Stanley Lifestyles Ltd (NSE: STANLEY) Q2 2025 Earnings Call dated Nov. 14, 2024
Corporate Participants:
Sunil Suresh — Managing Director
Pradeep Kumar Mishra — Group Chief Financial Officer
Analysts:
Nilesh Patil — Analyst
Jaspreet Arora — Analyst
Megh Shah — Analyst
Sreeram Ramdas — Analyst
Resha Mehta — Analyst
Deepak Jangid — Analyst
Sanjay Shah — Analyst
Shreyas Chandak — Analyst
Pawan Kumar — Analyst
Naitik — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Stanley Lifestyles Limited Q2 FY ’25 Earnings Conference Call, hosted by ICICI Securities. [Operator Instructions]
I now hand the conference over to Mr. Nilesh Patil from ICICI Securities. Thank you and over to you, sir.
Nilesh Patil — Analyst
Thanks, Del. Good morning all of you. On behalf of ICICI securities, we welcome you all to Q2 FY ’25 results conference call of Stanley Lifestyles Limited. We have with us Mr. Sunil Suresh, Managing Director; Mrs. Shubha Sunil, Whole-Time Director, Mr. Pradeep Kumar Mishra, Group Chief Financial Officer; and Sri Krishna, Chief Executive Officer, Retail Division.
Now I hand over the call to management team for their initial comments on quarterly performance and then we will open the floor for question-and-answer session. Thanks and over to you, sir.
Sunil Suresh — Managing Director
Good Morning. My name is Sunil Suresh, Managing Director of Stanley Lifestyles Limited. Welcome to Stanley Lifestyles Limited earnings conference call for the second quarter and half year ended 30 September, 2024. During the first half of FY ’25, Stanley Lifestyles Limited reported revenue from operations of INR2,037 million. Despite our B2C business growing by 3% year-on-year, our overall sales declined by 1.1% compared to H1 of previous year. This was due to combination of factors including reduced store footfall due to unusually heavy rainfalls in our major retail markets, change in our business verticals from credit to cash and carry and reduced pull from our B2B customers.
Although the Indian luxury residential property sales continue to grow exponentially, the ongoing delays in property handover by builders continue to postpone the timing of actual furniture purchase. With more than 17 of our stores being below 18 months and under the gestation period of 30 months and due to the ratio of new stores under gestation period, we continue to incur higher operation costs which has put pressure on our current profitability. However, this will even out as the stores start to mature as we move forward. We have managed to reduce our marketing spends compared to the same period last year. Our cost of import raw materials were impacted by adverse foreign exchange movement and increased shipping costs.
From a profitability perspective, we delivered an EBITDA for H1 FY ’25 of INR386 million with a margin of 18.9% and the profit after tax was INR95 million. On the B2C retail front, we expanded our footprint by opening three new stores in H1 FY ’25 across each of our brands, Stanley Level Next Ahmedabad, Stanley Boutique Chennai and Sofas and More Chennai. This brings our net total store count to 64 as at the end of September 2024 comprising of 39 company-owned and company-operated COCO stores and 25 franchisee-owned and franchisee-operated FOFO stores. Our COCO stores contribute 58% of the revenue in H1 FY ’25 reflecting Stanley Lifestyles focus on direct consumer engagement and operational quality control.
We have stayed to our annual plan and all the stores budgeted have been successfully launched till date and we are confident of achieving all planned new store rollout for this financial year. With a better than previous year order book at the start of H2 FY ’25, we remain positive to have better business in the remaining quarters of this year. In the medium-term, India’s luxury residential property market which is driven by increasing affiliate demography is expected to follow an exciting and high growth trajectory. Sales of high-end residences valued more than INR4 crores or more increased by 38% in the first nine months of 2024 compared to last year. This expanding market of upscale homeowners is creating a strong momentum for quality furnishing and align with their lifestyle aspirations.
With our well-established brand positioning in a premium and luxury furniture space, bespoke offering and innovative designs, Stanley Lifestyles is uniquely positioned to capitalize on these powerful consumer trends. Management’s top priority include expanding our retail network strategically, localization of raw material and continuing to launch contemporary furniture collections for our target customer base. In summary, Stanley Lifestyles Limited’s strategy is to deliver value to both our customers and stakeholders while reinforcing our position as India’s leading brand in premium home interiors and high-end luxury furniture space. Thank you.
Operator
Sir, should we go forward with the Q&A?
Sunil Suresh — Managing Director
I’m handing over to Pradeep Mishra, our Chief Financial officer.
