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Consolidated Revenue: INR 308.2 crores, growth of 17.4% year on year.
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Net Addition of EBOs: 21 EBOs added in Q2 FY25.
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Total EBOs: 534 EBOs as of September 30, 2024.
Release Date: October 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Kewal Kiran Clothing Ltd (BOM:532732) reported a consolidated growth of 17.4% year on year, indicating strong performance.
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The company added 21 Exclusive Brand Outlets (EBOs) in Q2 FY25, bringing the total to 534, with 55 more in development, showcasing expansion efforts.
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The Kraus brand performed well, contributing INR55 crores in revenue for the quarter, indicating successful integration and growth.
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The Junior Killer brand is gaining traction, with positive market sentiment and good performance since its launch in April.
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The company is optimistic about demand due to the festive season and upcoming wedding and winter seasons, expecting continued growth.
Negative Points
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Standalone sales were impacted by lower manufacturing due to a slowdown in consumer demand in the first quarter, affecting overall performance.
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Operating cash flows have decreased due to an increase in trade receivables, raising concerns about cash management.
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The company faced production issues, leading to missed growth opportunities, which could have increased growth by 10% if resolved.
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There is a high working capital cycle, with receivables for Kraus at INR76 crores against INR55 crores in sales, indicating inefficiencies.
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Depreciation and employee costs have increased significantly due to integration, impacting profitability.
Q & A Highlights
Q: Can you explain the decrease in operating cash flows due to increased trade receivables? Is this a one-off situation? A: Our working capital cycle has reduced significantly to around 106 days. We aim to maintain it between 120 to 130 days. The increase in trade receivables is a one-time occurrence, and we expect the working capital cycle to stabilize at 120 to 130 days. - Pankaj Jain, President, Retail
Q: What is the purpose of purchasing land for INR57 crores? A: The land is intended for a new head office and registered office due to space constraints at the current location. We are also considering monetizing the current asset. - Pankaj Jain, President, Retail
Q: How has the Kraus brand performed this quarter, and how does it compare to previous periods? A: Kraus has performed well, generating around INR55 crores in revenue this quarter. The annual figure last year was INR175 crores, but comparisons are difficult due to changes in accounting policies. - Pankaj Jain, President, Retail