Electronics Mart India Ltd

Ladies and gentlemen, good day, and welcome to the Elcctronics Mart India Limited Q3 FY 125 Eamings Conférence Call.

This conference call may contain forward-looking statements about the company which arc based on the belicfs, opinions, and expectations of the company as on date of this call. These statements are not the guarantecs of future performance and involve risks and uncertainties that are difficult to predict.

As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask question after the presentation concludes. Should you need any assistance during the conference call, please signal for an operator by pressing "*" followed by "0" on your touchtone telephone. Please note that this conference call is being recorded.

Tnow hand the conference over to Mr. Karan Bajaj — CEO of Electronics Mart India Limited. Thank you, and over to you, sir.

Thank you very much. Good evening, and a very wam welcome to everyone present on the call.

Along with me, I have Mr. Premehand Devarakonda — our Chicf Financial Officer.

We have uploaded our results and investor presentation for the quarter and nine months ended FY'25 on the stock exchanges and the company's website. Hope cveryone has had a chance to g0 through the same.

In nine months, FY 25 revenue recorded was at Rs.5,246 crores, reflecting a year-on-year growth of around 10%. EBITDA stood at Rs.337 crores, with EBITDA margins at 6.4% and pre-IndAS margins at 4.7% respectively.

The challenging macrosconomic environment is driven by persistent inflation pressure, subdued discretionary demand and slowing down real estate market in urban pockets. Large appliances continue to dominate as the largest revenue contributor, accounting for 45% of the revenue in the nine months FY '25. Mobile and small appliances contributed 42% and 13% respectively.

The store network expanded significantly during this period, with 14 new stores opened in Quarter 3. In Telangana, 2 stores were added, 10 stores were opencd in Andhra Pradesh and 2 in the National Capital Region. Gross store opening in Q4 are expected to be between 10 to 12 stores, taking the total count beyond the 200-store milestone at the pan-India level.

By December 24, the total store count rose from 177 stores as of September ‘24 to 191 stores comprising 178 multi-brand stores and 13 exclusive brand outlets, spanning 78 citics across 6 states. In the NCR region, the total number of stores reached 26. Page 2 of 24

EMI) The company has outperformed its full-year guidance in terms of store addition by adding 31 stores during the 9-month ended period. As of December 24, inventory days stood at 46 days.

The company continues to prioritize inventory optimization enhancing cash flow conversion, further fortifying the balance sheet position.

India's cconomic outlook remains optimistic, with the projected growth of 10.3% to 10.5% in the upcoming fiscal year, up from 9.7%. The anticipated growth is supported by increased govemment capital spending and a rebound in demand driven by premiumization.

Further, the Union Budget of 2025 has introduced significant personal income tax relicf by lifting the taxable income limit, With an estimated One lakh crore being distributed to the middle class, this move is expected to cnhance disposable income, dircetly boosting consumer spending, particularly in the consumer-durable scotor. With greater purchasing power, houscholds arc likely to increase their spending to purchase or upgrade their home appliances and clectronics, driving overall demand growth, bencfiting both manufacturers and retailers in the consumer- durable industry.

EMIL's competitive strategy focuses on developing a comprehensive product portfolio and forging strong partnership to capitalize on the region in the demand. By offering a wide array of high-quality products, EMIL is positioned to meet the diverse needs of consumers, ensuring customer satisfaction and Loyalty. The company's collaboration with renowned brands enhances its credibility and appeal allowing to capture large market share as demand contimous to rebound.

To conclude, we have actively expanded our store portfolio over the last 2-3 years. However, as the store matures and achicves higher throughput, we expect to sce a stronger recovery in the unit economics. As revenue flow stabilizes, it will lead to improved margins on the account of operating leverage. We remain cautiously optimistic on demand recovery, maily through a strong summer scason coming forward.

With this, I request M. Premehand Devarakonda — our CFO, to update you on the financial performance. Thank you all.

Thank you, Karan, sir. Good cvening and warm welcome to all the participants.

Let me begin with the Q3 FY '25 Financial Overview:

Our revenues for the quarter stood at Rs. 1,885 crores as against Rs.1,775 crores in Q3 FY 24, a growth of 6% year-on-year. Page 3 of 24

EMI) EBITDA for Q3 FY '25 stood at Rs. 99 crores as against Rs. 115 crores, a degrowth of 14% year-on-year. EBITDA margin for Q3 FY 25 stood at 5.2%. Pre-IndAS EBITDA for Q3 FY 25 stood at 67 crores, which works out to 3.6%.

PAT for Q3 FY '25 stood at Rs. 32 crores as against Rs. 46 crores. SSSG for Q3 FY 25 was 2.8% negative, mainly due to slowdown in Hyderabad region. Excluding Hyderabad regions, all other regions have a decent SSSG.

Now, moving on to nine months of FY '25 Financials:

Our revenue for 9 months FY 125 stood at Rs. 5,246 crores as against Rs. 4,761 crores in 9 months FY 24, a growth of 10% year-on-year.

EBITDA for nine months FY '25 stood at Rs. 337 crores as against Rs. 342 crores, a degrowth of 2% year-on-year. EBITDA margin for nine months FY '25 stood at 6.4%. Pre-IndAS EBITDA for 9 months FY '25 stood at Rs. 245 crores with a margin of 4.7%.

PAT for 9 months FY 25 stood at Rs. 129 crores as against Rs. 143 crores. For nine months, FY' '25, SSSG stood at 3.8%.

ROCE and ROE on an annualized basis for nine months FY '25 stood at 16.4% and 11.2% respectively.

The working capital days as on 31st December 2024 stood at 52 days.

The gross debt stood at 0.4x and net debt-to-cquity stood at 0.3x and our net debt-to-EBITDA stood at 1.04. Pre-IndAS cash flow from operations stood at Rs. 453 crores. ‘With this, now I open the floor for question and answer. Thank you one and all.

