Vaibhav Global Limited (NSE: VAIBHAVGBL) Q1 2026 Earnings Call dated Aug. 06, 2025
Corporate Participants:
Unidentified Speaker
Nishita Bhatt — Investor Relations, Adfactors PR
Sunil Agrawal — Managing Director
Nitin Panwad — Group Chief Financial Officer
Analysts:
Unidentified Participant
Dipali Kumari — Analyst
Naveen Baid — Analyst
Kumar Saurabh — Analyst
Harsh Mehta — Analyst
Shreyansh Jain — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the WebHub Global Limited Q1 FY26 earnings conference call. As a reminder, all participants lines will be in listen only mode and there will be an opportunity for you to ask question after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone. I now hand over the consent to Ms. Nishita Bhatt from Add Factors PR. Thank you and over to you Ma’.
Nishita Bhatt — Investor Relations, Adfactors PR
Am. Good morning everyone and thank you for joining us on Weber Global Limited’s earnings conference call for the first quarter ended 30 June 2025. Today we have with us Mr. Sunil Agarwal, Managing Director, Mr. Nitin Panwar Group CFO and Mr. Prashant Saraswat, Head of Investor Relations. We will begin the call with the opening remarks by Mr. Sunil Agarwar on the business operations, key initiatives and a broad outlook followed by discussion on the financial performance by Mr. Nitin Pandar after which the management will open the forum for the Q and A session. Before we get started, I would like to point out that some statements made or discussed on today’s call may be forward looking in nature and must be viewed in conjunction with the risks and uncertainties that we face.
A detailed statement and explanation of these risks is included in the earnings presentation which has been shared with you all earlier. The company does not undertake to update these forward looking statements publicly. I would now like to invite Mr. Sunil Agarwal to make his opening remarks. Over to you Sir.
Sunil Agrawal — Managing Director
Thank you Nishika. Good morning everyone. Thank you for joining VGL’s Q1 FY26 earnings conference call. Hope you have reviewed the results and investor presentation. The June quarter played out against a mixed global backdrop with consumer sentiments fluctuating across our key markets. However, we did see some improvement towards the end of the quarter gone by. We reported revenue of 814 crores in Q1 registering 8% year over year growth. Our gross margin held steady at 63.8% which is reassuring given the macro volatilities. We continue to operate comfortably within our target margin range of 60% plus thanks to our vertically integrated global supply chain.
This setup helps us stay cost competitive and responsive while maintaining industry leading margins. On the digital front, we are seeing steady momentum as digital now contributes to 43% of our B2C sales, we now remain on track to reach a 50% digital revenue share by FY27. Let me now walk you through region wise performance in the U.S. revenue grew by 1.3% compared to the same period last year. Consumer confidence April partially improved later, but towards the end of June the US strike on Iran subdued the sentiments, so overall remains below last year’s levels. With household savings more with household saving challenged, resultant discretionary spending continues to stay under pressure.
As you may be aware, the US has recently imposed a 25% tariff on all imports from India. While this development has created a level of uncertainty across the industry, we are fairly well positioned to navigate the impact. Unlike our peers, we operate a fully vertically integrated business model with in house design and manufacturing globally spread in house sourcing base. This gives us control over our supply chain and cost structure. Leveraging this model, we have proactively shipped advanced inventory ahead of the tariff announcements, ensuring that we are fairly well stocked for the coming few months. We remain optimistic about a potential reduction or rationalization of tariff in future.
The UK retail industry continues to face a challenging environment with growth held back by economic uncertainty and a cautious consumer spending. In the UK revenue grew by 2.3% YoY supported by RDL World Business, the core TSC business had an impact on both internal and external factors. Consumer confidence had fallen sharply in April before recovering in June. TAC also went through recent leadership transition which caused some initial disruption. We are now seeing early signs of improvement in PGSE performance while Ideal World continues to be a bit profitable in Q1. Also, Germany delivered 7.2% YoY revenue growth during the quarter.
Consumer demand was affected by macro challenges including weaker sentiment early in the quarter. While tax and interest rate cuts supported spending to some extent, these tailwinds were not sufficient to fully offset the broader pressure on discretionary demand. As a result, this quarter Germany incurred losses due to operating deleverage. Our Germany business saw improved year over year performance in Q1 and we are encouraged to see even stronger traction showing in Q2. With this momentum, we remain confident of achieving EBITDA profitability for full financial year in 2526. On the product front, our focus on innovation and responding to evolving consumer demand continues to yield results.
