Q1 2027 Page Industries Ltd Earnings Call

August 13, 2026

Speaker #1: Ladies and gentlemen, good day and welcome to the Page Industries Limited Q1 FY27 earnings conference call, hosted by Valdrum Advisors. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Operator: Ladies and gentlemen, good day and welcome to Page Industries Limited Q1 FY27 earnings conference call hosted by Valorem Advisors. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Purvangi Jain from Valorem Advisors. Thank you, and over to you, Ms. Jain.

Speaker #1: Should you need assistance during the conference call, please signal an operator by pressing star, then zero, on your touchscreen phone. Please note that this conference is being recorded.

Speaker #1: I now hand the conference over to Ms. Purvangi Jain from Valdrum Advisors. Thank you, and over to you, Ms. Jain.

Speaker #2: Thank you. Good evening, everyone, and a very warm welcome to you all. My name is Purvangi Jain from Valdrum Advisors. On behalf of the company, I would like to thank you all for participating in the company’s earnings call.

Purvangi Jain: Thank you. Good evening, everyone, and a very warm welcome to you all. My name is Purvangi Jain from Valorem Advisors. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the first quarter of the financial year 2027. Before we begin, a quick cautionary statement. Some of the statements made in today's earnings conference call may be forward-looking in nature.

Speaker #2: For the first quarter of the financial year 2027, before we begin, a quick cautionary statement: Some of the statements made in today's earnings conference call may be forward-looking in nature.

Speaker #2: Such forward-looking statements are subject to risk and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's belief, as well as assumptions made by and information currently available to the management.

Purvangi Jain: Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's belief as well as assumptions made by, and information currently available to, the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions.

Speaker #2: Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's conference call is purely to educate and bring awareness about the company's fundamental business and the financial quarter under review.

Purvangi Jain: The purpose of today's conference call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Now, I would like to introduce you to the management participating with us in today's earnings call and hand it over to them for their opening remarks. We have with us Mr. V.S. Ganesh, Managing Director, Mr. Deepanjan Bandyopadhyay, Chief Financial Officer, and Mr. Karthik Yathindra, Chief Executive Officer. Without any delay, I request Mr. V.S. Ganesh to start with his opening remarks. Thank you, and over to you, sir.

Speaker #2: Now, I would like to introduce you to the management participating with us in today's earnings call and hand it over to them for their opening remarks.

Speaker #2: We have with us Mr. V. Ganesh, Managing Director; Mr. Deepanjan Bandyopadhyay, Chief Financial Officer; and Mr. Karthik Yathindra, Chief Executive Officer. Without any delay, I request Mr. V.

Speaker #2: Ganesh, to start with his opening remarks. Thank you, and over to you, sir.

Speaker #3: Thank you. Thank you so much, and good afternoon, ladies and gentlemen. Welcome to the earnings call for the first quarter of FY27. I'm joined by our Chief Financial Officer, Mr. Deepanjan Bandyopadhyay, and our Chief Executive Officer, Mr. Karthik Yathindra.

V. S. Ganesh: Thank you. Thank you so much, and good afternoon, ladies and gentlemen. Welcome to the earnings call for the first quarter of FY27. I am joined by our Chief Financial Officer, Mr. Deepanjan, and our Chief Executive Officer, Mr. Karthik. I will begin with a brief overview of the business and the quarter. Following which, Mr. Deepanjan will take you through the financial performance in detail. We will then be happy to take your questions.

Speaker #3: I will begin with a brief overview of the business and the quarter. Following this, Mr. Deepanjan will take you through the financial performance in detail.

Speaker #3: We will then be happy to take your questions. Let me begin by saying that we are encouraged by the underlying performance of the business during the quarter.

V. S. Ganesh: Let me begin by saying that we are encouraged by the underlying performance of the business during the quarter, particularly the volume growth. Consumer demand remained healthy with good traction across our key channels, including exclusive brand stores, e-commerce, and our wider retail network. Our new product introductions, including JKY Groove, also received encouraging consumer response. While volume performance was strong, reported revenue was moderated by temporary quarter-end logistics and manpower-related constraints.

Speaker #3: Particularly, the volume growth: consumer demand remained healthy, with good traction across our key channels, including exclusive brand stores, e-commerce, and a wider retail network.

Speaker #3: Our new product introductions, including JKY, grew and also received encouraging consumer response. While volume performance was strong, reported revenue was moderated by temporary quarter-end logistics and manpower-related constraints.

Speaker #3: This affected billing during the period. The underlying demand and volume momentum, therefore, remained better than what was reported as revenue growth.

V. S. Ganesh: This affected billing during the period. The underlying demand and volume momentum therefore remained better than what was reported as revenue growth. The quarter also reflected inflationary pressure across key inputs, particularly cotton and synthetic materials, amid a volatile external environment. As regards pricing, we remained calibrated and chose to absorb part of the input cost increase, balancing margin protection with consumer value and competitiveness. This approach helped us stay competitive, while the subsequent moderation in some input costs supported our position.

Speaker #3: The quarter also reflected inflationary pressure across key inputs, particularly cotton and synthetic materials, amid a volatile external environment. As regards pricing, we remained calibrated and chose to absorb part of the input cost increase, balancing margin protection with consumer value and competitiveness.

Speaker #3: This approach helped us stay competitive, while the subsequent moderation in some input costs supported our position. At the same time, we continued to grow strongly.

V. S. Ganesh: At the same time, we continued to focus strongly on productivity and operational efficiency. Our strategic sourcing and supply chain initiatives helped us mitigate some of the cost pressures. We are also seeing steady progress in the scale-up of Odisha and Krishnarajapuram manufacturing facilities, which will progressively enhance our production capabilities and efficiency. Our digital transformation journey also continues to progress across ERP, distribution management, and HR transformation.

Speaker #3: We continued to focus strongly on productivity and operational efficiency. Our strategic sourcing and supply chain initiatives helped us mitigate some of the cost pressures.

Speaker #3: We are also seeing steady progress in the scale-up of the Odisha and KR Pet manufacturing facilities, which will progressively enhance our production capabilities and efficiency.

Speaker #3: Our digital transformation journey also continues to progress across ERP, distribution management, and HR transformation. We are also working on our consumer data platform. These investments are aimed at creating a more agile and data-driven organization, and in improving the way we serve our consumers and retail partners.

V. S. Ganesh: We are also working on our consumer data platform. These investments are aimed at creating a more agile and data-driven organization, and in improving the way we serve our consumers and retail partners. Our distribution network remains a significant strength with 1,15,871 multi-brand outlets, 1,640 exclusive brand stores, and 930 large format stores. Our online channel also continued to deliver healthy growth.

Speaker #3: Our distribution network remains a significant strength, with 115,871 multi-brand outlets, 1,640 exclusive brand stores, and 930 large-format stores. Our online channel also continued to deliver healthy growth.

Speaker #3: Financially, revenue grew by 7.9% during the quarter, and profit after tax declined by 4%, reflecting the combined impact of input cost pressure and the temporary constraints on converting underlying volume into billing.

V. S. Ganesh: Financially, revenue grew by 7.9% during the quarter, and profit after tax declined by 4%, reflecting the combined impact of input cost pressure and the temporary constraints on converting underlining volume into billings. Looking ahead, we remain very confident in the underlying health of the business. We see multiple growth opportunities from volume recovery, new products, premiumization, retail and e-commerce expansion, and through improving our supply chain and manufacturing efficiencies.

Speaker #3: Looking ahead, we remain very confident in the underlying health of the business. We see multiple growth opportunities from volume recovery, new products, premiumization, retail and e-commerce expansion, and through improving our supply chain and manufacturing efficiencies.

Speaker #3: In fact, looking at the demand signals, we are working hard on augmenting our in-house capacities and also working on improving our outsourced garment supplies.

V. S. Ganesh: In fact, looking at the demand signals, we are working hard in augmenting our in-house capacities and also working on improving our outsourcing garment supplies so as to cater to the demand. Our focus remains unchanged to strengthen the brand, deliver greater value to consumers, improve availability, and grow the business sustainably and profitably. I would like to thank all our shareholders for their continued trust and support. With this, may I now request Mr. Deepanjan to take you through the financial performance in greater detail. Thank you and over to you, Deepanjan.

Speaker #3: So as to cater to the demand. Our focus remains unchanged: to strengthen the brand, deliver greater value to consumers, improve availability, and grow the business sustainably and profitably.

Speaker #3: I would like to thank all our shareholders for their continued trust and support. With this, may I now request Mr. Deepanjan to take you through the financial performance in greater detail.

Speaker #3: Thank you, and over to you, Deepanjan.

Speaker #4: Thank you, Vijay. Good afternoon, everyone. I will now provide an overview of the company's financial performance for Q1 FY27. In Q1, revenue was Rs.