Thank you very much, sir. Ladies and gentlemen, we will now begin with the question-and- answer session. The first question is from the line of Manoj Gori from Equirus Capital. Please g0 ahead.

Yes. Thanks for the opportunity. So, my first question is on the sales side. So, when I look at the overall brand's performance, whether we talk about large appliances, who are largely into refrigerators and washing machines, the categories which have been relatively been under pressure plus when I look at some of the ECD categories of the companies which have reported their numbers, so both in 2Q and 3Q, when I look at the sales performance seems to be a bit on the higher side as compared to us. Page 4 of 24

EMI) So, even if we look at Whirlpool or IFB, they have reported double-digit kind of growth during Q3 despite a lot of sales that have been done during Scptember month, as the channel would have obviously stocked up for the festive season. So, just want to understand, where is the disconnect? Because when I look at our performance, that definitely seems to be a bit muted when I look at the brand's performance.

Hi, Manojji, you are absolutely right. So, if you look at the cluster division that we operate today in, whereas our matured stores, majority of them are in the Hyderabad cluster, which s at a flat or negative growth by 1 or 2% for us, especially where the larger appliances have been a stronghold for us for a very long time, except ACs.

Because AC, you have seen a very good growth coming from almost 40 odd percent. And that is both value and volume growth. Whereas when we look at a break-up of refrigerators and washing machines, unfortunately, we could not sce a higher double-digit volume growth in these clusters.

Whereas our newer clusters like Telangana country market, Andhra Pradesh, Delhi-NCR have outperformed and done really good. But unfortunately, what happens is that these clusters are really small on the total overall contribution that they have on the total balance shect. So, this was a problem with us in the last quarter as well.

So, until and unless Hyderabad does a good performarce, tll the time it is a bigger cluster for us, there s always going to be a much lesser growth we will see for us especially in the refrigerator and washing machine category, whereas the volume growth is around 2 or 3% only.

Whereas if you see mobile phones, air conditioners, kitchen appliances, the growth is much higher. Then, you will sce an inline performance across geographics, and that would help us grow better. But saying that, we keep an eye on an everyday market share actoss categorics and comptition very closely to make sure that nothing is going wrong with us in Hyderabad because that's the biggest cluster for us. And that s on the positive for us where, you know, we have not lost even 0.5% of market share across categorics.

So, that is a good positive sign for us. And there are a lot of other reasons for the market to be a little slower in this region where we operate in Hyderabad. But we are quitc optimistic that for the summer coming up, it is gearing up quite well for us. And right now, the weather is also on our side, where it is supporting us that it has become a little hotter during the day in Hyderabad.

So, we are quite optimistic going forward for this cluster also to outperform and deliver us better.

And to add up to your question, one more thing, Manoj fi, I would like to give out is that out of the 170-plus stores that we operate, around 75-80 stores today are the stores which have not reached the maturity level. So, in the drastic period of the last 20 or 18 months, you might have seen a lot of store expansions that happened. But ill the time the stores mature and that is where Page 5 of 24

EMI) you sce the actual true color of the store performing and giving us a higher growth and these are all in the newer clusters in Delhi NCR, AP and Telangana whereas in Hyderabad we have hardly opened two new stores. So, it is not about new count that are added up in the existing market in this region.

So, that is why you would see, you know, the market s getting a little slower, not supporting us the way we wanted the growth to be. But we are quite optimistic and quite happy with how itis shaping up now.

Correct, sir. Sir, two subpats on this side. One, if we look at the Hyderabad business, obviously we have a very strong presence over thare. Like, are we confident that we are not losing any ‘market share into this market? And probably these are the markets which are facing some issucs at this moment.

Absolutely. As I told you, so that is what we as a homework we do every day across team and across categorics. And if you deep dive into the volume growth that is there in the market today versus what we are delivering and at the same time, the new categories are doing very well for like built-in audio, kitchen appliances, these are the categories that have actually shaped up really well in the last quarter onwards. Then we started focusing on the other products to be, you know, started selling better for us. And you would sce good growth.

AC is an exception. AC we see a 40% growth is because, you know, the penetration was lower.

All the brands are very aggressive. And unfortunately, for the last few years, you might have even seen discretionary growth in pricing as well or the ASP is also going up, especially in the large appliances, which unfortunately, this year is not that great.

You are not sceing the support of price increase coming up here, the inflation going up here, you know, we would get a higher growth ratc in terms of value. That has not been supporting s, whereas the volume growth has been in single digits for the larger appliances, especially televisions at 5-6%, washing machines, refrigerator, both at 2-3%. So, you would not see a major jump in value contribution from those categories as well.

Correct. So, our market share remains intact in Hyderabad. Absolutely.

In Delhi, if you look at even in the third quarter, our sales growth was roughly around 9%. So, that's on the SSSG side. Again, if I look at in AP Telangana, we did saw some challenges. So, did we see similar kind of challenges even in Delhi NCR? Because even there, if you look at the SSG seems to be a bit sluggish than what we would have been expecting. Page 6 of 24

EMI) See, that number that has been given is majorly given for the stores which have been matured over 12 months. If I actually see what is in line, so that number would be upwards of 20% for us. Or if T give you an exact number, that would be around 22.5% for the SSSG for the stores which have been operating for 12 months. Stores which are over above that is around § to 9%. So, you would sce that decrease, I mean, you see the change there.

But overall performance of Delhi-NCR is up by almost 50% if you compare the quatter-to- quarter number. And for the first nine months, it's p by 60 plus percent, So, we are quitc happy with the performance there. And that is what we are expecting. Definitely, yes, it is a newer ‘market. The more we fetch out of the market, the better it is for us. And more sooner it becomes mature and stabilizes for us in the coming times because a lot of stores that have opencd up arc not even 12 months old. So, we are quite optimistic about that cluster as well.