We are pleased with the successful scale up of our Lab grown diamond jewelry portfolio which contributes to 11% of Group’s overall sales in Q1, up from 1% in the same quarter last year. This strong traction reflects growing consumer acceptance. We are curating our offering and optimizing both airtime and digital platforms. To cater to this rising demand, we continue to focus on four pillars of our growth widening reach, New Customer registration and acquisition, Customer retention and repeat purchases. In Q1 our TV network reached 127 million households as of 30 June 2025. Our unique customer base ranks at 730,000 which is up 12% YoY and the highest ever for Region group.
New customer acquisition stands at 400,000 in Q1 while retention rate improved to 42% on a TTM basis. Customers purchase on an average of 22 pieces from us on last one year sustainability continues to be the core of our business. I am pleased that VGL has been assigned a combined ESG rating score of 72 which is a strong ESG rating from ICRA. This recognition reinforces our position as a responsible corporate citizen. I’m also pleased to share that WABO Global is now certified by the Responsible Jewelry Council, that is ijc, a globally recognized standard for ethical and sustained business practices in jewelry industries.
This places us amongst a select group of certified manufacturers worldwide and reflects our commitment to responsible sourcing, governance and environmental stewardship. Further, Germany has received the Great Place to Work certification and with this VGL is now globally Great Place to Work Certified group. We are grateful to our employees for their honest feedback and remain committed for an inclusive and collaborative work environment at vgl. Community Give Back is integral in our business model where every unit sold results in a meal for a school going child. We are pleased to share that this quarter we served 100 millionth meal to school going child since the inception of our midday meal program called Year Purchase fees.
Currently we are serving approximately 57,000 meals every school day and we are on our journey to donate 1 million meals every school day by FY 2040. On the clean energy front, we generated 1.4 million kilowatt hours of solar energy this quarter meeting 100% of power needs of our manufacturing units. These steps bring us closer to our target of achieving carbon neutrality in scope 1 and 2 emission by 2031. In addition, we have built rainwater harvesting tanks of 4,000 kiloliters in and around our manufacturing locations taking our total capacity to 10,000 kiloliters. This is another step towards achieving water stewardship.
We believe in long term value creation for our stakeholders. The board has recommended a first interim dividend of 1.5 rupees per equity share which implies 66% payout. Looking ahead, our focus remains on driving innovation, leveraging advanced technologies including AI and driving operational efficiency. Current macroeconomic environment and recent tariff development presents near term challenge especially in consumer sentiments. In light of this, we are taking a cautious approach in guiding to achieve revenue growth of 7 to 9% of our FY26. We believe that the short term disruptions give way to long term growth, especially for an agile company like tgm.
That said, we remain optimistic that the tariff situation in weaker macros will resolve over time and will unlock potential for growth beyond our current guidance for the two years further ahead, we continue to project mid teens revenue growth supported by strong operating leverage and our investment into digital. Despite macro risks, our low cost, vertically integrated model and high agility positions us well to navigate the evolving landscape. I will now hand over the call to Nitin to discuss the financial performance. Over to you Nitin.
Nitin Panwad — Group Chief Financial Officer
Thank you Sunil. Good morning everyone and thank you for joining Q1FY26 earnings call. I will take you through the key financial highlights for Q1. As Sunil mentioned earlier, we continue to closely monitor market dynamics and proactively manage our operations. Consumer sentiments remain delicate across our key markets influenced by changing spending pattern and external factors like tariffs and geopolitical tensions. In Q1FY26 we delivered revenue of rupees 814 crore up 8% year over year from 756 crores. This growth came despite the challenging external environments in the us. Revenue remained steady supported by omnichannel reach and believe digital native and vertically integrated business like US are well positioned for long term market share.
Gains in uk, muted consumer sentiments and internal leadership changes affect our core performance which is more of transition nature but strong traction at Ideal World help balance the growth. Germany continues its upward trajectory going well ahead of the market. Macro pressure and operating deleverage led to quarterly loss. We remain confident in our strategy and expect Germany to achieve EBITDA profitability in full financial year of FY26. In local currency terms, US, UK and Germany grew by 1.3%, 2.3% and 7.2% respectively. Looking at channel mix perspective TV revenue grew by 1% year over year to 444 crore while digital revenue grew strongly by 14% to 329 crore.
This momentum reflects our continued investment in strengthening Omni channel capabilities. Digital now contributes 43% of overall revenue and we remain firmly on course of reaching 50% by FY27. Lifestyle products continue to scale well now falling 36% with a momentum with a medium term goal of reaching 50%. Our budget pre option remain popular accounting of 39% of our total retail revenue gross margin for the quarter was healthy at 63.8% reflecting the advantage of our vertically integrated business model. EBITDA margin improved by 50 basis points year over year to 9.2%. The improvement was driven by saving in employee cost through headcount rationalization.
