Relaxo Footwears Limited (NSE:RELAXO) Q4 FY23 Earnings Concall dated May. 12, 2023.
Corporate Participants:
Sushil Batra — Chief Financial Officer
Gaurav Dua — Whole Time Director
Ramesh Kumar Dua — Managing Director
Analysts:
Prerna Jhunjhunwala — Elara Securities Private Limited — Analyst
Aliasgar Shakir — Motilal Oswal — Analyst
Vikas Jain — Equirus Capital Private Limited — Analyst
Kaustubh Pawaskar — Sharekhan — Analyst
Omkar Ghugadre — Shree investments — Analyst
Ankit Kedia — Phillip Capital — Analyst
Manish Poddar — Motilal Oswal AMC — Analyst
Gaurang Kakkad — Haitong Securities — Analyst
Jasdeep Walia — Clockvine Capital — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Relaxo Footwears Limited Q4 FY ’23 Earnings Conference Call, hosted by Elara Securities Private Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Ms. Prerna Jhunjhunwala from Elara Securities Private Limited. Thank you and over to you.
Prerna Jhunjhunwala — Elara Securities Private Limited — Analyst
Good evening, everyone. On behalf of Elara Securities India Private Limited, I would like to welcome you all to 4Q and full year FY ’23 post result conference call of Relaxo Footwears Limited. Today, we have with us the senior management of the company, including Mr. Ramesh Kumar Dua, the Managing Director; Mr. Gaurav Dua, Whole Time Director; Mr. Ritesh Dua, Executive Vice President, Finance; Mr. Sushil Batra, Chief Financial Officer; and Mr. Ankit Jain, Company Secretary.
Without taking any further time, I would now like to hand over the call to Mr. Sushil Batra. And over to you, sir. Thank you.
Sushil Batra — Chief Financial Officer
Thank you, Prerna. Good afternoon, ladies and gentlemen. Thank you for joining us on this earnings call for the quarter and fiscal year ended 31 March, 2023. The earnings press release and the investor presentation has been uploaded on the stock exchanges as well as at our website and we hope you have had the chance to go through these.
Before we begin the question-and-answer, I will quickly go through the Q4 and FY ’23 performance, starting with Q4. Q4 FY ’23 we recorded revenue of INR765 765 crores as against INR698 crores in Q4 FY ’22 recording a growth of 10% year-on-year. On a Q-on-Q basis, the revenue increased by 12%. This is mainly due to volume growth across all categories. Our Q4 FY ’23 EBITDA was at INR118 crores, up by 6% year-on-year from INR111 crores in the corresponding quarter of previous year. EBITDA margins were at 15.4% in Q4 FY ’23 as against 15.9% in the corresponding quarter. On a Q-on-Q basis. EBITDA margins have grown substantially by 481 basis points due to selling of low cost inventory along with mostly old inventory.
PAT was at INR63 crores. On a sequential year basis, PAT grew by 110% from INR30 crores in Q3 FY ’23. PAT margin for Q4 FY ’23 was 8.3%. Our price efforts during the last quarters have resulted a good momentum and we have continued our market share recovery in all major segments during this quarter without relying much on discount and offers.
Now moving on to full year FY ’23. Despite the challenging environment last year, our strong team responded effectively and our commitment to maintaining our high standard of excellence have made us successful. Revenue for FY ’23 was at INR2,783 crores, up by 5% year-on-year from INR2,653 crores in FY ’22. EBITDA was at INR336 crores as against INR416 crores in FY ’22. EBITDA margin was at 12.1% as against 15.7% in FY ’22. Margins were affected primarily by the high pressure on [Indecipherable] during most of the year. PAT was at INR150 crores in FY ’23. We are now a debt free company with robust cash flow operations due to strong acknowledgement.
During the year, the company incurred a capex of INR174 crores. With the stabilization of raw material prices, we are currently experiencing strong demand and hold an optimistic view of the future. Our company strategically is positioned to take advantage of the opportunities within the industry allowing us to further expand our market share. Our key strengths lie our in-house manufacturing capabilities, quality of our brand is strong, recall of our brand. We remain dedicated to upholding this strength and we’ll perfectly try to maintain the integrity. We have confidence that our continual efforts will yield positive outcome for us in the times ahead.