Pradeep Kumar Mishra — Group Chief Financial Officer
Thank you, Mr. Sunil, and good morning, everyone. I am pleased to share Stanley Lifestyles’ financial performance for quarter two and H1 FY ’25. For quarter two, our revenue from operations stood at INR1,030 million, a decline of 6.4% year-on-year. Gross profit for the quarter reached INR576 million, representing a margin of 56%. EBITDA was INR185 million with an EBITDA margin of 18%, while our PAT was INR57 million, a margin of 5.5%. For the first half of FY ’25, which is H1, revenue from operations totaled INR2,037 million. Gross profit was INR1,111 million with a margin of 54.5%. Our EBITDA was INR386 million with a margin of 18.9% and PAT came in at INR95 million, reflecting a margin of 4.7%.
In our quarterly segmental performance, the retail segment, including Stanley Level Next, Stanley Boutique and Sofas and More reported revenues of INR553 million and a 4.7% increase over same quarter last year. Franchisee stores contributed INR159 million in quarter two demonstrating strong year-on-year growth of 28.2%. The B2B segment contributed INR268 million with a slight 0.7% year-on-year decrease, primarily due to softening demand from institutional clients. For the first half of FY ’25, the retail segment generated revenue of INR1,061 million, reflecting a 3% year-on-year growth, while franchisee stores contributed INR297 million, representing a 17.4% increase, while our B2B segment recorded INR490 million in revenue with a marginal 0.6% year-on-year decline.
In terms of store contributions, our COCO stores accounted for 55% of revenue in quarter two and 58% in H1. Franchisee-owned and franchisee-operated stores contributed 16% in quarter two and 15% in H1. From a regional perspective, the south region contributed to be a stronghold contributing 76% of our revenue in quarter two and 80% in H1 FY ’25. At the product level, Sofas remained the leading category in our portfolio contributing 56% of our revenue in quarter two and 54% in first half FY ’25. The company in H1 focused mainly on backward integration, particularly through localizing leather and backward integrating many other processes, which continue to make a complete home solution.
As of September 30, 2024, Stanley Lifestyles hold a strong financial position with net cash balance of INR2,112 million. This cash position supports our growth plans enabling us to expand both our retail footprint and our supply chain capabilities. Looking ahead, we remain optimistic about growth opportunities in luxury furniture market. Our focus will be on expanding our retail network and diversifying product lines to meet increasing customer demand. In addition, our technology initiatives at the point of sale coupled with our commitment to sustainable practice are set to enhance both customer experience and operational efficiency.
Thank you. I would be happy to address any questions you may have on our performance this quarter. Over to you, yeah.
Operator
Sir, can we begin the Q&A?
Sunil Suresh — Managing Director
Yes, we can.
Questions and Answers:
Operator
Thank you. [Operator Instructions] The first question is from the line of Jaspreet Arora from Equentis Capital. Please go ahead.
Jaspreet Arora
Yeah. Hi, good morning. Thanks for the opportunity. Overall, there seems to be a decline in revenue on a Y-o-Y basis for Q2. Mr. Mishra you gave the break-up of the three segments, the B2B franchisee and owned. There it seems there was a growth and one was the flattest scenario. So not able to add up these two and what am I missing?
Pradeep Kumar Mishra
Yeah. So our main business is brand and B2B business. And in brand, we have three different format stores. So our brand business in Q2, over last year Q2, the retail portion really grew by 5% and which is the COCO stores. And there was a major impact in the B2B orders in the B2B segment of our business which degrew over last year. So retail did pick up in quarter two over last year quarter two, but partially impacted by B2B or the OEM segment. Also, one was the lower institutional demand. Second, we also stopped credit in our B2B2C division. So that also impacted slightly in quarter two.
Jaspreet Arora
How much was the B2B down on a Y-o-Y basis for quarter two?
Pradeep Kumar Mishra
B2B down was 1% over last year and the B2B2C business which is some accessories which is sold through dealer network that was really down almost 60%.
Jaspreet Arora
Okay. So major impact has come from there.
Sunil Suresh
We converted that from credit and cash and carry because finding it bit difficult to collect the old dues. So we made it a cash and carry from April. So that actually has degrown by 60%.
Jaspreet Arora
Okay. Okay. Understood. So amongst the three reasons that you mentioned, sir, so this was one of the reasons and I believe this will continue for the next two quarters because you started in April. So even second half would have an impact of — for this particular reason, right, the change in terms?
Sunil Suresh
There might be a slight impact. But like I said in my speech that we are quite positive because the order books have been much better than beginning of H2 last year versus this year, point number one. Point number two, also a lot of stores which are under gestation are now coming to I would say a little closer to gestation in the H2 period. So yeah, we see a stable business. And also normally for us, H2 gives almost 55%, 56% of the annual business. So we are now entering a better period of the year.
Jaspreet Arora
Okay. And the other two reasons you mentioned was one was the unexpected rains in Bangalore and I believe Bangalore gives more than 50% of revenue. Am I right?
Sunil Suresh
Correct. Yeah. So we had unexpected heavy rains, heaviest in the last 30-odd years in Bangalore. So we had almost two, three weekends got washed away. That was one of the major reasons. But I think we have picked up back in Bangalore also.