And this is going as we decided that we will touch a certain throughput for the first set of 8 stores that we opened up in 22 August. So, those are in line. So, majorly the SSG that you would see is for those st of § stores that we had opened initially, and then after that the other storcs.

Whereas the stores that we opened in the last 24 months are up by 22%.

Correct, sir. Sir, lastly, if | may ask one more question. Pleasc.

So, obiously, today, when we look at roughly 60-65% of the revenue comes from Hyderabad market, and we do understand these arc matured markets, the stores arc very mature, and accordingly, there will be negative drag on the overall SSSG performance. Correct.

I'sce this contribution changing probably new stores getting, adding up in the SSSG caleulation next year. And how do you see this 60-65% moving to roughly around 50-55% and by when should we expect that? So, there are two questions. One, what would be the new percentage, new store additions in SSSG for next year? And second, by when should we expect Hyderabad contribution to come down to 50-55%?

Manoj ji, for the next year, like for this last quarter itself, sce right now for the first nine months of this year, we opencd around 31, 32 stores, and another 10 to 12 stores are in the pipelin that we will open up. We have already opened up few stores in Jan and Feb, and few more stores opening up in March as well, especially in the Delhi cluster.

So, this year, we would end up, FY 25 closing, we would end up in addition of around approximately 40 stores, whereas for the next year, FY 126 also we have 35 stores that arc already getting ready for us. Page 7 of 24

EMI) So, in FY '25, we should be closing the addition by around another 35 to 40 stores. So, that we have already shortlisted in the existing clusters. I am not even adding a new cluster to this. So, to take the count up to almost 225 to 230 stores in the next financial year, that is the idea for the company for the addition of stores, which will majorly be in the existing chusters in NCR Delhi and AP and Telangana.

So, that is the plan. And as I told you earlicr, almost out of the 200 odd stores that will end up by Q4, there will be 80 odd stores which will still be not matured or still under-matured in the time that we would take it to get matured. So, almost say 24 to 36 months it takes around for the store to get matured. So, that is the number of store counts. Around 80 odd stores will be still et to touch the maturity levels in the coming times.

Sure, sir. Very helpful. I have some more questions. Wll get back in the queue. Wish you all the best.

Thank you. The next question s from the line of Yash Darak from RSPN Ventures. Please go So, yes, thank you for the opportunity. So, first question with regards to accounting of discounts, if you can explain what leads to a reduction in gross margin in the month of December, cven historically, and how are discounts accounted in the books?

Sir, can you repeat your question because you arc not that clear. Hello?

Yes. So, my question was with regards to accounting of discounts. Historically also, the gross margin reduces in the month of December. If you can explain how you account discounts and what leads to a reduction in gross margin in the month of December? Sure.

Sir, the sales promotion actiritics or cashback offers, we roll out during the festive scason, that will be adjusted against the revenues. As a result, the net sales realization will come down. So, that will obviously reduce the gross margin.

Okay, but then what is the sales promotion number in the other expenses if you see? There is a line item on a sales promotion.

Sales promotion is the, nommally we also participate in the dealer buy-down charges. I mean, that is interest subvention to be borne by the dealer is accounted under the head sales promotion. Tam sorry. I did not get it, sir. Page 8 of 24

EMI)

Okay, and if you could give me the gross debt, I think the debt was supposed to be reduced by the financial year end, but the amount of interest has increased quite a bit. So, what has led to that increase, and if you would give me the amount of gross debt?

To answer your question, the interest would even contribute from the IndAS 116 which is the adjustment that we do. The interest and depreciation would be a little higher because we keep on adding up stores. So, the rental adjustments and the lease liability is added up in interest and depreciation after EBITDA rather than the expense out on rental income. That is the method that we follow. But in tems of the actual debt, if you want, I can give you a breakdown on that as well. Give me a second.

Sir, if you actually sec the term loans that are there versus the borrowing that is, so, there is a decrease in the term loan, working capital requirement, and there is an unseeured working capital loan. There are three different debts that we operate in. Whereas the working capital has gone up significantly is majorly because we started purchasing for the Diwali scason, and then cventually that will come down if you compare i to the 31st March numbers and the 31st December mumbers. So, there will be a significant decrease there.

Ifyou look at last quarter versus this quarter also, there is a significant decrease there. Whereas the term loan for buying properties has gone up a lttle bit because we ended up buying a lot of propertics and a lot of registration is due for us, which we completed in Quarter 3. That was all the advances that we had given out in the previous quarters as well. So, the term loan would have gone up a lttle bit. But whereas if you see the working capital loan and the unchecked working capital loan, both have reduced drastically. Can you please give me the amount?

Yes, sit. So, from the sccured working capital loan, which was at Rs.429 crores previously, it has come down to Rs.322 crores and the unsceured working capital loan has reduced to Rs.L.9 crores.

So, I guess the total debt is around Rs. 325 crores. Page 9 of 24

EMI) Like in this term loan s also there.

I did not tell you the term loan I just told you about working capital. Term loan has increased. Term loan has now gone up toall the propertics all put together is around 200 crores. So, the total borowing if you see on the 315t December, it would be around 530 crores.

Okay. Thank you, sir. And with regards to guidance, do we still maintain the annual guidance which was carlier given? I think it was around 15%. Do we still maintain it or are we supposed to reiterate or revise? 1 think that should be in line with the numbers. So, the growth is around 10.5%, 10.6% to be precise for the first nine months. And then we arc looking at a decent growth coming in in Quarter 4. So, in line with what we were expecting, so that should be there. But the bottom-line revision was already discussed in the previous quarters as well because the gross margins got diluted by 0.75% and the expenses up by almost 0.6%, 0.7%. So, we are expecting the bottom line to take a litle impact in the previous year. And it will be in line with what we were expecting it to be.

So, we don't see a drastic change there. But we are quite optimistic in terms of what is in future for us, especially looking at the performance in Jan and Feb, and then the other clusters that we are operating, especially Delhi, Telangana, country market, Andhra. And the new stores also that we opened up are performing quite well for us. So, we are in line. There are times where, you know, a company would face a situation like this. But we are quite comfortable, and we are quite optimistic on what is up in store for us.

