Ladies and gentlemen, good morning and Welcome for Lenskart's Q2 FY26 Earnings Call. To present the results, we have with us Mr. Peyush Bansal, Co-founder and Chief Executive Officer, Mr. Abhishek Gupta, Chief Financial Officer, and Mr. Nikunj Mall, Head of Investor Relations. As a reminder, all participant lines will be in the listen-only mode, and there'll be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, you may use the chat option to interact with the moderator. Please note that this conference is being recorded. I now hand over the conference to Mr. Nikunj Mall, Head of Investor Relations from Lenskart. Thank you, and over to you, sir. Thank you, Nirav. Good morning, everyone, and thank you for joining Lenskart's earnings call for the second quarter of fiscal year 2026. Before we begin, I would like to remind you that some of the statements we make today may be forward-looking in nature and are subject to risks and uncertainties. The conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as of the date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. We have uploaded our Q2 results and a detailed shareholders' letter on our website and stock exchanges. Please note that during the call, consistent with our IPO prospectus, the financial numbers we are going to be presenting are referring to the pro forma financials for like-for-like comparison, unless stated otherwise. Reported financial statements reflect acquisition of Dealskart, Meller, and GeoIQ from their respective transaction closing dates. Pro forma financial statements present the financials as if the acquired business had always been a part of the company and hence represent a clearer business trajectory. For instance, international growth, the reported financials would indicate a higher Q2 revenue growth of 34% YoY due to inorganic addition of Meller during the period. Hence, proforma financials of 26% revenue growth are a better representation on a like-for-like basis. Similarly, in India, the underlying actual business growth for Q2 FY26 is 22% year-over-year, as reflected in the proforma financials. However, it will appear as 13% basis reported financial. This disparity exists because the last year Q2 numbers, as per reported financials, did not consolidate Dealskart and was higher than the actual secondary customer sales because of higher B2B primary sales between Lenskart and its master franchisee Dealskart ahead of pre-festive season stocking. In addition, our reported EBITDA is excluding other income and includes all ESOP costs and R&D expenses. With that, I would now turn over the call to Peyush. Hi, good morning, everyone. I'm really thankful for all joining the call today. I'm grateful to all of you for putting faith in us with your capital and also with your eyes. Thank you. At Lenskart, we have spent a decade with one single mission: how do we get vision correction and a high-quality pair of glasses accessible to everyone? We think it will take a decade more, at least, for us to make any kind of impact. The journey towards vision for a billion has just begun. If you look around you, you'll easily find six, seven out of 10 people wearing glasses. This has grown increasingly as the time we spend on digital screens has increased. Our view is that almost half of India today, more than 750 million people, need vision correction. About 70% of adults and 40% of children in India have some form of vision impairment. This isn't just a market. It's a fundamental human need. And we believe we are not just participating in this market. We are catalyzing market creation. In H1 FY26, we conducted 9.3 million eye tests in India, up 47% year-on-year. But here's the number that matters most to us, 46% of these were first-time users. People who didn't know they needed vision correction until we made eye testing accessible. The majority of them discovered a prescription issue and bought their first pair of glasses at Lenskart. This is why we started Lenskart: to transform India from the blind capital to the world of vision capital. We are still very early in our journey. We have less than 5% market share in India, and the solutions we are building here are relevant for international markets as well. But how are we doing this? Let me explain. At the core of this problem-solving lies technology. At Lenskart today, we have 500-plus engineers and are one of the most tech-invested eyewear companies in the world. Technology solves three critical problems: where to open stores, how to scale eye testing, and how to deliver everywhere. Our AI platform, GeoIQ, analyzes 3,000+ variables to identify optical locations, ensuring disciplined expansion and low paybacks. We have deployed remote eye testing in 500+ stores in India and even Japan now, allowing one optometrist to serve multiple locations using AI-enabled copilots with a high degree of efficiency and quality. We have built a