Deepanjan Bandyopadhyay: Thank you, V.G. Good afternoon, everyone. I will now provide an overview of the company's financial performance for Q1 FY27. In Q1, revenue was INR 14,204 million, which is a 7.9% growth year on year. Sales volume in the quarter was 61.9 million pieces, growing by 5.7% year on year. EBITDA for the period was INR 2,890 million, which has declined by 1.9% year on year.

Speaker #4: 14,204 million, which is a 7.9% growth year-on-year. Sales volume in the quarter was 61.9 million pieces, growing by 5.7% year-on-year. EBITDA for the period was Rs.

Speaker #4: Revenue was ₹2,890 million, which has declined by 1.9% year-on-year. EBITDA margin was 20.3%, within our planned range of 19 to 21%. A stronger EBITDA margin of 22.4% in Q1 FY25, due to the stable input costs then, resulted in the decline in EBITDA in the current quarter.

Deepanjan Bandyopadhyay: EBITDA margin was 20.3%, while EBITDA margin was within our planned range of 19% to 21%, a stronger EBITDA margin of 22.4% in Q1 FY26, due to the stable input cost then resulted in the decline in EBITDA in the current quarter. Profit after tax for the quarter was INR 1,928 million, declining by around 4% year on year. Inventory days was 66 in the end of Q1, as against 73 days in the beginning of the quarter. Net working capital days was around 54 days as against 66 days in the beginning of the quarter. With that, we can now take up the queries.

Speaker #4: Profit after tax for the quarter was Rs. 1,928 million, declining by around 4% year-on-year. Inventory days were 66 at the end of Q1, as against 73 days at the beginning of the quarter.

Speaker #4: Net working capital days were around 54 days, as against 56 days at the beginning of the quarter. With that, we can now take up the queries.

Speaker #2: Shall we open the line for questions? Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and 1 on your touch-tone telephone.

Operator: Shall we open the lines for questions?

Deepanjan Bandyopadhyay: Yes.

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 your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Ashutosh Joytiraditya with ICICI Securities. Please go ahead.

Speaker #2: If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question.

Speaker #2: Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Ashutosh Jyothiraditya with ICICI Securities.

Speaker #2: Please go ahead.

Speaker #5: Yeah, hi. Thank you, sir, for the opportunity. So I have two questions. First one is on the volume growth trajectory. So I believe in Q4, what the CEO has highlighted is that we are focused on delivering double-digit kind of volume growth going ahead.

Ashutosh Joytiraditya: Yeah. Hi. Thank you, sir, for the opportunity. I have two questions. First one is on the volume growth trajectory. I believe, in Q4, what the CEO has highlighted that we are focused to deliver the double digit kind of a volume growth going ahead. But I do not understand what was the miss there. Second question is on the pricing thing. As far as I remember, last quarter the management said that in January, the price hike that was taken, it was mainly to improve the product quality. They were anticipating that there will be some calibrated price hikes going forward to mitigate the raw material impact. Again, on that front also, what I can understand is that the management seems to have missed the outlook, what they have given. Yeah, two questions. Thank you, sir.

Speaker #5: But I don't understand what was the miss there. And second question is on the pricing thing. So, as far as I remember, last quarter the management said that in January the price hike that was taken was mainly to improve the product quality, and they were anticipating that there will be some calibrated price hikes going forward to mitigate the raw material impact.

Ashutosh Joytiraditya: They were anticipating that there will be some calibrated price hikes going forward to mitigate the raw material impact. Again, on that front also, what I can understand is that the management seems to have missed the outlook, what they have given. Yeah, two questions. Thank you, sir.

Speaker #5: But again, on that front also, what I can understand is that the management seems to have missed the outlook that they had given.

Speaker #5: Yeah, two questions. Thank you, sir.

Speaker #2: Thanks, Ashutosh, for the question. On the volume side, I think we still remain committed towards the goal of double-digit growth in terms of volume for the financial year.

V. S. Ganesh: Thanks, Ashutosh, for the question. On the volume side, I think we still remain committed towards the goal of a double-digit growth in terms of volume for the financial year. This is going to be phased across quarters. With regards to the Q1 deliveries, there were two major pieces that has affected the volume delivery. One is a planned one, which is structural in terms of how we are planning our growth across quarters. With the ARS now fully in place, we are also not front-loading our performance like it used to be. Hence, schemes and incentives for the trade have been designed in a way that it is better distributed between quarters. Structurally itself, you will see a difference between

Karthik Yathindra: Thanks, Ashutosh, for the question. On the volume side, I think we still remain committed towards the goal of a double-digit growth in terms of volume for the financial year. This is going to be phased across quarters. With regards to the Q1 deliveries, there were two major pieces that has affected the volume delivery.

Speaker #2: This is going to be phased across quarters. With regards to the Q1 deliveries, there were two major pieces that have affected the volume delivery.

Speaker #2: One is the planned one, which is structural in terms of how we are planning our growth across quarters. With the ARS now fully in place, we are also not front-loading our performance like we used to.

Karthik Yathindra: One is a planned one, which is structural in terms of how we are planning our growth across quarters. With the ARS now fully in place, we are also not front-loading our performance like it used to be. Hence, schemes and incentives for the trade have been designed in a way that it is better distributed between quarters. Structurally itself, you will see a difference between

Speaker #2: And hence, schemes and incentives for the trade have been designed in a way that it is better distributed between quarters. So structurally itself, you will see a difference in performance between quarters.

Karthik Yathindra: performance between quarters. However, the annual goal remains unchanged, which is to aim for a double-digit growth in volume. The second bit which has affected the quarter delivery has been essentially our undelivered billing. Unlike the last year Q1, this year, we have had extraordinary volume that has not been delivered in spite of being billed. That is because of the disruption we have experienced in the logistics and manpower towards the quarter end, which is what was narrated also in the MD's commentary. These two have impacted volume growth reported for Q1, both of which we believe one planned, the other is temporary and hence should be absorbed going forward. With regards to price increase, you are right. The January price increase was largely to enhance the product itself and was not linked to input cost. We have undertaken a price increase partially to absorb the input cost in Q1.

Speaker #2: However, the annual goal remains unchanged, which is to aim for double-digit growth in volume. The second bit, which affected the quarter's delivery, has essentially been our undelivered billing.

Speaker #2: So, unlike last year Q1, this year we've had extraordinary volume that has not been delivered, in spite of being billed. That's because of the disruption we've experienced in the logistics and manpower towards the quarter end, which is what was narrated also in the MD's commentary.

Speaker #2: These two have impacted volume reported, volume growth reported for Q1, both of which we believe—one is planned, the other is temporary and hence should be absorbed going forward.

Karthik Yathindra: These two have impacted volume growth reported for Q1, both of which we believe one planned, the other is temporary and hence should be absorbed going forward. With regards to price increase, you are right. The January price increase was largely to enhance the product itself and was not linked to input cost. We have undertaken a price increase partially to absorb the input cost in Q1.

Speaker #2: With regard to the price increase, you're right. The January price increase was largely to enhance the product itself and was not linked to input costs.

Speaker #2: We have undertaken a price increase, partially to absorb the input cost in Q1. This was done sometime in the middle of May. However, the full gains of the price increase are still not being realized, and that's something that we'll be realizing in Q2, purely because of the FIFO principles that we operate in our billing.

Karthik Yathindra: This was done sometime in middle of May. However, the full gains of the price increase has still not been realized, and that is something that we will be realizing in Q2, purely because of the FIFO principles that we operate in our billing. A large portion of what was invoiced in Q1 was in the previous pricing, and the gains from the price increase, which was taken in the mid of May, would be realized in Q2.

Speaker #2: So, a large portion of what was invoiced in Q1 was at the previous pricing. The gains from the price increase, which was taken in the middle of May, would be realized in Q2.

Speaker #5: Okay, okay. So just on your reply on the volume growth, as per my understanding, you are saying that for the remaining three quarters, we should be seeing like 11–12% kind of average volume growth.

Ashutosh Joytiraditya: Okay. Sir, just to on your reply on the volume growth. As per my understanding, you are saying that for the remaining three quarters, we should be seeing 11%, 12% kind of average volume growth? How confident-

Speaker #5: And how confident yeah, sorry.

Karthik Yathindra: Yeah, we-

Ashutosh Joytiraditya: Yeah, sorry.

Speaker #2: Fairly confident, given how the demand atmosphere has been in Q1. So, we should see recoveries for us to make up for lost ground in Q1.

Karthik Yathindra: Fairly confident, given how the demand atmosphere has been in Q1. So we should see recoveries for us to make up for lost grounds in Q1.

Speaker #5: Okay, fair point, sir. Thank you. Thank you for the opportunity, sir.

Ashutosh Joytiraditya: Okay, fair point, sir. Thank you. Thank you for the opportunity, sir.