Okay, sir. Thank you. Got it. Only with regards to the first question, the interest subvention, which s something I am not really clear about, can I get back to you on that?

Twill tell you the number also. So, if you compare the Quarter 3 FY 24 mumber, which stood at around Rs. 48.3 crore, has increased to Rs.51.5 crores in the FY '25. So, this is basically the dealer buy-down, because most of our sales happen through NBEC, like Baraj Finserv, IDFC, HDB, HDFC. So, what happens is that when a customer walks in, especially during the Diwali period, the price becomes very competitive. And usually, no dealer charges the dealer buy-down.

So, there are two major aspects when financing a case. One s the manufacturer buy-down and another one s the dealer buy-down. So, mamufacturer like Samsung, LG, Apple would bear their side of interest, whereas the dealer also is charged a bit. So, the customer gets an absolute 0% interest fiee EML So, usually a lot of dealers would embed that pricing in the cost itsclf, whereas we don't do that. So, any mode of payment on our store would have the actual discounted price available for the customer, whereas if he opts for a financing option through NBFC, then there is a dealer buy-down charge, which we take it under our hit, you know, as a cost to us. So, that is where that is something directly proportional to the sell-out that we do through NBECs, just like a credit card charges. Page 10 of 24

EMI) Okay, got it, sir. Thank you. Thank you so much. Thank you, sir.

Thank you. The next question is from the line of Tanay Shah fom DAM Capital. Please go Yes, hi. Thank you for your opportunity. Just wanted to understand, has there been any improvement in demand across the product categories which we operate in? And given that winters have not been so harsh, you know, have you kind of started sceing some sort of stocking for the summer-led products like, you know, the RACs and all the other smaller appliances as well? So, just wanted to understand on that aspect.

The sccond question would be in terms of water heaters, what we do, right? So how has the demand been in the previous quarter? And, you know, ifyou could just kind of give some flavor on that as well.

Sure, definitely, as I told you like the summer has sct in a litle carly here in the region. So, we would se a little higher growth coming in air conditioner and air cooler for us. Usually, we would start off by, say, Feb end, it has already started up right now. So, we have been preponed in 1520 days. So, that is an advantage that we arc looking at as we talk right now.

The demand looks good. Especially mobile phones, that was a little sluggish for the last few quarters. Especially after the S25 launch, we saw good sellout during the first week of February, but obviously whenever new model launches, it is there for a week, 10 days. So, we do not attribute that to the wholc quarter. But we saw good demand coming in there as well.

So, premium phones are still doing good for us. So, there is not a slowdown there. The (27:15) appliances, the kitchen appliances overall have started doing very well. And then water heaters and room heaters both did perform really well, especially in the north region during the last quarter, whereas water heaters in Hyderabad are at a single-digit growth, whereas in newer clusters, again across the country, because of summer here, you would see a little slowdown in the going quarters for this water heater and room heater category.

But saying that, now it has become more like a 365-day product. If there is a new apartment or avilla coming up, usually people put in these categories, whereas real cstate has been a little slower here in this region for the last few months. So, we would definitely sce that kind of an impact. But once everything stabilizes, when the real estate starts picking up and the new home buyers start moving in, not only room heaters or water heaters, but a lot of other categorics also sce definite improvement going forward in this region at least. Page 11 of 24

EMI) So,if I got thatright, you arc trying to say that we have preponed our stocking for RACs and air coolers much before, like around two to three wecks, and demand is supposedly going to be g00d. And at the same time, we arc saying that water heaters did well in the northem market. Is that right?

Yes, yes, absolutely. And what happens is that we already, irrespective of the season, preponing or postponing, we usually start stocking up as carly as Jamuary. So, we were all ready for RAC business and air cooler business anyway. But now we have started stocking up a little more depending on the sellout that we will be doing on a daily basis right now.

Understood. And the other thing I wanted to know is just sort of a different kind of a question that what percentage of our overall sales would be consumer finance? Like what would be... 65%. Okay. Got that. Okay. Thank you so much.

Thank you. The next question is from the line of Saumil Shah from Paras Investments. Please g0 ahead.

Yes, hi. Thanks for the opportunity. As you mentioned to previous participant, we are in line fo achicve our revenue guidance of 15%. So, in terms of bottom-line, can we achicve our previous year's PAT?

Sir, it will be too early for me to comment on that. Butyes, definitely, obviously, if you compared to the previous quarters that we have delivered, there has been a decline. So, I can't deny that fact that there was a declin in the PAT levels. But we are trying to improve them. But obviously, you know, we won't be able to surpass with a very big growth number in terms of the PAT ‘margins this year. So, that will be also in line with more or less what we have delivered last year.

But we are confident that that would happen, but I can't promise you that it will, you know, surpass those levels and grow nmuch, you know, about that because we have already passed three quarters in this year.

Olay. And in terms of guidance for the FY '26, what can you expect in terms of revenue and EBITDA we can reach our carlier guidance?

Sir, next year, see, right now it will be too early to comment on next year again. But with the new store additions that have happened, and the stores are about to get mature, alot of stores arc yet to get matured, and the new stores that we will be opening up next year, I think a 15% Y-on- Y growth should be quite comfortable for us to achieve next year as well And in terms of EBITDA margins? Page 12 of 24

EMI) Shouild be in line, sir.

Inline of this current quarter or the previous quarter?

Sir, the same mmber that you would do on a regular basis, the percentage-wise, it should be in line with the same number. 15%. 15% more or less, yes.

No, I am talking about EBITDA margins around 7-8%.

Yes, EBITDA margins arc at pre-IndAS levels arc at 7%, i, sorry, post-IndAS levels are at 7%, which we look at, say, 1.2, 1.3% lower post-adjustment of rentals there. I think that should be the number that we are looking at, sir, around 7%, 6.8 to 7% comfortably.