Improvement in efficiencies. Shipping costs benefited from improved logistic efficiencies and successful rate negotiations. Additionally, we saved airtime cost due to operating leverage. Profit after tax stood at 38 crores, a 37% year over year growth. Both our recent acquisitions continue to contribute meaningfully. Ideal World sustained its growth momentum while Mindful Souls remains a high margin business and is expanding its product portfolio and customer base. These platforms are also generating valuable cross business learning and synergies that supports long term efficiency and innovation. On the cash flow front, our model remained highly cash generative. We reported 22 crore in operating cash flow and 15 crore in free cash flow.
With a net cash position of 174 crore and consistent dividend payouts, our balance sheet remains strong and resilient. Further, the recent upgrade in both short and long term credit rating by ICRA reflects our consistent performance, strong liquidity and prudent capital management Return Metrics remain healthier ROCE 19% and ROE 12%. We remain firmly committed to delivering consistent value to our shareholders. The Board has recommended a first interest dividend of rupees 1.5 per equity share implying a 66% payout. While we remain confident in our long term growth outlook, the current macroeconomic environment. Calls for a measured approach. Accordingly, we are revising FY26 revenue guidance to 79% supported by operating leverage. We remain optimistic that issues like the tariff situation and weaker macros will be resolved over the time and could unlock the potential of growth beyond the guidance. Over the medium term, we continue to target mid teen revenue growth with sustained margin expansion driven by scale and cost efficiencies. Thank you. Over to you moderator.
Questions and Answers:
operator
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and two participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue ascends. The first question is from the line of Sandee, an individual investor. Please go ahead.
Unidentified Speaker
Hello sir. Congratulations and good numbers. I had two questions. The first in your press release you’ve given a growth guidance of 7 to 9% considering the current macro environment and US tariff regulation. However in the call right now you’ve given a guidance of revenue for early teens and in the previous con call also you’ve given a guidance of 8 to 12%. So are we like reducing our guidance for the current year given the current economic situation?
Sunil Agrawal
Hello Tanvi, this is Sunil. Yes, given the current macro environment, especially the consumer sentiment that we see in us so we are revising that 7 to 9% for current financial year. Now there is a potential for upside to that if the macro situation improves. But the current guidance is 79 now mid teens is for next financial year onwards assuming that the macro environment goes to steady state.
Unidentified Speaker
Okay, got it. And the one more follow up question. So you’ve mentioned that you know you had a lot of pre ship inventory before the U. S Tariff regulation was imposed. So that also helped in a way to get us achieve better EBITDA margins. But how do you see that going forward in the coming quarters that now you know the inventory levels will also deplete and we will have the revised pricing. So how do you look at the EBITDA levels or this revised price inventory?
Sunil Agrawal
Yeah, good question Sandeep. The inventory that we have sent recently to us will help us moderate the consumer sentiments. Good. Other retailers would also have an entry and other retailers will slowly increase their prices reflecting the tariff addition. So we will also have this cushion to get to that consumer acceptance of higher prices. And we are multi country sourcing organization so we will be able to source product from countries especially for us which are most suitable. So for example we have Thailand, China, Indonesia, India for our own sourcing and then third party sourcing from Europe, Turkey or even uk, Middle East.
Many different countries we can source and we will source from most suitable country for our US market in our own manufacturing we will redirect towards UK and Germany. So we are very agile and we’ll be able to navigate it I believe better than pretty much anybody else for guidance was the consumer sentiment.
Unidentified Speaker
Okay, okay. And just so how much this tariff it will be 25% across all our goods that are sent to us.
Sunil Agrawal
Yes, 25% is on the top of existing tariffs for a different category. For example jewelry was 5.7% plus 25. It will become 32.7% from India. From Indonesia is 19 plus 5.7. Thailand is 20 plus 5.7. So the different countries have different tariffs. Europe will be 15 to a stock and 7. In a way those countries will be cheaper than India in terms of sending goods to us. Yeah, so what we will do is to not send goods from India to China. India will dedicate for UK and Germany businesses and US will be for these. I mean other countries can be dedicated to us. We are very agile in that sense and we can between the countries we can decide what is the best for us.
Unidentified Speaker
Okay. Okay, got it. So just one last follow up question. So will this thing impact or will we face more competition from the local players in US given a 25% increase in our prices? I know the other export oriented customers will increase their price but how do we see the competition from the local players there in America in the States?
