Credo Brands Marketing Ltd (Mufti) – Q4 FY25 & FY25 Full Year Concall Highlights Financial & Operational Performance: - Q4 FY25 Revenue: ₹153.2 crore (+15% YoY); FY25 Revenue: ₹618.2 crore (+9% YoY). - Profitability: Q4 EBITDA ₹41.1 crore (margin 26.8%), up 33% YoY; FY25 EBITDA ₹179.7 crore (margin 29.1%). PAT for FY25 was ₹68.4 crore, reflecting strong margin discipline despite industry challenges. - Balance Sheet: Maintains healthy cash reserves; no debt, providing financial flexibility. Industry & Market Conditions: - Post-COVID surge in demand for mid-premium and premium menswear has normalized; consumer sentiment remains subdued due to macroeconomic headwinds. - Current demand in the premium apparel segment is weak, driven by lower discretionary spending, but this is viewed as a cyclical phase rather than a long-term concern. Business Model & Strategic Focus: - Inventory Management: Unique model of fresh stock sales through offline stores (EBOs, MBOs, LFS), with unsold inventory liquidated via online outlets, enabling high margins and extended inventory days (~67 days, down 10 days YoY). - Store Expansion: Added 16 new EBOs (total 441 stores in 247 cities), with 19 closures in FY25; opening new stores selectively in prime locations. Same-store sales growth (SSSG) at 1.8%. - Digital & Omnichannel: Achieved over double turnover via own website in FY25; actively expanding online contribution in a profitable manner. Digital marketing spend maintained at ~5% of revenues. - Premiumization & Store Upgrades: Launching a new retail identity, renovating up to 30 flagship stores in FY26, with a cautious and calibrated approach. Margins & Growth Outlook: - Margin Strategy: EBITDA margins expected to be sustained around 28–30%. Gross margins stable at 56–58%. - Revenue Growth: Targetting mid-teens growth in FY26, driven by store expansion (~20–25 new stores), SSSG, and market recovery. Growth will be calibrated to demand sentiment, prioritizing profitability. - Capex: Estimated ₹12–15 crore in FY26, financed through internal accruals. Key Drivers & Outlook: - Demand Cycle: Expectation of demand revival enabled by supportive macroeconomic policies (e.g., focus on middle-class disposable income). - No Immediate Export Plans: Focus remains on India, leveraging category leadership, omnichannel strengths, and high store productivity. - Operational Leverage: Employee and other costs remain flat YoY, indicating good operating leverage; incremental digital and store investments will be made when justified. - Credit & Risk Management: Asset-light model, strong liquidity, and disciplined expansion minimize credit and inventory risks. Risks & Headwinds: - Ongoing subdued demand in the first two months of FY26, with SSSG muted at 1.8%. Ongoing macroeconomic uncertainties could impact discretionary spend. - Market recovery depends on macro factors; growth will be calibrated accordingly. Management Confidence & Strategy: - Fully confident in navigating challenges while maintaining profitability. - Focus on premiumization, digital transformation, and selective expansion. - Prioritizing long-term relationship building with distributors, franchisees, and retail partners.