Q1 2027 Aditya Birla Fashion and Retail Ltd Earnings Call

August 10, 2026

Speaker #1: Ladies and gentlemen, good day and welcome to the first quarter earnings conference call of Aditya Birla Fashion and Retail Limited. The call will begin with a brief discussion by the company's management on the Q1 FY27 performance, followed by a question and answer session.

Operator: Ladies and gentlemen, good day and welcome to the First Quarter Earnings Conference Call of Aditya Birla Fashion and Retail Limited. The call will begin with a brief discussion by the company's management on the Q1 FY27 performance, followed by a question and answer session. As a reminder, all participant lines will be in the listen only mode. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. We have with us today Mr. Ashish Dikshit, Managing Director, Mr. Suraj Bahirwani, CEO, Pantaloons, and Mr. Jagdish Bajaj, CFO. I want to thank the management team on behalf of all the participants for taking their valuable time to be with us.

Operator: Ladies and gentlemen, good day and welcome to the Q1 Earnings Conference Call of Aditya Birla Fashion and Retail Limited. The call will begin with a brief discussion by the company's management on the Q1 FY27 performance, followed by a question and answer session. As a reminder, all participant lines will be in the listen only mode. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. We have with us today Mr. Ashish Dikshit, Managing Director, Mr. Suraj Bahirwani, CEO, Pantaloons, and Mr. Jagdish Bajaj, CFO. I want to thank the management team on behalf of all the participants for taking their valuable time to be with us.

Speaker #1: As a reminder, all participant lines will be in listen-only mode. Should you need assistance during this conference call, please signal an operator by pressing star, then zero, on your touch-tone phone.

Speaker #1: Please note that this conference is being recorded. We have with us today Mr. Ashish Dixit, Managing Director; Mr. Suraj Bahirwani, CEO - Pantaloons; and Mr. Jagdish Bajaj, CFO.

Speaker #1: I want to thank the management team on behalf of all the participants for taking their valuable time to be with us. I must remind you that today's discussion may include certain forward-looking statements and therefore must be viewed in conjunction with the risks that the company faces.

Operator: I must remind you that today's discussion may include certain forward-looking statements and therefore must be viewed in conjunction with the risks that the company faces. Please restrict your questions to the quarter performance and to the strategic questions only. Housekeeping questions can be dealt separately with the IR team. With that, I would now like to hand the conference over to Mr. Jagdish Bajaj. Thank you, and over to you, sir.

Speaker #1: Please restrict your questions to the quarter's performance and to strategic questions only. Housekeeping questions can be dealt with separately by the IR team. With that, I would now like to hand the conference over to Mr. Jagdish Bajaj.

Speaker #1: Thank you. And over to you, sir.

Speaker #2: Thank you. Good evening, everyone. Thank you for joining us today for the Q1 FY27 earnings call of Aditya Birla Fashion and Retail Limited.

Jagdish Bajaj: Thank you. Good evening, everyone. Thank you for joining us today for the Q1 FY27 earnings call of Aditya Birla Fashion and Retail Limited. From a demand perspective, the environment remained broadly stable and largely in line with trends seen over the last few quarters. Within the period, consumer traction was relatively better in May, while June reflected the market dynamics in the lead up to the market-wide End of Season Sale. Overall, consumption trends remained steady across categories and channels. Occasion-led consumption, however, saw some moderation as Adhik Maas impacted the peak wedding season and consequently led to lower wedding-related purchases. Against this backdrop, ABFRL sustained its double-digit growth momentum with healthy traction across key businesses, underscoring the resilience and strength of our diversified portfolio. Our retail channel, in particular, remained strong across the portfolio, supported by upgraded merchandise, sharper assortment, improved in-store experience, and sustained consumer engagements.

Speaker #2: From a demand perspective, the environment remained broadly stable and largely in line with trends seen over the last few quarters. Within the period, consumer traction was relatively better in May, while June reflected the market dynamics in the lead-up to the market-wide end-of-season sale.

Speaker #2: Overall, consumption trends remained steady across categories and channels. Occasion-led consumption, however, saw some moderation, as Adhik Maas impacted the peak wedding season and consequently led to lower wedding-related purchases.

Speaker #2: Against this backdrop, ABFRL sustained its double-digit growth momentum, with healthy traction across key businesses, underscoring the resilience and strength of our diversified portfolio. Our retail channel, in particular, remained strong across the portfolio, supported by upgraded merchandise, sharper assortment, improved in-store experience, and sustained consumer engagements.

Speaker #2: Now, moving to the financial performance of the quarter, ABFRL reported revenue of ₹2,026 crore, registering an 11% year-on-year growth. Over the years, ABFRL has built a large, diverse portfolio comprising both large, established businesses and newer growth platforms.

Jagdish Bajaj: Now moving to the financial performance of the quarter. ABFRL reported revenue of INR 2,026 crore, registering an 11% YOY growth. Over the years, ABFRL has built a large, diverse portfolio comprising both large established businesses and newer growth platforms. Our established portfolio includes businesses such as Pantaloons, TCNS, our designer-led brands, The Collective, and mono brand businesses. Alongside these, over the last four to five years, we have incubated and scaled several new businesses, including TMRW, Galeries Lafayette, OWND!, and Tasva. Viewed through this lens, both our established and newer businesses contributed meaningfully to growth during the quarter. Our established businesses delivered steady high single-digit growth. Importantly, this growth was accompanied by margins that remained broadly stable compared with the same period last year, reflecting the underlying strength and resilience of these businesses.

Jagdish Bajaj: Now moving to the financial performance of the quarter. ABFRL reported revenue of INR 2,026 crore, registering an 11% YoY growth. Over the years, ABFRL has built a large, diverse portfolio comprising both large established businesses and newer growth platforms. Our established portfolio includes businesses such as Pantaloons, TCNS, our designer-led brands, The Collective, and mono brand businesses. Alongside these, over the last four to five years, we have incubated and scaled several new businesses, including TMRW, Galeries Lafayette, OWND!, and Tasva. Viewed through this lens, both our established and newer businesses contributed meaningfully to growth during the quarter. Our established businesses delivered steady high single-digit growth. Importantly, this growth was accompanied by margins that remained broadly stable compared with the same period last year, reflecting the underlying strength and resilience of these businesses.

Speaker #2: Our established portfolio includes businesses such as Pantaloons, TCNS, our designer-led brands, and the Collective and mono-brand businesses. Alongside these, over the last four to five years, we have incubated and scaled several new businesses including Tomorrow, Gallery Lafai, On, and Taswa.

Speaker #2: We viewed through this lens, both our established and newer businesses contributed meaningfully to growth during the quarter. Our established businesses delivered steady, high single-digit growth. Importantly, this growth was accompanied by margins that remained broadly stable compared with the same period last year, reflecting the underlying strength and resilience of these businesses.

Speaker #2: At the same time, our newer businesses continued to scale strongly, delivering around 30% year-over-year growth, supported by the expansion of the retail footprint and continued investment in building these businesses for the long term.

Jagdish Bajaj: At the same time, our newer businesses continued to scale strongly, delivering around 30% YOY growth, supported by the expansion of the retail footprint and continued investment in building these businesses for the long term. Moving to profitability, EBITDA for the quarter stood at INR 167 crore with a margin of 8.2%. The YOY decline largely reflects lower treasury income, along with continued investment in scaling our newer businesses. Excluding treasury income, EBITDA increased YOY, reflecting better operating performance on a comparable basis. At a segment level, the ethnic businesses maintained broadly stable EBITDA, while TMRW continued to demonstrate improvement in its profitability trajectory, with YOY EBITDA losses narrowing during the quarter.

Jagdish Bajaj: At the same time, our newer businesses continued to scale strongly, delivering around 30% YoY growth, supported by the expansion of the retail footprint and continued investment in building these businesses for the long term. Moving to profitability, EBITDA for the quarter stood at INR 167 crore with a margin of 8.2%. The YoY decline largely reflects lower treasury income, along with continued investment in scaling our newer businesses. Excluding treasury income, EBITDA increased YoY, reflecting better operating performance on a comparable basis. At a segment level, the ethnic businesses maintained broadly stable EBITDA, while TMRW continued to demonstrate improvement in its profitability trajectory, with YoY EBITDA losses narrowing during the quarter.

Speaker #2: Moving to profitability, EBITDA for the quarter is ₹1,167 crore, with a margin of 8.2%. The year-on-year decline largely reflects lower treasury income along with continued investment and scaling of our newer businesses.

Speaker #2: Excluding treasury income, EBITDA increased year over year, reflecting better operating performance on a comparable basis. At a segment level, the ethnic businesses maintained broadly stable EBITDA, while Tomorrow continued to demonstrate improvement in its profitability trajectory, with year-over-year EBITDA losses narrowing during the quarter.

Speaker #2: Reported loss for the quarter is ₹249 crore, compared to a loss of ₹234 crore in the corresponding period last year, primarily due to higher index depreciation and finance cost associated with new store openings.

Jagdish Bajaj: Reported loss for the quarter stood at INR 249 crore compared to a loss of INR 234 crore in the corresponding period last year, primarily due to higher index depreciation and finance cost associated new store openings. Coming to the balance sheet and cash position at the standalone level, we ended the quarter with gross cash of approximately INR 1,000 crore. The deployment of this cash remained broadly in line with priorities and framework that we outlined during the previous investor call. We are confident that this cash is enough for us to fund the businesses for next two years with annual cash funding requirement of INR 500 to 550 crore, and by FY29 and FY30, we expect the business to be EFCF positive. On our retail network expansion, we continue to follow a calibrated and measured approach to expansion.

Speaker #2: Coming to the balance sheet and cash position, at the standalone level, we entered the quarter with gross cash of approximately ₹1,000 crore. The deployment of this cash remained broadly in line with the priorities and framework that we outlined during the previous investor call.

Speaker #2: We are confident that this cash is enough for us to fund the businesses for the next two years, with an annual cash funding requirement of ₹500 to ₹550 crore.

Speaker #2: And by FY29 and FY30, we expect the business to be FCA positive. On our retail network expansion, we continued to follow a calibrated and measured approach to expansion.

Speaker #2: At the end of the quarter, our portfolio comprised 1,286 stores spanning more than 7.9 million square feet of retail space. During the quarter, we added more than 45 stores across the portfolio.

Jagdish Bajaj: At the end of the quarter, our portfolio comprised 1,286 stores spanning more than 7.9 million square feet of retail space. During the quarter, we added more than 45 stores across the portfolio with expansion focused on markets and brands where we continue to see attractive long-term growth opportunities. Let me brief you on the performance of individual segment. Coming to the Pantaloons segment, revenue for the quarter stood at INR 1,204 crore, registering a 10% YOY growth. EBITDA margin came in at 15.9%, lower than the previous year, largely reflecting the continued scaled up of OWND!. The Pantaloons business delivered another solid quarter, with revenue growing 7%, supported by a healthy 4% like-to-like growth. The Pantaloons strategy continues to progress well, with sharper merchandise, improved fashion relevance and the new retail identity driving better consumption traction.

Jagdish Bajaj: At the end of the quarter, our portfolio comprised 1,286 stores spanning more than 7.9 million square feet of retail space. During the quarter, we added more than 45 stores across the portfolio with expansion focused on markets and brands where we continue to see attractive long-term growth opportunities. Let me brief you on the performance of individual segment. Coming to the Pantaloons segment, revenue for the quarter stood at INR 1,204 crore, registering a 10% YoY growth. EBITDA margin came in at 15.9%, lower than the previous year, largely reflecting the continued scaled up of OWND!. The Pantaloons business delivered another solid quarter, with revenue growing 7%, supported by a healthy 4% like-to-like growth. The Pantaloons strategy continues to progress well, with sharper merchandise, improved fashion relevance and the new retail identity driving better consumption traction.

Speaker #2: With the expansion focused on markets and brands, we continue to see attractive long-term growth opportunities. Now, let me brief you on the performance of individual segments.