Thank you. Now we can open the floor for questions.
Questions and Answers:
Operator
[Operator Instructions] The first question comes from the line of Aliasgar Shakir from Motilal Oswal. Please go ahead.
Aliasgar Shakir — Motilal Oswal — Analyst
Yeah. Thanks for the opportunity, sir, and congratulations to finally seeing good market share trend in your company. I have three questions. First is on the current quarter. So I understand from our channel checks that post the cleanup of the old inventory, market demand has picked up quite strongly and in fact, Relaxo has not been able to meet all the distributor demand. So is this true in multiple geographies? And do you think we would have lost any revenue because of that factor? If you could just quantify what could have been the impact of that in this quarter and has that been now subsided or we are still seeing demand not being able to fully met?
Gaurav Dua — Whole Time Director
Yeah, this is Gaurav Dua. What you said is partly correct that there is an upsurge in demand and we are seeing it. One reason is that we have corrected the prices and second, this is a peak season for us for open footwear as we are 75% open and 25% close. So this is the open footwear starting from January to June to July. So — and regarding the shortages, we are managing, we have inventory with us and the uptick we have seen across India for the open footwear.
Aliasgar Shakir — Motilal Oswal — Analyst
Got it. So can you quantify if you would have lost any revenue because of that in this quarter and has that been now subsided?
Gaurav Dua — Whole Time Director
It was — it happened in February because there were some IT issues, which has been corrected and now we are able to cover. We have the inventory, sufficient inventory.
Aliasgar Shakir — Motilal Oswal — Analyst
Okay. Got it. Second question is on your margins. So while we have significantly reduced prices, we have seen impact on margins. So can you share — I mean, what is the trend we should expect in the coming quarters as raw material prices are also softening? So should we see that helping us and therefore the impact on margin that we saw in this quarter should improve? How should we see that?
Ramesh Kumar Dua — Managing Director
I’m Ramesh Kumar Dua. Markets remain challenging and we have been very cautious with respect to pricing of our article so that we always have a good market share as the sales are concerned. The EBITDA margin that you have seen in this quarter that is likely to continue and there’s likely to be some improvement also.
Aliasgar Shakir — Motilal Oswal — Analyst
Got it. Thank you, sir. This is very helpful. On the gross margin also, should we see improvement because of the raw material price softening?
Ramesh Kumar Dua — Managing Director
Some improvement, yes.
Aliasgar Shakir — Motilal Oswal — Analyst
Understood. And just last question on the close footwear in the sportswear category, I understand that we have made a lot of changes in our design team, online team. If you could share some thoughts in terms of what is the strategy in the sportswear in terms of the new product development? And what is the aim in the next three, four years? Can we expect to reach about INR1,000 crores in three, four years time? I mean, if you can just share what is your strategy there?
Gaurav Dua — Whole Time Director
So if you talk about Sparx sport shoes, we have grown healthily. We have done roughly around 25% growth. And before that last year, we put up a plant to cater to this need. So still the plant capacity still we have will take two to three years to reach to that level. And you’re talking about INR1,000 crores, Sparx is already INR1,000 crores plus brand.
Aliasgar Shakir — Motilal Oswal — Analyst
Yeah, but sportswear would be relatively lower or I mean just for Sparx is much bigger. But within that, sportswear, if you could just quantify how much would that be?
Gaurav Dua — Whole Time Director
So that is roughly around — we do sports shoe and all sports category roughly around INR400 crores. So definitely, we have aspiration to become INR1,000 crores and it will take two years, three years, time will tell.
Aliasgar Shakir — Motilal Oswal — Analyst
Understood. This is very helpful, sir. Thank you so much.
Operator
Thank you. Next question comes from the line of Vikas Jain from Equirus. Please go ahead.
Vikas Jain — Equirus Capital Private Limited — Analyst
Thank you, sir. Thank you so much for the opportunity. For the first question, definitely, we have a seen market share which you have regained from — which you had lost to earlier competitors. So — and just want to understand can we [Indecipherable] we have regained almost all of the market share or some part of it is still less?
Gaurav Dua — Whole Time Director
Can you repeat the question? It’s not clear.