centralized, technology-led supply chain that delivers next day in 58 cities and now even same day in some cities. Behind every pair of glasses we ship, there's a network of automation and AI solving real problems at scale. And this technology, combined with our other investments, is now creating a meaningful compounding effect. For the last decade, we have been building the pillars of our business. Now these pillars are giving shape to a new phase of sustained compounding. This is our compounding flywheel in action, with four interconnected pillars. First, our vertical integration. Our product margin is 69.2% in Q2, realized through scale and centralization, giving us 35% - 40% cost advantage. We have been scaling in-house frame manufacturing from 4.4 million frames a year in FY23 to almost four million in H1 FY26. Second is technology-led omnichannel. 45% of our sales are digitally influenced in India, with our mobile app driving high-intent purchases through features like AI virtual try-on, geo-analytics, and retail analytics. Third is the Lenskart brand itself. Lenskart brand has high word of mouth that has brought our marketing cost down from 9.7% in FY23 to 7.5% of revenue in H1 through just brand pull. Fourth is operating leverage. Our store-level EBITDA in India is about 33%, including opening a large number of new stores, versus our EBITDA pre-Ind AS margin of 13%, giving us large operating leverage runway towards the industry steady state of 25% pre-Ind AS. Importantly, this compounding effect transcends borders and currencies. The same flywheel that works in India operates profitably in Singapore, Japan, Thailand, and the Middle East. We are building a global compounding machine. This flywheel is what drives our sustainable, profitable growth. You can see this playing out in our financial results. Let me take you through Q2 and H1 FY26 results. For Q2 FY26, on a like-to-like basis, revenue of INR 21,466 million, up 24% year-on-year. EBITDA of INR 4,258 million, up 34.3% year-on-year, representing a 19.8% margin, up from 18.3% in Q2 FY25. PAT of INR 1,130 million, up 50% year-on-year, representing a 5.3% margin, up from 4.4% in Q2 FY25. H1 FY26 highlights revenue of INR 41,788 million, up 25.3% year-on-year. EBITDA of INR 7,908 million, up 37% year-on-year, representing an 18.9% margin, up from 17.3% in H1 FY25. PAT of INR 1,937 million, up 98.1% year-on-year, representing a 4.6% margin. What's remarkable is that our H1 PAT of INR 1,922 million is almost equal to our full-year FY25 PAT. Our EBITDA margin has improved from 8.3% in FY23 to 19.8% in Q2 FY26, a 1,150 basis points expansion in three years. This is the math of operating leverage at work. Let me break this down by geography. Our India business grew 24.7% in H1, with a 19.5% EBITDA margin and 13.4% pre-Ind AS margin, up from 10% in H1 FY25. Our stores delivered an adjusted same-store growth of 15%, consistent with FY25 levels. Beyond that, we achieved approximately 20% adjusted same-pin code sales growth, indicating that we are gaining market share within existing geographies. The growth was primarily volume-driven, with eyewear units sold up 24%. We expanded into new cities and went deeper into Tier 2 markets. Our loyalty program, Lenskart Gold, now has 7.4 million active members. Coming to international business, our international business grew 26.1% in H1, with 18.2% EBITDA margin and 5.9% pre-Ind AS margin, up from 4.7% in H1 FY25. What's important here is that the majority of the growth came from same-store performance. We are leveraging our India capabilities, supply chain, technology, manufacturing to drive growth and profitability across our markets. Our international strategy is phased and deliberate. Each market is at a different stage. Singapore and UAE are established with market leadership. Saudi Arabia is in early investment phase. Japan and Thailand are scaling with improving economics. Now, let me explain what I mean by market creation. The most important question, what is our runway for growth? Third-party reports estimate the Indian eyewear market at $9.2 billion. While we believe this is a reasonable estimate, we are confident it still understates the true opportunity. As one of the few scale players in a highly fragmented market, our data reveals a much broader and more nuanced perspective. Our market creation thesis is built on solving problems that have remained unaddressed for decades, same-day delivery, high-quality eye testing at scale, availability in remote towns, as well as right in your neighborhood through centralized manufacturing, reimagining eyewear as fashion with virtual try-on, and introducing the first paid subscription program for eyewear through Gold membership. We are pushing the boundaries of eyewear design with creative collaboration, including Batman, Harry Potter, Masaba, Hello Kitty, and now POP MART, bringing new consumers into the category and