Monte Carlo Fashions Ltd

Ladies and gentlemen, good day and weleome to Monte Carlo Fashion conference call hosted by Emkay Global Financial Services. We have with us today Rishabh Oswal, Exccutive Director, Sandeep Jain, Exceutive Director; Raj Kapoor Sharma, Chicf Financial Officer; Dinesh Gogna, Director; and Ankur Gauba, Company Secretary. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Shotild you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded.

T now hand the conference over to Mr. Mohit Dodeja from Emkay Global Financial Services. Thank you, and over to you, sir.

Good morming, everyone. Id like to welcome the management and thank them for this opportunity. I shall now hand over the call to the management for the opening rematks. Over to you, gentlemen.

Yes. Good morning. This is Sandeep Jain and thark you all for joining us for today's carnings call to discuss the performance of third quarter and year-to-date results of financial year 2025.

Let me start by sharing the financial and operational highlights. For the third quarter under review, the consolidated revenue from operation was INRS49 crores, registering a growth of 9% year-on-year. EBITDA was INR155 crores, representing a growth of 27% year-on-year with EBITDA margin reported at 28.23%, net profit grew by 25% year-on-year to INR97 crores.

For the 9 months ended financial 2025, the consolidated revenue from operations stood at INRS9S crores, which increased by around 5% year-on-year. EBITDA was INRIS1 crores, witnessing a growth of around 19% year-on-year with EBITDA margin reported at 20.21%. Net profit stood at INR92 crores, representing a growth of 16% year-on-year.

As the financial performance suggests, we had a strong revival this quarter, driven by our focus on strategic initiatives to drive sales and reduce cost. We continue with our endeavor to build a leading branded apparc] company with efforts to increase our distribution network. And we are also committed to open 45 to 55 EBOs pan-India, including West and South. Our total number of EBOs have reached 469 across 23 states and 4 UTs. And we are also present in 1,810 multi-brand outlets, 959 national chain stores and 467 SIS as well as various e commeree platforms, our online sales through our own website have picked up, especially from our own website.

For brand Cloak & Decker company has opened 5 EBOs in Q3, totalling to 10 EBOs as of 31st December 2024, and we plan to continue to open further in sizes of 500 to 1,000 square fect. We have also tied up with quick commerce platforms like Blinkit, Swiggy, and Zepto for up to 30- minute delivery. Lastly, we have collaborated with Sales Force to streamline and enhance the company's operational cfficiencies and drive customer loyalty and experience.

With this, now we open the floor for question-and-answer session. Page 2 of 10

Thank you very much. We will now begin the question and answer session. The first question is from the line of Viraj Parckh from Camclian Assct Managers. Please go ahead.

Congratulations ona good set of numbers. Just a few questions from my end. Firstly, sir, I would just want to understand on cotton and woollen segment, volumes have been flat more or less. T mean, woollen has grown by 1.6% and cotton degrown by 3.6% in volume terms. But however, in absolute value, we've seen like a 5% growth in cotton and a 13.4% growth inwoollen. So that just highlights that we've increased the average realization for owr produets in these segments.

So can you please claborate more on that?

So I think you have rightly pointed out. So there has been increase in the realization of cotton and woollen. The reason being is that because we took corrective action, as we suggested in last con call also, regarding the discounts. So the discounts have gone up -- discounts have, somy, gone down. So that has improved the realization in Cotton as well as in Woollens. So that is the prime reason.

So sir, I mean, calier, we were a bit more sceptical about the demand environment per se. And at a company level, we are focusing more on profitability. With the increasing compefitiveness in this industry and how sustainable are these price realizations? I mean, I think my sccond question s also on the lines of our gross margins, which has come at 46.8% this quarter, which is a significant rise and that has eventually contributed to a healthy profitability this quarter.

So I wanted to more understand on the sustainability of these margins and realizations going ahead for our main two segments?