Speaker #2: Thank you. The next question comes from the line of Vitesha Seth with Ambit Capital. Please go ahead.

Operator: Thank you. Next question comes from the line of Videesha Sheth with Ambit Capital. Please go ahead.

Speaker #3: Yes, hi. Thank you. So, my first question was on the comment made about the new product lines. Which segments will they be focused towards, besides the younger consumer through Groove or licensed merchandise? If you could help with that, please?

Videesha Sheth: Yes. Hi, thank you. My first question was on the comment made on the new product lines. Which segments would it be focused towards besides the younger consumer through Groove or licensed merchandise? If you could help on that, please.

Speaker #2: So, we've got product introductions across the category. Some of them have hit the market in Q1, and some will go through in Q2, before the festive season is upon us.

Karthik Yathindra: We have got product introductions across the category. Some of it has hit the market in Q1. Some of them will go through in Q2 before the festive season is upon us. Q1, the big ones were Groove 3, which is our street fashion line which was launched in the month of June. This is our third line. If you will recall, we had launched this as a proposition starting Q1 last year. This year, the collection was taken to close to 500 Exclusive Brand Outlets across the country and has been received very well, and our sell-through numbers look very good. This is a large one. Other than that, we have had specific products that have come in across the portfolio. Another big piece is the collaboration with Disney and Marvel to bring in character merchandise.

Speaker #2: Q1, the big ones were Group 3, which is our street fashion line, which was launched in the month of June. This is our third line. If you recall, we had launched this as a proposition starting Q1 last year.

Speaker #2: This year, the collection was taken to close to 500 exclusive brand stores across the country and has been received very, very well, and our sell-through numbers look very good.

Karthik Yathindra: This year, the collection was taken to close to 500 Exclusive Brand Outlets across the country and has been received very well, and our sell-through numbers look very good. This is a large one. Other than that, we have had specific products that have come in across the portfolio. Another big piece is the collaboration with Disney and Marvel to bring in character merchandise. This again, while the go-to-market was planned towards the end of June, large portion of revenues from this will be realized in Q2.

Speaker #2: So, this is a large one. Other than that, we've had specific products that have come in across the portfolio. Another big piece is the collaboration with Disney and Marvel to bring in character merchandise.

Speaker #2: But this, again, while the go-to-market was planned towards the end of June, a large portion of revenues from this will be realized in Q2.

Karthik Yathindra: This again, while the go-to-market was planned towards the end of June, large portion of revenues from this will be realized in Q2.

Speaker #3: Okay. So just two follow-ups to this. One is that in this licensed merchandising piece, it's quite a competitive space with multiple D2C players already present.

Videesha Sheth: Okay. Just two follow-ups to this. One is that in this licensed merchandising piece, it is quite a competitive space with multiple D2C players already present. What is the differentiated opportunity that Jockey as a brand has? The second would be, fair to assume that new product lines will be dedicated to the athleisure space rather than the innerwear space?

Speaker #3: So, what is the differentiated opportunity that Jockey as a brand has? And secondly, would it be fair to assume that new product lines would be dedicated to the athleisure space rather than the innerwear space?

Speaker #2: Okay. So, specifically on the character merchandise, you're right. I think they're prevalent across many brands, both D2C brands as well as legacy brands. We are looking to differentiate this with the design aesthetic and the signature handwriting that we have the opportunity to put out in the market.

Karthik Yathindra: Okay. Specifically on the character merchandise, you are right. I think they are prevalent across many brands, both D2C brands as well as legacy brands. We are looking to differentiate this with the design aesthetic and the signature handwriting that we have the opportunity to put out in the market. Of course, this is backed by the trust and the quality that you can expect with Jockey merchandise. These two pieces, I believe, will help differentiate our product offering when compared to the rest of them in the market. The start is this with Disney and Marvel. This also opens up a window for us to collaborate with other licenses in the character merchandise space going forward. As far as the second question is concerned, there will be upgrades as well as newness across the portfolio.

Speaker #2: Of course, this is backed by the trust and the quality that you can expect with Jockey merchandise. These two pieces, I believe, will help differentiate our product offering when compared to the rest of the market.

Karthik Yathindra: These two pieces, I believe, will help differentiate our product offering when compared to the rest of them in the market. The start is this with Disney and Marvel. This also opens up a window for us to collaborate with other licenses in the character merchandise space going forward. As far as the second question is concerned, there will be upgrades as well as newness across the portfolio. The large pieces which will be backed with marketing investments, new propositions, et cetera, is going to be in the athleisure space.

Speaker #2: And the start is this with Disney and Marvel. This also opens up a window for us to collaborate with other licenses in the character merchandise space going forward.

Speaker #2: As far as the second question is concerned, there will be upgrades as well as newness across the portfolio. But the large pieces, which will be backed with marketing investments, new propositions, etc., are going to be in the athleisure space.

Karthik Yathindra: The large pieces which will be backed with marketing investments, new propositions, et cetera, is going to be in the athleisure space.

Speaker #3: Noted. And the second question was on the inventory level. So, if there is a further reduction of inventory days from 73 to 66 or 67, could that also lead to loss of sales to some extent?

Videesha Sheth: Noted. The second question was on the inventory level. If further reduction of inventory days from 73 to 66 or 67, could that also lead to loss of sales to some extent? What is the thought process here in bringing down inventory levels all the more?

Speaker #3: So, what's the thought process here in bringing down inventory levels even further?

Speaker #2: No, right observation. I don't think our intention is to bring down inventory levels any further. And we should admit there has been some level of lost sales opportunity in Q1 as well.

Karthik Yathindra: No, right observation. I do not think our intention is to bring down inventory level any further. We should admit there has been some level of lost sales opportunity in Q1 as well because of non-availability, and this was largely attributed to some level of disruptions we have had on the supply side in Q1. I think we have reached optimum level of inventory, both in the value chain as well as inventory at Page level. In fact, we are now looking at augmenting capacity, investing above plan in terms of manufacturing to make sure that both in-house as well as outsourced, to make sure that we are able to do justice to the demand that is coming our way.

Speaker #2: Because of non-availability. And this was largely attributed to some level of disruptions we've had on the supply side in Q1. But I think we've reached an optimum level of inventory, both in the value chain as well as the inventory at page level.

Speaker #2: In fact, we are now looking at augmenting capacity, investing in our plan in terms of manufacturing to make sure that, both in-house as well as outsourced, we're able to do justice to the demand that's coming our way.

Karthik Yathindra: In fact, we are now looking at augmenting capacity, investing above plan in terms of manufacturing to make sure that both in-house as well as outsourced, to make sure that we are able to do justice to the demand that is coming our way.

Speaker #3: Oh, got it. And this last bit, if I may—would it be possible to give a ballpark range in the difference between primary and secondary growth in this quarter?

Videesha Sheth: Got it. Just last bit, if I may. Would it be possible to give a ballpark range in the difference between primary and secondary growth in this quarter?

Speaker #2: We don't give away secondary numbers, but I can say that secondary growth performance has been much better than primary. This is largely because of the undelivered inventory and hence us not reporting it as primary in Q1.

Karthik Yathindra: We do not give away secondary numbers, but I can say that secondary growth performance has been much better than primary. This is largely because of the undelivered inventory and hence us not reporting it as primary in Q1.

Speaker #3: Sure, thanks for that. I'll get back to you in case I have other questions.

Videesha Sheth: Sure. Thanks for that. I will get back in the queue for further questions.

Speaker #2: Thank you.

Karthik Yathindra: Thank you.

Speaker #1: Thank you. The next question comes from the line of Saurabh Kundan with Goldman Sachs. Please go ahead.

Operator: Thank you. Next question comes from the line of Saurabh Kundra with Goldman Sachs. Please go ahead.

Speaker #4: Yeah, thank you very much. So, Karthik, my question was actually around the logistics disruptions only. If you could just double-click in on exactly what these were.

Saurabh Kundra: Yeah, thank you very much. Karthik, my question was actually around the logistics disruptions only. If you could just double-click on exactly what these were and some idea on the quantum of the undelivered volume will really help. Related to that question, does this mean that for the year, you said double-digit volume growth is your target. Could it be a little bit higher in Q2 because Q2 will have this undelivered volume and then also whatever the underlying volume is there in Q2? Could you please double-click exactly what manpower issues and what logistics issues these were? Thanks.

Speaker #4: And some idea on the quantum of the undelivered volume will really help. And, related to that question, does this mean that for the year, you said double-digit volume growth is your target?

Speaker #4: Could it be a little bit higher in Q2, because Q2 will have this undelivered volume, and then also whatever the underlying volume is there in Q2?

Speaker #4: And could you please double-click on exactly what manpower issues and what logistics issues these were? Thanks.