Jaspreet Arora
Okay. And the third reason I missed, sir, so one was the change in terms. One was the rains and there was one more reason you mentioned.
Sunil Suresh
Yeah.
Jaspreet Arora
What was the third one?
Sunil Suresh
B2B slowed down by 1%.
Jaspreet Arora
Okay. Okay. So second half, would you say that assuming these things are largely behind us, there is a potential to grow in if not 20% plus at least in double-digits on a Y-o-Y basis 2H over 2H?
Sunil Suresh
We remain very positive in terms of B2C sales and we think we will definitely continue growing there. B2B is still looking a bit weak. We have not yet got our — what they call as forecast for Q3 as well as Q4. So we are hoping that will pick up. The business we converted from credit to cash and carry is already normalizing slowly and we hope that will be ironed out by end of Q3. So I think we look fairly positioned well to kind of do, of course, some amount of growth at this point in time because of uncertainty of B2B, we are not having the clarity. We are expecting their forecast for Q3 and Q4 very soon, both Toyota and IKEA.
Jaspreet Arora
Okay. Understood. And just lastly, assuming this delay in handover of…
Operator
Sorry to interrupt, sir. Please fall back in queue.
Jaspreet Arora
I’ll come back. Thank you.
Operator
Thank you. The next question is from line of Megh Shah from ProsperoTree Financial Services. Please go ahead.
Megh Shah
Yeah, good morning, sir. I just have one question. After the IPO on multiple interactions with media as well as analysts, you have suggested that the scope for the company’s growth is very high and have almost indicated that our aspiration/capability is to reach INR1,000 crores revenue in three to four years maximum. Having said that, for the last couple of quarters, there has been almost no growth. So if we are supposed to achieve a INR900 crores to INR1,000 crores revenue mark, generally, it will not scale up overnight. So with that background, I would like to ask you, would you like to downward revise your four year’s indication considering that the last three to four quarters have been very muted in terms of growth?
Sunil Suresh
Not at all. You must understand that this has been some internal corrections and changes we have done. Despite the senior management time of one year having gone towards the IPO, we came back to business and we have done certain changes which are going to give us a lot more stability. So numbers are very clear and all the required avenues to generate these revenues are in place. So there is no correction as far as our forecast of reaching a INR1,000 crores in the next three to three and a half years is very much there in place.
Megh Shah
Okay, sir. That’s all from my side. Thank you.
Sunil Suresh
Thank you.
Operator
Thank you. The next question is from the line of Sreeram Ramdas from Green Portfolio. Please go ahead.
Sreeram Ramdas
Hey. Can you hear me?
Sunil Suresh
Yes.
Sreeram Ramdas
See, on your DRHP, I saw there is something called assignment deed and from what I understand the trademark was not registered in the company’s name. Is that correct?
Pradeep Kumar Mishra
No. I’ll give you a feedback. The trademark was originally in the name of promoters and before we filed DRHP, the same was transferred to company and the necessary application company has already filed, taken all actions to transfer the trademark from promoter to the company. This has to yet get approved by the department and registrar of trademark and others and as soon as that completes, the entire trademark will rest with the company now.
Sreeram Ramdas
Okay. You mean before you file the DRHP, there was an agreement between the promoter to transfer the trademark and copyright name to the company, correct?
Sunil Suresh
Yeah.
Sreeram Ramdas
But what about the payment? I see the payment is around INR50 crores. So I have two questions from this. How did you arrive at that INR50 crores? I think INR37.5 crores and another INR15 crores on the copyright. So how did you arrive at the INR50 crores? And secondly, is shareholder money being used for this?
Pradeep Kumar Mishra
So the total value is INR37.5 crores. The copyright is — the part of that is included in INR37.5 crore and this — no part of the IPO proceeds is planned for using in this acquisition.
Sreeram Ramdas
Okay. And so how did you arrive at this figure INR37.5 crores?
Pradeep Kumar Mishra
This was done on a valuation on the brand, the future potential. And then there was bankers involved which give us a fair value assessment of that. So there was a valuation which was done independently and depending on that it was agreed to transfer as a value.
Sunil Suresh
The free cash what we had.
Pradeep Kumar Mishra
Yes, it was done with the free cash. Cash flow is also staggered over time. It was not paid as a bullet cash flow.
Sreeram Ramdas
Okay. And while going for the IPO, did you make any provisions for that or was this money being used from the reserves to pay the promoter?
Pradeep Kumar Mishra
It’s from reserves. Again, I said like no part of IPO money is used for this acquisition.
Sreeram Ramdas
Got it. All right, sir. Just that one. Thank you so much. Have a good day.
Operator
Thank you. The next question is from the line of Rasha Mehta from Green Edge Wealth. Please go ahead.