Vikas Jain — Equirus Capital Private Limited — Analyst
Yeah. Sir, I just mentioned about the market share. So have like regained the entire market share and reached to what we were at the pre-COVID times or probably some part of it is still more or less to gain?
Gaurav Dua — Whole Time Director
Yes. Definitely, what we have lost market share in last quarter one or quarter two last year, we are seeing the good momentum now and we are gaining the market share back. So definitely, we will recover. We have recovered. Now we’ll recover more.
Vikas Jain — Equirus Capital Private Limited — Analyst
Sure. Okay. And sir, second question with respect to the demand. Ramesh sir did mention that the demand environment continues to remain challenging. So probably is it like the — how would you — some comments with respect to how is the underlying market growing? And what do you think it will take for the market to normalize in what time period according to your estimates?
Gaurav Dua — Whole Time Director
So actually what we are hearing from the market there that we see — and this festive. There is demand contraction happening in some parts of India. Rural India is still not able to cover up what — contribute what it was contributing, but I think this is a temporary phenomenon. The inflation is now getting controlled and we will definitely see the uptake in coming quarters.
Vikas Jain — Equirus Capital Private Limited — Analyst
Understood. And sir, with respect to last — again, I would like to — with respect to penetration in South India, so how — can you broadly break our revenues across on a geographic basis? What is the contribution from the all four, North, West, East and South?
Gaurav Dua — Whole Time Director
So North contributes maximum to around 44%, put by East 22%, 28% West and 15% is South. And we are maintaining this from last year. It is similar.
Vikas Jain — Equirus Capital Private Limited — Analyst
Sure. And with respect to more distributors hiring in the South. Is that on time or how many have you added this year probably?
Gaurav Dua — Whole Time Director
So see, it’s not great achievement in adding more distributors. We have maintained what we were having. So always there will be a churn new addition and some people leaving. So it’s roughly around same.
Vikas Jain — Equirus Capital Private Limited — Analyst
Okay, sir. Thank you so much for the opportunity.
Operator
Thank you. Next question comes from the line of Kaustubh Pawaskar from Sharekhan by BNP Paribas. Please go ahead.
Kaustubh Pawaskar — Sharekhan — Analyst
Good afternoon, sir. Thanks for giving me the opportunity. Sir, my question is on the price, sir, what we have taken. So we have taken the price such to reduce the pricing gap between the lower price — the products which are [Indecipherable] and low price point products. But since you said that raw material prices have corrected, have we seen any price reduction undertaken by those bottom of the pyramid players or lower price point players in the market and because of which again the pricing difference what we were planning to reduce it has again gone up? Any sense on that?
Ramesh Kumar Dua — Managing Director
No. Now our prices are very competitive and there is no room for further price cut. We don’t have competition while we are very competitive based on shoe. And so I don’t think there is any room competitors can do much about it.
Kaustubh Pawaskar — Sharekhan — Analyst
Okay. So you don’t see any further price points happening in the market, right?
Ramesh Kumar Dua — Managing Director
No, no, not so.
Kaustubh Pawaskar — Sharekhan — Analyst
Okay. And sir, my second question, you have been consistently talking about expanding your capacity. So any guidance for capex going ahead and where you are planning to add capacity?
Ramesh Kumar Dua — Managing Director
No. Last year, whatever capacity we wanted to expand that has been expanded.
Kaustubh Pawaskar — Sharekhan — Analyst
Okay. So there is no — going to be any…
Ramesh Kumar Dua — Managing Director
This year only money is going on molds, which are regular kinds of things, some repair molds and backward integration, some capital asset generation. That’s it.
Kaustubh Pawaskar — Sharekhan — Analyst
Okay. Any thoughts on your retail expansion plans by FY ’23 how much was reach and where you want to take it over the next three years?
Ramesh Kumar Dua — Managing Director
Earlier, we were maintaining around 400. Now, we are expanding this year.
Kaustubh Pawaskar — Sharekhan — Analyst
Can you provide some numbers, sir?
Ramesh Kumar Dua — Managing Director
So earlier, we were running 400 outlets. Now we are planning to have 465 this year. 65 more additions.
Kaustubh Pawaskar — Sharekhan — Analyst
Okay. Thanks.
