Khadim India LtdQ1 FY23Consumer Durables

Khadim India Ltd

Q1 FY23 Earnings Call Analysis

Management growth scorecard

Revenue

Category 3

Margin

Category 2

Fundraise

N/A

Order

N/A

Capex

Yes

1 of 3 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

Category 3

→Khadim India expects sales growth of around 10%-12% annually for the next 1-2 years (Page 8, 10).
→Retail business growth is targeted at 10%-12%, with volume growth contributing 1%-2% and value growth 8%-10% (Pages 8, 13).
→Distribution sales are targeted to grow by approximately 15% (Pages 13, 14).
→Volume in FY23 was 76 lakh pairs, improving from 70 lakh in FY22, but still below pre-COVID levels of 1 crore pairs (Pages 12, 13).
→The company aims to arrest volume degrowth in Tier III and IV cities with lower price products, while premiumizing in metros (Pages 8, 10, 12).
→Store additions planned at 100-120 stores per year, mostly franchisee, supporting growth (Pages 5, 11).
→Retail proportion is expected to increase to around 70% of total sales in 2-3 years (Page 11).

Margin guidance

Category 2

→FY24 EBITDA margin expected to increase from 11% to 12.5%, with continued gross margin improvements mainly from retail business and cost optimizations.
→Targeting EBITDA margin of 15% by FY25, driven by premium products, volume growth, and operational efficiencies.
→Retail sales expected to grow 10%-12%, with wholesale/distribution growing ~15%, gradually increasing retail's share from 63% toward ~70% in 2-3 years.
→Revenue growth guided around 10%-12% overall, potentially reaching ₹750 crores next year if distribution grows 15%.
→Expectations of 1%+ gross margin improvement next year, supporting EBITDA growth.
→Store-level EBITDA stands at ~25%, with plans to open 100-120 stores yearly, balancing capex and profitability.
→Profit after tax for FY23 doubled vs FY22, signaling a turnaround with strong cash flow and margin focus ahead.

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Fundraise plans

→No explicit mention of any new fundraising through debt or equity in the provided excerpts.
→Current debt stands around ₹116 crores, with expectations to reduce to ₹80-90 crores in next 2-3 years.
→Capex planned at around ₹12-13 crores for retail expansion and modernization—funding these likely from ongoing operations.
→No indications of fresh term loans; existing debt is mainly working capital debt.
→Plans to reduce working capital debt partly contingent on government receivables realization.
→No mention of equity fundraising or plans to raise capital via new equity issuance.
→Focus appears on improving cash flow from operations and debt reduction rather than fresh borrowing or equity raising in near term.

Order book

→As per the transcript provided (pages 1-17), there is no explicit mention or disclosure regarding the current or expected order book or pending orders for Khadim India Limited.
→The discussion mainly revolves around sales volume, market share, store-level EBITDA, retail and distribution strategies, volume growth, and expansion plans.
→There are mentions of receivables and institutional debtors (e.g., ₹188 crores receivables, with ₹70 crores from institutional debtors), but no specific data on pending orders or order book.
→The focus is on retail expansion, volume and value growth, and operational metrics rather than order backlog.
→Therefore, no details about current or expected order book or pending orders are available in the provided transcript.

Capex plans

Yes

- Capex planned: Around ₹12-13 crores for retail expansion, modernization of retail outlets, and factory upgrades. (Page 9) - Future store openings: Focus on opening 100-120 stores over the next 2-3 years, instead of 200, to avoid closures and ensure profitability. (Page 11) - Capex aligned with profitability: Capex plans depend on business profitability; potential to open more stores with increased profitability. (Page 11) - Lower capex to support debt reduction: Minimal capex helps reduce debt from ₹116 crores to an expected ₹80-90 crores over 2-3 years. (Page 9,14) - Advertisement & sales promotion budget: ₹15 crores planned, with possibility to increase depending on business growth. (Page 14,10) Overall, capex is moderate, focused on strategic expansion and modernization while maintaining cash flow discipline.

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