you have enough funds we will. We will pay higher dividend. It will all depend on what’s the fund position at that point of time.
Sameer Gupta
On that note sir, can you also provide a guidance on CapEx for the coming years?
Deepanjan Bandyopadhyay
I think next year we just close the budgeting process. So I think we are planning for around 188 crores of capex for next year.
Again the capex is largely for the upcoming krpaid2 extension that we have. Also we are purchasing one more land at Orissa. So these two factors predominantly plus there are usual upgradations that happen. So taken together the Plan is around 188 crores for next year.
Sameer Gupta
Got it sir. I’ll come back in the queue for any follow ups. Thanks for this.
operator
Thank you. The next question is from the line of Rishi Modi from Marcellus Investment Manager. Please go ahead.
Rishi Mody
Yeah. Hi guys. Am I audible?
operator
Yes sir.
Karthik Yathindra
Yes.
Rishi Mody
Yeah. The first thing I want to understand is your QCOM E Com space. So I’m under the assumption that it’s growing faster than the rest of the channels for us and basis my understanding of the FMCG industry seems that the QCOM channel is a very high gross margin channel for the company. Higher than the other channels because of the right back size or something on those lines. So I’m just understanding is that the case for you guys and is that playing into the gross margin expansion that you are seeing?
Karthik Yathindra
Well you’re right about the pace of growth or pace of expansion within the Quickcom business.
So that is something that we have witnessed as well. And also it’s a nascent business so large portion of the growth there is inorganic because of expansion into more number of dark stores within existing players as well as new players coming on board within this channel. So we’ve experienced quite an Aggressive jump in revenues there because of the inorganic impact with regard to margins, our margins are not very different for the quick commerce business, meaning not very high when compared to rest of the channels in terms of what we experience Further Quick Commerce, while the growth rates are significantly high, its current contribution to the overall business of Page is still quite small to have any impact on the overall gross margins of the brand.
Rishi Mody
Okay, just a follow up there. What I’m seeing till at least a couple of quarters back was that I think Jockey was the only listed player on Blinket or zepco. But recently a lot of these other players have also started getting the listing like Xyxx and all these other new age brands values and all. So just you see higher competition and at a say a older dark sport where you were dominant, are you losing shelf space or losing share of sale? Even if you are losing shelf space.
Karthik Yathindra
T he other brands being present in these platforms is not recent in platforms like let’s say Blinkit or Zepto which were the platforms that we entered into initially.
This was in fact in 2324 itself also had competition back then we had enough brands present over there. So we’ve not seen any significant change in our presence as far as Quickcom is concerned because of competition in the last, in the recent times, let’s say in the last couple of quarters in fact, like we do with the rest of the marketplaces in E Commerce at this point in time we continue to lead this particular category in Quick Commerce as well.
Rishi Mody
Second, I wanted to understand on the OPEX front from the Panjan. So if. I look at your FY25 of X over FY24 and I remove the 80bps reduction from employee cost then adjusting at present there’s a 150bps increase in opex as a percentage of revenue excluding employee cost in FY25 over FY24. We just wanted to understand what are the main component changes, line item changes that we have seen out here.
Deepanjan Bandyopadhyay
I think if you’re comparing between I mean absolute value increase, a large portion of the value increase will be for things like royalty will be for things like E Commerce margins which are. In. Terms of percentage of revenue.
Rishi Mody
Okay, yeah, so effects is 35.3%. If I remove 16.6% cost, that’s this year and last year it was 34.9 including employee benefit expense of 17.5%. So there’s a 130 bits increase if I adjust for the employee cost benefits that we have received. So where has that investment gone? I just wanted to understand that extra 130 bits that we have spent.
Deepanjan Bandyopadhyay
So two major factors definitely has been one the IT expenses which has contributed to the increase. We also have marketing. Yeah, we also have marketing expenses increase this year. It’s. I won’t say it’s an increase because the previous FY24 was slightly on the lower side. But otherwise this year is a more like a normal increase. These two will be the major factors. Rest of the expenses are more like fixed in nature and has largely remained consistent.