Operator
Thank you. Next question comes from the line of Omkar Ghugadre [Phonetic] from Shree investments. Please go ahead.
Omkar Ghugadre — Shree investments — Analyst
Yeah. My question was regarding — it’s from your investor presentation. So from FY ’21 to FY ’23, the average realization has gone up, but the number of pairs sold has decreased. So — and in this quarter, the average realization has gone down significantly, but number of pairs sold has been — has increased dramatically. So what’s the management’s view on this going forward? What could be the average cost of pair or like how it is supposed to be in the future?
Ramesh Kumar Dua — Managing Director
Last year, we had done major [Indecipherable] in some of our categories like hawai. So that was the reason that our average selling price has gone down and our volume has gone up. So that is why volume is going up, but the average rate has gone down only because reduction in freight.
Omkar Ghugadre — Shree investments — Analyst
So from here on, what we can expect, a stabilization here or like…
Ramesh Kumar Dua — Managing Director
Stabilization. By and large stabilization.
Omkar Ghugadre — Shree investments — Analyst
Okay. You don’t see any upside from here on?
Ramesh Kumar Dua — Managing Director
On the whole year side because in this quarter mostly open footwear got on demand. Close footwear count is a bit concession. So overall, in the year, again, you will see our last year average price of INR160 will be back.
Omkar Ghugadre — Shree investments — Analyst
Okay. So for the current financial year, you are expecting around INR160 per pair realization.
Ramesh Kumar Dua — Managing Director
It could be little high also depending upon the [Indecipherable] the little better than think will be further, but our around INR160, INR165 we can expect average.
Omkar Ghugadre — Shree investments — Analyst
Okay. And what about the number of pairs? I mean, what could be the ballpark estimate for that?
Ramesh Kumar Dua — Managing Director
Definitely, from the last year, we are expecting double-digit growth in volume as we shared.
Omkar Ghugadre — Shree investments — Analyst
Okay. So around double-digit volume growth and around similar kind of average realization per pair or somewhat higher?
Ramesh Kumar Dua — Managing Director
Yeah.
Omkar Ghugadre — Shree investments — Analyst
Okay. As far as the ROE and ROC is concerned, what’s your plan on next two, three years since it has come down dramatically again from FY ’21 to FY ’23?
Ramesh Kumar Dua — Managing Director
Definitely, it will improve in coming years because last year was a tough year. Profits were under pressure and we did capex also. Next year, definitely, it will be much better than this FY ’23 and we can match with FY ’22. So it goes well.
Omkar Ghugadre — Shree investments — Analyst
Yeah. Because it has now come down to a single-digit now. That’s what — that’s why I am asking?
Ramesh Kumar Dua — Managing Director
Definitely, should be at least between 15% to 20%. That is the intent and things are well. So definitely we will achieve that.
Omkar Ghugadre — Shree investments — Analyst
Okay. As far as the demand outlook is concerned, how are you seeing currently it is shaping up?
Gaurav Dua — Whole Time Director
So currently, there is a little challenging in the market. There is little demand contraction, but I think going forward, quarter two, quarter three onwards, it would be better
Omkar Ghugadre — Shree investments — Analyst
Okay. In the current quarter you are facing some demand issues?
Gaurav Dua — Whole Time Director
Yeah. Because what we — also what we’re hearing from the market that still rule is not back on track. It’s going to take a little time.
Omkar Ghugadre — Shree investments — Analyst
Okay. Any update on what could be the export percentage and how — is there any opportunity for Relaxo or like the home market is so large that you are not even bothered to think about or bothered to think about export market?
Ramesh Kumar Dua — Managing Director
I’m pleased to what you say. Exports we have done around 4.5% for revenue. And the way we are growing last two, three years time, we are getting double-digit growth and we have — [Indecipherable] also we are expecting the same towards [Indecipherable].
Omkar Ghugadre — Shree investments — Analyst
Okay. The margins were there are better than the home market or like how it is?
Ramesh Kumar Dua — Managing Director
It is like similar.
Omkar Ghugadre — Shree investments — Analyst
And which are the major countries you are exporting to?
Ramesh Kumar Dua — Managing Director
We are exporting to all these like regions we are growing like Gulf, Oceana region or even Africa. Even Central America has now showing back on track because during COVID time that was badly affected. So that also is going up. So all markets are good.