Okay. And so, my final question, in terms of debt, where can we see by the end of this year?

The debt levels again by the end of this year would again be in line only. What you have scen on 31st March is because of the purchase of summer. So, a lot of advances go out, a lot of inventory is carried. The debt levels will be majorly for working capital only, for the inventory.

And once the cycle will go down to the summer end, you would sce the decrease in quarter 1 numbers. Because we exit the season by June, the inventory and cooling product reduces drastically, sir.

Okay. So, by March end, we can sce around 500 crores of net debt.

Lesser than that, sir. And then there will be two cyeles, sir. Because your summer s one, one is Diwali. So, by taking these two types of advances, we take up the stocks. So, that is where you will sce an increase in working capital for these two quarters. And then the way it is reduced on the 31t December, it is drastically reduced from what it was in the previous quarter.

Okay. That's it from my side. Thank you, and all the best for the future quarters.

Thank you. The next question is from the line of Dhruv Modi from DSM Securitics. Please go Yes. So, Thave a few questions. Like, the first question is, which brand and specific categories witnessed, like, shuggishness during Quarter 3 of FY 257 Page 13 of 24

EMI) Sir, the categorics majorly that you would see, there was not a decline in volume. So, I would not attribute it as a decline in volume growth, whereas the volume growth was, say, a single- digit growth across television, washing machines, refrigerators, the larger appliance category.

But, sir, unfortunately, what has happened, the price didn't increase in those categoris. In fact, for the premium produets in television, the price has reduced a little bit. So, you would not sec a major, you know, I would not say a major degrow there because of volume, but in terms of value. But the categories that outperformed really well were air conditioners. The telephone, mobile phone, other divisions, small appliances did very well. So, these categorics cventually contributed to the growth coming in.

But othertelcvisions, air conditioning, washing machine and refrigerator, if they had contributed in line with what the other categories did, then overall larger appliances would have seen amuch better number.

Okay, got it. And the other question is, why has our employee cost increased by 29% on year- on-year basis?

Sir, the cmployee cost majorly for the new clusters that are there because the teams across AP Telangana, Andhira and Delhi have also been increased. So, you would see a little higher expense going up there compared to the previous quarters. Because the team cxpanded, now, we have got a lot more people in these clusters, especially Andhra also could divide it to a newer cluster because the number of stores there are increasing. There are 15 stores there in pipeline for the coming year. So, definitely we need to increase the team there as well.

So, the costs are all under control in terms of what expenses overall we are looking at. That will be manpower cost, marketing cost or any other cost. Costs which are variable in terms of nature like sales promotion or finance cost are dircctly, you know, like your credit card charges o NBFC charges, which are dircetly proportional to the revemue that we generate on those businesses.

But apart from that, all other expenses are all under control in terms of what we expected it to be. So, nothing is in red where we fecl that it is in, you know, gone over our expectation. But building a team takes a little time and especially for the newer clusters and all. So, that is the major reason for the cost of employee going up.

Okay. And the last question I have is like, what is our store opening guidance for FY '267 FY 25, sir, L will give you the Q4 number also. Q4 number, we will add up another 10 stores this year by the end. And then another 35 stores arc in the pipeline for the next year, sir. Out of which we might start opening up stores by the first quarter itsclf. So, 35 stores have already been signed up for the next financial year. Page 14 of 24

EMI) Okay. Thank you very much, and all the rest.

Thank you. The next question is from the line of Prateck Poddar from Bandhan AMC. Please go Karan, just one small question. The 35 stores which will open next year, what's the split between Delhi, Telangana upcountry and AP?

Sir, around 6 stores in the Delhi NCR region. And the rest of them are in the South region.

And how much is the split of the 20 between, let's say, AP and upcountry? i, Hyderabad would be 3 stores, 15 stores in the Andhra upcountry market and the rest of them are in Telangana upcountry market, sir. Hyderabad, you said it was three, right? Yes.

So, around 11 stores in Telangana, upcountry. Yes, sir.

Okay. And what is the split this year out of the 40 stores? Sorry, just before that, you said gross stores, you will add 10, 12. Does that mean that you will be cutting or, I mean, closing some of the stores or this is the next store add for Quarter 42 Sorty, no, 10 stores will add up in the next, in this quarter, Jan, Feb, March, and Quarter 4. Thats gross, you said. So, 1 just wanted to confirm. gross or net?

No, 1o, net, net, net. Not gross. Gross, totally, we opened around 32 stores this first nine months, no? Got it. Fair.

We are not shutting any stores, sir. Sir, that time has not come now. When that time comes, I will tell you first. We are doing good. Don’t worry.

Surely. Sir, just the 40 stores which you add, maybe can you just help me with the break-up between again same, NCR, Hyderabad? Page 15 of 24

EMI) Yes. So, ill now, what we have opened up is around 6 stores in Delhi, 5 stores in Hyderabad.

Telangana Upeountry market would be 7 stores, and 14 odd stores in Andhra Pradesh. This is what we opened up this year in the nine months. Jan, we have already opened up 2 stores.

Between Jan and last 45 days, we have already opened up 2 stores in Delhi from the 10 stores I am talking about the addition, so including those we are going to open around 5 more stores in Delhi which Janakpuri will open up this week. So, Janakpuri, already the soft launch is done. So, because of the graph there, I mean, because of the pollution being higher there, the construction was stopped for the last few months. That is why its delayed. Same thing, what happencd last year where we opened 6 stores on the 30th of March last year as well.

This will be a similar number this year as well. We will end up opening up the majority of the stores by this week, next week and the last month of this year. So, that is the idea for Delhi NCR.

And then few more stores opening up in Telangana upcountry market and Andhra as we talk.

So, the total store addition this year in FY 25 would be around 40 stores, which will take the total store above 200 stores for the group. And next year, again, 35 stores, what we have already signed up for FY 26, where the handover of the property or the construction is under way, where we will statt opening up by the first quarter of next year.