Sunil Agrawal
Yeah. So jewelry manufacturing is extremely limited in US or even the accessories handbags are also. They are pretty much non existent in us. But maybe down the road if there is no resolution in medium term then we can set up the small units in us. The capex is not meaningful there. So it’s not difficult if the labor arbitrage is sufficient to do that.
Unidentified Speaker
Okay. Okay. So thank you sir, that actually answers all my questions.
Sunil Agrawal
Thank you so much.
operator
Yes, thank you. The next question is from the line of Deepali Kumari from Arihant Capital Market limited Please go ahead.
Dipali Kumari
Yeah, hello. Yeah, thank you for the opportunity. So Ms. Germany saw 7.2% growth compared to the last year. But the business is still running at the loss. You said breakeven was raised in July. So what helps you make this turnaround happen? And like was it higher sale for change in how the business is running?
Sunil Agrawal
Yeah, this is Sunil. Thank you Vitali. So Germany we have seen better performance even from July. So July is still EBITDA loss, but very marginally so. As we go towards season, we expect the H2 to be sufficiently EBITDA positive to cover the deficit of H1 or at least Q1. So we’re fairly confident of Germany achieving a bigger profitability for the full financial year.
Dipali Kumari
Okay, so like.
Nitin Panwad
Germany we have changed our product mix and offering and planning strategy and presentation that helped to the gross margin improvement from earlier level to 63% to 68% in Germany. So you may see the lower growth comparatively previous year but a substantial improvement in gross margin itself from Germany business. Helping to improve the profitability. So gross margin improvement is double digit and higher while revenue is 7.2, you see. But gross margin is much higher in Germany now onwards. So achieving a EBITDA profitability made it much lower sales point.
Dipali Kumari
Okay, 26 German market will be profitable. Okay, what is the planned capex for FY26 and 26 7? Like any big Project you are coming like you are acquiring or life after acquiring Mindful soul and ideal voice. Are you looking more acquisitions or any other product categories.
Nitin Panwad
So in capex terms perspective. So FY26 we haven’t planned any major capex. It is a routine nature capex upgradation of our software and the tangible goods which is around 3 to 5 million but FY27 may be slightly higher as we are consolidating our UK operation in a one place so around 2,3 million higher in FY27. So we expect 5 to 7 million CapEx overall but this year is around 3 to 5.
Dipali Kumari
Okay. And like any new product category you are interested for.
Nitin Panwad
Yeah. So category wise is obviously the lab grown as Sunil mentioned is working very well for us. It is within a year of span of time it is contributing more than double digit. It’s almost 11% in our sales ratio For a group from lab grown we continue to see performing well in terms of gross margin improvement and lesser returns from lab grown and we see a lot of potential with that category. Apart from that our business model is more for launching new varieties of product with different gemstones every single day. We cover the supply chain vertically integrated Factories launching around 100 different new products to the consumers.
So launching wise, innovation wise it is many new products we are keep launching to give newness to the TV and web consumers so they can keep on repeat buying and increase the retention rate. From the same consumer.
Dipali Kumari
Okay sir, got it. Thank you.
Sunil Agrawal
Deepali, to your question about the mindful soul and ideal world and creation. So we are happy with both acquisitions and we don’t have any other active target that we are looking at right now. But we are always open for possibility. If there’s any opportunity comes we’ll look at it. We have to look at the balance between the existing portfolio doing well and growing and then adding to the portfolio.
operator
Thank you. The next question is from the line of Naveen Beg from Nirvama Asset Management. Please go ahead.
Naveen Baid
Yeah, thank you for the opportunity. I had a housekeeping question. So in your segmental reporting Europe shows a bit profit of 8 crores. Whereas in your presentation you are still. Speaking of losses in the European segment. Can you help me reconcile the numbers please?
Sunil Agrawal
Yeah. So. Hi Ranil. So can you just refer which line you are quoting with the segment of windl.
Naveen Baid
Yeah, the. The profit before interest in taxes of. 8 crore is what we’ve reported for the quarter. Okay. Sorry. Amazing. 12.8 crore. Yeah. Is what you have reported.
Nitin Panwad
12.8 crore in Europe Business. Yeah. So you know the effects in the segmental reporting there is a larger movement in euro and gdp. Okay. That currency movement led a larger forex gain in both of the countries. However that game is not translating in consolidation level as is that all the gains for intercompany loan is going to other comprehensive income. So while segmental reporting is showing profitability but that gain is largely contributing to the intercompany loan foreign of intercompany loads.