Omkar Ghugadre — Shree investments — Analyst
Okay. Thank you.
Operator
Thank you. Next question comes from the line of Ankit Kedia from Phillip Capital.
Ankit Kedia — Phillip Capital — Analyst
Sir, 11% realization drop Y-o-Y and quarter-on-quarter, how much is due to price cut and how much is due to mix change or new — you introduced INR105 chappals also in the market last quarter. So can you give us that impact of mix versus price cut?
Ramesh Kumar Dua — Managing Director
Overall, lowest price article that you’re talking that is very minimal. It has no any significant, it is just is entry barrier kind of an article. But otherwise whatever price cut we could do on account of fall in our raw material prices that we have done and that’s it. No more price cut. We’re competitive and optimistic. Things are growing. We are getting our market share back.
Ankit Kedia — Phillip Capital — Analyst
And sir, this 11% realization drop, can you quantify how much is due to mix and how much is due to price cut?
Ramesh Kumar Dua — Managing Director
Very complicated, we have 400 articles, different articles, different pricing, different material consumption. So this is very difficult to quantify because article wise things are different.
Ankit Kedia — Phillip Capital — Analyst
Sir, is it fair to assume that the price cut in open footwear could be higher than the price cut in closed footwear if I have to take on blended basis?
Ramesh Kumar Dua — Managing Director
Yeah, yeah. Because more polymers are required in open footwear. It’s not easy in our hawai slippers. Again, sports shoe upper are material, bottom with different material. So you’re right, in case of sports shoe, price cut was not in there. It was almost same.
Ankit Kedia — Phillip Capital — Analyst
Understood. So the wearing is the 75% open footwear, we would have — while in closed footwear which is around 25%, 30% of our business, we would have not tinkered with the places much?
Ramesh Kumar Dua — Managing Director
No, not much.
Ankit Kedia — Phillip Capital — Analyst
Understood. Sir, my second question is regarding promotions. We have seen higher promotional activity in the quarter in the market. Your competitors also in the month of January, February, March were very active by giving higher dealer commissions and even retailer commissions. So could you please elaborate how was our promotion activity in the quarter? And going forward, how are you looking at your A&P spend?
Ramesh Kumar Dua — Managing Director
So we maintain the A&SP spend little bit. So in terms of [Indecipherable], we always — we have — like depends category to category. Hawai, we have different types of schemes. In shoe division, we have different type of schemes. So seeing the demand, seeing the market scenario, seeing the pricing, we decide what kind of scheme we have to run and the competition also. So we don’t benchmark exactly. We see what is our need and then we show the scheme. So we do not exceed if competition is giving more, let’s give more. We have to analyze other situations also.
Ankit Kedia — Phillip Capital — Analyst
Sure. And what is the A&P target for next year and how much is it for this year if you can quantify?
Ramesh Kumar Dua — Managing Director
So like if you talk about A&SP, we do around 8% to 9% and we are maintaining this from last two, three years and just try to maintain a similar pattern in next — this coming year also.
Ankit Kedia — Phillip Capital — Analyst
Understood.
Ramesh Kumar Dua — Managing Director
So this includes advertisement also in [Indecipherable] and promotion.
Ankit Kedia — Phillip Capital — Analyst
And how much would be pure advertising?
Ramesh Kumar Dua — Managing Director
Roughly around 4.5%, 4%.
Ankit Kedia — Phillip Capital — Analyst
Understood, sir. And sir, if you can just share, one of your competitors in sports shoes is going very aggressive in EVOs [Phonetic]. While if I look at your EVO count for last four years has been pretty much flat at 390 odd EVOs. Why haven’t you expanded EVOs se in last four years? What is the risk you see in EVO expansion which has — while COVID years were the end two years, but still the expansion has not been compared to the market where we are seeing competitors expand EVOs. So if you can just talk a bit on that?
Ramesh Kumar Dua — Managing Director
You’re right, last two years we did expand. We wanted to make it little more efficient because we have to control our bottom line also and our article 75% is open footwear, 25% is sports shoe. Competition, you are comparing with only shoe outlets. So keeping in view balance, so our — as a strategy of our retail showroom was to showcase our products. Share of our retail outlet in the total scheme of thing is around 8%.