Resha Mehta
Yeah, thank you. Sir, just a couple of questions from my side. So one I think to one of the previous participants you were talking something about Toyota and IKEA. So can you just comment on this B2B, only specifically the B2B business? What is the revenue contribution on an annualized basis? Who are our clients here and what kind of slowdown are we seeing here? Because as you said, B2B business has also declined by 1%. And secondly, also the B2B2C business that is overall what contribution to our overall business on an annualized basis. And what accessories, etc, do we supply via the dealers to what kind of clients? So if you can just elaborate on both these business segments?
Pradeep Kumar Mishra
Yes. My B2B business contributes about 20% of overall revenue and the split is broadly 80/20. 80% is more which I say brand and 20% is more B2B and it goes 1% 2% quarter-on-quarter. But on annualized 80/20 is a good rule of thumb to plan.
Resha Mehta
80% is own brand, yes?
Sunil Suresh
80% is own brand.
Pradeep Kumar Mishra
Brand includes retail, accessories, all of that put together. And then there is 20% which is more where we manufacture as contract manufacturing and as OEM that’s 20%. And that includes all the OEM names that we cater to.
Resha Mehta
Sir, like Toyota, IKEA…
Sunil Suresh
Yes, Toyota, IKEA and Williams Sonoma is another new account that we have opened.
Resha Mehta
Okay.
Operator
Yes, ma’am. Does that answer your question?
Resha Mehta
No. I think so I had to pass.
Operator
The management line has been disconnected. Please stay connected. We shall reconnect them. Ladies and gentlemen, please stay connected. The management line shall be reconnected shortly. Please stay connected. Thank you. Ladies and gentlemen, the management line has been reconnected. Over to you, sir.
Sunil Suresh
Yeah, I don’t know. Which — where did I lose?
Resha Mehta
Yeah. So actually, my question was on B2B and B2B2C segments and you were talking about Williams Sonoma, whom you have onboarded as the latest customer in B2B segment. And so just wanted to understand here that within the B2B segment, so how is the demand outlook, how is the order book now looking like? And also in your B2B2C segment like which are the accessories? What kind of accessories do you all sell through dealers? And is there also an order book concept there or how does it work there?
Sunil Suresh
Yeah. So let me explain that in terms of B2B situation overall is down by 1%, but we have still not got clarity in terms of their H2 forecast which we are expecting due course of this month. There seems to be some amount of correction. So we are awaiting their forecast. Normally, it’s a rolling forecast they give on a monthly basis. So we are waiting for their forecast. The B2B2C piece is basically where we would trade with certain leather goods and certain leather hides through our franchises and dealers that had — earlier had a long credit period. And due course, this first quarter, we realized that the payments were getting further delayed. So we made it a cash and carry business.
So that was about 10% of our overall business. That has taken the biggest hit because we moved to cash and carry, but I think it is already getting ironed out and we are normally coming back to business there. So it should — while H1 took a hit, I think H2 we will, of course, be a bit down, but I think it’s more controlled. So between all three as I said, B2C is 70% of our business. That has grown by 5%. B2B has degrown by 1%, which is 20% of our business. And B2B2C is degrown by — how much is the percentage of degrown…
Pradeep Kumar Mishra
61%.
Sunil Suresh
61% degrowth in B2B2C, which is 10% of our business.
Resha Mehta
Right. So now again on this B2C growth part, right, so it is around 5% as you said for the H1 FY ’25, right and even if we look at the H2 which is almost 55% revenue contributor, right? So even if we see a very high growth in H2 at an overall level for the full year we will still be growing at around a single-digit number. Now, considering that you have outlined that real estate project deliveries, etc, are getting delayed. So clearly the demand is not seeming to be very buoyant at this stage. So in that light from where do you feel that the growth will come? B2B has slowed down, kind of B2B and B2B2C has kind of slowed down. Even retail has slowed down. Then where do we see this growth coming from and in the similar line then would we want to scale down our store expansion network plans of 10 to 11 stores on an annualized basis also because the new stores are kind of also impacting the profitability? So your comments there would be helpful?
Sunil Suresh
So yeah, very important for you to understand. While we have, I would say, demonstrated a lot of success by growing in a cluster especially Bangalore and Hyderabad clusters where we continue to increase. In Hyderabad, Bangalore, we are more or less completely grown. Most of our stores are now going to start coming up in newer markets. So those markets where we are not present, we are opening more and more stores. So basically, in terms of our store rollout plan, there will be no stopping us and we will continue to roll out these 11 stores for this year.
And then coming back to where it has slightly impacted our profitability is like I said almost 17 stores are below 18 months. And they are also aging as we speak and we are very confident that they will start getting to profitability in the due course of next couple of quarters. So while there has been delays from builders, we are also expecting a huge inventory handout to happen probably in the next three to four quarters. So we know the products are being sold and builders are handing out and there might be a huge glut of inventory that is handed over in the next few quarters and we are expecting that to happen.