Speaker #2: Yeah. So this was actually disruption, partly to be attributable to the rumors around escalation in fuel prices, availability of fuel itself, and hence with all of our logistics being third-party.

Karthik Yathindra: Yeah. This was actually disruption because partly to be attributable to the rumors around escalation in fuel prices, availability of fuel itself and all of our logistics are third party and the third party labor having a concern given the SAR drive that was undertaken through the month of June. We had disruptions in the last mile delivery with our distributors towards the end of June. That is what has impacted deliveries and I cannot exactly quantify it, but what I can say is rough and ready, about three days of billing went undelivered when compared to normal. Typically every quarter ending, we have about three to four days of billing that does not get delivered and gets pushed to the next quarter. This year, that moved to about seven days.

Speaker #2: And the third-party labor had a concern given the SAR drive that was undertaken through the month of June. We had disruptions in last-mile delivery with our distributors towards the end of June.

Speaker #2: That's what has impacted deliveries, and without—I mean, I cannot exactly quantify it—but what I can say is, rough and ready, about three days of billing went undelivered when compared to normal.

Karthik Yathindra: That is what has impacted deliveries and I cannot exactly quantify it, but what I can say is rough and ready, about three days of billing went undelivered when compared to normal. Typically every quarter ending, we have about three to four days of billing that does not get delivered and gets pushed to the next quarter. This year, that moved to about seven days.

Speaker #2: So, typically every quarter-end, we have about three to four days of billing that does not get delivered and gets pushed to the next quarter.

Speaker #2: This year, that moved to about seven days. So, a delta of about three days of invoiced billing was not reported as revenue this Q1.

Karthik Yathindra: A delta of about three days of invoiced revenue, invoiced billing was not reported as revenue this Q1. That is what has impacted. On your second observation, largely yes. A majority of this should be reported in Q2. Anyway, the next three quarters, given that our goal is to hit a double-digit volume should see above average volume growth to make up for the shortfalls in Q1.

Speaker #2: So that's what has impacted. And on your second observation, largely, yes. A majority of this should be reported in Q2. And anyway, the next three quarters, given that our goal is to hit a double-digit volume, should see above-average volume growth to make up for the shortfalls in Q1.

Speaker #4: Okay, just one more question. The difference between value and volume this time is a little bit lower than it was in, let's say, the previous quarter.

Saurabh Kundra: Okay, just one more question. The difference between value and volume this time is a little bit lower than it was in, let's say, the previous quarter, which is basically the price and mix. Pricing ideally should have been slightly higher than the previous quarter because you took something in May. What changed that the difference should shrink a little bit? If you can just let us know.

Speaker #4: Which is basically the price and mix. So, pricing ideally should have been slightly higher than the previous quarter because you took something in May. So what changed that the difference should shrink a little bit?

Speaker #4: If you can just let us know, what's your outlook going forward? Yeah.

Karthik Yathindra: Yeah.

Saurabh Kundra: What is your outlook going forward?

Speaker #2: Yeah, so two pieces there. One is the product mix, like you rightly pointed out. We've had some of our lower ASP products, like accessories and socks, in a way—again, this is by design in terms of scheme design—seeing above-average performance in Q1, which has, in a way, contributed to a lower ASP.

Karthik Yathindra: Well, two pieces there. One is the product mix, like you rightly pointed out. We have had some of our lower ASP products like accessories and socks in a way. Again, this is by design in terms of scheme design, seeing above average performance in Q1, which has in a way contributed to a lower ASP. The second is the price increase taken in May, like I mentioned earlier, not much of it we have realized in Q1 in terms of benefit. That is something that will flow in from Q2. The outlook going forward will definitely be a much bigger difference between volume and value performance than what we have seen in Q1, purely attributable to mix as well as the price increase in May, which will start kicking in by Q2.

Speaker #2: And the second is the price increase taken in May, like I mentioned earlier, not much of it has been realized in Q1 in terms of benefit.

Speaker #2: That's something that will flow in from Q2. So the outlook going forward will definitely show a much bigger difference between volume and value performance than what we've seen in Q1.

Karthik Yathindra: That is something that will flow in from Q2. The outlook going forward will definitely be a much bigger difference between volume and value performance than what we have seen in Q1, purely attributable to mix as well as the price increase in May, which will start kicking in by Q2.

Speaker #2: Purely attributable to mix, as well as the price increase in May, which will start kicking in by Q2.

Speaker #1: Great, thank you. Thank you. Next question comes from the line of Tejas Shah with Avendus Spark Institutional Equities. Please go ahead.

Saurabh Kundra: Great. Thank you.

Operator: Thank you. Next question comes from the line of Tejas Shah with Avendus Spark Institutional Equities. Please go ahead.

Speaker #2: All right. Thanks

Tejas Shah: Hi. Thanks for the opportunity. A couple of questions. Given the rise of e-commerce and digital channels in our mix, how are you leveraging real-time data analytics to harmonize, let's say, channel pricing, maintain margin parity, and also build some sort of KYC on the customer base as well?

Speaker #5: Thank you for the opportunity. A couple of questions. Given the rise of e-commerce and digital channels in our mix, how are you leveraging real-time data analytics to harmonize, let's say, channel pricing, maintain margin parity, and also build some sort of KYC on the customer base as well?

Speaker #2: Thanks, Tejas, for this question. On pricing parity, see, because there is no real-time data required—because we anyway don't, unlike most other brands, our pricing—we follow a uniform consumer pricing principle.

Karthik Yathindra: Thanks, Tejas, for this question. On pricing parity, see because there is no real-time data required because we anyway don't, unlike most other brands, our pricing, we follow a uniform consumer pricing principle irrespective of the channel of purchase. So there is no quick deals or flash sales or any kind of markdowns at any given point in time for the end consumer, irrespective of where that consumer is shopping. However, on the larger point of about how we are leveraging data, we are probably in the apparel consumer space, we are best positioned to leverage consumer data given the large set of consumers that we serve. In terms of D2C, our avenues today is jockey.in as well as EBOs, where we have direct first-party information.

Speaker #2: Irrespective of the channel of purchase, there are no quick deals, flash sales, or any kind of markdowns at any given point in time for the end consumer, irrespective of where that consumer is shopping.

Speaker #2: However, on the larger point about how we are leveraging data, we are probably, in the apparel consumer space, best positioned to leverage consumer data, given the large set of consumers that we serve.

Karthik Yathindra: However, on the larger point of about how we are leveraging data, we are probably in the apparel consumer space, we are best positioned to leverage consumer data given the large set of consumers that we serve. In terms of D2C, our avenues today is jockey.in as well as EBOs, where we have direct first-party information.

Speaker #2: And in terms of D2C, our avenues today are jockey.in as well as EBOs, where we have direct first-party information. We are trying to synthesize this data—first-party consumer data—by building a CDP, a consumer data platform, which is largely in place.

Karthik Yathindra: We are trying to synthesize this data, first-party consumer data, by building a CDP, a consumer data platform, which is largely in place. We should be going live by end of August. We are now ensuring that we're being completely compliant with the Digital Personal Data Protection Act, 2023 and ensuring that all forms of consent in usage of this data is being secured. Once that is done, we would be in a position to leverage it. Now, leveraging this data is on two fronts. One is the direct impact on revenue in sense of cross-selling and upselling products. The second, and more importantly, a little bit more strategic, is about understanding consumer buying behavior, having cohort-level analysis of what is being bought, and feeding that back into our category management and product design teams to better make informed decisions on what to launch, how much to launch, et cetera.

Speaker #2: We should be going live by the end of August. We are now ensuring that we're being completely compliant with the DPDP Act, and ensuring that all forms of consent in usage of this data are secure.

Speaker #2: Once that is done, we would be in a position to leverage it. Now, leveraging this data is on two fronts. One is a direct impact on revenue in the sense of cross-selling and upselling products.

Karthik Yathindra: Now, leveraging this data is on two fronts. One is the direct impact on revenue in sense of cross-selling and upselling products. The second, and more importantly, a little bit more strategic, is about understanding consumer buying behavior, having cohort-level analysis of what is being bought, and feeding that back into our category management and product design teams to better make informed decisions on what to launch, how much to launch, et cetera. That's something that we are building as a foundational capability within the organization.

Speaker #2: The second, and more importantly, a little bit more strategic, is about understanding consumer buying behavior—having cohort-level analysis of what is being bought and feeding that back into our category management and product design teams to better make informed decisions on what to launch, how much to launch, etc.

Speaker #2: So that's something that we are building as a foundational capability within the organization.

Karthik Yathindra: That's something that we are building as a foundational capability within the organization.

Speaker #5: Super. And just one follow-up there. At what stage do you expect these digital investments to become a source of efficiency tailwind, also, let's say, to unlock operating leverage? And specifically, for DMS, to improve inventory turns and replacement cycle, also across the distribution network?