Yes. Thank you. Thanks for asking this question. So I would be happy to state that there is now a chance of improvement in the margins going forward. The reason being is that we have taken aprice risc also and the raw material price is almost stable. Sowe'll be having a trade show right now going on as far as pre-winter booking is concerned, which is showing us a very good response.

And our full winter trade show is going to happen in Delki in next 1 month. So already, we have taken a price ise. But as far as raw material is concerned, all the raw material, what we arc using in cotton fabrics, in woollen yam, they are all stable. So they have not gone up. So there is every chance of an improvement in the margins going forward also next financial year.

And sir, would you speak a bit more on the competitive intensity we are sceing in this space? T mean, eventually, if we are sustaining these realizations and we're talking about margins being increased, will it eventually take a hit on our volumes or how are we planning growth going abead, if you could highlight that road map?

It will not take a bit on our volume. So last year, we consciously produced less goods because we wanted to focus more on the profitability. And the reason being was that we were stuck with the inventory also. So that was the reason we were very cautious last year. But this year, now the inventory issue has been sorted out. And there have been expansion in EBOs as well as SIS as well as online platform, which is doing very well. Page 3 of 10

So we are very confident that as far as our company is concerned, I can't talk about the other companics, but as far as our companies arc concerned, definitely, we will be - we sce that the worst is behind us now. So going forward, I see even the next quarter going to be better as compared to last financial year quarter. And the next year should be, I would say, we are open with a very optimistic note as compared to last year, which we opencd. ir, will it be possible to give us an idea of, in December '24, what was that inventory levels at the channel? I mean, if you can just highlight a number of days as well, if we keep an active mumber, what are the inventory days at a channel level right now? Just a minute.

So inventory, we are having INR476 crores as against INR428 crores.

So it's INR476 crores as against INR428 crores.

Last two questions before I get back in quee. Firstly, I saw that we've opened exclusive outlets for our home textile segment. And I feel carlicr, 2 years ago, we were doing pretty good in that segment. And I think the momentum has picked up going into this year. So we've done around INRS3 crores kind of quarterly sale. I think it's the highest in the last 7, § quarters that I sce in terms of home textiles.

So can you speak more on your strategy for home textiles and how much revenue you're seeing?

And if we can break up in terms of wnit cconomics in terms of revenue per square fect for the stores we are opening?

Sce, first of all, the stores which we have opencd are basically only adjacent to our EBOs. Its not the, I would say, the standalone stores. Like if we are operating on the ground floor and first floor is available, so we took that first floor because it's outright sale. If's not a consignment sale and all the 6 EBOs have been opencd as outright sales only. And it's not that we are opening standalone stores, it’s basically adjacent stores or like ifa space s available near these stores, we are taking it up and opening it up.

And as far as home textile is concerned, sce, this year, carlicr, we guided that we should be having a flat revenue growth, but I'm happy to state that we should be ending by, I think, 13% to 15% value growth in home textiles. And even next year also, we are projecting the same growth. So maybe, again, it depends on the trade show, it can be more because right now, I think that this year, we should be having around 13% to 15% of growth in the home textiles in this financial year over the last year.

And the strategy would be to open company-owned company-operated stores in this scgment, 1ight? We won't go for the FOFO model?

Its through distributor agents and MBO business only. We are not focusing much on the standalone stores in home furnishing. We are only opening those areas where we get additional space in our EBOs or some adjacent space is available where our EBOs can casily - a person Page 4 of 10

Sir, last question, just i you can -- L know it a litfle bt more forward-looking, but if you could just get a flavor of the quarter 4. Because I belicve like in this last calendar year, onan interview, we spoke about good order for summer booking, which highlights a good Q4 for us. So I mean, Inst year, we it was quite bad for us, Q4, because of nuiltiple reasons. How do you sce this Q4 panning as compared to last Q4 in terms of profitability, a ballpark?

Sce, as of now, we are fully confident that the last quarter should be better than the last year's quarter because inventory is less and the discounting have been less and the summer dispatches have been happening even started carlier as compared to last year. So we arc confident going forward in the next quarter that it will be better as compared to last year's quarter.