Speaker #2: Coming to the Pantaloon segment, revenue for the quarter is 28 rupees 1,204 crore, registering a growth registering a 10% YOY growth, EBITDA margin came in at 15.9%, lower than the previous year, largely reflecting the continued scaled-up of owned.

Speaker #2: The Pantaloons business delivered another solid quarter, with revenue growing 7%, supported by a healthy 4% like-to-like growth. The Pantaloons strategy continues to progress well, with sharper merchandise, improved fashion relevance, and the new retail identity driving better consumption traction.

Speaker #2: Digital momentum remained healthy, further extending the overall omnichannel position proposition. ON delivered 55% year-over-year growth, primarily led by network expansion and encouraging consumer traction.

Jagdish Bajaj: Digital momentum remained healthy, further extending the overall omni-channel proposition. OWND! delivered 55% YOY growth, primarily led by network expansion and increasing consumer traction. During the quarter, we added 10 new stores across the segment, comprising one Pantaloons store and nine OWND! stores as we continue to expand the network in key markets. Turning to our ethnic portfolio. It is one of the most comprehensive portfolio with annual revenue more than INR 2,200 crore. This business in Q1 reported revenue of INR 450 crore, registering a 4% YOY growth while margins remained broadly stable. This growth is to be seen in context of higher wedding dates in Q1 last year and the impact of Adhik Maas on occasion wear related purchases this year. Some of our designer wear businesses also got impacted due to lower wedding purchase in context of global disruptions, where the order book went down.

Jagdish Bajaj: Digital momentum remained healthy, further extending the overall omni-channel proposition. OWND! delivered 55% YoY growth, primarily led by network expansion and increasing consumer traction. During the quarter, we added 10 new stores across the segment, comprising one Pantaloons store and nine OWND! stores as we continue to expand the network in key markets. Turning to our ethnic portfolio. It is one of the most comprehensive portfolio with annual revenue more than INR 2,200 crore. This business in Q1 reported revenue of INR 450 crore, registering a 4% YoY growth while margins remained broadly stable. This growth is to be seen in context of higher wedding dates in Q1 last year and the impact of Adhik Maas on occasion wear related purchases this year. Some of our designer wear businesses also got impacted due to lower wedding purchase in context of global disruptions, where the order book went down.

Speaker #2: During the quarter, we added 10 new stores across the segment, comprising one Pantaloon store and nine owned stores, as we continue to expand the network in key markets.

Speaker #2: Turning to our ethnic portfolio, it is one of the most comprehensive portfolios with annual revenue of more than ₹2,200 crore. This business in Q1 reported revenue of ₹450 crore, registering a 4% year-on-year growth, while margins remained broadly stable.

Speaker #2: This growth has to be seen in the context of higher wedding dates in Q1 last year, and the impact of Adhik Maas on occasion-related purchases this year.

Speaker #2: Our designer wear businesses also got impacted due to lower wedding purchases in the context of global disruptions, where the order book went down.

Speaker #2: Despite all this, the portfolio delivered a healthy 5% like-to-like growth, reflecting the underlying strength of the brands and their consumer proposition. As you are aware, our ethnic portfolio comprises two distinct segments: designer-led brands and premier ethnic.

Jagdish Bajaj: Despite all this, the portfolio delivered a healthy 5% like-to-like growth, reflecting the underlying strength of the brands and their consumer proposition. As you are aware, our ethnic portfolio comprises two distinct segments, designer-led brands and premier ethnic. Within the designer-led portfolio, the business continued to deliver profitable growth during the quarter, supported by strong category expansion, differentiated collections and high impact collaborations. Overall, the portfolio grew at a high single digit growth rate. Within the premier ethnic wear brand, TCNS, the retail revenue grew 10% YOY, supported by low single digit like-to-like growth and network expansion, with eight new stores adding during the quarter. However, the non-retail channels de-grew in pursuit of building them profitably. The portfolio continues to sharpen its product propositions with greater granularity in assortments and a broader merchandise grid designed to cater to a wide range of occasions and consumer needs.

Jagdish Bajaj: Despite all this, the portfolio delivered a healthy 5% like-to-like growth, reflecting the underlying strength of the brands and their consumer proposition. As you are aware, our ethnic portfolio comprises two distinct segments, designer-led brands and premier ethnic. Within the designer-led portfolio, the business continued to deliver profitable growth during the quarter, supported by strong category expansion, differentiated collections and high impact collaborations. Overall, the portfolio grew at a high single digit growth rate. Within the premier ethnic wear brand, TCNS, the retail revenue grew 10% YoY, supported by low single digit like-to-like growth and network expansion, with eight new stores adding during the quarter. However, the non-retail channels de-grew in pursuit of building them profitably. The portfolio continues to sharpen its product propositions with greater granularity in assortments and a broader merchandise grid designed to cater to a wide range of occasions and consumer needs.

Speaker #2: Within the designer-led portfolio, the business continued to deliver profitable growth during the quarter, supported by strong category extension, differentiated collections, and high-impact collaborations.

Speaker #2: Overall, the portfolio grew at a high single-digit growth rate. Now, within the premier ethnic wear brand, TCNS, the retail revenue grew 10% year over year, supported by low single-digit like-to-like growth and network expansion.

Speaker #2: With eight new stores added during the quarter, however, the known retail channels declined in pursuit of building them profitably. The portfolio continues to sharpen its product propositions with greater granularity in assortments and a broader merchandise grid designed to cater to a wide range of occasions and consumer needs.

Speaker #2: Alongside measured retail expansion, these initiatives are beginning to strengthen the underlying business, and we remain confident of building momentum and narrowing full-year losses. Thus far, we have delivered robust growth of 35% year-over-year with double-digit like-to-like growth, marking the eighth consecutive quarter of positive L12 performance.

Jagdish Bajaj: Alongside measured retail expansion, these initiatives are beginning to strengthen the underlying business, and we remain confident of building momentum and narrowing full-year losses. Tasva delivered robust growth of 35% YOY with double digit like-to-like growth, marking the eighth consecutive quarter of +LTL performance. The brand continues to strengthen its proposition through sharper product differentiation and greater regional relevance, driving healthy consumer traction and helping it gain market share across key wedding markets. Tasva's retail footprint now stands at 90 stores, and we continue to expand its distribution in key occasion wear market going forward. Moving to luxury retail. The Collective and Monobrand portfolio maintained healthy momentum, delivering double digit YOY growth. Strong like-to-like performance together with sustained e-commerce traction supported the quarter. The network stood at 51 stores in the end of the period following the addition of three new stores.

Jagdish Bajaj: Alongside measured retail expansion, these initiatives are beginning to strengthen the underlying business, and we remain confident of building momentum and narrowing full-year losses. Tasva delivered robust growth of 35% YoY with double digit like-to-like growth, marking the eighth consecutive quarter of +LTL performance. The brand continues to strengthen its proposition through sharper product differentiation and greater regional relevance, driving healthy consumer traction and helping it gain market share across key wedding markets. Tasva's retail footprint now stands at 90 stores, and we continue to expand its distribution in key occasion wear market going forward. Moving to luxury retail. The Collective and Monobrand portfolio maintained healthy momentum, delivering double digit YoY growth. Strong like-to-like performance together with sustained e-commerce traction supported the quarter. The network stood at 51 stores in the end of the period following the addition of three new stores.

Speaker #2: The brand continues to strengthen its proposition through sharper product differentiation and greater regional relevance, driving healthy consumer traction ahead and helping it gain market share across key wedding markets.

Speaker #2: Thus far, our retail footprint now stands at 90 stores, and we continue to expand its distribution in key occasion wear markets going forward. Moving to luxury retail, the collective and mono-brand portfolio maintained healthy momentum.

Speaker #2: Delivering double-digit year-over-year growth, strong like-to-like performance, together with sustained e-commerce traction, supported the quarter. The network is 251 stores at the end of the period following the addition of three new stores.

Speaker #2: Gallery Lafay continued to progress well following its launch last November. We are seeing steady improvement across key operating indicators, alongside growing brand awareness and consumer segments.

Jagdish Bajaj: Galeries Lafayette continued to progress well following its launch last November. We are seeing a steady improvement across key operating indicators alongside growing brand awareness and consumer engagements. A series of high impact brand and celebrity collaborations has also helped drive footfall and reinforce Galeries Lafayette's positioning as a differentiated luxury retail destination in India. Turning to Tomorrow. Primary sales grew 11% YOY, while secondary sales increased at a faster pace of 16%, reflecting healthy underlying consumer demand. Importantly, cash losses narrowed further during the quarter, benefiting from improving operating leverage and greater scale efficiencies. We'll continue to drive the trajectory going forward as well with a clear path to achieve brand level cash profitability over next 12 to 18 months. At the same time, Tomorrow continues to strengthen its omni-channel footprint, adding more than 20 stores during the quarter.

Jagdish Bajaj: Galeries Lafayette continued to progress well following its launch last November. We are seeing a steady improvement across key operating indicators alongside growing brand awareness and consumer engagements. A series of high impact brand and celebrity collaborations has also helped drive footfall and reinforce Galeries Lafayette's positioning as a differentiated luxury retail destination in India. Turning to Tomorrow. Primary sales grew 11% YoY, while secondary sales increased at a faster pace of 16%, reflecting healthy underlying consumer demand. Importantly, cash losses narrowed further during the quarter, benefiting from improving operating leverage and greater scale efficiencies. We'll continue to drive the trajectory going forward as well with a clear path to achieve brand level cash profitability over next 12 to 18 months. At the same time, Tomorrow continues to strengthen its omni-channel footprint, adding more than 20 stores during the quarter.

Speaker #2: Engagements. A series of high-impact brand and celebrity collaborations has also helped drive footfall and reinforce Gallery Lafay's positioning as a differentiated luxury retail destination in India.

Speaker #2: Turning to tomorrow, primary sales grew 11% year over year, while secondary sales increased at a faster pace of 16%, reflecting healthy underlying consumer demand. Importantly, cash losses narrowed further during the quarter, benefiting from improving operating leverage and greater scale efficiencies.

Speaker #2: We will continue to drive the trajectory going forward as well, with a clear path to achieve brand-level cash profitability over the next 12 to 18 months.

Speaker #2: At the same time, Tomorrow continues to strengthen its omnichannel footprint, adding more than 20 stores during the quarter. Including Ronk, the portfolio now operates over 140 stores across key markets nationwide, providing a stronger platform for the next phase of growth.

Jagdish Bajaj: Including Wrogn, the portfolio now operates over 140 stores across key markets nationwide, providing a stronger platform for the next phase of growth. In conclusion, the quarter saw us carry forward the momentum build from the preceding period with healthy growth across several parts of the portfolio. While we remain mindful of the evolving consumer or macro environment, we will continue to navigate it with discipline and agility, taking appropriate actions as required. Our diversified portfolio strategy continues to play out in line with our expectations. Our established businesses remain on a steady growth trajectory, supported by strong brands, improving consumer propositions, and disciplined execution. At the same time, our newer businesses are getting scaled and building stronger market positions with a clear focus on improving operating leverage and progressively reducing losses as they move towards greater maturity. As we look ahead, our priorities remain clear.

Speaker #2: In conclusion, the quarter saw us carry forward the momentum built from the preceding period, with healthy growth across several parts of the portfolio, while we remain mindful of the evolving consumer and macro-environment.

Speaker #2: We will continue to navigate it with discipline and agility, taking appropriate actions as required. Our diversified portfolio strategy continues to play out in line with our expectations. Our established businesses remain on a steady growth trajectory, supported by strong brand, improving consumer propositions, and disciplined execution.

Speaker #2: At the same time, our newer businesses are scaling up and building stronger market positions, with a clear focus on improving operating leverage and progressively reducing losses as they move towards greater maturity.

Speaker #2: As we look ahead, our priorities remain clear: sustained growth in our established businesses with better margins, scaling our new platforms responsibly, strengthening profitability, and maintaining a disciplined approach to capital allocation.