Naveen Baid
So at. At the level for European operation where are for the quarter?
Nitin Panwad
Yeah, so your voice is little bit. I think for, for European operations at.
Naveen Baid
The EBITA level where were we in the quarter?
Nitin Panwad
Yeah, so EBITDA level was roughly around a 700,000 loss that we have in Germany. Euros.
Naveen Baid
Yeah. Okay. Okay, got it. Thank you.
operator
Thank you. The next question is from the line of Kumar Saurabh from Scientific Investing. Please go ahead.
Kumar Saurabh
Hello. Am I audible?
Nitin Panwad
Yes, yes.
Kumar Saurabh
So sir, I had a question regarding the UK business. So last two years have not been that great. Given the challenges, you know in the European and UK market, given the safety agreement, do you see our growth being higher than how it has been in past two years for UK market?
Sunil Agrawal
Kumar, this is Sunil. So thank you for your question. So the FTA agreement will definitely help but UK was to some extent our internal challenge more than external. External consumer sentiment was challenging but our leadership that we had put in UK didn’t work out. So we made those changes in February, March of this year and we’re seeing that it’s already making a difference. So the FDA will help and the leadership change as well as the internal team restructuring will also help us in sustaining the momentum going forward. We already seen our legacy UK business, TJC getting back to growth in last two months.
So June and July were positive for TJC and Ideal World is giving double digit growth to us year over year. So this is good momentum for UK going forward.
Nitin Panwad
And Kumar, certainly the FTA definitely help right now Currently jewelry we import from India it is contributing 3 to 5% duty and the lifestyle product 7 to 15% duty. So maybe around mid of the next year it will reflect in terms of the duty charging to zero. So those purchasing will definitely help to improve our margin lines and the consumer demand.
Kumar Saurabh
Okay, okay sir, I think already we have a good dividend policy but if you can highlight for next 2, 3 years given like we will be growing around 8, 9% so my understanding is we will not require a lot of capex. So is the dividend policy going to be on the Similar lines or there could be some increased dividend coming.
Sunil Agrawal
Yeah. So we already always in favor of sharing the earnings or wealth with shareholders. So we can look at the dividend or potential acquisition or potential buyback if there’s sufficient cash for the debt. So as you’ve seen our track record, we always are looking for opportunity to reward the shareholders.
Kumar Saurabh
And the last question, so I think in last four, five years we have done two acquisitions. So one question is what is your experience with these acquisitions? Are you happy the way these acquisitions have shaped up or do you think what you targeted that has not been achieved? The reason I am asking is, you know when there are no good times, companies who sit on very good cash flows, you know they have money to go and acquire companies which are weaker. So in next one I’m not asking for something immediate but based on your history of execution of acquisitions and the opportunities available in market, do you see any high probability of another potential equation in next one or two years?
Sunil Agrawal
Yeah. So the first point is how do we feel about acquisition? So we are very happy with both acquisitions. With microsource we indicated one of their native digital learning into our group and that is helping as you saw in our digital numbers accelerating. So a lot of those learnings have incorporated in other five group retail brands. So I’m very happy with that. But Microsoft cells is having some revenue de growth mainly owing to the supply chain movement away from China to India. So that led to some degrowth and we expect that growth could come back in later quarters of this financial year.
So I’m pretty happy with that. For ideal world we got it for very low money as you rightly said distressed asset and we got it for pretty low price. I’m pretty happy with that position. Good growth already a bit of profitable in second year, great return on investment. So yes to your point if there’s any other opportunity we have very strong balance sheet through cash generation machine in this year. So there’s an opportunity. We’ll definitely look at it. As I mentioned earlier to Deepali’s question, we don’t have any active acquisition target as of now. Got it.
Kumar Saurabh
Thank you sir and wish you all the best sir.
Sunil Agrawal
Thank you Guan.
operator
Thank you. The next question is from the line of Ms. Ready and individual investor. Please go ahead.
Unidentified Speaker
Congratulations on a very good set of numbers. It is gratifying that you got great place to work for our European operation. My question is sir regarding our entry into the Indian retail market, our jewelry retailers here are doing very good. We have a very good domain Knowledge of the western retailer. Why can’t we? Definitely. I think it is definitely time for us to explore Indian market. That is my view. Sir, what is your thoughts on this?