Rishi Mody
Okay. All right. Thank you.
operator
Thank you. The next question is from the line of Naveen Trivedi from Motilal OSWAL Financial Services Ltd. Please go ahead.
Naveen Trivedi
Yeah, good evening everyone. So just on this demand bit more better you mentioned about better traction you expect for the next year. Does this confidence is because of you have seen better sales growth acceleration in the first 45 days of this financial year.
Karthik Yathindra
Thanks Naveen but no, I’m not commenting on the first 45 days. This is what we are targeting in terms of what we want to achieve for the next year. It’s more an intent in terms of where we want to get to in the next year. It has no reference to what we’ve experienced in the first 45 days.
Naveen Trivedi
And you mentioned in your presentation about tier 2 and tier 3 cities outperforming metro 1 and tier 1 market. Can you quantify the divergence and as well as what revenue makes this cities contribute to your mix your portfolio.
Karthik Yathindra
T he way we break our business in terms of town classification metro and tier one metro tier one, tier two contribute to 50% of the business and tier three and four also contribute to 50% of the business. Considering how we’ve penetrated our markets over the years. So that’s in terms of contribution of business. In terms of performance we’re seeing about between the two about four percentage point difference where tier three and four have outperformed the Metro and Tier one.
Naveen Trivedi
Sure. Thank you so much and all the best to you.
Karthik Yathindra
Thank you.
operator
Thank you. The next question is from the line of Prerna Janjunwala from Elara Capital. Please go ahead.
Prerna Jhunjhunwala
Thank you for the opportunity and congratulations to good set of numbers. So I had a question on athleisure. Given that you know it took about a year to reduce inventory by around seven days in the channel. Do you see the demand environment now is conducive for faster depletion in inventory in this year and resumption of higher growth in athleisure. And what steps have we taken to do the same? If at all this can be done.
Karthik Yathindra
Thank you. You’re right. I think we are definitely in a better position than where we were about a year ago. But like I mentioned, the intended is to bring it down further by at about seven to eight days so that we can operate at an optimum 45 days inventory level as far as At Leisure is concerned. But considering that some of the good work has already been done, we should be closer to, you know, secondary performance when compared to the difference we saw last year. So yes, it should be a lot more conducive than what we’ve experienced in the early parts of last year with regards to specific efforts for atleisure.
The way we operate our business is we break ourselves into categories and have specific business plans, inputs both in terms of sales initiatives and inputs as well as marketing and brand input to drive each category as a business of its own. So in that light, At Leisure of course has a complete business plan put together, a dedicated sales team to operate and a marketing calendar to deliver on the demand objectives for that particular category. So that’s what will be going behind this. We are also looking at addressing newer consumer segments. As far as this category is concerned, we believe that there is a potential there to get to address the younger audience.
As far as AT Leisure is concerned, this would mean a certain shift in the styling of our products, a certain shift in the fits of our products to make sure we are able to attract more younger audiences as far as the At Leisure business is concerned.
Prerna Jhunjhunwala
And just a follow up on this and are these products and younger consumer engagements begun or it is a plan for the next year.
Karthik Yathindra
It is the plan for the coming the current year as we speak. So it’s 20, 25, 26 plans.
Prerna Jhunjhunwala
Okay, understood. Thank you. And all the best.
Karthik Yathindra
Thank you.
operator
Thank you. The next question is from the line of alok Shah from 361 Asset Management. Please go ahead.
Alok Shah
Yeah. Hi. Thank you for the opportunity. My first question is on the revenue contribution that you would be getting from your EBO channel. What would that number be in the ballpark now and what would this number have been say in FY23?
Karthik Yathindra
We don’t exactly share numbers there by each channel. Yes, we have seen significant growth in EBS this year definitely. And it’s comforting to see that the growth is not just because of new stores addition, it’s also for the same store growth. But yes, we do not disclose the numbers.
Alok Shah
Got it. The idea was to actually dissect this gross margin improvement little better. So if you can help us understand how much of this gross margin delta may have come from this EBO channel contributing to the sales? Because I understand from a gross margin perspective the share of gross margin from the EBO would be higher than most of the channels. So EBO followed by maybe your own website would be the highest gross margin contributor. And you can correct me on this. Yeah.