So any guidance you want to give on annual profitability?

We already guided for a flat revenue and improving in margins. We arc maintaining that guidance. And we have actually surpassed our guidance because we guided for flat revemue growth for this financial year, and we'll be ending with single-digit growth. And we also guided that we will be having a better EBITDA and better margins. So definitely, we have seen in 9 months, already the margins have been better as compared to last financial year. So on a full year basis also, it will be better as compared to last financial year. Thank you so much sir. Al the best.

Thank you. Your next question is from the line of Devanshu Bansal from Emikay Global. Please goahead.

Congratulations on a very good profitability performance in Q3. Sir, ther is this fax reduction in the Union Budget that has been announced plus our base is also low, right? So in FY 25, we will see almost like a single-digit growth. So any outlook that you can sort of give us for FY 126 because already you are secing very good momentum in the trade shows for both summer and winter offerings. So what kind of growth and profitability should we expect for FY '26?

Sce, one thing which I can assure you is that the next year should be better as compared to this financial year. The full year guidance we normally give in our fourth quarter con calls. So please wait for the fourth quarter con call. We'll come with a guidance for the next financial year also.

And please note that whenever we gave guidance, we try to give a very accurate guidance.

So in March, we arc having a trade show, which is going to happen in around 20th of March. So we'll have a full - the targeted growth for the next financial year as we have the bookings in our band in our trade show. So please wait for the fourth quarter con call, and we'll give a guidance for the next financial year as well. But one thing which is very evident is that the stock inventory is less. It looking to be great year going forward in next financial year. Page 50f 10

Sir, just a small follow-up. When you say '26 will be better than FY 25, so'is it like growth in FY 26 should be better than growth in FY '25 or you're just mentioning that FY '26 absolute revenue should be better than FY '25 absolute revenue?

Both revenucs and both margins should be better in financial '26 as compared to financial '25. This is what I can guide.

Sccond question is on price hike and realization. So what I could gather from your commentary was that you indicated that discounts have reduced, which have led to this realization gain. And in another comment, you also mentioned that you have taken some price hikes as well, right? So in Q3, this improvement in realization is entircly because of reduction in discounts or there is a component of price hike also that has helped us?

It's basically for both the factors. There have been a price hike alsoand there have been reduction in discounts also. So both the factors contributed in increasing the realization.

And for Q4, we have taken further hikes or the hikes were what we have taken during Q3?

The price hike has alrcady been taken in the winter products in the month of - when we start the production around August and September. So only we are trying to be having a lower inventory, which will definitely improve our profits and also lower discounts. So that will improve the realizations.

Last question, sir, there has been some debt increase, sir. So we - I just wanted to better understand as in what is driving that? And from an ROE perspective, '24 was sort of very muted.

It was like 8%, 9% only. So what are the initiatives that we are taking to improve the refurn profile of the business?

We have a zero long-term debt. It's only the working capital debt, which has gone up because of higher inventory and higher planning for the next summer. And it will come down in the March quater.

On aY-o-Y basis, you are saying that that INR200-odd crores debt that was there in 24, it should broadly be similar, right, at FY 257 Yes.

And anything on initiatives that we have taken to improve the return profile of the business? Return profile means? ROE, return on equity.

So that will definitely be better as profitability has improved. So that will definitely be better.

Any initiatives on the working capital optimization that may happen in the business, sir, or it will remain stable? Page 6 of 10

Working capital will remain the same. We don't see any difference. There can be a marginal difference, but we don't see any significant difference as far as working capital is concered.

Understood. Thanks for taking my question. This was really helpful.

Thank you. The next question is from the line of Mohit Dodsja from Emkay Global Financial Services. Please go ahcad.

Congratulations for a good set of numbers. I just wanted to know how is the broader... Can you please repeat it?

Yes. Sir, I just wanted to know how is the broader demand environment?