expanding its relevance. Importantly, our pricing is not determined by competition. We price for affordability and accessibility. Each of these innovations has had a direct and measurable impact on expanding the market. What we are seeing in quick commerce today reinforces a principle we understood early in our journey. When you remove friction for the consumer, you don't just serve the market. You create it. We began with four-day delivery, moved to three, then two. Today, we deliver next day in 58 cities in India and recently introduced a two-hour delivery service in Singapore. Each step towards greater convenience has unlocked new demand. So first, we are creating the category. As I mentioned, 46% of our eye tests were for first-time users, people who were not part of any market estimate. We are converting latent need into active demand. Second, our micro-market performance proves the depth of demand. In cities across India, across tiers in India, we have tripled our stores and doubled revenue per store at the same time. Whether it is a metro, Tier A, Tier 2, this is not cannibalization. This is market expansion. Let me be specific. We have stores opposite each other in locations like Chembur in Mumbai. Over the last two years, cannibalization has been minimal. When we add density to a postal code, we are not splitting the same pie. We are doubling the TAM in the postal code. Our runway is therefore not just about capturing share in a fixed market. It's about two powerful vectors of market creation. One, geographic expansion. We have identified about 2,800 unserved pin codes in our existing 431 cities, plus 2,000 new towns through our GeoIQ platform, where we have no presence, but dynamics are similar to our existing towns. Second, market densification. Our data shows we can continue adding stores in existing markets with minimal cannibalization. When you combine these vectors, the addressable opportunity is multiple times our current footprint, a decades-long expansion runway. And this is not just an India story. The solutions we are building here are relevant for international markets as well. In Singapore, we are now the largest eyewear player, with about one out of four people wearing a Lenskart pair of glasses. The playbook is global. We are executing on this with discipline and speed. In H1 FY26, we added 203 net new stores in India. For the full year FY26, we are targeting more than 450 net store additions in India. As we expand, we are also thinking about the future of the category itself. Eyewear hasn't seen a new generation of brands in decades. Traditional brands grew on global platforms, but today's D2C brands need a different ecosystem. We are building the platform for the next generation of eyewear brands. Our house of brands serves different customer segments: John Jacobs for premium fashion, OWNDAYS for quality and value across Asia, Meller for fashion-forward sunglasses, and collaborations like POP MART for younger trend-driven consumers. Meller is a gem. The love for this brand is the best we have seen in many years. It gives us the right price point for fashion sunglasses, combined with a strong European design DNA and some of the most aggressive and creative marketing you'll see in the eyewear category. We recently launched it across our network in India and Middle East, and the response has been overwhelming. I encourage you to check it out online or at your nearest Lenskart store. Could Meller be the Ray-Ban? Could Meller be to Lenskart what Ray-Ban is to Luxottica? I don't know, but the potential is certainly there. Our goal is to be the enabling platform for the future of eyewear, bringing customers more choice and helping new brands scale on our infrastructure. But the biggest transformation is yet to come. Customer experience remains central to everything we do. Our NPS improved from 70% in FY23 to 79% in Q2 FY26. AI is becoming the cornerstone of everything we are doing because we believe it's the only way to solve the problem of vision correction at scale. When you get your eyes tested, AI is helping our optometrists. When you try on frames, AI is powering your frame recommendations. When you place an order, AI is optimizing our supply chain to get your glasses to you faster. Even when you interview with Lenskart, there's an AI agent conducting most rounds today. And the future is even more exciting. B, our new smart glasses, allows eyewear to do much more for you and is a core part of our purpose. B will enable hands-free calling, taking photos, videos, real-time translation, AI assistance, food logging, UPI payments, and seamless integration into your digital life, all through your glasses. This transforms us from an eyewear company to an eyewear and data company. This is not just another product. It's a combination of our full-stack approach. We are designing the hardware, developing the software, and mobile app in-house, and