So we are very confident that we are in the right place at the right time when that happens. So from a B2C perspective, we are absolutely bullish and we continue to carry forward whatever good work we have done in the last three, four years of moving this company from a sofa only to a complete home solution provider. That’s exactly how we are going to go about. From a B2B perspective, while certain accounts have been sluggish, there are major plans for these institutional companies. They are expanding quite rapidly and that also is some existing accounts, plus we are also looking for certain key new accounts with good profitability.
We have a lot of enquiries from China Plus 2 kind of companies who want to now move and the change in government in America now I think is going to also work positively for us, because a lot of people want to leave China because the tariffs on China is definite as far as the new government is concerned. So we remain positive to add a few more good accounts as we go forward. So fundamentally, I would like you to understand while we would not really want to change the way we are conducting our business which is a 70/20/10, this will continue.
Of course, there were certain changes in the 10% business, which is a good thing what we have done and we are much more secure in terms of our repayments from the market. So this is how we are doing certain smaller changes, but as I have always mentioned our middle mid-term kind of strategy is well in place. We have been the first mover with more than 20 years of experience in the Indian market and we continue to grow forward with the new demand coming in.
Resha Mehta
Right. That’s helpful. And lastly, just on the reasons for gross margin expansion by 280 bps, if I see Q-o-Q, 400 bps Y-o-Y. So what is the reason for gross margin expansion? And working capital has also seen a decent spike in inventory days as well as receivable days, if we compare with March 2024.
Pradeep Kumar Mishra
Yeah. Quarter one, we had a exceptional transaction which was not at the gross margin run rate. We are at about 56% of gross margin run rate from quarter four onwards last year and quarter one was an exception where it dipped because it was a one-off transaction. Now we’ve come back on 56% margin which is significantly improved from last year’s also because structurally a lot of work is happening in terms of bringing efficiency. A lot of localization efforts which has gone in and those have started to pay incremental margins immediately. So quarter one was a one-off. And this margin is in spite of we seeing a forex going up and increased shipping cost on imports. We’ve been able to maintain and manage our margins.
Resha Mehta
Right. On the working capital increase?
Pradeep Kumar Mishra
Yes. Working capital, what happened was so one is when I add a new store, my working capital goes up because of the inventory which is put on display at the store, right? So the inventory levels go up when I expand new stores, that’s one. So that’s one reason for working capital to go up. Second was because of supply chain disruptions because of Red Sea. Stanley as a company, we offer a lot of customization at a quick turnaround time. So having raw metal inventory is key for us. And there were a lot of disruptions happening because of non-availability of shipments or containers, expensive shipment costs if you want to book late. So we’ve strategically held higher inventories not from now, but from last year itself and then it’s gone up. Eventually with a lot of new programs that we have, at least in the raw material and few import stocks that we had ramped up inventory, we will see reducing it by quarter four, quarter one going forward because situation should stabilize and it should help us reduce on the raw material side.
Resha Mehta
And receivable days, the reason for increase from 18 days to 23 days because now that we have moved to cash and carry model, ideally the receivable days should have come down, right?
Pradeep Kumar Mishra
Yes. And these are all sticky collections which are progressing well. We have done good work in October, but that was one main reason for us to convert and review the credit cycle.
Sunil Suresh
But B2B remains the signed up in the past as a 60 days credit.
Resha Mehta
Right. I have two more questions. Can I squeeze them in or should I fall back in the queue?
Sunil Suresh
Yeah, you can go ahead, I guess.
Resha Mehta
Yeah. Thank you. So Bangalore would be contributing how much to our overall revenues on an annualized basis?
Sunil Suresh
Close to between 50%, 55%. So that’s the…
Resha Mehta
Of the B2C revenue or of the overall pie?
Pradeep Kumar Mishra
Of the B2C revenue.
Resha Mehta
Got it. Got it. And marketing spends, so typically they have hovered around 5%. So I think there was a comment in the investor presentation that we have reduced that. And what was the reason for reduction and then do we revert back to the old levels? And lastly, just a data question. What is the SSSG across all three formats for Q2 as well as H1 FY ’25.
Sunil Suresh
Yeah. From a marketing also, we have strategically started moving from traditional towards mostly social media and other marketing spends. We are still in an experimental mode. We have not gone full hog and we are doing pilot studies. And also realizing the climatic conditions, we held back a bit. So we did not spend our normal spend, especially in Q2. We were holding because of the weather conditions. And we have a very, I would say, quick action team where we are able to hold back our advertisement in case we realize there is a certain problem in a certain city. Usually, we have these kind of practices in the past. We realize that if there is a weather condition like monsoon or sometimes also floods and cyclones, we hold back our advertisement spend. So that’s what we have done.
Resha Mehta
Got it. And lastly on the SSSG…
Sunil Suresh
Now, I think in Q2 we are definitely going to come back to normal spends. Already we have started. Sorry, in Q3, we are going to come back to normal spends, yeah.