Sunil Agrawal
Thank you for your question Mr. Reddy and thanks for your comments and compliments. Appreciate it. So India market is definitely promising but that for digital retail it is still in a discovery phase. A lot of investment is being made by Amazon and Walmart into expanding digital presence. But we believe that we are not the first mover kind of company. We are low cost, vertical model, very agile but always coming later in the market when the market matures so that we can come to profitability pretty quickly. So as you saw the experience in Germany, we will become profitable in four years of entry.
But whereas Amazon it has taken much much longer and still profitability is nowhere inside. So we want to wait a little longer before India matures for digital marketing. There’s no plan to come on television or become motor in India because that is not our business model. Okay sir, thank you. Thank you.
operator
Thank you. The next question is from the line of Gopi Nanda Reddy from pnr. Please go ahead sir.
Unidentified Speaker
What percentage of our sales is into lab grown diamonds?
Nitin Panwad
So lab grown diamond right now contributing 11% of our total sales.
Unidentified Speaker
Given, given the change in the specification by gia is there any impact on our sales or how is it going to work? Any impact
Nitin Panwad
GIA specification is available for India, the world. Sorry then we haven’t seen the impact yet in terms of sales perspective. Quarter on quarter lab grown share is. Keep on going
Sunil Agrawal
and we use IGA certification, we don’t use giu. So all our product that we source is IGI certified. Not all, pretty much large portion of biggest stones are IGI certified and we have not changed the policy from the consumer point of view.
Unidentified Speaker
So when it comes to consumers, IGL certification is very much accessible to the consumers.
Sunil Agrawal
Yeah. So GI decision hasn’t gone to consumers because they haven’t publicized it on public television, public media. It’s all a business decision, business news. So consumer doesn’t know and they don’t care. As long as they are getting the right information, logical information, they are still buying quite a lot. We’re still seeing continuing momentum.
Unidentified Speaker
Are we procuring jargon diamonds from India or we ourselves are making or any.
Sunil Agrawal
Idea are we procuring from the growers in India and China?
Unidentified Speaker
Are we seeing the pricing to get stabilized or are we looking at many is it going to go down or if a new.
Sunil Agrawal
We have seen although the decline is going slow down but we’re still seeing continued softness in prices because the production is still there. Which is. I would say production is continuing to grow faster than the demand. Demand is going fast but the production is going f.
Unidentified Speaker
Okay, that’s from my side. Thank you.
Sunil Agrawal
Thank you.
operator
Thank you. The next question is from the line of Harsh Mehta from Perpetual Capital Advisor. Please go ahead.
Harsh Mehta
Hi sir, can you hear me?
Sunil Agrawal
Yes, go ahead, Harsh.
Harsh Mehta
Yes, sir. So you previously mentioned that because of the tariff situation for the US market, you’ll source from different geographies if I’m right. So as you diversify your sourcing, should this still affect your margins in the term or are you confident of maintaining the existing marketing levels to this transition also?
Sunil Agrawal
Yeah. So thanks for the question, Harish. As I mentioned earlier, the extra inventory that descends to us will tide us over for the few months till the consumer starts to accept this increased prices. The other retailers will also be forced to increase the prices. And we believe, we are confident that our margin guidance of 60% plus will sustain for foreseeable future. Because the tariff situation has been there for some time and we’ve been able to maintain the margin. As you saw last quarter at 63.8. Even in July, our margin continues to be in the region.
Harsh Mehta
Okay, but. Right. Okay, got it. And sir, I wanted to understand if there are any plans or considerations to consolidate your UK operations with the recently acquired Ideal World business.
Sunil Agrawal
Sorry, we already consolidated that business. So the support services, the financial finance hr, IT supports services to the new as well as the existing business. Whereas the front and the sales team is separate. Merchants and sales teams are separate. Leadership is one. So there are lots of synergies there from operational support point of view, group supply chain point of view. But the front end teams are separate.
Harsh Mehta
Okay, got it. I’m sure with the India UK FDA in place, the benefits from it. Like you said, the rates were around 3 to 5% before the FDA which will now go down to 0%. Will this benefit entirely be taken by the company or will it be shared with the consumers? To some extent. Because I think the UK demand was also a bit sluggish. So will this help build the demand also?
Sunil Agrawal
Yeah, good question. So we look at customer pull constantly. If the customer pull is there, we are able to increase our margins. So we will try to keep that for our bottom line. But if the consumer pull is subdued, then we may offer part of this. So we are dynamic in that sense. Actually we are dynamic every hour, every day. And our pricing model is pretty agile in that sense. If there’s opportunity, we Take higher margin. If there’s a challenge we go a little lower. But that’s because we offer 100 new products every day. We have the ability.
Right. If we had only two products and consistent product then we couldn’t be as flexible as we are able to be.