Jagdish Bajaj: Sustained growth in our established businesses with better margins, scale our new platforms responsibly, strengthen profitability, and maintain a disciplined approach to capital allocation. We'll also closely look at areas to bring in efficiencies and leverage to make sure the overall profitability is enhanced. We expect the losses to narrow going forward and to build a business that is sizable and profitable in context of the large market opportunity that is the fashion and lifestyle space in India. Thank you, and happy to take questions now.

Speaker #2: We will also closely look at areas to bring in efficiencies and leverage to make sure the overall profitability is enhanced. We expect the losses to narrow going forward, as we aim to build a business that is sizable and profitable.

Speaker #2: In the context of the large market opportunity that is the fashion and lifestyle space in India, thank you, and I am happy to take questions now.

Speaker #1: Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone.

Operator: Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their 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 Garima Mishra with Kotak Securities. Please go ahead.

Operator: Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their 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 Garima Mishra with Kotak Securities. Please go ahead.

Speaker #1: 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.

Speaker #1: Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Garima Mishra with Kotak Securities.

Speaker #1: Please go ahead.

Speaker #3: Yeah, hi. Thank you so much for the opportunity. First question is on the Pantene segment. Revenue for the segment scaled pretty fast this quarter, and presumably most of this is on account of owned.

Garima Mishra: Yeah. Hi. Thank you so much for the opportunity. First question is on the Pantaloons segment. Revenues for the segment scaled pretty fast this quarter, and presumably most of this is on account of OWND!. What is the consumer response to this format, and how much of the segment revenue and EBITDA contribution was on account of OWND! in Q1?

Speaker #3: So, what is the consumer response to this format, and how much of the segment's revenue and EBITDA contribution was on account of owned, in one key?

Speaker #2: Thanks, Karima. As we have given in the IR deck, Pantene's business grew 7.7 and a half percent this quarter, out of the total segment growth of 10%.

Jagdish Bajaj: Thanks, Garima. As we have given in the IR deck, Pantaloons business grew 7.7%, 7.5% this quarter of the total segment growth of 10%. The remaining was from OWND!. 2%, 2.5% of segment growth incrementally came from OWND!. Pantaloons also did show a pretty decent growth this quarter. As far as the profitability is concerned, OWND! still continues to be in an investment phase, and therefore profitability mostly driven by Pantaloons. In fact, OWND! has taken away some of the segment profit.

Ashish Dikshit: Thanks, Garima. As we have given in the IR deck, Pantaloons business grew 7.7%, 7.5% this quarter of the total segment growth of 10%. The remaining was from OWND!. 2%, 2.5% of segment growth incrementally came from OWND!. Pantaloons also did show a pretty decent growth this quarter. As far as the profitability is concerned, OWND! still continues to be in an investment phase, and therefore profitability mostly driven by Pantaloons. In fact, OWND! has taken away some of the segment profit.

Speaker #2: And the remaining was from owned. So, 2 to 2.5 percent of segment growth incrementally came from owned. So, Pantene also did show pretty decent growth this quarter.

Speaker #2: As far as profitability is concerned, Owned still continues to be in an investment phase, and therefore, profitability is mostly driven by Pantaloons. In fact, Owned has taken away some of the segment profit.

Speaker #3: All right. And Ashish, in terms of consumer response to the format, and also, what are your expectations in terms of store additions for this format?

Garima Mishra: All right. Ashish, in terms of consumer response to the format, and also what are your expectations in terms of store additions for this format?

Jagdish Bajaj: At this stage, Garima, we are sort of still watching the format in terms of its adequate profitability. We have still not achieved the segment level profitability, which perhaps will take some time. We will probably add more stores towards the H2 of the year. For H1, I think our expansion plan is about 20 to 22 stores.

Speaker #2: So, at this stage, Garima, we are still monitoring the format in terms of its adequate profitability. We have not yet achieved segment-level profitability, which perhaps will take some time.

Ashish Dikshit: At this stage, Garima, we are sort of still watching the format in terms of its adequate profitability. We have still not achieved the segment level profitability, which perhaps will take some time. We will probably add more stores towards the H2 of the year. For H1, I think our expansion plan is about 20 to 22 stores.

Speaker #2: We will probably add more stores towards the second half of the year. For the first half, I think our expansion plan is about 20, 20, 22 stores.

Speaker #3: Got it, got it. Second question is on tomorrow. Now, one key point for tomorrow with Mr. Slower is the scale-up of revenue, especially compared with last year.

Garima Mishra: Got it. Second question is on TMRW. In Q1, TMRW witnessed a slower scale-up of revenue, especially compared with last year. What is the strategy here, and should we expect this sort of momentum of revenues to sustain in the near term?

Speaker #3: So, what is the strategy here, and should we expect this sort of momentum in revenues to sustain in the near term?

Speaker #2: So Garima, if you look at Tomorrow, over the last several quarters, the business has been growing close to 25% annually over the last three years. Last year, the same quarter was much higher, about 39%.

Jagdish Bajaj: Garima, if you look at TMRW over last several quarters, the business has been growing close to 25% annually over last 3 years. Last year, same quarter was much higher, about 39%. On top of that, this quarter, there is a significant difference between secondary and primary, and that's why we've reported both. While primary has grown only by 11%, the secondary revenue has grown by about 16%, 17%. We expect TMRW to continue to be on 20% plus revenue growth rate for the year. The business is gaining both momentum and is reducing the losses. This year, therefore, is a significant year in TMRW's journey.

Ashish Dikshit: Garima, if you look at TMRW over last several quarters, the business has been growing close to 25% annually over last 3 years. Last year, same quarter was much higher, about 39%. On top of that, this quarter, there is a significant difference between secondary and primary, and that's why we've reported both. While primary has grown only by 11%, the secondary revenue has grown by about 16%, 17%. We expect TMRW to continue to be on 20% plus revenue growth rate for the year. The business is gaining both momentum and is reducing the losses. This year, therefore, is a significant year in TMRW's journey.

Speaker #2: On top of that, this quarter, there is a significant difference between secondary and primary, and that's why we reported both. While primary has grown only by 11%, the secondary revenue has grown by about 16–17%.

Speaker #2: We expect tomorrow to continue to be on a 20% plus revenue growth rate for the year, and the two businesses gaining both momentum and reducing the losses.

Speaker #2: And this year, therefore, is a significant year in tomorrow's journey.

Speaker #3: Okay. And maybe the last question from me. The absolute net loss for the quarter was still high. So should we assume that FY27 remains a year of investments, and that we start seeing improved profitability only from FY28 onwards?

Garima Mishra: Okay, maybe the last question from me. The absolute net loss for the quarter was still high. Should we assume that FY27 remains a year of investments, and then we start seeing improved profitability only FY28 onwards? Also, I think Jagdish did give the gross cash number, which I missed. Would appreciate if I can get both the period ending cash and debt numbers.

Speaker #3: Also, I think Jagdish did give the growth cash number, which I missed. So, I would appreciate it if I can get both the period-ending cash and debt numbers.

Speaker #2: So, in terms of profitability, I'll let Jagdish comment later. Garima, we had indicated that over the next two years, our losses will reduce. This quarter probably doesn't reflect it.

Jagdish Bajaj: In terms of profitability, I'll let Jagdish comment later. Garima, we had indicated that over next 2 years, our losses will reduce. This quarter probably doesn't reflect it to that extent. On an annual basis, we will have lower losses this year, and FY28 will probably be even lower losses. We had indicated that FY29 is the year when portfolio will become fully profitable, and that's really the trajectory that we are on.

Ashish Dikshit: In terms of profitability, I'll let Jagdish comment later. Garima, we had indicated that over next 2 years, our losses will reduce. This quarter probably doesn't reflect it to that extent. On an annual basis, we will have lower losses this year, and FY28 will probably be even lower losses. We had indicated that FY29 is the year when portfolio will become fully profitable, and that's really the trajectory that we are on.

Speaker #2: To that extent, but on an annual basis, we will have lower losses this year. And '28 will probably be even lower losses. We had indicated that '29 is the year when the portfolio will become fully profitable, and that's really the trajectory that we are on.

Speaker #1: And Garima, on cash, I said that when I started the year with roughly ₹1,100 crore, ₹1,150 crore, or ₹1,200 crore cash, now I have approximately ₹11,000 crore.

Jagdish Bajaj: Garima, on cash, I said that when I started the year with roughly INR 1,150, 1,200 crore cash, now I have INR 11,000 crore approximately. By year-end, I will have around INR 500 crore.

Speaker #1: By year-end, I will have around ₹500 crore. This is the standalone cash.

Jagdish Bajaj: This is the standalone cash.

Speaker #2: Standalone cash.

Ashish Dikshit: Standalone cash.

Speaker #3: Got it. Understood. Very good.

Garima Mishra: Got it. Understood. Very clear. Thank you.

Jagdish Bajaj: You are aware that TMRW has already raised INR 500 crore for their growth plan, so we don't have to contribute to them now.

Speaker #1: And you are aware, and you are aware that Tomorrow has already raised ₹500 crore for their growth plan. So we don't have to contribute to them now.

Jagdish Bajaj: You are aware that TMRW has already raised INR 500 crore for their growth plan, so we don't have to contribute to them now.

Speaker #3: Got it. Very clear. Thank you.

Garima Mishra: Got it. Very clear. Thank you.

Speaker #1: The next question comes from the line of Tejas Shah with Avenda Spark Institutional Equities. Please go ahead.

Operator: The next question comes from the line of Tejas Shah with Avendus Spark Institutional Equities. Please go ahead.

Speaker #4: Hi team, thanks for the opportunity. Couple of questions. First, on Pantene, the format LTL has moderated from 14% to 4% this quarter. To a large extent, we also called out that Jagma has kind of played spoilsport.

Tejas Shah: Hi, team. Thanks for the opportunity. Couple of questions. First, on Pantaloons, the format LTL has moderated from 14% to 4% this quarter. To large extent, you also called out that Adhik Maas kind of played spoilsport. If you adjust for that period, how this number would look for the rest of the period?

Speaker #4: So, if you adjust for that period, how would this number look for the rest of the period?

Speaker #2: So, this fluctuated a fair bit during the quarter. First, to sort of give context to the 14% of Q4—we had mentioned in the Q4 call that part of that was because of the shift in USS.

Ashish Dikshit: This has fluctuated a bit during the quarter. First, to give context to 14% of Q4, we had mentioned in the Q4 call that a part of that was because of the shift in EOSS. We had called out from November onwards, which is almost the H2 of the year, the business had grown with like-to-like of 7.5%. That is the like-to-like trajectory we were in. We started with a little bit lower April. May was much better with significant double-digit, but June again came down. Therefore, the full quarter ended up being more modest at about 4%. We hope that as we go forward, the rest of the year, we'll be able to improve it and to get the annual like-to-like growth in at least high single digits.

Speaker #2: And we had called out from November onwards, which is almost the second half of the year, the business had grown with like to like of 7, 7 and a half percent.

Speaker #2: And that is the sort of like-to-like trajectory we were in. We started with a little bit lower in April, May was much better with significant double-digit growth, but June again came down.

Speaker #2: Therefore, the full quarter ended up being more modest at about 4%. We hope that, as we go forward, the rest of the year we'll be able to improve it.

Speaker #2: And to get the annual like-to-like growth in at least high single digits.

Speaker #4: Sure. And Ashish, how do you read the consumer demand sentiment? Because when we look at jewelry, it has been robust, obviously helped by gold prices.

Tejas Shah: Sure. Ashish, how to read the consumer demand sentiment because when we look at jewelry, it has been robust, obviously helped by gold prices. In pockets also, value retailers would have done well. In very broader discretionary also sentiments are mixed. Just your read on the demand on the ground.

Speaker #4: In some pockets also, value retailers would have done well. And when we look at discretionary, also, sentiments are mixed. So just your read on the demand on the ground.

Speaker #2: So from our perspective, I think I would still say demand has been quite steady, and I won't say strong, but quite steady even this quarter.