Okay. Sorry, just going back. 40 stores, 10 stores are in NCR. How much would be out of this 40 in AP and Telangana? How much is AP? I mean, ex-Hyderabad, I am saying. Hyderabad would be around the 15 itsclf.

So, basically this year you have not opened any store in Hyderabad. That's a fair understanding. Yes.

Okay. And whats the store count of Hyderabad? Last question.

So, Hyderabad store count today stands at 69 stores. That includes all EBOs put together.

Thats fair. That's fair. Okay. Thank you. This is very helpful. Best wishes.

Thank you. The next question is from the line of Ankit Kedia from Phillip Capital. Please go Now, sir, questions from my side. You have given the store level breakup across regions. If I look at profitability, so next year, what are you modeling in terms of margins for NCR region?

Given the 9 months, they are pretty nuch flat today. So, you know, if the growth trajectory s similar to what we have done this year, will we be able to do 6-7% margins for the first 10-12 stores which were there in NCR? Page 16 of 24

EMI) Ankit ji, those stores definitely, yes. if you look at store-wise, EBITDA, or store-wise profitability, gross margin levels, those stores will be at that count. But if you look at the new stores, that will definitely drag down the overall mumber for NCR. But the mature stores will be all in line. Probably not 6-7% the way it is back home in Hyderabad or AP and Telangana.

Tt will be down by a percent or two because the cxpenses there inifially would be a litle higher, say, your cost of manpower, rental, marketing and all in terms of the revenue that we generate per store, beeause the productivity per store is much lower compared to the existing market. So, you would look at those numbers being a little high, and the gross margins or the EBITDA umbers at the store level would be down by 1% or 2% compared to the existing market.

But saying that overall number in Delhi, which we have guided that we will touch a certain throughput,itis on par with that. And we are quite optimistic on that region going forward. The newbig stores that are opening up 6 of them are all the big clusters like Kalkaji, Janakpuri, Pitam Pura that we opencd up recently. So, all are bigger cluster stores and going forward we feel that Delhi should be shaping up quite well for us in FY 26 as well.

Sure. And if T could look at new state entry next year, are we planning any, say, getting into Lucknow's side of the market o it will still be purely NCR next year?

Definitely the existing clusters need more stores. That is why the addition of 35-40 stores in the coming year would definitely be there. But saying that, we even have to look at a balancing act between the existing clusters and newer clusters that we would approach.

There are newer clusters like Orissa, Westem UP, probably Lucknow, you kuow, a part of Haryana expansion that we are doing p, you know, from Gurgaon and Mancsar and Rewari and those places. So, definitely the new market that we are looking into, but I am not surc that how soon we will be able to start those operations in those arcas because more than that, we want to fortify our existing clusters. And Delhi is a very big market today.

Delhi, we would be ending up at 30-32 stores by next year. We want, you know, by opening up next financial year. We want to be more stronger in that region. So, if it demands for us to open more stores in Delhi-NCR, or periphery of Western UP, we will start that immediately. So, right now, we will end up the year first and concentrate on increasing the productivity in the cxisting stores and growing in the existing market and then take a step forward in the newer clusters.

Sir, my last question is on commission and incentives. Given that, you know, your growth this year has been a little muted around, you know, just double-digit, do you think brands will give you the similar incentive and commission what you were getting before, given that in South market, predominantly Hyderabad core market, we have in Corona actually declined? Page 17 of 24

EMI) Yes, that is in line. So, that would not change per se. Because sce, you are not looking at a degrowth by 50, 70, 100%. You are not looking at a big number change there. You are talking about few digits here and there. So, brands don't take you for a ride for such a growth or a degrowth because sce, the growth is coming in the newer market. So, overall contribution that we give out to the brands are in line with what, you know, our contracts or what we promised. So, that docsn't change per se.

But if you keep on degrowing quarter-on-quarter with a nmuch higher number or you stop doing a brand or you stop catering to their product range or anything of that sort of a major decision like that, then that will impact your margin. Not the smaller changes here and there. Because they also understand, right? They understand the market, how it is behaving. And it is not a temporary relation that you create with a manufacturer. That s why we deal with the bigger brands, where our relationships are much stronger than a quarter.

Fair point. And the last question is on mobile handset salcs. You know, we have scen a disproportionate increase in mobile handsets, which comes at a lower margin. Are you comfortable at this, you know, 43%, 44%, and obviously 9 months the number s lower? Or, you know, its just that the demand in mobile handset continucs to be so strong that the margin trajectory will be foreed to be lower because of that?

Sir, I can't understand your question well. You mean to say that the margins in mobile arc going to be lower than other categories? That's what you mean to say?

They are lower. We know that. But do you have a conscious choice to keep a mobile revenuc mix at a certain percentage because it's impacting your margins?

Sir, that is beyond our control. So, usually, I mean like the healthier position would be like, you know, any category which makes more money sclls better, right? So, that is an ideal situation for any retailer. But you can't demand what sells on the floor. So, if there is a good demand for us on mobile front, we definitely would like to cater to that. And it is not only a short-term product margin that you look at. Mobile on a whole is a bigger category, a much bigger ocean than what it looks like. You know, so why don't we, cater to that audience as well? So, there is nothing that stops us from catering to that audience, irrespective of the margin profile between large appliances and mobile phones.

So, we will be glad to grow in any of the categories that have come our way. And mobile phone is a very big market to grow in. And then eventually a customer walking info your store, Iet it be audio, built-in, kitchen appliances, small appliances, any category today, you can't shy away from selling it. Because the cycle of a customer is not necessary only for one product category that keeps on coming to your store, right? They arc looking at the array of products. So, you got to, as a retailer, focus everything and make sure the customer gets a one-stop solution for cverything that he wants. Page 18 of 24

EMI)

Sure. That's helpful, sir. Thank you so much, sir.