Tejas Shah: Super. Just one follow-up there. At what stage do you expect these digital investments to become a source of efficiency tailwind also to, let's say, unlock operating leverage, specifically the DMS, improve inventory terms and replacement cycle also across the distribution network?

Speaker #2: Yeah, so the DMS is underway, but we've not yet completely moved ahead. It's still a very small portion of distributors who are on DMS today.

Karthik Yathindra: Well, the DMS is underway, but we've not yet completely moved ahead. It's still a very small portion of distributors who are on DMS today. But the goal is by end of this year or latest Q1 of next year, all of the distributors in our network should be on DMS, and then give it about a quarter more to stabilize as a tool, and thereafter you will start seeing efficiencies coming into the system.

Speaker #2: But the goal is, by the end of this year or, at the latest, the first quarter of next year, all of the distributors in our network should be on DMS.

Speaker #2: And then give it about a quarter more to stabilize as a tool, and thereafter you will start seeing efficiencies coming into the system.

Speaker #5: Great, thanks, and all the best going forward.

Tejas Shah: Great. Thanks and all the best for coming quarters.

Speaker #2: Thank you, Tejas.

Karthik Yathindra: Thank you, Dev.

Karthik Yathindra: Thank you, Tejas.

Speaker #1: Thank you. A reminder to all the participants: please restrict yourself to two questions. Next question comes on the line of Avi Mehta with Macquarie Capital.

Operator: Thank you. A reminder to all the participants, please restrict yourself to two questions. Next question comes from the line of Avi Mehta with Macquarie Capital. Please go ahead.

Speaker #1: Please go ahead.

Speaker #4: Yeah. Hi, Karthik, and hi team. Sorry, just two bits I wanted to understand on this growth outlook. The way you're essentially witnessing, and just clarifying, there should be, in the next quarter, a benefit of these lost billing days as well as the underlying secondary sales trends which we saw.

Avi Mehta: Yeah. Hi, Karthik and Deepanjan. Just two bits I wanted to understand on this growth outlook. The way you are essentially witnessing, and just clarifying, in the next quarter, there should be a benefit of these lost billing days as well as the underlying secondary sales trends which we saw. I just wanted to clarify that part, and that should rationally flow in the next quarter only, right? Is that a fair expectation to have?

Speaker #4: I just wanted to clarify that part. And that should rationally flow in the next quarter only, right? Is that a fair expectation to have?

Speaker #2: That's correct. I think that's a fair expectation to have.

Karthik Yathindra: That is correct. I think that is a fair expectation to have.

Speaker #4: Perfect. And just on the input cost bit—I mean, if I recollect, there was some low-cost inventory benefit that we had in this quarter; despite that, gross margin did come under pressure.

Avi Mehta: Perfect. Just on the input cost bit. If I recollect, there was some low-cost inventory benefit that we had in this quarter, despite that gross margins did come under pressure. Wanted to just appreciate how are we placed now, and should we see sequential margins more or less now improving, or is there some pressure in the near term that we should build in? In turn, how do you see the full year EBITDA margin guidance? Would you retain that at 19% to 21%? Thank you.

Speaker #4: Wanted to just appreciate how we are placed now, and should we see sequentially margins kind of more or less now improving, or is there some pressure in the near term that we should build in?

Speaker #4: And in turn, how do you see the full year EBITDA margin guidance? Would you retain that as 19 to 21%? Thank you.

Speaker #2: Yeah. As we've gone—okay, go ahead. Go ahead. Deepanjan, please go ahead.

Karthik Yathindra: As we can. Okay, go ahead. Deepanjan, please go ahead.

Speaker #3: Okay. So, Midas last quarter—yes, we did see inflationary conditions in the input cost, especially. In fact, fabrics also went up, and as well as any synthetic products that we are buying, which are petroleum-based; there was a significant escalation there as well.

Deepanjan Bandyopadhyay: Okay. Mid of last quarter, yes, we did see inflationary conditions in the input cost, especially in fact, fabrics also went up as well as any synthetic products that we are buying, which is petroleum-based. There also, there was a significant escalation. While we did pre-positioning of supplies, we couldn't fully absorb the extreme increases that happened. But yes, end of June and even now, the situation has, to a large extent, normalized, and going forward, we expect things to be stable. Of course, if there's again an escalation in the Middle East situation, it can happen differently. But as of now, we expect things should be stable, and with that, our annual outlook on EBITDA margin will still be within this 19% to 21%.

Speaker #3: So while we did pre-positioning of supplies, we couldn't fully absorb the extreme increases that happened. But yes, end of June and even now, the situation is to a large extent normalized.

Deepanjan Bandyopadhyay: But yes, end of June and even now, the situation has, to a large extent, normalized, and going forward, we expect things to be stable. Of course, if there's again an escalation in the Middle East situation, it can happen differently. But as of now, we expect things should be stable, and with that, our annual outlook on EBITDA margin will still be within this 19% to 21%.

Speaker #3: And going forward, we expect things to be stable. Of course, if there's again an escalation in the Middle East situation, it could happen differently.

Speaker #3: But as of now, we expect things should be stable. And with that, our annual outlook on EBITDA margin will still be within this 19% to 21% range.

Speaker #4: So Deepanjan, just clarifying—you have the price. Basically, what I'm trying to understand is, the price hike that has been taken passes on the current input cost and hence kind of gets us back to earlier gross margins.

Avi Mehta: Deepanjan, just clarifying, you have the price. Basically, what I'm trying to understand is the price hike that has been taken passes on the current input cost and then gets us back to earlier gross margins. That understanding is I wanted to just confirm.

Speaker #4: That understanding is what I want to kind of just confirm.

Speaker #3: You're right. So, we did initiate the price increase, as Karthik said, in mid-May. It didn't absorb the entire impact of the cost input increase.

Deepanjan Bandyopadhyay: You are right. We did initiate the price increase, as Karthik said, in mid of May. It did not absorb the entire impact of cost input increase. That will completely flow in Q2, and with that, we should start getting the stabilization in the gross margins.

Speaker #3: Now, that is completely flowing in Q2. And with that, we should start getting stabilization in the gross margins.

Speaker #4: Got it. Got it.

Avi Mehta: Got it.

Speaker #2: So I think Deepanjan.

Karthik Yathindra: I think, Deepanjan.

Speaker #5: Identify Avi's side.

Avi Mehta: Just to clarify Avi's side.

Speaker #2: Let me just clarify. I think the price increase that we have taken does not completely absorb the input costs. If the input costs continue to be, or resume to the level of what they were in April and May, then the quantum of price increase will not be enough to absorb the complete input costs.

Karthik Yathindra: Let me just clarify. I think the price increase that we have taken does not completely absorb the input costs. If the input costs continue to be or resumes to the level of what it was in April and May, then the quantum of price increase will not be enough to absorb the complete input costs. We have taken, and I think that is what MD also mentioned in his commentary. We have taken a very measured approach, keeping in mind not to outprice ourselves and keeping competitiveness in the market in mind. We have partially absorbed the input cost in the form of MRP increase, believing that many of these, both the raw material increase as well as operational costs through logistics, et cetera, are temporary in nature and should in a way stabilize going forward.

Speaker #2: We have taken and I think that's what MD also mentioned in his commentary. We have taken a very measured approach, keeping in mind not to outprice ourselves and keeping competitiveness in the market in mind.

Karthik Yathindra: We have taken a very measured approach, keeping in mind not to outprice ourselves and keeping competitiveness in the market in mind. We have partially absorbed the input cost in the form of MRP increase, believing that many of these, both the raw material increase as well as operational costs through logistics, et cetera, are temporary in nature and should in a way stabilize going forward. We have not in a way attempted to completely absorb the input costs in the form of MRP increase taken in May.

Speaker #2: We have partially absorbed the input cost in the form of an MRP increase, believing that many of these—both the raw material increase as well as operational costs through logistics, etc.—are temporary in nature and should, in a way, stabilize going forward.

Speaker #2: So we have not, in a way, attempted to completely absorb the input cost in the form of the MRP increase taken in May.

Karthik Yathindra: We have not in a way attempted to completely absorb the input costs in the form of MRP increase taken in May.

Speaker #4: Got it. Very clear on this, Karthik. Karthik, I just had a bookkeeping question, and if anyone could kind of just, like, speak to the drop in MBUs, is there anything that we should be aware of?

Avi Mehta: Got it. Very clear on this, Karthik. Karthik, I just had a bookkeeping and if anyone could just

Karthik Yathindra: Yeah.

Avi Mehta: I do not know, Speedo, the drop in MBOs, is there anything that we should be aware of? That is all. Thank you.

Speaker #4: That's all. Thank you.

Speaker #2: Yes. I think we've gone through a consolidation, especially in the swim business in the offline space, given how quickly that business has moved from offline to online.