building it on Qualcomm's advanced AR1 chip, and this is just version one. This is one of the greatest times for us as we look forward. We are grateful to all our shareholders, customers, employees for your trust. We are excited about the journey ahead. This is still day zero. With that, we'll open the call for your questions. Thank you very much. We'll now begin with the question and answer session. Anyone who wishes to ask a question, may click on the raise hand icon to ask your questions. Kindly unmute your audio. Announce your company name before proceeding with your question. Participants are requested to restrict to two questions per participant and rejoin the queue for a follow-up question. First question is from the line of Vivek Maheshwari. Please go ahead. Hi, good morning, Peyush and team. This is Vivek from Jefferies. Since this is the first time that we are, you know, speaking to you after your listing, maybe my questions may be, you know, a bit basic. But the first one is on your comments in your shareholder letter as well as today on the compounding bit with a focus on margins led by, let's say, operating leverage. Of course, you mentioned that. But now that you're listed, how do you manage or ensure that, you know, you don't lose sight of the growth and do not overly focus on the margin bit? So that's the question. That's the first question. Thank you, Vivek. Great question. See, in our business, we have been investing for the last decade plus into fundamental pillars which are driving this margin. This margin is not driven by reducing marketing cost or controlling costs in the short term. They are fundamentally coming from a few pillars which are core to our business. First of them being vertical integration manufacturing that we have invested. Our product margin in the last five years, if you see from FY23, has grown from 64% to now 69%. So this is a very, very strong pillar that we see in our business. Even if we look at how we acquire customers, our omnichannel approach, today, 45% of the sales is digitally influenced. Our marketing costs have come down from over 9% - 7.5%, not by reducing absolute marketing costs, but by actually just the brand pull and word of mouth, so we have actually spent more, but the growth has outpaced the marketing cost, which is what is kicking into the business, and then there is the operating leverage, whether it is the employee cost. There are a lot of fixed costs in the business, like technology costs, so while we continue to invest in growth, even if you look at examples like B, you know, they are getting funded from, you know, they are getting funded from the growth itself. I just want to reassure you, growth is our priority. In fact, I would say volume growth is our priority. So in, I would say the operating leverage is coming from fundamental pillars in the business, one of which is also the Lenskart brand. It is not coming at the cost of growth. Got it, Peyush. That's good to know. Two more questions. The second one is on the GST bit. You have mentioned that, you know, there has been an impact in the month of September. A lot of consumer companies have had quantified this impact. Is it possible for you to either quantify what is the impact in September quarter or how October, November, X of this, once the GST bit settled down, where the numbers are trending? Because you have given some reference to October, November in the shareholder letter. Yeah, thank you, Vivek. I was expecting that question. So overall, I would say we still had a very strong quarter too. We did see demand softening in the month of September because of anticipation of revision in GST rates. But I would say we still did fairly well. What we have seen is this has more than normalized in October and November. In fact, I would say because we passed the GST benefit to the consumers, we have seen a very, very strong demand coming from consumers in a category like ours. So I would say I'm not, we do not give future guidance, but I would say we have seen very, very encouraging signs in demand coming in Q3. Okay, got it. And last one, Peyush, this 10-month payback, you know, what you mentioned in the shareholder letter, and of course, that is what, you know, let's say 80% + of your stores have done in the past also, as given in RHP. How fixated you are, you know, as you penetrate, and I understand the math that you, and it's a brilliant, you know, piece of information in the letter, but about the time via your stores. But how fixated you are, you know, to this 10-month, you know, payback? Number one. Number two, do you think, and again, sorry if it's a naive question, but let's say you have mentioned about, you know, how digital, you know, influences, you know, users, and they in turn walk up to your stores. Is there a possibility that, you know, into the future, you may not need as many stores as you're thinking because customers