Ankit Kedia — Phillip Capital — Analyst
Right. And is it fair to assume the margins in EVOs would be just near double-digit and lower than the company average?
Ramesh Kumar Dua — Managing Director
Yes, it’s lower than company average, but I think high-single-digit margin we earn interest in the category.
Ankit Kedia — Phillip Capital — Analyst
Understood, sir. Thank you so much and all the best, sir.
Operator
Thank you. Next question comes from the line of Manish Poddar from Motilal Oswal AMC. Please go ahead.
Manish Poddar — Motilal Oswal AMC — Analyst
Yeah, hi. Thanks for taking the questions. So kindly three questions. One is can you help me with primary and secondary numbers for this quarter?
Ramesh Kumar Dua — Managing Director
Can you repeat again? Can’t hear you.
Manish Poddar — Motilal Oswal AMC — Analyst
Primary and secondary numbers because you are saying that Q1 is still soft, but your volume numbers when I look at it 5.2 crores versus 4.2 crores of last year or 4.1 crores of this quarter — last quarter, they seem to be doing decent. So I’m just trying to understand what am I missing.
Ramesh Kumar Dua — Managing Director
I think it’s a volume growth you are referring the number which you’re mentioning.
Manish Poddar — Motilal Oswal AMC — Analyst
Yes, volume growth.
Ramesh Kumar Dua — Managing Director
We sold more open footwear in this quarter and lot of demand was there. So that’s why these numbers are very high as compared to earlier quarters.
Manish Poddar — Motilal Oswal AMC — Analyst
Okay. But would that be the case in the base quarter also?
Ramesh Kumar Dua — Managing Director
This quarter — the coming? This current quarter Q1 you are talking about?
Manish Poddar — Motilal Oswal AMC — Analyst
No, no. I’m just saying when I compare Q4 FY ’22 where you sold 4.2 crores pairs versus 5.2 crores pairs in this quarter, the mix would be similar, right? This point which…
Ramesh Kumar Dua — Managing Director
Also I think it will sustain.
Gaurav Dua — Whole Time Director
Mix is also similar, you’re right.
Manish Poddar — Motilal Oswal AMC — Analyst
So this growth is it the channel was running low on Relaxo products given our pricing and now it has stabilized? Is that a function of that or is it a lot of customer offtake also happening?
Gaurav Dua — Whole Time Director
No, no. It is like what we lost market share in Q1, Q2, Q3, now we are regaining that market share. So we are getting the space back as shelf.
Manish Poddar — Motilal Oswal AMC — Analyst
Okay, shelf space. Okay. And the second point is you were also doing pricing parity earlier. So where are we in the journey now? How is pricing across channels for you now?
Ramesh Kumar Dua — Managing Director
Now we are very competitive. That is why we are able to get commissions.
Manish Poddar — Motilal Oswal AMC — Analyst
Okay. And just one last one, if you could give, let’s say, for FY ’23 as a whole just a broad brand-wise split between Sparx, Flite PU, Flite EVA and Relaxo?
Ramesh Kumar Dua — Managing Director
Sparx is around 40%. Flite is around 38%. Rest is our Bahamas and Relaxo brand.
Manish Poddar — Motilal Oswal AMC — Analyst
So Sparx 40%, Flite is 28% and the rest is…
Ramesh Kumar Dua — Managing Director
Flite is 38%.
Manish Poddar — Motilal Oswal AMC — Analyst
Okay. And how much would be Flite PU and EVA in that 38%?
Ramesh Kumar Dua — Managing Director
40% something…
Gaurav Dua — Whole Time Director
Or you can say on 15% 23% like that.
Manish Poddar — Motilal Oswal AMC — Analyst
15%, 23%. And just one last one in Sparx…
Ramesh Kumar Dua — Managing Director
23%, 15%.
Manish Poddar — Motilal Oswal AMC — Analyst
Sorry, I didn’t catch that number.
Gaurav Dua — Whole Time Director
So you were asking split of EVA and PU, EVA about 15% and PU was 23%.
Ramesh Kumar Dua — Managing Director
[Indecipherable] the breakup we’re having.
Manish Poddar — Motilal Oswal AMC — Analyst
Thanks. Just one last one. In Sparx, how much was closed in Sparx?