Harsh Mehta
Right? Okay, I’m sure Last two questions. So prior to the German business starting the working capital cycle for your business was around 60 days based on, but based on the FY25 latest numbers that you posted the working capital cycle is extended to 80 days. So with the German business ramping up again in the next 23 years.
Nitin Panwad
So in terms of working capital cycles major investment is done in true the other inventory and the recently added up inventory in US increase the working capital days later. Also that the the recent days the customer demands towards the budget programming financing option is more prominent to the to the consumer as the geopolitical tension and worldwide customer is looking for more financing option. However, we do take care based on customer history and their payment terms to before giving financing the consumer. So so part of the working capital bond to the our details and part is the inventory that led to increase the total working capital base.
Now coming back to your question about the Germany so Germany has the major working capital deployment is only in the inventory as the capex amount is very low and the debtor is not as significant. In Germany the majority of the sales comes through invoicing payment method. So Germany will definitely continue to improve and be contributing the bottom line. But right now as we have seen the based on the current transient nature challenges we have increased our inventory as a strategically and the budget pay financing option as the customer demand is higher towards the this option.
Harsh Mehta
Okay, understood. So you should expect this to remain around 80 days only for the near future.
Nitin Panwad
Yeah, we expect that to be slow down to improve the customer to improve the cash in the business but not significantly. As you have seen the March 21st was 4050 days. It will not bring it down to that level but lower than the current level.
Harsh Mehta
Right. Okay. And sir, last question. So on the other income side in this quarter there has been a 51% increase in other income. Could you elaborate on what what were the key drivers behind this growth? And also the normalized tax rate. What should we consider as a normalized tax rate for the business on a full year basis excluding any one times or geographical animal use?
Nitin Panwad
Sure. So we are a business who is generating a money in the US dollar, GDP and euro and most the spending is in rupees terms generates a lot of foreign exchange gain in a business and you may have seen a history of the business and the other income normal is all, pretty much all of it contributing to the foreign exchange gains. And we expect that this will remain come maybe some 10, 15% up and down but forex gain will come in the business continuously. And your other question is about the tax rate. So tax rate is getting benefited by lower losses in Germany and also the previous losses is now getting now coming business coming profitability that the the tax effect is now recognizing.
So normal state of tax rate we expect in which financial it is roughly around 21 to 22%.
Harsh Mehta
Right. Thank you so much. That’s it from my sir. Thank you.
operator
Thank you. Ladies and gentlemen, please limit your question to two questions per participant and come back for the question in the queue. The next question is from the line of Shrians Jain from Swan Investment. Please go ahead.
Shreyansh Jain
Hello. Hi. Hi. So my first question is again on the bookkeeping. So Germany we think we were doing some losses in this quarter and if I look at the upper UK business, UK business also our EBIT is about 10 odd crores. So if I would just, I was. Going to understand that there’s a lot. Of dividend that sits in this ebit. So X of dividend even, even the. UK entity is, is doing losses. Is it the x of dividend UK is positive. EBIT is roughly around £600,000 in UK acts of dividend. Okay, okay. And so the other question is, you know last quarter we were guiding for. 8 to 12% and now we are. Seeing 7 to 9 odd percent. So this tariff thing I think was fairly known to us. So I’m just trying to understand what. Has led to this downward revised guidance. And the second part to this question is given this uncertain scenario and you have also lowered your guidance, how do you see spends on content and broadcasting? Because we broadly spent about 600700 odd crores on this line items. So do you want to maintain spending on this expense or you think this also should go down with the guidance on revenues?
Sunil Agrawal
Yes, yes, this is Sunil. From the guidance point of view we are seeing lipstick effect already in us. What do I mean by that? The lower price point like jewelry is selling more right now. So we see higher traction on our under 10 days on the 50 day and $50 day. Can you hear me? There’s a disturbance on the line.
Shreyansh Jain
Yes I can sir.
Sunil Agrawal
So can you go mute please? And so that this eco coming back. Thank you. So we are seeing that low price point is gaining traction and that tells us the consumer sentiment is currently challenging in us. So we didn’t see that sentiment last quarter and we started seeing the sentiment in last few weeks since the June end when the US had action in Iran and from there onwards the tariff disturbance came and the consumer sentiment continued to deteriorate over there. And that also reflected recently in the job reports where earlier months job report were severely down rated and the current month, last month’s job rate was pretty low.
