Summary
Sai Silks (Kalamandir) Limited - Q3 FY 2025-26 Earnings Call Summary Tuesday, January 20, 2026, 11:00 AM
Event Participants
Executives 2 K.V.L.N. Sarma (CFO), Rachamadugu Bharadwaj (Senior Vice President)
Analysts 6 Akhil Parekh, Amish Kanani, Ankit Gupta, Dhwanil Desai, Hitaindra Pradhan, Param Vora
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹411.25 crores | -8.3% YoY; Impacted by shift of Dasara to Q2 and moderated festive demand. |
| 9M Revenue | ₹1,234.00 crores | +16.1% YoY; Reflects resilient performance despite quarterly volatility. |
| Gross Margin (%) | 42.2% | +40 bps YoY; Driven by pricing discipline and improved product mix. |
| EBITDA Margin (%) | 17.0% | Maintained through conscious reduction in advertisement and promotional spends. |
| Profit After Tax (PAT) | ₹38.40 crores | -16.5% YoY; Moderation due to lower festive-led volumes compared to high Q3 base last year. |
| 9M PAT | ₹108.20 crores | +50.7% YoY; Surpassed full-year FY25 PAT due to operational leverage and cost discipline. |
| PAT Margin (%) | 8.77% (9M) | +200 bps YoY; Reflects better absorption of fixed costs and enhanced efficiencies. |
| Retail Footprint | 7.70 lakh sq. ft. | Added 20,500 sq. ft. in Q3 and 54,500 sq. ft. in 9M FY26 across 11 new stores. |
| Net Debt | ₹0.00 crores | Company is currently debt-free with zero working capital borrowings. |
Geographic & Segment Commentary
- Varamahalakshmi Silks: This format remains the primary growth engine and focus for expansion. Mature stores in Tamil Nadu are yielding ₹37,500 per sq. ft. with a target to reach ₹45,000 by FY27. It requires lower advertisement spend compared to other formats and offers a superior margin profile.
- KLM Fashion Mall: Experienced slight degrowth in Q3, specifically in menswear and kids’ wear, which now contribute 12% of the mix versus 15% last year. Saree sales within this format remain resilient, and management expects low single-digit SSSG for the full year.
- Valli Silks: Positioned as a “Kalamandir-like” format with reduced capex and inventory requirements. Management is currently “building the model” for efficiency and aims to potentially turn this into a franchisee-friendly format over the next 12-15 months.
Company-Specific & Strategic Commentary
- Geographic Diversification: Management plans to enter Maharashtra (Nagpur, Mumbai, Pune) and Kerala in FY27. Initial entry will involve 1-2 stores to test consumer behavior before aggressive clustering, specifically targeting the gap in the branded saree market.
- Cost Optimization: Shifted from high-cost offline media (TV, newspapers) to digital and social media channels. Combined advertisement and business promotion expenses are being targeted to remain under 4% of revenue.
- Operational Leverage: Despite softer Q3 revenues, the company protected margins by pushing aggressive expenditure into the higher-growth Q2 and controlling costs in Q3, leading to significant YoY PAT growth for the 9-month period.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| FY26 Revenue Growth | 15% YoY | Revised from 18% to a conservative 15% following Q3 calendar shifts. |
| FY27 Store Expansion | 80,000 - 85,000 sq. ft. | More aggressive expansion planned; 50% through Varamahalakshmi format. |
| FY27 Sales Growth | 15% - 20% YoY | Driven by 10% store area growth and 4-5% Same Store Sales Growth (SSSG). |
| FY27 EBITDA Margin | 17% - 18% | Expected improvement from Varamahalakshmi mix and maturing Tamil Nadu stores. |
Risks & Constraints
| Risk | Context |
|---|---|
| Calendar Volatility | The business is highly sensitive to the lunar calendar and wedding dates; shifts in festive months (like Dasara moving to Q2) cause significant quarterly revenue fluctuations. |
| New Market Taste | Entering Maharashtra involves different merchandising needs compared to South India. Management plans to mitigate this by testing with 1-2 stores before full-scale deployment. |
| High Rental Costs | Management noted that rental costs in Mumbai are significantly higher than their average in the four southern states, potentially pressuring rent-to-revenue ratios. |
Q&A Highlights
Expansion and New Markets
- Question: Why enter Maharashtra when there is still room in existing states? (Dhwanil Desai)
- Answer: We use a cluster model. We will enter with 1-2 stores to understand consumer behavior (sarees vs. lehengas) and use our diversified sourcing (100+ clusters) to adapt. Once the model is cracked, we will scale to leverage warehouse and admin costs. (R. Bharadwaj)
Valli Format Economics
- Question: Can you share the unit economics for the Valli format? (Rahul Jain)
- Answer: It is currently in line with Kalamandir economics but with lower capex. We are pausing expansion in Q4 to finalize an efficient model for potentially launching a franchisee version in the future. (R. Bharadwaj)
Working Capital and Funding
- Question: How will you fund the ₹100 crore+ requirement for next year’s expansion? (Resham Mehta)
- Answer: IPO funds will be exhausted by FY26-end. However, we have zero debt and high internal accruals. We do not anticipate needing external working capital borrowings until H2 FY28. (K.V.L.N. Sarma)
Marriage Season Outlook
- Question: How do wedding dates look for the next year? (Ankit Gupta)
- Answer: FY27 wedding dates are approximately 10% higher than this year. Crucially, they are well-distributed from April to July, avoiding the “clustering” seen in previous years. (R. Bharadwaj)
Key Takeaway
Sai Silks Kalamandir delivered a resilient 9M FY26 performance with revenue growing 16.1% to ₹1,234 crores and PAT surging 50% to ₹108 crores, despite a 8.3% revenue dip in Q3 caused by the early onset of the festive season. The company successfully expanded its 9M PAT margins by 200 bps to 8.77% through tight control over advertisement spends (targeted <4%) and improved product mix favoring the Varamahalakshmi format. Strategically, the firm is pivoting toward an aggressive FY27 expansion plan of 80,000-85,000 sq. ft., including a foray into Maharashtra and Kerala, funded entirely through internal accruals and remaining IPO proceeds. While FY26 revenue guidance was tempered to 15%, management remains confident in a 15-20% growth trajectory for FY27, supported by a 10% increase in wedding dates and maturing store productivity in the Tamil Nadu market.
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