Ashish Dikshit: From our perspective, I think I would still say demand has been quite steady and, I wouldn't say strong, but quite steady even this quarter. Therefore, the fear that demand might reverse or slow down hasn't been seen as of now. As you know, we are moving to a slightly more inflationary phase in the H2 of the year, so we'll have to keep watching on how that plays out. For us, in terms of revenue growth, this quarter was more impacted by we have a large share of wedding wear businesses between our designers and some of the premium brands in ethnic wear. That business was impacted by very specific marriage date related issues and a longer Adhik Maas, et cetera, which is more pronounced in our business.

Speaker #2: And therefore, the fear that demand might reverse or slow down hasn't been seen as of now. But as you know, we are moving to a slightly more inflationary phase in the second half of the year.

Speaker #2: So we'll have to keep watching how that plays out. For us, in terms of revenue growth, this quarter was more impacted because we have a large share of wedding wear businesses between our designers and some of the premium brands in ethnic wear.

Speaker #2: And that business was impacted by very specific marriage date-related issues and a longer 'Adhik Maas,' etc., which is more pronounced in our business. But I would say, looking forward at overall demand, more reflected both by industry performance and by the rest of our portfolio, I would say this quarter at least, the demand stood reasonably well.

Ashish Dikshit: That business was impacted by very specific marriage date related issues and a longer Adhik Maas, et cetera, which is more pronounced in our business. I would say if I were to look at overall demand more reflected both by industry performance and by rest of our portfolio, I would say this quarter at least the demand stood reasonably well.

Ashish Dikshit: I would say if I were to look at overall demand more reflected both by industry performance and by rest of our portfolio, I would say this quarter at least the demand stood reasonably well.

Speaker #4: Sure. And the last one, if I may, on gold—as we reach, we have at least 90 stores now—what are the early markers giving you confidence that we have found the right product-market-brand fit?

Tejas Shah: Sure. The last one, if I may. On OWND!, as we reach, we have at least 90 stores now, what are the early markers giving you confidence that we have found the right product market brand fit? How should one, as an external observer like us, how should we get that confidence that this is the model that we are backing now to the fullest, and we have found that right sweet spot on the space?

Speaker #4: And how should one, as an external observer like us, how should we get that confidence that this is the model that we are backing now to the fullest and we have found that right sweet spot in the space?

Speaker #2: So, there are a couple of things that we are internally sort of measuring clearly, like-to-like gross margin and sell-through, which are three parameters that give you a reflection of how any retail format works.

Ashish Dikshit: There are a couple of things that we are internally sort of measuring. Clearly like-to-like gross margin and sell-through are three parameters that give you a reflection of how any retail format works. We haven't got to a point where we are pressing an accelerator in this format. We still have some work to be done. We have a new management team which has come in. We have dedicated the business, separated it from Pantaloons management, and created a whole new team. Over the next three to five months, we will closely watch where some of the changes that we are bringing in the format, how they play out. At this point of time, therefore, we are not growing it as aggressively as you know we are capable of in terms of expanding the business.

Speaker #2: We haven't gotten to a point where we are pressing the accelerator on this format. We still have some work to be done. We have a new management team which has come in.

Speaker #2: We have dedicated the business, separated from Pantene's management, and created a whole new team. Over the next three to five months, we will closely watch how some of the changes that we are bringing in the format play out.

Speaker #2: At this point in time, therefore, we are not growing it as aggressively as you know we are capable of, in terms of expanding the business.

Speaker #2: We'll continue to—I would say a large part of this year will continue to be about getting the format right. The best reflection would be store profitability, where we're just about breaking even.

Ashish Dikshit: We'll continue to, I would say, a large part of this year will continue to be getting the format right. The best reflection would be store profitability, where we're just about breaking even. I think we need to do better than that and get to slightly better profitability before we press the pedal.

Speaker #2: I think we need to do better than that and get to slightly better profitability before we press the pedal.

Speaker #4: Got it. Thanks, Anand.

Tejas Shah: Got it. Thanks a lot.

Speaker #1: A reminder to all participants: you may press star and one to ask a question. The next question comes from the line of Archana Menon, an individual investor.

Operator: A reminder to all participants, you may press star and one to ask a question. The next question comes in the line of Archana Menon, an individual investor. Please go ahead.

Speaker #1: Please go ahead.

Archana Menon: Hi. Thank you for the opportunity. This is Archana Menon from Morgan Stanley. My first question was on the TCNS business. I just want to get a better understanding about the performance this quarter, because there seems to be a difference between the reported revenue growth and the retail growth. Even for the retail growth, when I look at the LTL numbers, it seems to have come down from the 7%-8% growth last 2 quarters to 2% this quarter. Just want to understand what has led to this.

Speaker #3: Hi, thank you for the opportunity. This is Archana Menon from Moments Candy. My first question is on the TPMS business. I just want to get a better understanding of the performance this quarter, because there seems to be a difference between the reported revenue growth and the retail growth.

Speaker #3: And even for the retail growth, when I look at the L2L numbers, it seems to have come down from the 7-8% growth in the last two quarters to 2% this quarter.

Speaker #3: So, just wanted to understand what has led to this.

Speaker #2: Hi Archana. TPMS, you're right. I think we've had very consistent, almost double-digit growth for four to five quarters. This is one of the quarters in which the like-to-like trajectory has remained low, which is about 2%.

Ashish Dikshit: Hi, Archana. You're saying it right. I think we've had very consistent, almost double-digit growth for 4 to 5 quarters. This is one of the quarters in which the like-to-like trajectory has remained low, which is about 2%. I would say overall, not a very good quarter for the business. The overall growth is marginally lower than last year. Overall number was marginally lower than last year. A part of it was we had, as you know, previous 12 to 15 months, we've been reducing old inventory. There was a lot of liquidation set into that base. While our growth has come down, our margin is slightly better than last year at the same time. I think I have to say that with just 2% like-to-like, this has been a somewhat disappointing quarter from organic performance.

Speaker #2: So, I would say overall, not a very good quarter for the business. The overall growth is marginally lower than last year. The overall number was marginally lower than last year.

Speaker #2: A part of it was, as you know, over the previous 12 to 15 months, we've been reducing old inventory. There was a lot of liquidation set into that base.

Speaker #2: So, while our growth has come down, our margin is slightly better than last year at the same time. But I think I have to say that with just 2% like-to-like, this has been a somewhat disappointing quarter from an organic performance perspective.

Archana Menon: Thanks, Ashish. How should we be thinking about this for the rest of the year, both in terms of L2L and the new store openings?

Speaker #3: Thanks, Ashish. And how should we be thinking about this for the rest of the year, both in terms of L2L and new store openings?

Speaker #2: So, for new store openings, we are looking at, I think, about 35 to 40 stores, probably at an overall level. This would be close to a 10% increase in space addition, since these stores are slightly bigger.

Ashish Dikshit: New store openings, we look at, I think about 35 to 40 stores probably at an overall level, which would be about close to 10% of space addition because each store is slightly bigger. We're improving the retail performance. Like to like, we'll have to get back to high single digits and early double digits. There's a lot of work happening in contemporizing the brand infusion, greater element of fusion, and contemporariness from traditional ethnic wear. You'll see a lot of it play out in the second half of the year.

Speaker #2: We're improving the retail performance. But like to like, we'll have to get back to high single digit and low double digit. There's a lot of work happening in contemporizing the brand, infusing greater elements of fusion, and contemporariness into traditional ethnic wear.

Speaker #2: And so, you'll see a lot of it play out in the second half of the year.

Speaker #3: Understood. And on the core Pantaloons business, as you mentioned, could you help us understand how the profitability for the Pantaloons brand has been moving?

Archana Menon: Understood. On the core Pantaloons business, as a whole, could you help us understand how the profitability for the Pantaloons brand has been moving?

Speaker #2: So, Pantene's brand—yeah, Pantene's brand, as you know, has been operating at close to 18% EBITDA, as we used to report at some point separately.

Ashish Dikshit: The Pantaloons brand.

Archana Menon: Yeah. Sorry.

Ashish Dikshit: Pantaloons brand, as you know, has been operating close to 18% EBITDA, as we used to report at some point separately. I think the business performance is pretty much similar to last year. Growth is 7%, but EBITDA margins are in the similar region. OWND!, which is pulling it down for the segmental margin to be marginally lower.

Speaker #2: I think the business performance is pretty much similar to last year. Growth is 7%, but EBITDA margins are in the similar region. It's Own which is pulling it down for the segmental margin to be marginally lower.

Speaker #3: Understood. And last question from me on the inflation. What is the kind of inflation that you are seeing for both, Pantene's and own? And have any price hikes already been taken?

Archana Menon: Understood. Last question from me on the inflation. What is the kind of inflation that you are seeing for both Pantaloons and OWND!, and have any price hikes already been taken? The point I'm trying to figure out is how should we be thinking about margins for both Q1 for H2?

Speaker #3: So the point I'm trying to figure out is, how should we be thinking about margins for both Q2 and for the second half?

Speaker #2: So, there is inflation of close to 4% plus, which is there in both the businesses. Owned, at this point, we're still sort of getting the format proposition right.

Ashish Dikshit: There is inflation of close to 4% plus, which is there in both the businesses. OWND!, at this point, we are still sort of getting the format proposition right, so I'm less worried about it. I think we haven't got a stable margin as yet. In Pantaloons, we have chosen to keep the price hike to much smaller part of this and not impact the customer because the rest of the basic proposition was working very well. We think it's a transient phase for price increases in raw material, and therefore we haven't passed on a large part of it. Half of it is passed on. The rest half, we have kept it. We hope to recover it through better sell-through, higher sales. Some of the margins at a gross margin level certainly will be impacted as we go into H2.

Speaker #2: So I'm less worried about it. I think, in the end, we haven't got a stable margin as yet. In Pantene's, we have chosen to keep the price hike to a much smaller part of this.

Speaker #2: And not impact the customer because the rest of the basic proposition was working very well. We think it's a transient phase for price increases in raw material.

Speaker #2: And therefore, we haven't passed on a large part of it. Half of it is passed on; the rest, we have kept. We hope to recover it through better sell-through and higher sales, but some of the margins at a gross margin level certainly will be impacted as we go into the second half.

Speaker #3: Understood. Thank you so much.

Archana Menon: Understood. Thank you so much.

Speaker #1: The next question comes from the line of Abhijit Kundu with Antique Stock Broking. Please go ahead. The line of the current participant has dropped.

Operator: The next question comes from the line of Abhijit Kundu with Antique Stock Broking. Please go ahead. Since the line of the current participant has dropped, we move to the next participant, that is Devanshu Bansal with Emkay Global Financial Services. Please go ahead.

Operator: The next question comes from the line of Abhijeet Kundu with Antique Stock Broking. Please go ahead. Since the line of the current participant has dropped, we move to the next participant, that is Devanshu Bansal with Emkay Global Financial Services. Please go ahead.

Speaker #1: We move to the next participant. That is Devanshu Bansal with MK Global Financial Services. Please go ahead.

Speaker #4: Hi, sir. Thanks for taking my question. So, sir, I wanted to understand the growth that we can anticipate for the ethnic segment for this full year.

Devanshu Bansal: Hi, sir. Thanks for taking my question. Sir, I wanted to understand the growth which we can anticipate for the ethnic segment for this full year. TCNS obviously is slow, but I guess that is only 40% of the business, right? In the rest 60% of the business, what is the growth rate that we can anticipate? As I understand that, designer brands was due to shift or slow wedding season this time around. Overall, if you could just highlight what's your expectation for this year from ethnic segment?

Speaker #4: So, TCNS obviously is slow, but I guess that is only 40% of the business, right? So, in the rest 60% of the business, what is the growth rate that we can anticipate, as I understand that designer brands were down due to shift or slow wedding season this time around.

Speaker #4: But overall, if you could just highlight what your expectation is for this year from the ethnic segment?