will be very comfortable, let's say, placing orders online? I know it's a very personalized category, but do you see that part playing out? So two parts to this question, and that's about it. Thank you, Vivek. Yeah, I'll take that one. So the first one, sorry, the first one? 10 months. Are we fixated on 10 months? See, we are not fixated on 10 months, to be honest. I think we prioritize growth and market share. You know, our core goal is that we want to serve more and more customers and create the market. We do care about economics and discipline to make sure that it is making sustainable sense for us. That being said, the GeoIQ platform that we have been building for over seven years now is becoming more and more powerful. You know, over the last three years, as we expanded into Tier 1, Tier 2 cities, we were amazed by the amount of machine learning that was kicking in. To give you an example, we already have, you know, a few years back, we had a thousand stores. Across these 1,000 stores, we had thousands of variables which we were tracking. The amount of data that was available on the internet was also limited. So the predictability of the model was up to a certain extent. But as years have passed by, now today we have over 2,000 stores. Across these 2,000 stores, we track even more variables. Plus, the data that is available in the cloud is even higher. When you merge all of this and put it into, you know, regression, the learning of the model is very, very refined. Today, we track mobility patterns of people on both sides of the street. We know where do people stop. We even know where people are coming from on a particular latitude, longitude, where are they going to. We understand through satellite imagery today what is happening, you know, what is the growth index of the country, in which part, you know, growth is. In fact, we are no more going into markets where there is retail. We are actually almost the first retailer in any market because the data has become really, really powerful. So what you see in the payback is not because we are fixated that only 10 months we will open. What is coming out of just pure data and science and analytics, right? So that, you know, and then the model is not further refined in terms of prioritization. Today, we do not go and say, okay, go open a store in a locality. We started from a city, we moved to a pin code, then we moved to a locality. Today, we say within 50 m of this point, right? Even the properties are coming to us on our RetailIQ platform where people we are only allowed to open. So I think just the science of it has become very, very strong. Yeah, I would say it's not, Vivek, it's Abhishek here. It's not a constraint. It is a prioritization discipline. Yeah. The second question. Second question is that in future, will the go-to-market evolve and will we might be a time for growing stores? I would say that, you know, if I look at any market in the world, even the developed markets, the population you can segment into three buckets. There's a population that is buying online. In India, let's say that number is 200 million-250 million. Then there's a bucket which is influenced online, but they are shopping offline. And there's a bucket which is not online at all. Now, in any market you go to, the middle bucket is the largest. That being said, you know, and Lenskart's core model leverages into that bucket. Because when you're not leveraging into that bucket, a lot of the marketing cost that you're doing is actually going waste. Because the consumer is coming, is digital, they are coming, your marketing dollars are not changing. So what a store is really doing is actually becoming the conversion point. So let me explain to you. So let's say you have 100 people coming on the website. And the best case conversion on a website is four to five. Now, even in an evolved market, this four to five, let's say, goes to 10, right? But is 10 good enough? Now, the same consumer today, you know, who's coming on the website, checking out your customer reviews, doing virtual try-on, is ready to convert with a little bit of assistance. Now, that assistance could come over a call, it could be through an AI stylist, which we have just launched on our app, or it could be in a store, and then that conversion of 100 from five moves to 10, and with the store, it moves to 20- 30, and then you have someone coming to your house to do an eye test, it moves to 35, and that is where the operating leverage and the profitability comes in, right? What we are seeing today in online is adoption is increasing more and more. In the global markets, we see people are getting comfortable buying eyewear online. But I would still say that the goal that Lenskart is looking at is an omnichannel model where we are not really building omnichannel, we are building omniconsumer in that sense. And I would say customers are shopping across. We