Sce, I think there are now two, thre things which we are witnessing in last month, which is helping us to understand that there should be good quarters going forward, basically the Q1 and Q2. The reason being is that there have been a tax reduction in the budget, which will definitely boost the consumer sentiments and consumer spending.

So that is one area. And second, I think RBI has just taken a stcp to reduce the interest rate also, that will further boost the sentiments. So I think that it might take 3-4 more months, but definitely, the sentiments are improving. And we will sce this cffect coming in the next financial year. But as far as, as on today is concerned, yes, the situation has not changed much, but it has started improving.

So across channcls, is there a growth differcnce?

If you sce that the Online segment, I would ask M. Rishabh to speak on the Online segment, which has performed very, very well. And I've already told that the Home Furnishing scgment has seen a growth, Otherwise, the Rock It also have performed very well. It has grown almost 40% to 50%. So Mr. Rishabh can speak on that.

So I think it is fairly visible from the numbers also that there is a difference in the growth percentage of cach vertical. So newer channels like online and large format continue to grow at a faster pace than what the other channcls are growing. MBO SIS are growing at single digits, and we foresee they growing at the same pace. So - yes. So I think Rock It also has doubled almost this year. And we foresce - because of a very small base, they should be growing ata faster percentages than the rest of the company. Okay. Thank you, sir.

Thank you. The next question is from the line of Yuvraj Kunwar from Emkay Global. Please go ahead.

Iwould like to ask what is your expectation for capex for the next year?

Tt would be normal capex of INR1S crores to INR20 crores. That's what we perceive. Otherwise, there are no major capex is planned. Page 7 of 10

Thank you. The next question is from the line of Devanshu Bansal from Emkay Global. Please goahead.

I just wanted to better understand your comments around demand. So obviously, your performances has been relatively better versus whatever trends we are seeing. In other companics, these channels be it MBO, LS, obviously, there is one large partner which is struggling and that is sort of leading to a good amount of challenges for brands.

So from that perspective, while EBOs, et cetera, are doing well, there is these other channels, MBO, LFS, ctestera, which are not sort of doing well. So according to you as in, can we see some amount of growth improvement in these challenged, I would say, source of channcls also? Or how should we see that?

Yes. So this is Rishabh. I'd like to answer this. So I'll go channel by channel. So when it comes to MBO, SIS, last year, as you know, we had a lot of inventory that was left over across all channels, and that included SIS. And due to owr financial working, we bill the products that are left over to the SIS outright. Therefore the overall buying for these SIS was quite less as compared to last year. But if I compare the sccondary sale, which is not reported in the numbers, it is much higher than what we did last year. Going forward, we foresee this number growing at a faster pace when it comes to MBO SIS. Oline, as you've already noticed, it has grown at 40% this year. We target a growth of 25% to 30% for the next year as well for the online segment. ‘When it comes to National Chain Store, as yourightly said that there is right now a restructuring happening in the National Chain Store level. A lot of retailars are refiguring out their format if they would want to go the Zudio way or they want to premiumize there, but I would like to mention that Monte Carlo across all our channel partners hold a very significant and very important part. Itis not - because of a strong monopoly in certain categorics, these retailers tend to keep s and we would be one of the last brands to be affected by this demand. In fact, last week only we have our pre-winter bookings going on. Last week only we had mestings with all these retailers. And all of them are very bullish on Monte Carlo and everyone is going to increase the revenue that they get from Monte Carlo.

The only thing that we have to figure out going forward is to maintain -- ensure the profitability as the cost structure in National Chain Stores is much higher as compared to the other channels.

Lastly, sir, can you -- you'e discussed MBO, online, National. So EBO also, if you could just lay down what's your growth expectations as in just ballpark mmbers there, both in terms of store additions and SSG?

Yes. So as far as EBOs are concerned, we did almost INR465 crores as compared to INR435 crores. But as far as like-for-like growth is concerned, it is almost flat. So the growth came only Page 8 of 10

from the new EBOs, which we opencd in this financial year. But going forward, we look forward to having a like-for-like growth of around 5% to 7%. And also with the addition of new EBOs, which have planned from 40 to 50 EBOs next financial year. So definitely, it will be a scgment which will be growing for us.