Speaker #2: So, Devanshu, you're right. I think Q1 was significantly impacted both by fewer wedding dates, as well as international travelers and weddings not happening enough, which has affected our Designer part of the business.

Ashish Dikshit: Devanshu, you're right. I think Q1 was very significantly impacted both by fewer wedding dates as well as the international travelers and weddings not happening enough, which has affected our designer wear part of the business. We expect this segment to perform 20% plus at an overall level. Despite some of the drag which the TCNS portfolio currently has, which we expect to come back to at least early double-digit kind of growth. Overall portfolio should be north of 20% for full year. This year is somewhat skewed in terms of H2 versus H1. While Q1 and to some extent even Q2, and Q2 more so because of the shift in festival dates, nothing to do with weddings. H2 is likely to be significantly higher than in H1 for the entire ethnic portfolio.

Speaker #2: We expect this segment to perform at 20% plus at an overall level. Despite some of the drag which the TCNS portfolio currently has, which we expect to come back to at least only double-digit kind of growth, the overall portfolio should be north of 20% for the full year.

Speaker #2: This year is somewhat skewed in terms of H2 versus H1. So, while Q1 and, to some extent, even Q2—and Q2 more so because of the shift in festival dates—there was nothing to do with weddings.

Speaker #2: H2 is likely to be significantly higher than H1 for the entire ethnic portfolio.

Speaker #4: Okay. So despite 40% of the business being flattish, and even in H1 overall maybe in single digits, you're anticipating that overall we may deliver 20% growth, right?

Devanshu Bansal: Okay. Despite 40% of the business being flattish, and even in H1 overall may be in single digits, you are anticipating that overall we may deliver 20% growth, right, in FY27 for this ethnic segment?

Speaker #4: In FY27, for this ethnic segment.

Ashish Dikshit: Yeah, for the full portfolio. Yes.

Speaker #2: Yeah, for the full portfolio, yes. Yes.

Speaker #4: Okay. Okay. Okay. And Ashish, currently for—

Devanshu Bansal: Okay. Ashish, currently for-

Ashish Dikshit: Sorry, just to sort of add to that, Devanshu. With TCNS growth to some extent is also impacted by large liquidation that we're doing, which I was responding to Garima's question earlier in the call. Some of the bases to that extent are unhealthy, and that's one of the reasons why TCNS, while may not show that higher growth as rest of the portfolio, it'll be healthier growth this time around. Sorry, you can go back to the next question.

Speaker #2: And sorry, just to add to that, Devanshu, the TCNS growth, to some extent, is also impacted by a large liquidation that we're doing, which I was responding to in Garima's question earlier in the call.

Speaker #2: So some of the basis to that extent are unhealthy. And that's one of the reasons why TCNS, while may not show that higher growth as the rest of the portfolio, it'll be healthier growth this time around.

Speaker #2: Sorry, you can go back to the next question.

Speaker #4: Okay. Okay. So, Ashish, for Galleries Lafite, what is the current revenue run rate? And subsequent to that, what is the overall investment that we have made in this business?

Devanshu Bansal: Okay. Ashish, for Galeries Lafayette, what is the revenue run rate currently? Subpart with what is the overall investment that were made in this business? What is the current level of operational loss also that you can sort of anticipate because it is in initial years? If you could throw some light here.

Speaker #4: And what is the current level of operational loss also that you can sort of anticipate, because it is in the initial years? So if you could throw some light here.

Ashish Dikshit: Devanshu, we don't give this level of detail for initial business. You're right, I think the business is still operationally loss-making because the overheads do not cover the size of the business, and it's early stages. What I would say is between The Collective business and Galeries Lafayette, we expect to break even, at least in the H2 of this year at a total level, which is a combined level.

Speaker #2: Devanshu, you know we don't give this level of detail for initial businesses, but you're right. I think the business is still operationally loss-making because the overheads do not cover the size of the business.

Speaker #2: And it's early stages. What I would say is, between our collective business and Galleries Lafite, we expect to break even, if not in the second half of this year, then at least after that.

Speaker #2: At a total level—which is a combined level.

Speaker #4: Okay. Okay. Okay. And last question, Ashish. So, we acquired, or maybe the Tomorrow portfolio had this brand, Berry Lush, which has been recently acquired by Snitch.

Devanshu Bansal: Okay. Last question, Ashish. We acquired, or maybe the TMRW portfolio had this brand, Berrylush, which has been recently acquired by Smedge. If you could throw some light because this business was expected to be this way, right? That we acquire a certain valuation and then sort of improve and scale and then sell it off, right? Have we been able to create some value in this particular transaction?

Speaker #4: So, if you could throw some light, because this business was expected to be this way, right? That we acquire at a certain valuation and then sort of improve and scale, and then sell it off, right?

Speaker #4: So, have we been able to create some value in this particular transaction?

Speaker #2: No, Devanshu, I think just to correct you, we did have an intention to, but we didn't complete the transaction for Berry Lush, which was about three to four years back.

Ashish Dikshit: No, Devanshu. I think just to correct you, we did have an intention to, we didn't complete the transaction for Berrylush, which is about 3, 4 years back.

Devanshu Bansal: Okay.

Speaker #2: It was never a part of our Tomorrow's portfolio. So, whatever has happened is outside our portfolio. In Tomorrow, we have not either sold or shut any of the businesses.

Ashish Dikshit: It was never a part of our TMRW's portfolio. Whatever has happened is outside our portfolio. In TMRW, we have not either sold or shared with the businesses.

Speaker #4: Got it. So this brand itself was not acquired at that particular time.

Devanshu Bansal: Got it. This brand itself was not acquired at that point in time.

Speaker #2: Yes. Yes.

Ashish Dikshit: Yes.

Speaker #4: Okay, sir. Okay. Okay. Thank you for taking it.

Devanshu Bansal: Okay. Thank you for letting me know.

Speaker #1: Participants, please press star and one to ask a question. The next question comes from the line of Sameer Gupta with IIFL Capital. Please go ahead.

Operator: Participants, please press star and one to ask your questions. The next question comes from the line of Sameer Gupta with IIFL Capital. Please go ahead.

Speaker #5: Hi. Good evening, everyone, and thanks for taking my question. Sir, firstly on TCNS—I know it has been asked multiple times during this call, but we acquired the brand in October of ’23.

Sameer Gupta: Hi. Good evening, everyone, thanks for taking my question. Sir, firstly on TCNS, I know it has been asked multiple times during this call. We acquired the brand in October 2023, and it has, on an overall basis, seen consecutive years of decline. I understand that when you acquired it wasn't in the best of health. Two and a half years now, we are still cleaning up the non-retail portion. One, why is this cleanup taking more time? Two, by when do we envisage this to be completed so that overall business can then return to a healthy growth trajectory?

Speaker #5: And it has, on an overall basis, seen consecutive years of decline. Now, I understand that when you acquired it, it wasn't in the best of health.

Speaker #5: But two and a half years now, we are still cleaning up the non-retail portion. So, one, why is this cleanup taking more time? And two, by when do we envisage this to be completed?

Speaker #5: So that the overall business can then return to a healthy growth trajectory.

Speaker #2: I think we have gotten to that point now. There was a lot of cleanup that had to be done with the old inventory, both in terms of quality and design sensibility.

Ashish Dikshit: I think we have got to that point now. There was a lot of cleanup which had to be done with the old inventory both in terms of quality and design sensibility. That shift has been going on. It did take time for us to understand the extent of challenges the business had. As you know, fashion supply chain is usually longer than other categories, therefore even when you find that out, the change takes longer. I think we are past that. We are behind that phase. We expect that from this season onwards, which is festive period this year onward, we'll start to turn the business around.

Speaker #2: That shift has been going on. It did take time for us to understand the extent of challenges the business had. And, as you know, fashion supply chain is a little longer than other categories.

Speaker #2: And therefore, even when you find that out, the change takes longer. But I think we are past that; we are beyond that phase. And we expect that from this season onwards, which is the festive period, this year onwards, we will start to turn the business around.

Speaker #5: Got it. Got it. And with the renewed profitability that you have basically achieved in this brand, and as the scale-up happens eventually...

Sameer Gupta: Got it. With the renewed profitability that you have basically got to in this brand when the scale-up happens eventually.

Speaker #2: Sorry, I couldn't get that. Was that a question?

Ashish Dikshit: Sorry, I couldn't get that. Was that a question?

Speaker #5: Basically, the profitability that has improved with this cleanup—on that profitability only, you would want to scale up. And there is no risk to profitability as you scale up, right?

Sameer Gupta: Basically, the profitability that has improved with this cleanup, on that profitability only you would want to scale up and there is no risk to profitability as you scale up, right?

Speaker #2: Yes, yes. Absolutely. We will only scale up to the extent that the profitability of the business is good. There's no hurry or need to scale up beyond that.

Ashish Dikshit: Yes. Absolutely. We'll only scale up to the extent that profitability of the business is good. There's no hurry or need to scale up beyond that. I think we've taken quite some time to fix the business. We would like to scale up only the quality and profitable part of the business.

Speaker #2: I think we've taken quite some time to fix the business. We would like to scale up only the quality and profitable part of the business.

Speaker #5: Got it, sir. Second question is on tomorrow. Now, again, this is also being asked, but maybe you can also elaborate on the specific points.

Sameer Gupta: Got it, sir. Second question is on TMRW. Again, this has also been asked, but maybe you can also elaborate on the specific points. 16% secondary growth for a portfolio where the expectation is 20% plus, and this is probably the least impacted from lower weddings or Adhik Maas. Any particular reason why the growth has been, even on a secondary basis, below expectations this quarter?

Speaker #5: 16% secondary growth for a portfolio where the expectation is 20% plus, and this is probably the least impacted from lower weddings or Aditya Maris.

Speaker #5: So, any particular reason why the growth has been, even on a secondary basis, below expectations this quarter?

Speaker #2: Well, I don't think quarter-on-quarter it varies. Last year also, earlier it was close to 25%, while quarter one was close to 40%. So you have a base effect in some quarters.

Ashish Dikshit: I don't think quarter-on-quarter it varies. Last year also, full-year growth close to 25%, while Q1 is close to 30%. You have a base effect in some quarters. I think the business has delivered a consistent 25% revenue growth for last several years. I think we are still on a good turf to deliver that kind of revenue growth. At this point of time, I'm not worried about one quarter being slightly lower. I agree with you, this business doesn't have the impact of wedding dates or any of those things, and therefore, organically, this should deliver 20% plus growth.

Speaker #2: I think the business has delivered a consistent 25% revenue growth for the last several years. I think we are still on good turf to deliver that kind of revenue growth.

Speaker #2: I don't—I mean, at this point of time, I'm not worried about one quarter being slightly lower. I agree with you. This business doesn't have the impact of wedding dates or any of those things.

Speaker #2: And therefore, organically, this should deliver 20%+ growth.

Sameer Gupta: That's pretty helpful. Quarterly vagaries can happen. Just was looking if there was any specific that happened. That's clear enough. Last question, if I may squeeze in. Again it has been asked, but on Galeries Lafayette, what kind of annual revenue run rate you are envisaging for FY27? That would be helpful just from a modeling perspective.

Speaker #5: That's pretty helpful. I mean, quarterly vagaries can happen. I was just looking to see if there was anything specific that happened. But yeah, I mean, that's clear enough.

Speaker #5: Last question, if I may squeeze it in. Again, it has been asked, but on Galleries Lafite, what kind of annual revenue run rate are you envisaging for FY27?

Speaker #5: That would be helpful, just from our modeling perspective.

Speaker #2: Yes, let it get to — let it see at least one season, I would say, before we comment on the number. As you know, we opened after the season last year.

Ashish Dikshit: Just let it see at least one season, I would say, before we comment on the number. As you know, we opened after the season last year. The store was opened. We've just gone through six months. Give us at least one full season so that we have a good sense of the revenue base.

Speaker #2: The store was opened. We've just gone through six months. Give us at least one more full season so that we have a good sense of the revenue base.