Karthik Yathindra
What is more relevant is the EBITDA margin for each channel and it is largely similar across the channels. Of course there will be some variations here and there because each channel has its own margin structure, but it’s largely similar. So only because of EBS or for any other channel it doesn’t impact our gross margin significantly. Okay, I meant EBITDA margin, not gross margin.
Alok Shah
Sure, I get it. And lastly in terms of in house manufacturing, because we have done some some commercialization of the plants which are under construction. So how would that in house manufacturing mean now versus say maybe two, three years back?
Karthik Yathindra
So we have been traditionally largely in house manufacture in the sense it has been the range of 80 to 90% in that range it has been largely in house manufactured. This year I think it has been 27% outsourcing. So when we say outsourcing it the next completely bought out products that that’s what we mean. 600 million and 27%. But yes, I mean Odisha plan getting into commercial production which is expected early June. It will not immediately impact this proportion anyways because it will take some time to reach the maturity which typically is around six to seven months.
So we have started the recruitment process in Orissa and started the training process. But to reach the decent level of maturity that takes around six to seven months. So that will specifically not impact.
Alok Shah
Got it. So then we’ll again be in the band of 80 to 90%.
V S Ganesh
Just to clarify to you, actually we. We always look at, you know, around 25% to 30% outsourcing, 70% in house. And the reason for doing this is to make sure that even if there is any challenge as far as fulfilling capacities are concerned, the nose capacities can be sweated. And if there is an upside, we can quickly make use of the levers which we have and the augment capacities quickly. So it’s a nice blend. And why we Also look at 30% is also because we also want outsourcing to be at a manageable limit in the sense that they should be like an extended factory of ours.
The processes are exactly what we do in house. It is not different. And we have a management team closely helping the teams there and making sure the standards and Quality is maintained so we can’t go too aggressive on the outsourcing bit. But this balance actually helps. It is also strategically important because they also bring in more capabilities. There are some vendor partners who may have technical capabilities which we may not have and instead of investing in CapEx AS and technologies, we can actually use them and we work with world class vendors who service the best of the global brands.
So we also can actually tap onto the intelligence and exposure they have to come out with exciting products. So this is a very reason that we always value the outsourcing bit of it. And that’s where there should be some exciting volume also for the outsourcing vendor partners to make it into meaningful proposition for them. So these are the reasons why we always look at a 25 to 30% outsourcing and a 70% in house.
Alok Shah
Got it? Very clear sir. Thank you and best of luck for the future quarters. Thank you sir.
operator
Thank you. The next question is from the line of Sabyasaji Mukherjee from Bajaj Windsor anc. Please go ahead.
Sabyasachi Mukerji
Yeah, hi. My first question is on the volume growth outlook. While I understand that Q4 has been particularly strong when I compare past few quarters, 8.5%. But you know, are we seeing any possibility of going back to let’s say high single digit or early double digit kind of a volume growth in FY26? Yeah, that’s my first question.
Karthik Yathindra
So Sabyasa Ji, I think that is the intent. We are targeting a volume growth towards that end. Maybe higher single digit kind of a number which is what we’ve seen in quarter four. The intent is to deliver that obviously subject to how the market reacts and what kind of tertiaries we’re able to generate.
But yeah, that is what we are targeting for the coming year.
Sabyasachi Mukerji
Got it. Very encouraging follow up to that is, you know, how has been. If you can highlight how has been the secondary and tertiary offtake in Q4 that would be helpful.
Karthik Yathindra
So secondary has been slightly ahead of primary, not by too much but slightly higher than specific categories like Athleisure where our inventory has been higher. And that is the reason why we’ve seen relatively muted primary numbers. But overall in mature categories like men’s innerwear for instance, our primary numbers have matched secondary numbers. But in areas where we have inflated inventory at this point in time, secondary has been slightly ahead.
Sabyasachi Mukerji
Okay. And anything on the retail tertiary site.