Thank you. The next question is from the line of Rohan Gupta from SQ Sceuitics. Please go Yes. Hi, sir. Thank you for the opportunity. Most of the questions are being answered. My only data-related question is when do we xpect the Hyderabad cluster SSSG to normalize?

Sir, Hyderabad, SSSG, because of stores being all matured and the produetivity per store are very high, so, obviously, this needs to get positive. Not necessarily that Hyderabad will become like a 5%, 7% kind of an SSSG. So, even if it comes down to 2-3% kind of a level, it is good cnough for us. This is in line which we see that, it is going to happen going forward. And we arc quite optimistic on that. So, there is no worry on that.

Definitely, yes. That is being the largest cluster, the whole balance shect turns around if that cluster dosn't perform well. But looking at the big days like 26th January that went past by us tight now, or the coming times now, I think it looks positive. Okay, that is helpful. Thank you.

Thank you. The next question is from the line of Mchul Desai from JM Financial. Please go Yes, just for store additions, I missed that part. Can you just reiterate your total store additions that you are looking at in FY '25 on an Excel basis and on FY 26 also? And also, can you split in FY 25 whatever store edition, I mean, stores you end up, how much would be in Core South Market and in NCR region?

Okay. Sit, the addition of stores was around 32 for the first three quarters of this year, or the first nine months, out of which 6 stores were in Delhi NCR, around 14 stores in the Andhra market, and Telangana, including Hyderabad, were around 12 stores.

So, that was the breakup for these 32 odd stores that we opened up this year. And then another 10 stores will add up in this last quarter, Jan, Feb, March, which wil take the store count of new addition in FY '25 to around 42, 43 stores. That is the total number. Out of which, Delhi NCRthis whole year would end up around 32 stores, more or less. And the addition for the next year would be around the 35 stores which we have already signed up.

Definitely yes, once we have more stores coming up, because we have a whole year left for us, so they will keep on adding up more stores in the existing cluster. And out of the 35 stores, again you would see around 5 to 6 stores coming up in the Delhi NCR region. And then the rest of the stores cqually split between Andhra and Telangana, sir. Page 19 of 24

EMI) Okay, sir. Next, in FY '26, you said 35. Only 5 to 6 stores are in Delhi NCR you said, right?

That is what we signed up now. But definitely, yes, because we are already searching for new stores in the peripherics as well, so, as W progress, because we have almost 4 quarters in that whole year left with us, right? So, as we keep on progressing, we will add up stores. And Delhi is going to be the major market that we will be looking into. But it is not casy to find a property in Delhi NCR, right?

Because the major markets have already been covered. And it takes a little more longer time to secure a property up there compared to down south because down south it is more like a newer market that we are opening stores in tier 3, 4 towns. So, it's much easier to geta property at your price or your rental cost for a longer lease whereas compared to Delhi NCR. So, you know, right now at 32 plus another 6-7 stores arc getting ready. So, we would look at Delhi NCR shaping up at at least 50 stores by FY '27. That is the plan.

Okay. And in this FY '25, how many store additions were done in Hyderabad? So, I mean, when youare saying this 42-43 stores will get added overall, how many stores would have been added in Hyderabad market?

Sir, exclusive brand outlets, multi-brand outlets, all formats put together around 5 stores is what we added up in Hyderabad City. In nine months? Yes. And any plans to add any more in Q4?

Sit, in Q4 couple of stores arc getting so they might come in. There are 3 stores that are getting ready. Especially these are all the periphery markets of Hyderabad city which are like 30-40 kilometers away from the city center where now population increase. So, we are planning to open stores in those geographics also.

Okay. So, broadly from this 42-43 store, we are saying 7-8 would be in Hyderabad in FY 125. No, around 5. ForFY '25. For 26.

No, 1o, I am talking about FY '25. You said m FY '25... Page 20 of 24

EMI) Yes, 5, 5 plus another 2, yes. Around 7 stores, correct.

Seven stores, okay. And lastly, can you give some light on how Q4 demand trends have shaped up so far? Is there an acceleration in revenue growth versus what you have seen in Q3? I mean, are we in double digits in Jan and Feb so far or?

Thatwill be too carly for me to comment on that. But I can tell you on thing that summeris sct inalittle carly. So,itis looking great for us as a season to start off with. So, nothing disappointing right now. But having said that, it is only the Hyderabad city that has become a lttle warmer during the day, whereas other clusters for us, especially North and ofher chusters in upcountry, the weather has not changed drastically. So, we do not sce a, you know, a great jump in mmbers right now. But the revenue, daily revenue that we look at, what was a little sluggish for the last few quarters, is being a little more on the positive side, I would say that.

Okay, got it. That's all for my side. Thank you.

Thank you. The next question is from the line of Shrinarayan Mishra from Baroda BNP Paribas. Please go ahead.

So, we are already halfivay through the quarter, and I wanted to know the level of discounts and interest subvention which you are giving. Is it similar to 4Q or has it improved?

Sir, the discount structure more or less remains the same. There is not much of a difference there.

So, that would remain the same. But in terms of the productivity that we sce across categorics, that has been positive. So, what was a little shuggish for the last few quarters, I would just like to comment on that, We have seen a positive sign there. So, I would not say that it jumped drastically, but yes, it is much better than what was happening in the previous quarters.

So, the gross margins, we should expect for 4Q to be ot that great? Sorry, I didn't need a question.

Gross margins for 4Q, will it be impacted because of business promotion and discounts?

Not really, sir. So, that is always in line. That is accounted for. So, gross margins arc always accounted for the sales promotion and the cost of credit card or NBEC that we bear. So, there is not much of a change there. And that is ideally so, the overall value might look higher or lower depending on the revenue that we gencrate because it is dircetly proportional to the revenue that we generate. But in terms of percentage, itis in line with what we have been doing in the previous quarters as well. Page 21 of 24

EMI) Okay, and much of these will be in South Cluster, right? North, we won' be giving much of the discount.

