Baazar Style Retail LtdQ3 FY24Retailing

Baazar Style Retail Ltd

Q3 FY24 Earnings Call Analysis

Management growth scorecard

Revenue

Category 2

Margin

Category 2

Fundraise

Yes

Order

N/A

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 2

→Baazar Style Retail targets a 25% growth in revenue for FY'25, driven by strong festival seasons in Q2 and Q3.
→They have increased the same-store sales growth guidance from 8% to 9-10% for FY'25, with current H1 SSG at 41%.
→The company plans to add 35-40 new stores in FY'25, growing store count from 184 to approximately 220-225 stores.
→Over the next three years, they aim to double the store count.
→Sales per square feet stands at INR 7,500 annually, with gross margins expected to slightly increase above the current 33-34%.
→Private label sales, which grew to 52% in Q1 FY'25, are expected to contribute 45-50% of sales in FY'25, supporting margin improvement.
→Expansion focuses on core states (70% of new stores) and growing focus states like UP and Jharkhand (30% of new stores).
→Overall industry growth is projected at a 15% CAGR in North and East India through FY'27, offering significant potential.

Margin guidance

Category 2

→Revenue growth guidance for FY'25 is around 25%, targeting INR1,216 crores from INR973 crores in FY'24.
→Same-store sales growth (SSG) guidance for FY'25 has been revised upwards to 9%-10% from earlier 8%.
→PAT guidance for FY'25:
→ - Pre-Ind AS: 3.5% to 4% (excluding exceptional losses), translating to approximately INR47-50 crores.
→ - Post-Ind AS: 2.5% to 3%.
→Target PAT margin of 4%-5% post-Ind AS within the next two years.
→Store expansion plans aim to double store count over three years, supporting growth.
→EBITDA margin for FY'25 expected to improve with gross margin guidance around 33%-34%.
→Operating costs (pre-Ind AS) expected between 20%-23%.
→Prudence approach in guidance despite strong Q2 FY'25 growth; management prefers conservative estimates.

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Fundraise plans

Yes

→As per the October 3, 2024 conference call, Baazar Style Retail Limited raised INR146 crores through its IPO proceeds, with a primary intent to repay debt and support working capital and growth strategies.
→As of Q1 FY25, total bank borrowings stood at INR153 crores, and the company intends to reduce this further using IPO proceeds.
→No explicit mention was made of any planned new fundraising through additional debt or equity in the near future.
→Focus appears to be on organic growth funded by existing resources, including IPO funds and cash flows post-IPO.

Order book

The transcript does not specifically mention current or expected orderbook or pending orders for Baazar Style Retail Limited. The discussion mainly focuses on: - Store expansion plans: Opening 40-50 new stores annually. - Focus on growing store counts in core and focus states (70% in core, 30% in focus). - Strong store-level growth with same-store sales growth (SSG) at 41% in H1 FY'25. - Investment in technology, supply chain, and inventory management to support growth. - Financial highlights including revenue growth and profitability guidance. There is no direct reference to any orderbook or pending order details in the provided transcript.

Capex plans

Yes

→The company is investing heavily in technology, including an ultra-modern 1.8 lakh sq. ft. warehouse facility to improve inventory management and reduce supply timelines to stores (Page 14).
→Typical store capex is around INR 1 crore per store, with inventory investment around INR 1 crore, totaling approximately INR 2 crores per store (Page 6).
→The payback period for a store capex is about 16 to 18 months, and including inventory 31 to 36 months (Page 6).
→The company plans to continue expanding store count by 40-50 stores per year over the next 2-3 years, suggesting ongoing capital investment in new stores (Pages 6, 13).
→IPO proceeds of INR146 crores were partly used for debt reduction and balance for working capital and growth, implying capital allocation towards expansion (Page 12).
→The strategy includes investments in supply chain, human capital, technology, and private label to enhance operating efficiency and control product quality (Page 5).

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