Speaker #5: Sure, sir. And secondly, on Galleries Lafite only, in our interview or media reports, we read that you plan to put up another Galleries Lafite every two years.

Sameer Gupta: Sure, sir. Secondly, on Galeries Lafayette only, in an interview or media report, we read that you plan to put up another Galeries Lafayette every two years. Just wanted a clarification from your end. Is that the plan, or we would want to just first gauge the performance of this one store before putting up more investment here?

Speaker #5: So just wanted a clarification from your end. Is that the plan, or would we want to just first gauge the performance of this one store before putting up more investment here?

Speaker #2: No, I think if you read the full interview where it is covered, this is about after the business settles down, we have the opportunity to open a store in some part of the country every two or three years.

Ashish Dikshit: No, I think if you read the full interview where it was covered, this is about after the business settles down, we have the opportunity to open a store in some part of the country every two or three years. That was the comment, so to correct that. At this stage, we are focused on getting our Bombay right. I think over the next two to three years, our goal will be to get a Delhi store coming, which as you know, is the largest market in the luxury space. Therefore, that would be our next step. Once these two start to deliver and come to some level of performance, we look to extend beyond that. That's going into fifth and seventh years of the business.

Speaker #2: That was the comment. So, to correct that, at this stage, we are focused on getting our Bombay right. I think over the next two to three years, our goal will be to get a Delhi store coming.

Speaker #2: Which would be, as you know, the largest market in the luxury space. Therefore, that would be our next step. Once these two start to deliver and come to some level of performance, we will look to extend beyond that.

Speaker #2: But that's going into the fifth and seventh years of the business.

Speaker #5: Got it. This is also very, very clear. Thanks. Ashish, I'll come back in the Q4 follow-ups. Thanks.

Sameer Gupta: Got it. This is also very, very clear. Thanks, Ashish. I'll come back in with you for follow-ups. Thanks.

Speaker #2: Thank you.

Ashish Dikshit: Thank you.

Speaker #3: The next question comes from the line of Abhijit Kundu with Antique Stock Broking. Please go ahead.

Operator: The next question comes from the line of Abhijit Kundu with Antique Stock Broking. Please go ahead.

Operator: The next question comes from the line of Abhijeet Kundu with Antique Stock Broking. Please go ahead.

Speaker #5: Yeah. Hi, sir. Thanks for the opportunity. My first question is on Pantaloons. We have seen the facade changing—quite a bit of work has been done on the visual merchandising part.

Abhijit Kundu: Hi, sir. Thanks for the opportunity. My first question was on Pantaloons. Pantaloons, we have seen the façade changing, quite a bit of work done on the visual merchandising part. In all the stores which are a bit old and have been changed, what has been the kind of footfall changes or revenue growth in those stores? What are the targets in terms of store addition in Pantaloons? That is my first question.

Abhijeet Kundu: Hi, sir. Thanks for the opportunity. My first question was on Pantaloons. Pantaloons, we have seen the façade changing, quite a bit of work done on the visual merchandising part. In all the stores which are a bit old and have been changed, what has been the kind of footfall changes or revenue growth in those stores? What are the targets in terms of store addition in Pantaloons? That is my first question.

Speaker #5: So, in all the stores which were a bit old and have been changed, what has been the kind of footfall changes and/or revenue growth in those stores?

Speaker #5: And then, what are the targets in terms of store addition in Pantaloons? That is my first question.

Speaker #2: So you're right. I think there are two things happening. One is our new Pantaloons stores are distinctively superior in every dimension—visual merchandising, store layout, the facade, the quality of location, and the size, etc.—which is the new store.

Ashish Dikshit: You're right. I think there are two things happening. One is our new Pantaloons stores are distinctively superior in every dimension, visual merchandising, store layout, the façade, the quality of location, and the size, et cetera, which is the new store. There is also a constant and a steady sort of renovation happening of the older stores, where we are doing a limited amount of change, which is possible in our older store, which is around the façade, cleaning up some of the display, improving visual merchandising, changing the displays, reducing inventory. Those stores on a pre and post basis are delivering distinctively higher level of performance for us to give confidence, and which is why the number of stores that we are renovating is moving much faster.

Speaker #2: There is also a constant and steady sort of renovation happening at the older stores, where we are doing a limited amount of change, which is possible in our older stores—such as around the facade, cleaning up some of the displays, improving visual merchandising, changing the displays, and reducing inventory.

Speaker #2: Those stores, on a pre- and post-renovation basis, are delivering a distinctively higher level of performance for us, which gives us confidence. And that is why the number of stores that we are renovating is moving much faster.

Speaker #2: At this point of time, I think close to 150-odd stores of the network, which contribute to more than half the revenue, is something which has undergone change.

Ashish Dikshit: At this point of time, I think close to 150 odd stores of the network, which contribute to more than half the revenue, is something which has undergone change. We are confident that as we test this harder over the next few years, we will be able to change the shape of experience of all the Pantaloons stores. The focus right now is on larger, more impactful, high revenue generating stores, which is where the work is. As far as the store addition is concerned, we expect to add 20 stores this year. New stores, that is.

Speaker #2: And we are confident that as we test this harder over the next few years, we'll be able to change the shape of the experience at all the Pantaloons stores.

Speaker #2: But the focus right now is on larger, more impactful, higher revenue-generating stores, which is where the work is. As far as the net store addition is concerned, we expect to add 20 stores this year.

Speaker #2: New stores, that is.

Speaker #5: Okay, sir. Got it. And sorry if you were saying something.

Abhijit Kundu: Okay, sir. Got it. On, you know, sorry if you're saying something.

Abhijeet Kundu: Okay, sir. Got it. On, you know, sorry if you're saying something.

Ashish Dikshit: I was saying there may be some closures as well, which we take a call post festive period. I was talking from 20 new stores.

Speaker #2: I was saying there may be some closures as well, which we will take a call on post the festive period. But I was talking about 20 new stores.

Speaker #5: Understood, thanks. And on the ethnic business, and also on the Tomorrow business—ethnic business—which are the, within ethnic, which are the parts that are profitable, and which are the parts that are dragging down profit?

Abhijit Kundu: Understood. Thanks. On the ethnic business and also on the Tomorrow business. Within ethnic, which are the parts which are profitable and which is the part which is dragging down profit? Is it just TCNS and Tasva?

Abhijeet Kundu: Understood. Thanks. On the ethnic business and also on the Tomorrow business. Within ethnic, which are the parts which are profitable and which is the part which is dragging down profit? Is it just TCNS and Tasva?

Speaker #5: Is it just PCNS and Taswa?

Speaker #2: PCNS, Taswa, which are pulling it down. Yeah.

Ashish Dikshit: TCNS, Tasva, Ruxa, which are pulling it down. Yeah.

Speaker #5: Others are all profitable?

Abhijit Kundu: Others are all profitable?

Abhijeet Kundu: Others are all profitable?

Speaker #2: Yeah, others are profitable. Designer Portfolio is profitable.

Ashish Dikshit: Yeah, others are profitable. Designer portfolio is profitable.

Speaker #5: Okay. And why is it that Taswa has not yet seen profitability? Is the scale of operation still low? Are rentals higher? What is pulling down the profitability?

Abhijit Kundu: Okay. Why is that Tasva has not yet seen profitability? Is the scale of operations still low? Rentals are higher? What is pulling down the profitability?

Abhijeet Kundu: Okay. Why is that Tasva has not yet seen profitability? Is the scale of operations still low? Rentals are higher? What is pulling down the profitability?

Speaker #2: I think the scale of operation is the one that we need to get to. We are still at about 200-odd in total last year. The business is growing very well.

Ashish Dikshit: I think the scale of operation is the one that we need to get. We are still at about 200 odd store last year. The business is growing very well. It is growing at 35% to 40%. Wherever we are, we are creating an impact and significant share in the market. We are very confident about the format. The stores are doing well. The consumer response is very good. It took us some time to sort of master the supply chain and the product architecture, but I think all that is in place. Now it is a function of just growing the format.

Speaker #2: It's growing at 35–40 percent. Wherever we are, we are creating an impact and significant share in the market. So we're very confident about the format.

Speaker #2: The stores are doing well. The consumer response is very good. It took us some time to sort of master the supply chain and the product architecture.

Speaker #2: But I think all that is in place. Now, it's a function of just growing the format.

Speaker #5: And what should be the revenue which would make Taswa profitable? And going ahead, what should we look at?

Abhijit Kundu: What should be the revenue which would make Tasva profitable? Going ahead, what should we look at?

Abhijeet Kundu: What should be the revenue which would make Tasva profitable? Going ahead, what should we look at?

Speaker #2: I think double of where we are, between 400 to 500 crores.

Ashish Dikshit: I think double of where we are, between INR 400 to 500 crores.

Speaker #5: Understood. And tomorrow, again, we have a lot of mixture of brands and we have got fresh investment. But what would be the levers of profit improvement for tomorrow?

Abhijit Kundu: Understood. In TMRW, again, a lot of mixture of brands and perhaps got fresh investment. What would be the levers of profit improvement in TMRW? Same, the scale of operations?

Abhijeet Kundu: Understood. In TMRW, again, a lot of mixture of brands and perhaps got fresh investment. What would be the levers of profit improvement in TMRW? Same, the scale of operations?

Speaker #5: Same the scale of operations?

Speaker #2: No. Tomorrow, I think, needs—tomorrow has three levers. One is definitely growth. This is a high-growth business. We expect this to grow organically by 20 to 25 percent.

Ashish Dikshit: No. TMRW has three levers. One is definitely growth. This is a high growth business. We expect this to grow organically 20% to 25%. You heard my response to previous question. This portfolio, as the consumers, particularly young consumers, shop more and more online, has to have strong organic growth. One is operating leverage coming out of that, which is scale. This also has a shift in terms of gross margin profile of many of these brands. Many of these brands operated at much lower price points, had inferior unit economics. That's the work team has done over the last two and a half years, which is in a very short sort of way, we are converting what was promising, but smaller brands into meaningfully large brands, premiumizing the product, expanding the categories that they're playing in, improving the sourcing advantage.

Speaker #2: You heard my response to previous question. So this portfolio as the consumers, particularly young consumers, shop more and more online, has to have strong organic growth.

Speaker #2: So, one is operating leverage coming out of that, which is scale. But this also has a shift in terms of the gross margin profile of many of these brands.

Speaker #2: Many of these brands operated at much lower price points and had inferior unit economics. So, that's the work the team has done over the last two, two and a half years, which is, in a very short sort of way, we are converting what we're promising—that smaller brands—into meaningfully large brands. Premiumizing the product, expanding the categories that they are playing in, improving the sourcing advantage. So that's the second, which will probably show up both in the gross margin and the price increases that these businesses are able to take to improve their unit economics, which is different from scale.

Ashish Dikshit: That's the second, which will probably show up both in the gross margin and the price increases that these businesses are able to do to improve their unit economics, which is different from scale. The third part is really around the cost. As you know, these businesses have been acquired. Many of them are run by founders and their teams. Over a period of time, as these businesses scale up and we'd also build a large team, which is adding value, whether it's in design and sourcing or technology or digital marketing. Many of these will start to play out from a cost leverage point of view as the organization starts to scale and start to become one organization. All three levers are there, and that's really why it'll take a year and two before we get all this right.

Speaker #2: And the third part is really around the cost. As you know, these businesses have been acquired. Many of them are run by founders and their teams.

Speaker #2: Over a period of time, as these businesses scale up, and we had also built a large team which is adding value—whether it's in design and sourcing, or technology, or digital marketing.

Speaker #2: Many of these will start to play out from a cost leverage point of view as the organization starts to scale and become one organization.

Speaker #2: So all three levers are there, and that's really why it'll take a year or two before we get all this right. But it's pretty much on a good, strong growth trajectory.