Resha Mehta
Right. And SSSG?
Pradeep Kumar Mishra
And SSSG, H1 is trending lower. This is for all mature stores which is more than 18 months. Again, it’s about in lower — negative — it’s a negative zone in H1.
Resha Mehta
And negative how much like minus, mid single digit or…
Pradeep Kumar Mishra
Minus single digit, higher single digit.
Resha Mehta
Higher single digit. Okay. Fine. And this is across formats, right, or is there any major skew?
Pradeep Kumar Mishra
Across all store formats.
Resha Mehta
Got it. Got it. All right. Thank you so much and all the best.
Sunil Suresh
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Deepak Jangid from Ants and Bees Investment. Please go ahead.
Deepak Jangid
Thank you for taking my question, sir. Sir, you have mentioned that your target is to do INR900 crores to INR1,000 crores top line in the next three to four years. So I just want to know what is the growth outlook in terms of product categories?
Sunil Suresh
So while we have built this company and brand purely on a single hero product, which has been our sofas for the last decade and a half, starting from 2020, we started adding new facilities to be capable of manufacturing complete home furniture. So we have started upholstered beds, we have started mattresses, we have started kitchens and cabinets, we have also started the last year case goods, which is probably one of our fastest moving goods right now. So the transition is on. And like I’ve been saying that from 2025 onwards, Stanley is going to be positioned more as a luxury full home custom furniture manufacturing company and moving away from the typical sofa only kind of company. So typically when you look at any major furniture retailers globally, sofa as a component delivers between 40% to 45%, living room furniture delivers about 40% to 45% of the overall business.
We were missing on the various other categories and we have already started realizing within the new stores that we have set up, the sofa is coming to around 50%, 55% and further will drop because we are adding so many new products. So there will be a massive uptick in the attic of our customers. What was roughly about INR3.5 lakh, INR4 lakh by 2020, today in Stanley Level Next our luxury format is now close to about INR30 lakh per customer. So there are two ways of growth we are anticipating. One is of course from new markets, new stores that is going to be geographical growth, but from the existing stores, we are going to have a product offering changeover that will allow us to go almost four to five times more than what our previous average ticket size was. So this is the plan as far as B2C is concerned and that is how we plan to double our business in the next two and half, three years.
Deepak Jangid
Okay. And in terms of new product offering, are you planning to go into new products as well in the next three, four years?
Sunil Suresh
So most of the new product offerings have been — the factories have been established, the catalogues have been already made and we are continuing to upgrade. All the new stores are coming as a complete home solution provider, not like a furniture store as far as Stanley Level Next is concerned. Constantly we have a very strong NPD, almost 150 people working in our new product development area. We have designers from Italy and Germany working with us. Every year we actually obsolete 20% to 25% of the products which have been more than three years old and then continue to add newer products. So it’s an ongoing process. But from a presentation of the brand perspective, in the last decade, we were known mostly as a strong seating brand or a strong living room furniture brand, but now we are repositioning as a complete home solution brand that is where we are pivoting to.
Deepak Jangid
Okay. And what is the margin profile product-wise?
Pradeep Kumar Mishra
Margin profile it’s product, but now with a complete home it’s also with a customer in mind. And the idea is to have a complete home solution built. So the margin then gets the discounts or whatever happens gets distributed. So I think it should be at the same range that we are doing now. And all my products are at the similar margin profiles.
Deepak Jangid
Okay. And in terms of as you mentioned that with the increased localization and maybe in the next two, three years when the Red Sea crisis will not be there, so where do you see the margin going from here?
Sunil Suresh
So with scale we are seeing a tremendous amount of benefits. We are just in that point where we are moving in terms of getting a larger scale with new stores coming in and with a 100 stores that we have planned in the next three years taking the count to a 100 stores on the current 60 levels or 50 last year. So we believe that our margins and profitability we are targeting to arrive at anything more than 12% of PAT by the end of three to four years that is the vision. We have created a premium brand and we also like to have a premium profitability.
Deepak Jangid
Okay. Thank you.
Operator
Thank you. The next question is from the line of Sanjay Shah from Pranishta. Please go ahead.
Sanjay Shah
Hi, good. Good afternoon. I hope you can hear me.
Pradeep Kumar Mishra
Yes, you’re loud and clear.
Sanjay Shah
Thank you. Thank you for taking my question. I just want to get a better idea about you referred to the China plus One opportunity and the market softening up particularly in North America because of that. So I just want to get a better sense on how big is the international component of your business right now and where do you think it can go to?
Sunil Suresh
So just to get your attention on this note, China alone exports over $110 billion worth of furniture globally, out of which close to $70 billion goes to America itself. So the opportunities are absolutely massive. But as of now, India still does not have the ecosystem in place and we are still kind of building that ecosystem. So probably at the moment, we are exporting through one of our key accounts to various countries such as Middle East, Europe as well as America. But as we go forward, we are a little cautious because while we have a lot of inquiries at our doorstep, we are looking at a product and pricing match, quality product and pricing match.