Karthik Yathindra
In line because we today operate completely in in an ARS system. So any numbers you see, what we are in a way presenting from a primary point of view can Definitely not be higher than secondary or tertiary numbers because it’s largely replenishment.
Sabyasachi Mukerji
Lastly, if you can tell, tell us the channel inventory last quarter I think December it was some around 18 million pieces as a March end. What would be that number?
Karthik Yathindra
I’m not sure where.
Deepanjan Bandyopadhyay
I don’t think we have shared any channel inventory number per se. We have typically been sharing the movement in the inventory in the channel. But yes, channel number per se we have not shared and we cannot share that.
Sabyasachi Mukerji
So compared to December, is there any. I mean has it increased or in the same level or if you can highlight that.
Karthik Yathindra
It’s coming down water because of the ARS implementation. But yeah, we are reaching maturity levels in most categories.
Sabyasachi Mukerji
Got it. Okay. Thank you. That’s all from my side.
operator
Thank you. The next question is from the line of Aditya Gupta from Tara Capital Partners. Please go ahead.
Aditya Gupta
Hi, good evening. Thanks for taking my question. First. You mentioned the Tier 3 Tier 4. Growth have been higher. Is that for you or for the industry as well? And how do you think about the market share wins in the top cities. And PFC tier 4?
Karthik Yathindra
I’m sorry Aditya, but I didn’t get your question. There’s a lot of background noise.
Aditya Gupta
Sorry, I’ll repeat. No, I’ll just repeat. I was just asking. You mentioned that the growth in tier. 3 tier 4 was higher than the. Tier 1 tier 2 cities. Is that for you specifically or is. That the market also right now?
Karthik Yathindra
It’s difficult to answer. I would imagine it is for the market also. Our presence in Tier 3 Tier 4 is also dominated because lesser number of other players are able to to reach as deep as we are able to at least in terms of competition that operate in the price points that we operate in.
Aditya Gupta
Got it. Second bit on the price elasticity of. The customer in the environment today. If there was a strategy to let’s say operate at a low end of the margin guidance but squeeze out a couple of hundred basis points extra growth. Is that. Not of interest to you. Or the market is not like that currently?
Karthik Yathindra
Well, we wouldn’t compromise on the quality of the products that we anyway make in terms of entering a lower price point with the kind of quality we want to deliver for our consumers. We are hitting an optimum price point while keeping in mind the value for money proposition that we want our consumers to enjoy. Having said that, you also heard from us that whatever prices we are talking about is now about three years old. So in effect if I had to keep inflation in mind, we have become sweeter in terms of the value we are delivering to the consumer from a price to product point of view.
Aditya Gupta
Okay. And third bit. And I’m comparing number three QFI25. The gross margin swing is about 4.
operator
Sorry to interrupt sir, your audio is not clear.
Aditya Gupta
Is it better now?
operator
Yes. Sir. Can you please repeat your question?
Aditya Gupta
I was saying I was comparing gross margins to 3 QFY25 level. There’s almost a 400 basis point swing. And there’s an up move in the other expenses also. Right. So is it something to do with manufacturing cost the way you rip it? Because 400 basis point gross margin swing in three months sounds. It’s a little high. Right. So. And you’ve not taken any pricing. You’re saying the mix has not changed a lot. So is there something else that is driving this?
Karthik Yathindra
No, I think we have been on it for several quarters now. And the major factor as I highlighted earlier is that we have this year together. We have been selling at, selling out of low cost inventory. So that’s definitely playing out and continue to play out even in last in the Q4. Other major factor is definitely the sustained higher production efficiency which we have achieved. So combination of these two factors. Yes. That has resulted in a higher gross margin.
Aditya Gupta
Okay, thank you.
operator
Thank you. As there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments.
Deepanjan Bandyopadhyay
So thank you everyone for participating again. It was really a very interesting discussion and we’ll definitely look forward to further such interactions. Thank you again.
operator
Thank you on behalf of Page Industries Ltd. That concludes this conference. Thank you for joining us and you may now disconnect your lines.