Ashish Dikshit: It's pretty much on a good, strong growth trajectory. This Q1 is the first quarter where we have started to see the losses also coming down. We hope that this trajectory, and we expect this trajectory to keep going over the next couple of quarters, so that on an annual basis, losses drop while we continue to hold the momentum as far as the revenues concerned.

Ashish Dikshit: It's pretty much on a good, strong growth trajectory. This Q1 is the Q1 where we have started to see the losses also coming down. We hope that this trajectory, and we expect this trajectory to keep going over the next couple of quarters, so that on an annual basis, losses drop while we continue to hold the momentum as far as the revenues concerned.

Speaker #2: This quarter is the first quarter where we have started to see the losses also coming down. We hope for this trajectory, and we expect this trajectory to keep going over the next couple of quarters, so that on an annual basis, losses drop while we continue to hold the momentum as far as the revenue is concerned.

Speaker #5: Understood. Thanks. That's from my side. A reminder to all participants,

Abhijit Kundu: Understood. Thanks. That's all my side.

Abhijeet Kundu: Understood. Thanks. That's all my side.

Operator: A reminder to all participants, please press star and one to ask a question. The next question comes from the line of Prerna Jhunjhunwala with Elara Capital. Please go ahead.

Speaker #1: Please press star and one to ask a question. The next question comes from the line of Prerana Junjunwala with Elara Capital. Please go ahead.

Speaker #3: Thank you for the opportunity. I wanted to understand this Pantaloon format you mentioned—that there could be some inflation impact, while you would not take price hikes.

Prerna Jhunjhunwala: Thank you for the opportunity. Wanted to understand this Pantaloons format. You mentioned that there could be some inflation impact while you would not take price hikes. Do you see the discounting in the system going down to combat inflation? What is the full price year-to-date versus what is expected going forward?

Speaker #3: Do you see the discounting in the system going down to combat inflation? And what is the full price for today versus what is expected going forward?

Speaker #2: So I don't think inflation necessarily leads to discounting. Discounting is often a function of mismatch between sales expectations, inventory build-up, and actual performance.

Ashish Dikshit: I don't think inflation necessarily leads to discounting. Discounting is often a function of mismatch between sales expectation, inventory buildup versus the actual performance. I don't see the second half of the year reflecting in higher discounting because very rarely in fashion industry, discounting is a competitive sort of lever. It's very often the correction lever as far as the inventory is concerned. As we said, one of the reasons to not increase prices in line with the cost increase was we believe this customer is ready only for a very marginal increase in her shopping habits, therefore we're trying to maintain the volumes at this level. Therefore, hopefully there'll be no discounting while there might be initial sort of, small negative hit on the margins, which is at the gross margin level.

Speaker #2: So I don't see the second half of the year reflecting in higher discounting, because very rarely in the fashion industry is discounting a competitive sort of lever.

Speaker #2: It's very often the correction lever as far as the inventory is concerned. As we said, one of the reasons to not increase prices in line with the cost increase was we believe this customer is ready only for a very marginal increase in her shopping habits.

Speaker #2: And therefore, we're trying to maintain the volumes at this level. Hopefully, there will be no discounting, while there might be an initial sort of small negative hit on the margins, which is at the gross margin level.

Ashish Dikshit: Therefore, hopefully there'll be no discounting while there might be initial sort of, small negative hit on the margins, which is at the gross margin level. Through keeping the throughput superior, managing the inventory well, the overall margins we hope to continue to keep at the same level.

Speaker #2: But by maintaining superior throughput and managing inventory well, we hope to keep overall margins at the same level.

Ashish Dikshit: Through keeping the throughput superior, managing the inventory well, the overall margins we hope to continue to keep at the same level.

Speaker #3: Understood. And what would be your expansion plans for Taswa? Given that the growth rates are now steady around 30 percent plus for many quarters, and the format continues to become steady now, so any aggressive expansion plans over there to reach the higher volume revenues that it would require to become profitable?

Prerna Jhunjhunwala: Understood. What will be your expansion plans for Tasva, given that the growth rates are now steady around 30% plus for many quarters and the format continues to become steady now. Any aggressive expansion plans over there to reach the higher volume revenues that it would require to become profitable?

Speaker #2: So this year, our plan is to add 25 to 30 stores to our current network of about 90 stores, which is about a 30 percent expansion of the network.

Ashish Dikshit: This year, our plan is to add 25, 30 stores on a current network of about 90 odd stores, which is a 30% expansion of network, and growth rate to be in line with that, which is pretty much what you saw in this quarter, 35% year on year growth. A large part of it came because last year also we had expanded the network about 20, 25 stores. This year slightly higher, but I mean, 25, 30 is perhaps the right balance of growth.

Speaker #2: And the growth rate is in line with that, which is pretty much what you saw in this quarter—35% year-on-year growth. A large part of it came because last year also, we had expanded the network by about 20–25 stores.

Speaker #2: So this year, it's slightly higher, but I mean, 25–30 is perhaps the right balance of growth.

Speaker #3: And what would be the like-for-like in this format?

Prerna Jhunjhunwala: What would be the like for like in this format?

Speaker #2: So, so far, because the business—I mean, the last couple of quarters—we are getting in, I would say, mid-teens like-for-like growth. For a fairly large period, in many cases, the format was relatively new.

Ashish Dikshit: So far because the business, I mean, last couple of quarters, we are getting in, I would say mid-teens, like to like growth, for fairly large period. In many cases, the format was relatively new, therefore we also saw many a stores in 30% to 40% where the baseline gets established. Typically, what we have seen is store takes six to nine months to sort of get to a level where first year and a half, you see 20% to 25% growth after that. It takes that much time to get started. As the network is still very young, we continue to see high double digit like to like growth.

Speaker #2: So therefore, we also saw many stores in the 30–40 percent range where the baseline gets established. Typically, what we are seeing is a store takes six to nine months to sort of get to a level where, in the first year, year and a half, you see 20–25 percent growth after that.

Speaker #2: But it takes that much time to get started. As the network is still very young, we continue to see high double-digit, like-to-like growth.

Speaker #3: Understood. And tomorrow, why can't you go a little higher on the growth rate? Because if I see that top line of the segment, it's around 200 for the quarter.

Prerna Jhunjhunwala: Understood. In TMRW, why can't you grow a little higher growth rate? Because if I see the top line of the segment, it is around INR 200 for the quarter. Annualizing, it should be around INR 800 to INR 1,000 crore divided between six brands. Ideally, the growth should be 30% plus. That is how most of the D2C brands are growing, which are of a size less than INR 200 or INR 300 crore. Could you help us understand which brands are growing maybe faster than 20% to 25%, and which brands are growing, and what is driving the growth for the next mature, a little larger brand in the portfolio?

Speaker #3: So, annualizing, it should be around ₹800 to ₹1,000 crore, divided between six brands. So ideally, the growth should be 30 percent plus. That's how most of the D2C brands are growing, which are, of course, of size less than ₹200 or ₹300 crore.

Speaker #3: So, could you help us understand which brands are growing—maybe faster than 20 or 25 percent—and which brands are growing, and what is driving the growth for the next, much larger brand in the portfolio?

Speaker #2: So honestly, our growth rate for the large part of the business is in excess of 30 percent. I mean, if you leave out this quarter, and if you go back and check the previous four, five, six quarters, the growth rate is much closer to what you are indicating, which is 30–35 percent.

Ashish Dikshit: Honestly, our growth rate for the large part of the business is in excess of 30%. If you leave away this quarter, if you go back and check previous four, five, or six quarters, the growth rate is much closer to what you are indicating, which is 30% to 35%. In fact, if you look at last year, on a full year basis itself, our growth rate was 35%. This quarter is a little bit of an aberration. I do not want you to take that as a shift in base. It is a marginal blip on an otherwise strong 30-plus growth performance. The reason I am sort of talking of 20% to 25% at this point of time, because as we gain scale, we are also looking to improve the unit economics, which is on profitability, cost of customer acquisition, et cetera, which might moderate from mid-30s to mid-20s or late 20s.

Speaker #2: In fact, if you look at last year, on a full-year basis itself, our growth rate was 35%. So this quarter is a little bit of an aberration.

Speaker #2: I don't want you to take that as a short-term base. It's a sort of marginal blip on an otherwise strong 30-plus percent growth performance. The reason I'm sort of talking of 20-25 percent at this point in time is because as they gain scale, we're also looking to improve their unit economics, which is unprofitability, cost of customer acquisition, etc.

Ashish Dikshit: The reason I am sort of talking of 20% to 25% at this point of time, because as we gain scale, we are also looking to improve the unit economics, which is on profitability, cost of customer acquisition, et cetera, which might moderate from mid-30s to mid-20s or late 20s. That is really the indication that we want to give because one of the tasks for this portfolio is also to improve profitability of the business apart from the organic growth.

Speaker #2: Which might moderate from mid-30s to mid-20s or late-20s. And that's really the indication that we want to give, because one of the tasks for this portfolio is also to improve profitability of the business, apart from the organic growth.

Ashish Dikshit: That is really the indication that we want to give because one of the tasks for this portfolio is also to improve profitability of the business apart from the organic growth.

Speaker #3: So, when do we see the segment achieving profitability, as per your plans for growth and improving unit economics? I just wanted to know.

Prerna Jhunjhunwala: When do we see the profitability, the segment earnings profitability as per your plans of growth and unit economics becoming better?

Ashish Dikshit: We've said several times, FY29 is the year where we expect TMRW to sort of come. Between 2029 to 2030 is when we believe that this business will become profitable.

Speaker #2: We have said several times, FY29 is the year where we expect, you know, tomorrow to sort of come between FY29 to FY30, when we believe that this business will become profitable.

Speaker #3: And which brands are currently profitable, if any? And which do you think will be the first ones to become profitable, in your opinion?

Prerna Jhunjhunwala: Which brands currently are profitable, if any? Which will be the first ones to get profitable, in your opinion?

Speaker #2: So, I think at a brand level, two out of six brands are already profitable. We will look to expand that portfolio. I really don't want to give individual brand-level numbers.

Ashish Dikshit: I think at a brand level, two out of six brands are already profitable. We will look to expand that hopefully. I really don't want to give individual brand level numbers. These are small brands at an overall level. Still, most of the brands. Our big brands are between INR 200 to 300 crore and smaller brands are INR 100 crore, around INR 100 crore. At a brand level, we are close to achieving profitability in most of the brand except two at this point of time. It's the overall profitability which also includes the overheads outside the brands, which is the corporate overheads. We built a capability at the center level on technology, on digital marketing, on sourcing and design. It needs to come to a level that brand level profitability also adequately covers that.

Speaker #2: These are small brands at an overall level. So still, most of the brands are big brands and are between ₹200 to ₹300 crore. The smaller brands are around ₹100 crore.

Speaker #2: So at a brand level, we are close to achieving profitability in most of the brands except two at this point of time. It's the overall profitability, which also includes the overheads outside the brands—that is, the corporate overheads. We have built capability at the central level in technology and digital marketing, as well as in sourcing and design.

Ashish Dikshit: It's the overall profitability which also includes the overheads outside the brands, which is the corporate overheads. We built a capability at the center level on technology, on digital marketing, on sourcing and design. It needs to come to a level that brand level profitability also adequately covers that. That's why we're talking of 2029, 2030 as the year for it to come through.

Speaker #2: So it needs to come to a level that brand-level profitability also adequately covers that. And that's why we're talking about '29, '30 as the year for it to come through.

Ashish Dikshit: That's why we're talking of 2029, 2030 as the year for it to come through.

Speaker #3: Understood. Last question is on Capex. What is the Capex plan for this year and next year? And how is it split between store and non-store expansions and expenses?

Prerna Jhunjhunwala: Understood. Last question is on CapEx. What is the CapEx plan for this year and next year? How would it split between stores and non-store expansions and expenses?

Speaker #2: So we're not we have indicated approximately 450 crore including Capex and the working capital needs of all our businesses. This year. So about 300 plus growth, 300, yeah, plus growth as the Capex.