So those three months job report and our own internal lipstick effect that we are seeing led us to assess the consumer sentiment to be challenged in us. And we are seeing although our sales is growing in US but we’re seeing people down trading to the lower price point and that is the reason we gave you guidance 7 to 9 and consumer sentiment rebounds. There’s upside potential for this, our performance to go beyond 7 to 9 as well. So that we have qualified within our not qualified. But we have made the comment in my commenting that there is a potential to go up if the consumer sentiments go back to earlier that we saw last quarter.
And here’s one more question, I missed that second part of the question. Can you repeat that, Sarah?
Shreyansh Jain
Yeah, so I was saying given the uncertain scenario that we are looking at. We spend about 600 to 700 odd. Crores on content and broadcasting. So I’m just trying to understand with. This uncertain scenario do you plan to reduce the spends or you would want. To continue spending 600, 700 on crores on CNB? And one more addition to this is. You know, because you’re now saying digital will, you know, increase going forward and it will actually be 50% of our revenues in the medium to long term. So sir, how much of this CNB. Spend do we actually require to, you. Know, do every year? And yeah, so that’s the question sir.
Sunil Agrawal
Yeah, thank you for the question. Great questions. So we look at content in broadcasting. So the two portion of that one is the TV content, the TV license fee we pay to the television network in all the four channels. And there’s also digital spend that we do. So there are two segments within that. So the TV spend on a like or like basis we reduce in Germany reducing UK but US has increased because we found some new opportunities and we have taken them. So the content in broadcasting may not go down meaningfully and the digital spend we will continue to spend if we see the productivity of that customer that we are acquiring digitally to be there.
So our measure of productivity is that the customer we acquired should become profitable within three months and as long as we see that customer acquiring a certain scale, spend scale, then we continue to spend. So we can foresee that content of broadcasting as a percentage of sale not going down. So not only at absolute dollar value or rupee value but as a percentage of sale. As we are giving guidance of 7 to 9% growth so that spend will grow 7 to 9% in coming quarters. But we are seeing leverage coming in HR cost, SG&A and shipping, all three areas will see leverage for us.
Because HR cost, we’re finding efficiencies in our warehouse operations and AI is giving us many opportunity areas in back office functions to reduce the costs. So HR is there. Shipping, we are finding some ability to negotiate at our scale to lower the costs. And in SGMA also we are finding some AI benefits and some other abilities to reduce the cost throughout talent density measurements. Just to give an example of that, in Asia, our call center we have 180 employees so we are paying a little over market. And also we are giving carrier path to those talents within other parts of business that has increased our efficiencies about 20% because our attrition went down from 15% a month to 1% a month.
So we are finding efficiencies in HR and HGA by way of incorporating many different policies, AI talent density principles and many other optimization models.
Shreyansh Jain
Okay, and then my last question is. Addition to the same question.
operator
Ma’, am, we may request you to come back in the queue for a. Follow up. Ladies and gentlemen. Okay Shreyansh, you can go ahead.
Shreyansh Jain
This last question. If I were to look at the. UK business, we did about 900 odd crores of revenues last year and I’m assuming 200 crore crore out of that. Would have been ideal world. So can you just help me with the profitability in the standalone UK entity. Say out of 700 odd crores of revenue, what would be our EBIT or EBITDA if you can help me for last year, sir. X of the dividend income.
Nitin Panwad
Yeah, so last year was overall profit is roughly around 2 million 2 million pounds overall basis. While ideal world was lost Nothing as a first year PGC was profitable business. But overall was £2,000,000 x of dividend income. Yeah, last year, last full year. X of dividend is the total profit. And if you are, if you are referring the quarter four to quarter one improvement. So quarter four that we made losses in up but quarter one we are seeing already profitability as I just mentioned, £600,000 in quarter one and the same improvement that we are doing, we are seeing in July and August itself also.
Shreyansh Jain
You expect this to sustain for the year?
Nitin Panwad
Yes, yes. Certainly the changes with what we are seeing and the demand of the customers which is also moving, we are seeing that it is more sustainable because the weekly improvement is not a one off. It is coming week over week throughout in last two months.
Shreyansh Jain
Okay. Thank you so much sir. And all the best. Thank you.
operator
Thank you. Ladies and gentlemen, that was the last question for today. Due to the time constraints. I now hand the conference over to Mr. Sunil Agrawal for closing comments.
Sunil Agrawal
Thank you everyone. I want to thank all the participants for your time and great questions. If you have any further questions, feel free to reach out to Prashanth Saraswat, LBGL or Amit Sharma at PsychPrindia and we’ll be happy to answer your questions. Thank you all once again.
operator
Thank you on behalf of WebHub Global Limited. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.