We being a fairly premium brand here, our manufacturing capabilities and our quality standpoints are much higher than typically what they call as repetitive manufacturing Chinese companies which offer very low prices. So we have a lot of inquiries, but we are choosing the right partners. Where we see phenomenal opportunity actually is a lot of companies wanting to come to India now, establish their retail outlets here and they want to localize for their own retail expansion. We are in discussion with a couple of them including a very large Japanese company that is setting up furniture retail at a medium to medium low kind of a price point segment.
They have an idea to build almost 300 stores by 2030. So these are our opportunities. We have been the first movers. We have established solid manufacturing capabilities with all registrations and certifications required by these companies. So we do have an opportunity there, but it is not going to be at the cost of profitability because we continue to like I said keep the ratio of B2C and B2B between 75/25. So we are not very keen to look at getting into pure B2B and our business and our intellectual wealth is very much in the brand and the B2C business. Our focus will be here, but while there is an opportunity for profitability, we will definitely take those accounts.
Sanjay Shah
Thank you very much. I think that’s pretty interesting and I’m sure we’ll hear more about it over the next few quarters and years. Thank you.
Sunil Suresh
Thank you.
Operator
Thank you. The next question is from the line of Shreyas Chandak from Invest Well Agents. Please go ahead.
Shreyas Chandak
Hi, sir, Good afternoon. Thank you for the opportunity. Sir, I have a couple of questions. The first one being when we talk about growth for the next four to six quarters, could we actually give an estimate of will it be coming from volumes and what kind of growth would be coming from pricing considering we are already priced quite a premium?
Sunil Suresh
So I think it will be a combination of both because we do have headroom to increase the pricing because mainly we compete with European brands who have established a lot of brand stores in India. And for them, the cost of manufacturing in Italy, Germany and Spain is going very, very high primarily because of their various issues, the war, the power cost, of course, the labor cost, plus also the forex trading and trending much higher than in the past. So we do always continue to have a headroom to increase our pricing because the acceptance level in India also is constantly increasing and as a fairly matured 20-odd-year-old design company, we know what Indians require in terms of high-quality products.
So we are able to demonstrate that with better products and there is a headroom to increase our price as we grow. As far as volumes are concerned, as I said, we are primarily south-dominated and now very carefully each cluster-wise, we are kind of wanting to grow. We don’t like to grow haphazardly, so we are choosing clusters. Hyderabad is next, Mumbai is next and Delhi NCR is going to be the last cluster where we are going to grow. So this is how we have planned and as I mentioned, we will have great opportunities to grow both in terms of pricing and the brand acceptance and we have the pricing power, plus also in the expansion of stores and category expansion that we are doing.
Shreyas Chandak
Okay. Okay, sir. And for pricing headroom, we are talking about all the three formats being it Level Next, Boutique and Sofas and More?
Sunil Suresh
So Sofas and more, we consider that as a value premium segment. So we will continue to be fairly competitive there and that is since our entry-level offering, but in Stanley Level Next, we have a good opportunity because just now as you know for the last two, three years premium housings are really selling a lot and across the country if you take an average of INR4 crores plus, there are a lot of inventory which is already sold and we believe the high-end customers dwell in these kind of homes and that market is also going to grow for us.
Shreyas Chandak
Okay. Sir my next question is on the leather automotive interior segment. Sir, I would want some clarity. Is it like a purely B2B segment considering we do it while the cars are manufactured or we do more of an upgradement for customers when they want to basically upgrade their interiors after purchase of the vehicle? And if that is the case, then how do we inculcate airbags considering all the premium cars have inbuilt airbags within the seats?
Sunil Suresh
So basically, right now, though the brand started way back in 1996 as a custom automotive seating company, we have moved away from that business and it is still there, but we do very limited number of cars for very high end when they come to our own installation facilities and we do all kinds of cars starting from Jaguars to Land Rovers to Rolls-Royce also. We do have an airbag sewing machine, so we can actually do very high-quality custom interiors, but that’s a very small business. We do only about 20, 30, 40 cars a month and not more because we have scaled down that, but it is a highly profitable business, but a very small business, but most of our business comes with we supply cut and sewn leather trims to OEMs. So there we supply to car companies and that is our B2B component.
Shreyas Chandak
Okay. And then the car company itself does the final finishing of the entire product?
Sunil Suresh
Exactly. So we do the cut and sew to them. They do the installation in the factory, online production.
Shreyas Chandak
Okay. Thank you so much. That’d be it for my side.
Sunil Suresh
Thank you.
Operator
Thank you. The next question is from the line of Pawan Kumar from Shade Capital. Please go ahead,
Pawan Kumar
Sir, I am audible?
Operator
Yes, sir, you are.