And s, just one small follow-up here. Since like-for-like growth have been sort of muted over the last couple of years, so are you sceing some downgrade in confidence from franchisce investments perspective or that entlusiasm from franchisee investments perspective continue? So your comments on that?

Sce, market sentiments are bad. So it not only bad for us, it bad for everyone in the market.

So franchisces also understood that the market for cveryone is bad But still, we are outperforming as far as our competitors arc concerned, if you sce even in this tough period also, our EBITDA and profitability has grown. And that is only because of our franchisees working bard, So there are some tough times, which everybody knew that. But as going forward in this financial year, and we sce that the improvement is happening and all our franchisces arc also very confident because the one reason is that they have a low inventory right now as compared to last financial year. So that s giving us the confidence that next year could be better as compared to this financial year.

Very cncouraging. Sir, very encouraging. And just last question from my end. So since we have been through a challenging period, are you sceing some consolidation from the competition perspective? Are there brands which were like very aggressive now sort of cither sort of vanishing or sceing challenges? So from that perspective, if you could highlight your views?

Definitely. We have been getting offer of some of the brands which arc on sales because of -- they are not able to survive. So definitely, there is - there will be some consolidation in the market as the market is actually - as of today, the market is very tough. So I think there are some brands which are not able to survive and also the funding is not easily available basically for the garments and basically for the retail.

So that is posing some challenges to the existing brands, which arc basically more leveraged than other companics. But there are only a few companics who arc basically sitting on the cash. Otherwise, mostly some of - mostly company in garment s sitting on the debt. So thatis making them -- making difficult for them to survive.

So yes, you have rightly said that there are some challenges as far as some brands are concerned.

And also because of low demand, it is creating more challenges. So that is why I'm saying that some of the brands, there are offers from the matket that they are on the sale.

So are we open to consider, sir, our growth will be more organic in nature?

We are open to acquisition, if any good opportunity comes to us because we are sitting on our cash. If any good proposition which comes to us, which can increase owr shareholder values and Page 9 of 10

Last to complete this discussion, sir, any broader guidelines as in - so I'm asking from the perspective that since you talked about sharcholder value creation. So we are already sort of present in the physical retail online is also sort of doing well. So what are the gaps, key gaps in the portfolio that we would like to address from acquisition perspective? That is one. And sccondly, from a channel perspective also, are there any visible gaps that you can address with such acquisitions?

Ithink there are arcas where we are ot present basically in Southern and Western India. And also there arc some categories where we are not present or where we don't operate at all. And also some premium segment where right now we don't have a brand which can add value of around INR15,000 to INR20,000 at these kind of prices. So those are the opportunities. If available, definitely, we'll look info it Great sir. Thank you for taking my questions. It is really helpful.

Thank you. The next question is from the line of Shreyansh Jain from 3A Financial Services. Please go ahead.

Sir, Reliance recently announced the revival of Shein. So how do you look on that deal? Does it — will it affect your business?

Yes. Can you please repeat what you're saying?

Yes. So Reliance recently announced the revival of Shein. Shein. Okay.

Yes. So how do you look on that deal and would it affect your business?

No. It's basically, Shein operates in low cconomy scgment and ours is upper premium segment.

So there’s no direct competition from Shein as far as Monte Carlo is concerned. Okay. Thank you so much.

Thank you. Sir there are no questions in the queue. Should we close it or you want to contimie. Yes, we can close.

Yes, we can close it. Thank you very nuch for participating in this caming’s concall. I hope we have been able to answer all your questions satisfactorily. If you have any further questions or would like to know more about the company, please reach out to our IR managers at Valerom Advisors. Thank you very nuch.

Thank you. On behalf of Emkay Global Financial Services, that concludes this conference.

Thank you for joining us and you may now disconnect your lines. Thank you. Page 10 of 10