The company continues to guide for 12% revenue growth and 6–7% same-store sales growth this fiscal. “That is what we have been targeting, and we are quite confident that it is achievable,” said CFO Premchand Devarakonda in an interview to CNBC-TV18.
The retailer plans to open over 30 new stores this year, including six in the NCR region, with the remainder in its Southern cluster. Expansion into new geographies like Western Uttar Pradesh and Odisha is also on the cards over the next 12 months.
On the product front, Devarakonda said the company does not expect major changes in the revenue mix. “The revenue mix is not entirely under our control — it’s driven by market demand. Over the next two to three years, I believe the sales mix will remain more or less the same,” he noted, acknowledging that high-churn, low-margin categories like mobiles continue to gain share.
The company is also working on improving operational efficiency. After seeing a rise in working capital days to around 80, Devarakonda said the company is aiming to bring it back to around 60 days. The spike, he explained, was seasonal, due to inventory buildup at the start of the summer sales cycle.
In the National Capital Region (NCR), the company sees significant growth potential. While Hyderabad stores average over ₹70 crore per store, NCR stores are currently below that mark. “Over the next 24 months, we are targeting around ₹50 crore per store from NCR, and that is achievable,” he said, adding that a couple of stores are already close to that mark.
While NCR currently has lower margins due to high upfront costs, the company expects the region to break even at the profit-before-tax level this year.
As for air conditioners, which saw sluggish sales in April and May due to unseasonal rain and early monsoons, June brought a turnaround. “In the month of June, there has been some improvement across all categories,” Devarakonda said, noting that ACs form about 15% of the company’s total revenue.
Despite the weak start, the CFO remains optimistic. “As we approach the end of the quarter, this is turning out to be one of the less encouraging quarters,” he admitted, but added, “We are optimistic that if you look at the first half of this year, there will definitely be reasonable performance across all categories.”
This is the verbatim transcript of the interview.
Q: You had earlier said that Q1FY26 AC sales were impacted by unseasonal rains. Now that we’re towards the end of the quarter, how does the business look? How have footfalls and sales been in Q1?
A: As I mentioned earlier, the first two months of Q1FY26, especially for air conditioners, were quite disappointing because of unseasonal rains and also early monsoons. But in the month of June, there has been some improvement across all categories.
In fact, during the first two months, the other categories did reasonably well and showed decent single-digit growth. So, as we approach the end of the quarter, this is turning out to be one of the less encouraging quarters.
In spite of that, we are quite confident. Having seen the growth and performance of these categories over the last three weeks, we are optimistic that if you look at the first half of this year, there will definitely be reasonable performance across all categories.
Q: You’re holding on to the 12% revenue growth guidance and 6–7% same-store sales guidance that you had given earlier?
A: Yes, that is what we have been targeting, and we are quite confident that it is achievable.
Q: Just to quiz you a little bit more on what you said — large appliances are around 45% of your mix, I think. ACs would fall under that. ACs as a percentage of large appliances would be how much?
A: As a percentage of the total topline, it will be around 15%. If I take only the large appliances category, it will be around 30%.
Q: The NCR business is a smaller part of the company, but margins over there are a little bit lower. How do you see margin recovery in the NCR business, and for the company as a whole, what kind of band should we work with?
A: We are relatively new in NCR. Initially, store launch expenses and advertisement costs, as a percentage of the contribution from the NCR region, is quite high. As a result, margins were impacted. However, the throughput from stores launched in the last 24 months has gone up significantly. So, this year, we are expecting NCR to break even at the PBT level.
Q: When will NCR break even?
A: NCR business will break even in the current year (FY26).
Q: The South business, which is a mature market, has 7% margins and nearly ₹6,000 crore in sales. NCR is flat, with about ₹500 crore in sales. We understand that the total addressable market in NCR is much bigger than in the South. So, what is your growth plan for NCR? And how do you see the revenue mix between NCR and the South evolving over the next few years? NCR, while being a large market, is also more competitive, which is reflected in your margins.
A: The product mix is more or less the same in both Hyderabad and NCR. However, the store growth potential is much higher in NCR compared to Hyderabad. In Hyderabad, we are averaging more than ₹70 crore per store. In NCR, our target is much higher than that, and we believe it’s achievable in the near future.
Q: You have 28 stores in NCR right now, with close to ₹500 crore in sales. If you’re doing ₹70–75 crore per store in Hyderabad, shouldn’t NCR stores be doing a lot more?
A: Exactly, there is high potential in NCR. Over the next 24 months, we are targeting around ₹50 crore per store from NCR, and that is achievable. In fact, a couple of stores are already on track to reach the targeted throughput.
Q: What about working capital days? Over the last few years, they’ve gone up — from the mid-60s to around 80. Where do you expect this number to stabilise?
A: Our target is around 60 days. As of March 31, the number looks high because it marks the start of the season, and we have significant inventory buildup. That inflates the working capital days number. But if you take the average for the entire year, it’s below 60, and that’s the level we aim to maintain.
Q: How many outlets do you plan to open in the next 12 months? I remember you were looking to open six or seven in NCR this year. What’s the overall expansion plan over the next one to three years?
A: This year, we are targeting over 30 stores, out of which six will be in NCR and the rest in the Southern cluster. Next year, we have a similar target. We also plan to expand into new regions like Western UP and Odisha. These are markets we are targeting in the next 12 months.
Q: What would your ideal product mix be? At one-point, large appliances made up nearly two-thirds of your revenue. But now everyone’s looking to buy mobiles, which don’t offer much in terms of margins. So how are you planning your revenue mix going forward?
A: The revenue mix is not entirely under our control — it’s driven by market demand. Also, in the case of mobiles, the churn is much higher compared to large appliances. Over the next two to three years, I believe the sales mix will remain more or less same.