Karthik Yathindra: Yes, I think we have gone through a consolidation, especially in the Speedo business in the offline space, given how quickly that business has moved from offline to online. Today, our online contribution to the overall Speedo business is upwards of 35%. Hence, our network of Multi-Brand Outlets for Speedo has consolidated to about 700 stores in Q1. If I had to consider Q4 as well as Q1, because typically multi-brand stores/traders tend to build up inventory at the beginning of the season, which for Speedo is typically January, February. If I had to combine the two, it is about 950 odd stores.

Speaker #2: Today, our online contribution to the overall Speedo business is upwards of 35%. And hence, our network of multi-brand outlets for Speedo has consolidated to about 700 stores in Quarter 1.

Speaker #2: But if I had to consider Q4 as well as Q1, because typically multi-brand stores and traders tend to build up inventory at the beginning of the season, which for Speedo is typically January and February.

Speaker #2: If I had to combine the two, it's about 950-odd stores.

Speaker #4: Got it. Thank you very much. That's all.

Avi Mehta: Okay. Thank you very much. That is all.

Speaker #2: Thanks.

Karthik Yathindra: Thanks.

Speaker #1: Thank you. Next question comes from Nihal Vahesh Jam at HSBC. Please go ahead.

Operator: Thank you. Next question comes from the line of Nihal Jham, HSBC. Please go ahead.

Speaker #3: Yes, hi team. Good evening. Am I audible?

Nihal Jham: Yes, hi, team. Good evening. Am I audible?

Speaker #4: Yes, Nihal.

Operator: Yes, Nihal. Yes, Nihal, please go ahead.

Speaker #2: Yes, Nihal, please go ahead.

Speaker #3: Yes, a couple of questions. So, first one is again on the impact. You did highlight about the second part, which was the undelivered billing.

Nihal Jham: Yes. Couple of questions. First one is again on the impact. You did highlight about the second part, which was the undelivered billing. Just to understand the first part, we have AR has been fully in place, and as we highlighted in Q4 also, that the channel inventory across all segments has sort of normalized, let's say, close to between 45 days. With that as a framework, what is the kind of normalization that we are looking at in terms of sales? Because generally Q1 is one of the higher quarters, given it is also a back-to-school kind of quarter. Just wanted to understand the first part better in terms of the two impacts that you highlighted.

Speaker #3: Just to understand the first part, we have ARS fully in place, and as we highlighted in Q4 also, the channel inventory across all segments is sort of normalized, let's say close to between 45 days.

Speaker #3: So with that as a framework, what is the kind of normalization that we are looking at in terms of sales? Because generally, Q1 is one of the higher quarters, given it's also a back-to-school kind of quarter.

Nihal Jham: With that as a framework, what is the kind of normalization that we are looking at in terms of sales? Because generally Q1 is one of the higher quarters, given it is also a back-to-school kind of quarter. Just wanted to understand the first part better in terms of the two impacts that you highlighted.

Speaker #3: So, I just wanted to understand the first part better in terms of the two impacts that you highlighted.

Speaker #2: Yeah, so it’s got to do with how we design our schemes across months in the year. If you see the last two years’ performance, you will notice how the contribution of each quarter to the overall annual number has gotten a little more flatter.

Karthik Yathindra: Yeah. It has got to do with how we design our schemes across months in the year. If you see the last 2 years' performance, you will see how contribution of each quarter to the overall annual number has gotten a little more flatter. Prior to the implementation of AR, we had Q1 being the biggest quarter of the year, which is not the case in the last bygone year as well. We are trying to see how we can normalize between the 4 quarters in terms of more or less equal contribution. Obviously, seasonality will play a role, which is beyond what we tend to design. By design, to make sure that there is no inflation of inventory or any kind of push abnormally in one quarter when compared to the other.

Speaker #2: Prior to the implementation of ARS, we had Q1 being the biggest quarter of the year, which is not the case in the last bygone year as well.

Speaker #2: We're trying to see how we can normalize between the four quarters in terms of more or less equal contribution. Obviously, seasonality will play a role, which is beyond what we tend to design.

Karthik Yathindra: Obviously, seasonality will play a role, which is beyond what we tend to design. By design, to make sure that there is no inflation of inventory or any kind of push abnormally in one quarter when compared to the other. That is why we are trying to design our schemes to ensure that between quarters by design there is normalization.

Speaker #2: But, by design, to make sure that there is no inflation of inventory, or any kind of push abnormally in one quarter when compared to the other.

Speaker #2: That's why we are trying to design our schemes to ensure that, between quarters, by design, there is normalization.

Karthik Yathindra: That is why we are trying to design our schemes to ensure that between quarters by design there is normalization.

Speaker #3: Understood, Karthik. The related question to this was, you did highlight the impact of three days' ballpark, which could have been related to billing. Now, if you just take a very crude estimate of, say, three days' contribution to the quarter, it is like a 3 to 3.5 percent.

Nihal Jham: Understood, Karthik. The related question to this was you did highlight the impact of 3 days ballpark, which could have been related to billing. If you just take a very crude of, say, 3 days contribution to the quarter, it is like a 3%, 3.5%. We were clocking like a 14%, 15% growth in Q4. Is it fair to assume, saying that underlying momentum of secondary is similar, that because of this normalization, the 2%, 3% impact in the growth moderation is more related to this normalization and the secondary trends or the tertiary, if you have your EBO data sort of remain similar to Q4?

Speaker #3: And we were clocking like a 14–15 percent growth in Q4. So, is it fair to assume that you are saying the underlying momentum of secondary is slimmer—that because of this normalization, the 2–3 percent impact in the growth moderation is more related to this normalization and the secondary trends? Or the tertiary, if you have your EBO data, has sort of remained similar to Q4?

Speaker #2: Yeah. In fact, EBO dates have been better than Q4. We've seen Q1 perform better than Q4 when it comes to tertiary-level performance in the EBOs as well as distribution secondary.

Karthik Yathindra: Yeah. In fact, EBO has been better than Q4. We have seen Q1 perform better than Q4 when it comes to tertiary level performance in the EBOs as well as distribution secondary. But coming back to your observation on impact on the top line, I think you are more or less there, in terms of what impact it has had on the top line.

Speaker #2: But coming back to your observation on the impact on the top line, I think you're more or less there in terms of what impact it has had on the top line.

Speaker #3: Got that. And final bit on the RM impact side—so incrementally, we would have covered for what proportion of the RM inflation that we're seeing with this second price hike in May also that we've implemented?

Nihal Jham: Got that. Final bit on the RM impact side. Incrementally, we would have covered for what proportion of the RM inflation that we are seeing with this second price hike in May also that we have implemented?

Speaker #2: It's very difficult to put a number or say what percentage of the impact has been offset with the price increase because it's been very volatile.

Karthik Yathindra: Very difficult to put a number or say what percentage of the impact has been offset with the price increase because it has been very volatile. March and April operated at very different levels. We saw further escalation in May, a sharp decline in June, then again gone up towards the end of June. So it is very difficult to put a number and say this amount of increase in input cost has been covered with MRP increase. What I can say is that it is only partially covered. It has also got to do with how we are forecasting the RM prices to be, and that is a bit of a punt. Because we do not want to be in a position where we have outpriced ourselves because we do not want to discount the brand later on.

Speaker #2: March and April operated at very different levels. We saw further escalation in May, a sharp decline in June, then again it went up towards the end of June.

Speaker #2: So, it's very difficult to put a number and say this portion of this amount of increase in input cost has been covered with MRP increase.

Speaker #2: What I can say is only that it's partially covered. It's also got to do with how we are forecasting the RM prices to be.

Karthik Yathindra: What I can say is that it is only partially covered. It has also got to do with how we are forecasting the RM prices to be, and that is a bit of a punt. Because we do not want to be in a position where we have outpriced ourselves because we do not want to discount the brand later on.

Speaker #2: And that's a bit of a punt, because we don't want to be in a position where we've outpriced ourselves, since we don't want to discount the brand later on.

Speaker #2: And hence, we've seen a trend towards prices coming back—not to, let's say, the pre-war situation, but definitely better than what it was in April and May.

Karthik Yathindra: And hence, we have seen a trend towards prices coming back, not to let us say the pre-war situation, but definitely better than what it was in April and May. Hence, it is a waiting game as we go ahead. We are hopeful that it will not escalate to the extent that we need to come up with another price intervention. We believe that with this price intervention, we can operate in our targeted EBITDA range of 19% to 21%. As long as we are able to operate in that space, I think the intent would be to hold prices and drive volumes.

Speaker #2: And hence, it's a waiting game as we go ahead. We are hopeful that it will not escalate to the extent that we need to come up with another price intervention.

Speaker #2: We believe that with this price intervention, we can operate in our targeted EBITDA range of 19% to 21%, as long as we're able to operate in that space.