Pawan Kumar
Sir, thank you for the opportunity. Just try to get a sense of the size of opportunity we have in India in B2C market. Can you give some color on that?
Sunil Suresh
You will have to consider few aspects that at this point in time, the country is moving from what you can call as standard homes towards premiumization. And if you look at RERA data there are thousands of builders who are actually developing premium housing across the country in various urban 1 and urban 2 clusters. So the size of the market in terms of organized at the moment hovers between $1.5 billion to $2 billion. Unorganized could be 80 times bigger. So that is where we are. We are unable to get a tag on how the unorganized market works, but actually the trend is very clearly people are moving towards branded furniture.
Usually in developing countries like India initially people move and start acquiring branded sanitary ware first. Then it would be light fixtures and so on and so forth and then the furniture and furnishing comes in. So we are still like a 9 a.m. movement as far as India is concerned for premium furniture. So there is plenty of headroom to grow. Very interesting is one more thing I want you all to know is that while very matured markets like Europe, especially Italy, Germany, 90% of the furniture buying happens mainly for restoration and refurbishment for old homes. But in India, we are seeing a trend where 90% is coming from new homes. So that is the actual trend. So you can see how much more opportunity we have as we go forward.
Pawan Kumar
Thank you, sir. And sir, whom you really see your competitor like in this market like?
Sunil Suresh
While I think from the top end we have various European brands with whom we compete, in the segment as an Indian premium brand at the point, we don’t see anyone having backward integrated and having set up a manu-retail chain which is our moat. There might be traders importing from here, there and selling with a few stores. Other than that, of course, on the national level, we have brands that are playing lower than our segments, but in our segments at this point, we seriously don’t have a straight head-on competitor. And also, I think where we are able to score is close to 75% of our business comes from bespoke manufacturing and that is what traders and importers can’t offer. That is our main USP.
Pawan Kumar
Right, sir. Thank you for such elaborate answer. Sir, just a follow-up on this. Sir, do you see opportunity also beyond new homes for your kind of product? Although right now your commentary is coming just for the new homes.
Sunil Suresh
Yeah. Because right now, the opportunity is so much of new home inventory that we see that is, of course the main chase for us. Other than that, we are also seeing a lot of inquiries now slowly coming in because there is a lot of other areas where premiumization has started which is typically corporate seating, hospitality, airport seating. So we have been indulging and taking a few orders here and there. We have done the entire T2 on the new airport in Bangalore. We have done the Cochin airport. We have done the Calcutta airport. So we have opportunities arising while premiumization and seating is also starting in those markets. So our design team is now engaging in developing a new line of corporate seating, contract seating we call it. So that is already started to happen. So hopefully, next year, we will open a new segment for premium contract seating.
Pradeep Kumar Mishra
For new homes what we offer is a complete home solution that has been our focus and for existing homes when they do a renovation, it comes as a loose furniture, all the furniture which is movable. So we cater to that also. It’s been almost like 80/20 in terms of new home to old home sales ratio for our retail division. So we cater to existing also, but the growth in new homes is high and then that’s where new home sales is taking away.
Pawan Kumar
Okay, sir. Thank you for all your answers. That’s all from my side. Thank you.
Sunil Suresh
Thank you.
Operator
Thank you. The next question is from the line of Naitik from NV Alpha Fund. Please go ahead.
Naitik
Hi, sir. I just wanted your revenue breakup by segment for Q2 FY ’24 and possibly for H1 FY ’24 in terms of seating, case goods, leather, auto, etc.
Sunil Suresh
Pardon me, your voice was not very clear.
Naitik
No, sir, I wanted the revenue breakup for seating, case goods, leather, and auto interiors in Q2 ’24.
Pradeep Kumar Mishra
Yes and it is there in our product presentation. I will…
Naitik
No, I meant for last year ’24, not this year.
Pradeep Kumar Mishra
In terms of percentage, I think this data is included in our investor presentation.
Naitik
It was only for this year, not last year.
Pradeep Kumar Mishra
FY ’25 you want. Is it?
Naitik
No. For Q2, FY ’24?
Pradeep Kumar Mishra
I think the ratios remain same as H1. It doesn’t change much between quarter one and H1. So you should. We should estimate same. The same H1 trend.
Naitik
Year-over-year, right?
Pradeep Kumar Mishra
Yeah.
Naitik
Okay, sir, That’s it from my side.
Operator
Thank you. Ladies and gentlemen. That was the last question for today. I would now like to hand the conference over to the management for closing comments.
Sunil Suresh
Thank you very much all of you for joining us today and for your continued interest in Stanley Lifestyles Limited. We are excited about the path ahead and remain committed to delivering consistent growth and value in the coming quarters. As always, if you have any further questions, please feel free to reach out to our investor Relations advisor, Churchgate Partners and we’ll be happy to address all your queries. Thank you once again.
Operator
[Operator Closing Remarks]
Sunil Suresh
Thank you.