Ashish Dikshit: Mrina, we have indicated approximately INR 450 crore including CapEx and the working capital needs of all our businesses this year. About INR 300 plus crore as the CapEx. Yeah, CapEx. Which will go into new stores plus renovation stores of Pantaloons and others.

Jagdish Bajaj: Mrina*, we have indicated approximately INR 450 crore including CapEx and the working capital needs of all our businesses this year.

Ashish Dikshit: About INR 300 plus crore as the CapEx.

Speaker #2: Capex, which will go into new stores, plus renovation stores of PT and others.

Jagdish Bajaj: Yeah, CapEx. Which will go into new stores plus renovation stores of Pantaloons and others.

Speaker #3: Okay, understood. Thank you, and best wishes.

Prerna Jhunjhunwala: Understood. Thank you and best wishes.

Speaker #2: Thank you.

Ashish Dikshit: Thank you.

Speaker #1: The next question comes from the line of Aditya Soman with CLSA. Please go ahead.

Operator: The next question comes from the line of Aditya Soman with CLSA. Please go ahead.

Speaker #2: Yeah. Hi, good evening, and thanks for the opportunity. So, two questions. One, in premium ethnic wear brands, I see that obviously the growth for both Jaipur and Tesva is well ahead of the rest of ethnic.

Aditya Soman: Yeah. Hi. Good evening, and thanks for the opportunity. Two questions. One, in premium ethnic wear brand, I see that obviously the growth for both Jaypore, Tasva is well ahead of the rest of ethnic. Is this just a function of the brand being relatively new and the stores being relatively new, or is there sort of differentiation you are seeing in growth between the mass and mid-end and the premium end? That's one. The second question on, we've seen several of your competitors launch their own sort of quick delivery initiatives. Is this something you are looking to do, or how has the response been for you if you are listing on any of the other platforms? Thanks.

Speaker #2: So, is this just a function of the brand being relatively new and the stores being relatively new, or is there a differentiation you're seeing in growth between the mass and mid-end, and the premium end?

Speaker #2: That's one. And then the second question: we've seen several of your competitors launch their own sort of quick delivery initiatives. Is this something you're looking to do, or how has the response been for you?

Speaker #2: If you're listing on any of the other platforms? Thanks. So, Aditya Jaipur and Tasva are still very small in terms of their size. And while we are happy with the growth rate that they have, it's coming off a much smaller base that these businesses have.

Ashish Dikshit: Aditya, Jaypore and Tasva are still very small in terms of its size. While we are happy with the growth rate that they have, it's coming off a much smaller base that these businesses have. They're still in a growth phase, and therefore, those numbers at this point of time are looking much stronger than some of the mature businesses. If you heard Jagdish's commentary, in some ways, we are a company with a portfolio of businesses which are 20, 25 years old, strong businesses, the growth rate has been modest versus multiple newer businesses or the smaller businesses, either new or small, their growth rate is significantly higher. I won't read anything more than that as far as that segment is concerned.

Speaker #2: They're still in a growth phase, and therefore, those numbers at this point in time are looking much stronger than some of the mature businesses.

Speaker #2: If you heard Jagdish's commentary, in some ways we are a company with a portfolio of businesses that are 20, 25 years old—strong businesses, but the growth rate has been modest.

Speaker #2: Versus multiple newer businesses or smaller businesses, either new or small, their growth rate is significantly higher. So I won’t trade anything more than that as far as that segment is concerned.

Speaker #2: On your question of Cape Commerce, I think most of our current quick commerce efforts are around Tomorrow, where we are building capability at a central level for Tomorrow brands.

Ashish Dikshit: On your question of quick commerce, I think most of our current quick commerce efforts are around TMRW, where we are building capability at a central level for TMRW brands, because we expect the younger customers to probably adapt quick commerce in fashion a little faster. There has been internal development. We're testing with some of the cities to figure out does the quick commerce also drive demand in that category, and we're finding some positive traction. We also have to see the unit economics, how do we distribute inventory across multiple places. This is something we're not going to rush into it. We are, of course, also participating with partner ecosystem which exists, which is the third-party players in quick commerce. It's much smaller in this segment outside TMRW brands because most of the other brands are either more expensive or pure retail.

Speaker #2: Because we expect the younger customers to probably adapt to Quick Commerce and fashion a little faster. There has been internal development. We're testing with some of the cities to figure out: does Quick Commerce also drive demand in that category?

Speaker #2: And we're finding some positive traction. We also have to see the unit economics. How do we distribute inventory across multiple places? So this is something we're not going to rush into.

Speaker #2: We are, of course, also participating with the partner ecosystem which exists, which is third-party players in Quick Commerce. It's much smaller in this segment outside Tomorrow brands, because most of the other brands are either more expensive or pure retail.

Ashish Dikshit: We are, of course, also participating with partner ecosystem which exists, which is the third-party players in quick commerce. It's much smaller in this segment outside TMRW brands because most of the other brands are either more expensive or pure retail. Pantaloons and OWND! at this point of time focus on physical retail, and therefore that part of the segment is not exploring quick commerce other than small partnerships that Pantaloons is testing. Most of it is in TMRW.

Speaker #2: Pantaloons, and Owned at this point of time, focus on physical retail. Therefore, that part of the segment is not exploring quick commerce, other than small partnerships that Pantaloons is testing.

Ashish Dikshit: Pantaloons and OWND! at this point of time focus on physical retail, and therefore that part of the segment is not exploring quick commerce other than small partnerships that Pantaloons is testing. Most of it is in TMRW.

Speaker #2: Most of it is in tomorrow.

Speaker #3: I understand. Very clear. Thanks.

Aditya Soman: Understand. Very clear, sir. Thanks.

Speaker #1: The next question comes from the line of Parth Shah with Bernstein SG. Please go ahead.

Operator: The next question comes from the line of Parth Shah with Bernstein SG. Please go ahead.

Speaker #2: Hi, thank you for taking my question. Am I audible? Yes, you are. Yeah. Thanks. I just wanted to check again on the input cost side.

Parth Shah: Hi. Thank you for taking my question. Am I audible?

Ashish Dikshit: Yes, you are.

Parth Shah: Yeah. Thanks. Just wanted to check again on the input cost side. I think you mentioned there is a 4% inflation that you have seen, at least in some parts. Wanted to understand, do we see incremental effects occurring in Q2 or the H2 of the year as well, or is this largely sort of already done for the overall portfolio?

Speaker #2: I think you mentioned there's a 4% inflation that you've seen, at least in some parts. So, I wanted to understand: do we see incremental effects occurring into Q2 or the second half of the year as well, or is this largely already done for the overall portfolio?

Speaker #2: No. In fact, quarter one has not seen much of the cost pressure, so most of it is likely to be in Q2 and Q3 at this point in time.

Ashish Dikshit: No. In fact, Q1 has not seen much of the cost pressure, Most of it is likely to be in Q2 and Q3 at this point of time.

Speaker #2: Got it. So, we expect some pressure on margin there. And you said you will most likely not be taking a lot of price increases as of now.

Parth Shah: Got it. We expect some pressure on margin there, You said you will most likely not be taking a lot of price increases as of now.

Speaker #2: Yeah. Yes, because the question is more on Pantaloons and owned, which is value on the business. We will have to absorb some of this increase.

Ashish Dikshit: Yeah. Yes. The question is more on Pantaloons and OWND!, which is value add to the business. We will have to absorb some of this increase.

Speaker #2: Got it. And then on the value end, like you said, you mentioned competitive intensity being pretty high as well. So, I wanted to understand, is this just because there are more players?

Parth Shah: Got it. On the value end, like you said, you mentioned competitive intensity being pretty high as well. Wanted to understand, is this just there being more number of players? Is there more discounting happening right now because of sales being slower? Within that context also, if there is a difference you're seeing across larger cities versus tier 2 towns, anything on that you can share.

Speaker #2: Is there more discounting happening right now because of sales being slower? And within that context, also, if there is a difference you're seeing across larger cities versus tier-two towns, anything on that you can share?

Speaker #2: So, I don't think I had mentioned competitive intensity. I don't think it came up in previous questions. But yes, there are multiple players. But then, the size of the pie and the size of the market is significantly large in this space.

Ashish Dikshit: I don't think I had mentioned competitive intensity. I don't think it came up in previous questions. Yes, there are multiple players, the size of the pie and the size of the market is significantly large in this space. You will see multiple players playing out over a period of time. Right now, we are very small, with less than 100 stores in a potentially very large market. We are more focused internally on getting our economics right at this point of time.

Speaker #2: So, you will see multiple players playing out over a period of time. Right now, we are very small, with less than 100 stores in our potentially very, very large market.

Speaker #2: So, we are more focused internally on getting our economics right at this point of time. Okay, got it. And just one last quick one. I probably missed this, but from tomorrow, what are the store additions that we are expecting? Since you said like-to-like would be around mid-teens, so around 5 to 10 percent would be right, or is there any other number there?

Parth Shah: Okay, got it. Just one last quick one. Probably missed this, from TMRW, what is the store addition that we're expecting since you said that like to like would be around mid-teens, around 5% to 10% would be right, or any other number there?

Speaker #2: Okay. Again, I don't know which store addition you're talking about—tomorrow's or another one?

Ashish Dikshit: Okay. I don't know where TMRW's store addition you're talking. TMRW or-

Parth Shah: Yeah. TMRW, I think you mentioned in the presentation that-

Speaker #1: Yeah. Tomorrow. So, tomorrow, I think you mentioned in the presentation that offline will be doing well. Yeah. Yeah.

Ashish Dikshit: Okay.

Parth Shah: Yeah.

Speaker #2: Yeah, yeah. So, we have close to 140 stores tomorrow because we do want to convert these brands into truly omnichannel brands with a large digital and online play.

Ashish Dikshit: We have close to 140 stores in TMRW because we do want to convert these brands into truly omni-channel brands with large digital and online play, but complemented with a reasonably small but meaningful offline play. This year, we expect to add 75 plus stores across the portfolio for TMRW brands.

Speaker #2: But complement that with a reasonably small but meaningful offline play. This year, we expect to add 75-plus stores across the portfolio for Tomorrow brands.

Speaker #1: Okay, got it. Thanks. That's all from my end. The next question comes from the line of Krunal Shah with NM Asset Management. Please go ahead.

Parth Shah: Okay, got it. Thanks. That's all from my end.

Ashish Dikshit: Thank you.

Operator: The next question comes from the line of Kunal Shah with NM Asset Management. Please go ahead.

Speaker #2: Hi, it's Krunal from NM Investments. Thanks. Most of my questions have been answered. Just one question I have: in this Collective and mono brand, how has the profitability behaved, excluding the galleries where you have had investments?

Kunal Shah: Hi. It's Kunal from NM Investments. Thanks. Most of my questions have been answered. Just one question I have. In this The Collective and Monobrand, how has the profitability behaved ex of the Galeries Lafayette investment?

Speaker #2: It's a steady business. The profitability has been in the mid-teens to high teens; this quarter was relatively lower, so it's around the mid-teens. But the collective and the mono-brand business has been very steady in that sense.

Ashish Dikshit: It's a steady business. The profitability has been in mid-teens to high teens. This quarter was relatively lower, so it's around mid-teens. The Collective and the Monobrand business has been very steady in that sense.

Speaker #1: Okay, got it. Great, thank you so much. Ladies and gentlemen, that was the last question for today. On behalf of the management, we thank all the participants for joining us.

Kunal Shah: Okay, got it. Great. Thank you so much.

Operator: Ladies and gentlemen, that was the last question for today. On behalf of the management, we thank all the participants for joining us. In case of any further queries, you may get in touch with Mr. Amit Dwivedi. Thank you for joining us, and you may now disconnect your lines.

Speaker #1: In case of any further queries, you may get in touch with Mr. Amit Devedi. Thank you for joining us, and you may now disconnect your lines.

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Q1 2027 Aditya Birla Fashion and Retail Ltd Earnings Call

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