Ramesh Kumar Dua — Managing Director
Total close has been around 25%.
Manish Poddar — Motilal Oswal AMC — Analyst
45%. So…
Gaurav Dua — Whole Time Director
I think the query is within Sparx you’re asking?
Manish Poddar — Motilal Oswal AMC — Analyst
Yeah, within Sparx. So of this INR2,800 crores, you’re saying Sparx is roughly 40% of sales, so to roughly INR1,120 crores. How much is closed in that?
Ramesh Kumar Dua — Managing Director
So close is 40…
Gaurav Dua — Whole Time Director
40% is close and 60% is open in INR1,000 crores.
Manish Poddar — Motilal Oswal AMC — Analyst
In this level, so it’s roughly INR400 crores.
Gaurav Dua — Whole Time Director
INR400 crores to INR450 crores, yeah.
Manish Poddar — Motilal Oswal AMC — Analyst
Okay, fine. Thank you so much.
Operator
Thank you. Next question comes from the line of Gaurang Kakkad from Haitong Securities. Please go ahead.
Gaurang Kakkad — Haitong Securities — Analyst
Yeah, hi, sir. Congrats on a good recovery in volumes as well as margins. I have two questions. Firstly, can you give the trend in terms of how the EVA prices are currently panning out? And what was the Q4 average pricing of EVA for you?
Ramesh Kumar Dua — Managing Director
EVA prices are stabilized. This was around INR170, that is what — this is at what rate we consume. On the margin maybe it’s INR160 only. The current quarter that is going on, it is around INR160, INR155. It keeps on changing a little bit here and there.
Gaurang Kakkad — Haitong Securities — Analyst
Okay. And last quarter in the base this would be very high, right, closer to INR250, INR300 Q4 FY ’22?
Ramesh Kumar Dua — Managing Director
It was INR250 for quarter one of this — past year and ’22, ’23.
Gaurang Kakkad — Haitong Securities — Analyst
Right. And currently, the prices are stable at around INR155, INR160 which is what the Q4 pricing — average pricing was?
Ramesh Kumar Dua — Managing Director
Correct.
Gaurang Kakkad — Haitong Securities — Analyst
Okay. Thanks. And secondly, on the EVO outlet strategy, so you have been at those 400 outlets for some time now and it’s heartening to see that there is some plans in terms of expanding that by around like 15% this year. Now is it that we’ve got the model right in terms of EVO and now we can target healthy margins in the business or is it more so given that EVOs are largely Sparx brand focus, so we want to target aggressively and go aggressively on the Sparx brand. So what’s the strategy out here?
Ramesh Kumar Dua — Managing Director
Once we are having more efficiency in our stores, so we have started expanding this year. We will continue the momentum the things are.
Gaurang Kakkad — Haitong Securities — Analyst
Okay. So like every year, you will have around 60, 70 store expansion in the EVO going ahead?
Ramesh Kumar Dua — Managing Director
We hope so.
Gaurang Kakkad — Haitong Securities — Analyst
Okay. And this high-single-digit margins largely is sustainable or we can target to a more closer to double-digit or even above once it’s like fully scaled up and maybe two, three years down the line?
Ramesh Kumar Dua — Managing Director
Yeah, naturally. Down the line things will improve further, but we have to be always cautious slipping in new competition and competitive pricing. So once things will improve because when the sales improve, then efficiencies improve. Overheads start getting low. So ultimately, your bottom line improves.
Gaurang Kakkad — Haitong Securities — Analyst
Right. Yeah. That’s it from me. Thank you.
Operator
Thank you. Next question comes from the line of Jasdeep Walia from Clockvine Capital. Please go ahead.
Jasdeep Walia — Clockvine Capital — Analyst
Hello, good afternoon, sir. Can you hear me?
Ramesh Kumar Dua — Managing Director
Yeah.
Jasdeep Walia — Clockvine Capital — Analyst
Sir, thanks for giving me this opportunity. Sir, my first question is [Technical Issues].
Operator
Hello, this is the operator. Hello? Hello, this is the operator. Hello? Hello, this is the operator. Since there’s no response from your end, I’m going to have to disconnect your line. [Ends Abruptly]