Speaker #2: I think the intent would be to hold prices and drive volumes.

Speaker #3: Got that. Thank you so much, Karthik. After that, coming back in the queue.

Nihal Jham: Got that. Thank you so much, Karthik. I will try coming back in the future.

Speaker #2: Thank you.

Operator: Thank you. Thank you. The next question comes from the line of Sameer Gupta with IIFL Capital and India Infoline. Please go ahead.

Speaker #1: Thank you. The next question comes on the line of Sameer Gupta with IIFL Capital, an Indian full line. Please go ahead.

Speaker #4: Hi sir, good evening, and thanks for taking my question. The first question is basically on the RM side only. So, I understand you have not—like, you will not be able to quantify what kind of RM inflation you're facing.

Sameer Gupta: Hi, sir. Good evening, and thanks for taking my question. First question is basically on the RM side only. So I understand you will not be able to quantify what kind of RM inflation you are facing, but can you quantify the kind of price hikes that have gone in one in the system?

Speaker #4: But can you quantify the kind of price hikes that have gone on in the system?

Speaker #2: Yes, yes. So it's about a 2.2% weighted average increase that we have taken in the month of May. This is on the back of a 2.5% which was taken in the month of January.

Karthik Yathindra: Yes. It is about 2.2% weighted average increase that we have taken in May. This is on the back of 2.5%, which was taken in January. January, of course, had nothing to do with input price, but the May one, the 2.2%, is directly as a result of increase in RM cost.

Speaker #2: Jan, of course, had nothing to do with input price. But the May one—the 2.2 percent—is directly as a result of the increase in RM cost.

Speaker #4: And just a follow-up on this one. So basically, in the first quarter, you would still be having a lower cost escalation, which only started from March onwards.

Sameer Gupta: Just to follow up on this one. Basically, in Q1, you still would be having a lower cost inventory given that price escalation only started from March onwards. Suffice to say that, as you basically encompass the new price inventory in Q2, these price hikes will flow through and net, we are in a similar situation as in Q1.

Speaker #4: So, suffice it to say that as you basically encompass the new price inventory in Q2, these price hikes will flow through, and net-net we are in a similar situation as in Q1?

Speaker #2: No, see, if you look at the number of days of finished goods inventory that we started with, we had some level of pre-war inventory, and a lot of March inventory as well.

Karthik Yathindra: No. If you see the number of days of finished goods inventory that we started with, we had some level of pre-war inventory and a lot of March inventory as well. In a way, that is a net situation when it comes to Q1 opening. Large portion of our finished goods and to some portion, the raw material that was procured was through April and May. But we also had pre-positioning of inventory, specifically in raw materials, to offset this RM escalation impact. But again, the escalation has been much higher than what we had anticipated. So that impact did flow in Q1. The price increase in May should help offset that partially.

Speaker #2: And in a way, that is a net-net situation when it comes to Q1 opening. So, a large portion of our finished goods, and to some extent the raw material that was procured, was through April and May.

Speaker #2: But we also had pre-positioning of inventory, specifically in raw material, to offset this RM escalation impact. But again, the escalation has been much higher than what we had anticipated.

Karthik Yathindra: But we also had pre-positioning of inventory, specifically in raw materials, to offset this RM escalation impact. But again, the escalation has been much higher than what we had anticipated. So that impact did flow in Q1. The price increase in May should help offset that partially. Now that raw material prices are better than what it was in April, May, it should have a net equal impact, and take us back to early Q1 kind of a scenario.

Speaker #2: So, that impact did flow in in quarter one. So, the price increase in May should help offset that partially. And now that raw material prices are better than what they were in April and May, it should have a net-net equal impact.

Karthik Yathindra: Now that raw material prices are better than what it was in April, May, it should have a net equal impact, and take us back to early Q1 kind of a scenario.

Speaker #2: And take us back to early Q1, kind of a scenario.

Speaker #4: Okay. So, with the price hike, you will be back to like pre-Q1 levels, assuming that the prices stay where they are today.

Sameer Gupta: Okay. With the price hike, you will be back to pre-Q1, assuming that the prices stay where they are today.

Speaker #2: Yes. Going forward, because we've already— I mean, the prices have come down when compared to April and May. If it sustains at this level, we should be okay.

Karthik Yathindra: Yes. Going forward, because the prices have come down when compared to April and May. If it sustains at this level, we should be okay.

Speaker #4: Fair, fair. Second question—very different from what has been asked. There has been a minimum wage hike in Karnataka, and while garmenting at this point is still out...

Sameer Gupta: Fair. Second question, very different versus what has been asked. There has been a minimum wage hike in Karnataka and, while garmenting at this point is still out, we still have a very large workforce which is based in that state. A large number of our manufacturing units are there. Fingers crossed, but if we were to assume the worst were to happen here, a similar kind of a 60% minimum wage hike, if it includes garmenting as well, what kind of margin pressure are we looking at? Any indication you can give will be helpful. Another way to look at it would be how much percentage of our employee cost is basically at minimum wage in Karnataka.

Speaker #4: But we still have a very large workforce which is based in that state. A large number of our manufacturing units are there. Fingers crossed, but if we were to assume the worst were to happen here—a similar kind of a 60% minimum wage hike, which, if it includes garmenting as well—what kind of margin pressure are we looking at?

Sameer Gupta: Fingers crossed, but if we were to assume the worst were to happen here, a similar kind of a 60% minimum wage hike, if it includes garmenting as well, what kind of margin pressure are we looking at? Any indication you can give will be helpful. Another way to look at it would be how much percentage of our employee cost is basically at minimum wage in Karnataka.

Speaker #4: Any indication you can give will be helpful. And another way to look at it would be: how much percentage of our employee cost is basically at minimum wage in Karnataka.

Speaker #2: So, the first announcement that was made with this regard—see, by the way, the minimum wage increase for garmenting has already been actioned in the month of April.

Karthik Yathindra: The first announcement that was made with this regard. See, by the way, the minimum wage increase for garmenting has already been actioned in the month of April, which was applicable for the garment industry. That's already flown into the salaries, and it has, in a way, hit our P&L as well. The announcement that was made towards mid-May, which did not affect garmenting industry, still affects us marginally because of, let's say, a third party employed support staff, like security, like drivers, like our sales specialists at the stores, all within the Karnataka state. It is only to that effect that this second announcement by the Government of Karnataka is going to have an impact, which is not a material impact in terms of the overall P&L.

Speaker #2: Which was applicable for the garment industry. That's already flown into the salaries and it has, in a way, hit our P&L as well. Now, the announcement that was made towards mid-May, which did not affect the garmenting industry, still affects us marginally because of, let's say, third-party employed support staff like security, like drivers, like our sales specialists at the stores, all within the Karnataka state.

Karthik Yathindra: The announcement that was made towards mid-May, which did not affect garmenting industry, still affects us marginally because of, let's say, a third party employed support staff, like security, like drivers, like our sales specialists at the stores, all within the Karnataka state. It is only to that effect that this second announcement by the Government of Karnataka is going to have an impact, which is not a material impact in terms of the overall P&L.

Speaker #2: It is only to that effect that this second announcement by the Government of Karnataka is going to have an impact, which is not a material impact in terms of the overall P&L.

Speaker #2: By the way, that also has now been withheld temporarily with the latest announcement made in Karnataka. So, as of now, and the first announcement was challenged and was in the court.

Karthik Yathindra: By the way, that also has now been withheld temporarily with the latest announcement made towards the end of July by the Government of Karnataka. As of now, the first announcement was challenged and was in the court. Meanwhile, by the end of July, the government has withheld that announcement temporarily. Even if that were to go through, it is not going to have a massive impact because it does not affect employees who are directly related to garmenting. All of our tailors who are today governed by the minimum wage code do not get impacted by this announcement.

Speaker #2: Meanwhile, by the end of July, the government has withheld that announcement temporarily. So even if that were to go through, it's not going to have a massive impact, because it does not affect employees who are directly related to garmenting.

Speaker #2: So, all of our tailors, who are today governed by the minimum wage code, do not get impacted by this announcement.

Speaker #4: So you're saying that even if there was a rollback of the minimum wages, it would still exclude garmenting—that's for the employees who are directly employed at your place.

Sameer Gupta: You are saying that even if there was a rollback of the minimum wages, it will still exclude garmenting. The employees which are directly employed at your place. That is what you are saying, right?

Speaker #4: That's what you're saying, right?

Speaker #2: Yeah, it always was. The announcement by the government, anyway, did not cover the garmenting industry. For the garmenting industry, a separate announcement was made in the month of April itself.

Karthik Yathindra: Yeah, it always was. The announcement by the government anyway did not cover the garmenting industry. For garmenting industry, a separate announcement was made in the month of April itself. New minimum wage is announced and the same is passed on to all eligible employees.