The discounts across the country more or less remain the same. So, depending on what product category or what is the demand in the market for that particular season is how discounting is increased or decreased. But across the country, it remains the same. So, not much of a difference there. And definitely, yes, because South Cluster is the largest cluster, so whatever small change, positive or negative, you sc in the South Cluster would impact the whole balance shest because the contribution from the North Cluster is hardly negligible.

Okay. And lastly, the sccond question. So, do you see some behavioral, I mean, are the NBFCs willing to land now or they are still on the backseat and we sce pressure in landing?

Sir, actually, if you sce, the lending in our industry has always been very matured compared to a lot of other assct lending classcs that they have across the industry, whereas here, the CIBIL scores have to be higher. The documentation is much more stringent. Though the net valu is much smaller than a lot of other loans that they disbursed, but we have never seen a direct impact on lending per se. And then because we have almost four to five major NBFCs that we play around with, carlicr, I think that would impact the minority of the approvals that come our way.

But the majority of them should not have a problem because we definitely have a huge cluster base in Hyderabad. But whereas in Telangana upcountry matket or Andhra upcountry market, you would see a little impact due to the credit scores or the credit approval rate being a little different there. Okay, that answers my question. Thanks.

Thank you. The next question s from the line of Rajiv Bharati from Nuvama. Please go ahad.

Yes. Good afternoon, sir. Thanks for the opportunity. Sir, with regard to your Hyderabad market, just can you specify the number you clocked in Hyderabad and also the IndAS EBITDA?

Sory, the EBITDA number for Hyderabad City?

Yes. And the revenue number also for the quarter.

Okay. So, sir, the revenue number from Hyderabad City was Rs.1,079 crores for FY 25 Q3 versus Rs.1,095 crores last year. And the Telangana upcountry market was Rs.272 crores, Andhra was Rs. 247 crores, and Delhi NCR was around Rs.128 crores for the last quarter.

Yes. Can you specify the EBITDA pre-IndAS for Hyderabad? Page 22 of 24

EMI) So, the EBITDA number would be around 7.4% for the cluster down here. And Delhi would be around 0.15%, 0.2%, that kind of a number.

And this 7.4%, is there an expansion on Y-o-Y basis or not?

So, Hyderabad, if you again break that down into Hyderabad, you would sce a little decline there, to be frank. And whereas Telangana upcountry market and Andhra would be on the higher side compared to the Last year The highest EBITDA that we would gencrate would be in the Telangana upcountry market, which would be around 8%, 8.2%, approximately, whereas it would be a little lower in the Andhra, and then the lowest in the Hyderabad city market.

So, lets say a year back, this raised a 7.4% number.

So, it would be up by, you know, 0.2, 0.3 basis.

In Hyderabad, it will be down by 0.2%, is it? Yes, yes.

Yes. And just one question was asked regarding this incentive income. So, last year, ona full- year basis, you clocked Rs.250 crores incentive income, right? So, what is this number, for cxample, for the nine month and how has it grown?

Nine month, we would sce a little lower mmber this year is because from the last couple of years, incentive will come now. Most of them, so, incentive is basically your sell-in, sell-out support, you know, your marketing support or other heads that you get around 12, 13 heads that you would receive this money in. So, that number from say last year, for the first nine months it would be Rs.199 crors, has reduced by say Rs.5 or Rs.6 crores because that number has now been embedded in the invoice itsclf.

So, lot of companies like cash discounts or wherever they can, they are trying to embed that in the invoice itsclf rather than the over and above sell out support that they used to give out earlier.

So, though the margins overall number remains the same, but the accountability part of it which was supposed to come in the incentive now has been embedded in the invoice itsclf.

Yes, but then the percentage margin should increase, right?

Technically it should, but there is a difference of Rs.5 crores. So, there is not much of a difference there. Okay.

So, on Rs. 5000 crore you would see the difference of only Rs. 5 crores. Page 23 of 24

EMI) Great. Okay. Thats all from my side. Thanks a lot.

Thank you. The next question is fom the line of Decp Shah from Equirus Sccuritics. Please go Hi, sir, thanks for the opportunity. Sir, just wanted some clarification. So, you mentioned that you have maintained 15% top line guidance for FY '25. So, it means that you will be growing by roughly 25 odd percent in the 4th Quarter. Am I right or am I missing something over here?

It should be, yes. So, you are absolutely right. So, we arc optimistic on that mumber. But see, end of the day, it all matters, depends on the summer sctting up a little carly or the summer supporting. So, if March 2nd week if it starts pouring in Hyderabad, I can't have the control over it. But to what it is going on right now, we are looking at a trajectory of at least 21-22% right now of growth coming in with that category at least. So, that s the number that we are looking at for February coming forward.

So, I think they are quitc optimistic on that. And then depending on how the summer session becomes a little hotter during March, the second week, third week or starts pouring, that is when, you know, we will have to look into that number because the summer category majorly drives through the weather as well. But right now, things look good. So, definitely it has to be on a higher average than what we have done in the Quarter 4 and last year so that we achicve that overall number of 15% Y-o-Y.

Okay. And secondly, sir, you mentioned about 10 to 12 odd stores in 4th Quarter, storc opening in 4th Quarter and roughly 35 stores in FY 26. So, all the stores will be MBO or should we expect any EBOs also opening? All MBOs, all MBOs. Okay, sir. Got it. Thank you.

Thank you. Ladics and gentlemen, that was the last question. I now hand the floor over to the management for closing comments.

Thank you everyone for joining the call. And I hope that we were able to answer all your questions. And for any other further querics, you may get in touch with Mr. Deven Dhruva from SGA. And we will be happy to address all your querics. Thank you once again.

Thank you very much. On behalf of Elcctronics Mart India Limited, that concludes this conference call. Thank you all for joining us, and you may now disconneet your lines. Thank you Page 24 of 24