Speaker #2: New minimum wages announced are the same as passed on to all eligible employees.

Speaker #4: Got it, sir. But subsequent to that, in May, I think there is a review committee separately made just to relook at garmenting. And that is why the question—if we were to assume a similar kind of minimum wage hike that comes in through garmenting, what kind of margin impact are we foreseeing?

Sameer Gupta: Got it, sir. But subsequent to that, in May, I think there is a review committee separately made just to relook at garmenting, and that is why the question that if we were to assume a similar kind of minimum wage hike that comes in through garmenting, what kind of margin impact are we foreseeing?

Speaker #2: Okay, that is something that we have not done. Maybe it's something we can do and come back with a number, because the announcement that was made was clear that it was not to do with garmenting.

Karthik Yathindra: Okay, that is something that we have not done. Maybe something that we can do and come back with a number, because the announcement that was made was clear that it was not to do with garmenting. It still affects us, like I said, for associates who are not directly involved in garmenting, but that did not have a material impact on the P&L.

Speaker #2: It still affects us, like I said, for associates who are not directly involved in garmenting. But that did not have a material impact on the P&L.

Speaker #4: And this question, just to clarify, even that initiative—

Sameer Gupta: Got it. Last question.

V. S. Ganesh: Just to clarify, even that initiative also by the Government of Karnataka seems to be going slow because there has been change of hands of government at the ministry level, and things are going very slow on that front.

Speaker #3: Also, by the government, it seems to be going slow because there has been a change of hands at the ministry level, and things are going very slow on that front.

Speaker #4: Got it, sir. That’s very helpful. Last question, if I may squeeze it in. I have seen your annual report, and in that, the ad spend, selling, and distribution expenses are down 5% in FY26.

Sameer Gupta: Got it, sir. That is very helpful. Last question, if I may squeeze in. I have seen your annual report, and in that the ad spend, selling, and distribution expenses are down 5% in FY26, and I believe this also includes the commissions that are paid to the third-party e-commerce channels. Now, in a year where e-commerce has grown at 60%, I was just wondering why overall ad spends are down 5%. Would it imply that we have meaningfully moved to an outright sale model to e-commerce platforms? If yes, what is the rationale? If you could give the salience of outright sale and marketplace model within e-commerce. The other implication would be the brand level sales itself has been meaningfully cut down. Again, just wondering why that should happen.

Speaker #4: And I believe this also includes the commissions that are paid to the third-party e-commerce channels. Now, in a year where e-commerce has grown at 60%, I was just wondering why overall ad spends are down 5%.

Speaker #4: Would it imply that we have meaningfully moved to an outright sale model to e-commerce platforms? And if yes, what is the rationale? And if you could give the salients of outright sale and marketplace model within e-commerce, the other implication would be the brand level sales itself has been meaningfully cut down.

Sameer Gupta: Would it imply that we have meaningfully moved to an outright sale model to e-commerce platforms? If yes, what is the rationale? If you could give the salience of outright sale and marketplace model within e-commerce. The other implication would be the brand level sales itself has been meaningfully cut down. Again, just wondering why that should happen.

Speaker #4: Again, just wondering why that should happen.

Speaker #2: Okay. So, within the e-commerce business itself, if you had to look at it between the marketplace model and the outright model, yes, the contribution has shifted more towards the outright model.

Karthik Yathindra: Okay. So within the e-commerce business itself, if you had to look at it between marketplace model and outright model, the contribution has shifted more towards the outright model. This is largely because of quick commerce. Quick commerce, we cannot operate on a marketplace model. With the fast-paced expansion of the quick commerce players, all of them operate on an outright model with jockey.in, and that is why you see a swing in business tilting towards outright when compared to marketplace. Even with traditional marketplaces, our endeavor is to actually operate on an outright model when compared to marketplace because the last mile delivery and consumer experience happens to be better because we today operate with two fulfillment centers, one in south and one in north.

Speaker #2: And this is largely because of Quick Commerce. Quick Commerce—we cannot operate on a marketplace model. With the fast-paced expansion of the Quick Commerce players, all of them operate on an outright model with jockeying.

Karthik Yathindra: in, and that is why you see a swing in business tilting towards outright when compared to marketplace. Even with traditional marketplaces, our endeavor is to actually operate on an outright model when compared to marketplace because the last mile delivery and consumer experience happens to be better because we today operate with two fulfillment centers, one in south and one in north.

Speaker #2: And that's why you see a swing in business tilting towards outright when compared to marketplace. Even with traditional marketplaces, our endeavor is to actually operate on an outright model when compared to marketplace.

Speaker #2: Because the last mile delivery and consumer experience happens to be better, as we today operate with two fulfillment centers—one in the South and one in the North.

Speaker #2: Whereas most e-commerce players, that you can think of, operate with a lot more DCs—distribution centers—and fulfillment centers, and hence, the SLA to deliver to the end consumer is much better and results in a better consumer experience.

Karthik Yathindra: Whereas most e-commerce players that you can think of operate with a lot more DCs, distribution centers and fulfillment centers, and hence the SLA to the TAT to deliver to end consumer is a much better and results in better consumer experience. So that is something that has definitely had an impact. In terms of overall brand spend, the difference that you are seeing is because the year before last financial year, we had a large campaign for the World Cup, which was a disproportionate spend, which did not follow through in the last financial year. That is the delta that you see in terms of lesser spends at a brand level. Otherwise, the intent is to continue operating between a 4% to 5% percentage of the revenue towards marketing.

Speaker #2: So, that's something that has definitely had an impact. In terms of overall brand spend, the difference that you're seeing is because the year before last financial year, we had a large campaign for the World Cup, which was a disproportionate spend.

Karthik Yathindra: In terms of overall brand spend, the difference that you are seeing is because the year before last financial year, we had a large campaign for the World Cup, which was a disproportionate spend, which did not follow through in the last financial year. That is the delta that you see in terms of lesser spends at a brand level. Otherwise, the intent is to continue operating between a 4% to 5% percentage of the revenue towards marketing.

Speaker #2: Which did not follow through in the last financial year. That's the delta that you see in terms of lower spends at a brand level.

Speaker #2: Otherwise, the intent is to continue operating with between 4% to 5% of the revenue allocated towards marketing.

Speaker #4: Got it. Just very clear. Just a follow-up here. So basically, going towards an outright model, you also will be losing control of pricing on these marketplaces.

Sameer Gupta: Got it. Very clear. Just a follow-up here. So basically, going towards an outright model, you also will be losing control of pricing on these marketplaces. Would you be comfortable with that as a strategy?

Speaker #4: Would you be comfortable with that as a strategy?

Speaker #2: No. So we are looking to have the best of both worlds. We are in a strategic partnership with the majority of the marketplaces.

Karthik Yathindra: No. We are looking to have the best of both worlds. We are in a strategic partnership with majority of the marketplaces where we are operating in outright to ensure that price governance is maintained and we do not, in a way, dilute pricing principles to the end consumer. We are fairly confident that that is something that we will be able to maintain.

Speaker #2: We are operating in outright to ensure that price governance is maintained and we don't, in any way, dilute pricing principles to the end consumer.

Speaker #2: We're fairly confident that that is something we'll be able to maintain.

Speaker #4: Got it, sir. Thanks a lot for all these very detailed answers. I'll come back in the Q4 follow-ups.

Sameer Gupta: Got it, sir. Thanks a lot for all these very detailed answers. I will come back in the queue for follow-ups.

Speaker #2: Thank you.

Karthik Yathindra: Thank you.

Speaker #1: Thank you. A reminder to all the participants that you may press star and one to ask a question. Once again, a reminder to all the participants that you may press star and one to ask a question.

Operator: Thank you. A reminder to all the participants that you may press star and one to ask a question. Once again, a reminder to all the participants that you may press star and one to ask a question. Ladies and gentlemen, as there are no further questions, we have reached the end of question and answer session. I now hand the conference over to the management for closing comments.

Speaker #1: Ladies and gentlemen, as there are no further questions, we have reached the end of the question and answer session. I now hand the conference over to the management for closing comments.

Speaker #5: Thank you for being with us today. We truly appreciate your continued interest, confidence, and support. While the operating environment continues to evolve, our focus remains clear: serve our consumers better, strengthen our brands, execute with discipline, and build a business that creates enduring value.

Deepanjan Bandyopadhyay: Thank you for being with us today. We truly appreciate your continued interest, confidence, and support. While the operating environment continues to evolve, our focus remains clear: serve our consumers better, to strengthen our brands, execute with discipline, and build a business that creates enduring value. We look forward to engaging with you again the next quarter. Thank you again. Have a good day.

Speaker #5: We look forward to engaging with you again in the next quarter. Thank you again. Have a good day.

Operator: Thank you. On behalf of Page Industries Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.

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