have customers who come online, visit a store, and actually come back and buy online again. A lot of customers are actually going for their first purchase because they want to do an eye test in the store, but their repeated purchases are coming online. And some, after coming online, call somebody at home to complete their purchase. And this is evolving. So at Lenskart, I think we see this all as online. But yeah, adoption is increasing. We have launched recently a new assistant called B, which is also called B because it's an extension of our glasses, where you can chat with an AI agent. They scan your face. You can have a live video chat. It's very, very smart. It is in multiple languages. It scans how you look, thousands of facial features. It looks at your clothes, and it recommends you real-time the glasses. And that we have seen very, very great response. We are seeing people spend hours like they would spend in a store. Got it. Fascinating one indeed. Thank you very much, Peyush and team, for the elaborate answer. And I wish you and your team all the best. Thank you. Thank you, Vivek. Thank you very much. Next question is from Tejas Shah. Please go ahead. Yeah, thanks for the opportunity. This is Tejas Shah from Avendus. First of all, thanks for a very detailed newsletter for sharing very, very minute details. First, impressive SSG 15% all volume-driven. Peyush, you just spoke about that our focus will be on volume-driven growth. So just wanted to know, as a strategy, do you think pricing or premiumization becomes a meaningful lever in medium term? And second, the GST benefit, as we kind of pass it on to the customers, just wanted to understand how the category reacts to elasticity when such correction happens. And where does it take our competitive position versus unorganized in particular? Thank you, Tejas. Great question. See, pricing definitely plays a role. I think in India, if I look at the overall market, there is a market which is the middle of the bucket where Lenskart has largely been playing. And there's a market which is below that price point, and there's a market. And I think, as we stated in our prospectus, we have added market share in both of these. We almost are doing close to 18% business now, below INR 2,000 as much we are adding to the INR 10,000. I think market is evolving and growing on both the sides right now. But pricing does play a role. I think this market is growing so rapidly. And going back to my point about friction, you know, the more friction we remove from the category, it unlocks latent demand. Because a lot of times people need a little bit of trigger. I'll give you an example. We launched a new service. You know, we have been in the business of selling glasses with prescription, with the lenses. We have been a very small player where people bring their existing glasses to change their lenses. Recently, we invested in the supply chain ecosystem, and now we offer a service where you can bring existing glasses from any brand and get lenses replaced. We saw huge demand from consumers. Now, if you see, lens replacement usually happens at a slightly lower ticket size than frame and lens. But we saw great demand. We saw margin sustaining, and, you know, more market share coming into the picture. So I think, and I would say GST, coming to your second question, definitely has unlocked more demand because it was a category which was sitting at 12% GST, which has now come at 5%. And we have, I think the team has done a great job by passing that benefit to the consumer not only at every price point, but I would say at the lower price points even more to unlock demand. The blue computer glasses at Lenskart, which is what India, Digital India needs right now, with everybody spending more and more time on mobile, is more affordable than ever. And we have seen great uptake. Very clear. Second, same-pin code versus SSG. You mentioned that 20% same-pin code growth versus 15% SSG. Now, this 500 basis points gap suggests limited cannibalization. But going forward, how should we think about this number? Like, usually, has it remained this gap in past, or has it narrowed down, or it expands with all the GeoIQ data or expansion that we are doing that it actually kind of plays positively as we go ahead? See, at Lenskart, you know, our goal is to gain market share in every locality. And if you look at a pin code, it is a pretty large area, right? And within a pin code, there are multiple micro markets that exist. So I would not necessarily say that between SPSG and SSSG, there is cannibalization. You know, in a city like Bangalore today, you need, I think, 10 minutes or 15 minutes to get to a kilometer. So at least what our data suggests is there is no cannibalization between SPSG and adjusted SSG. We do optimize for same-pin code sales growth as a business because the way our model works is that we are bringing people online onto our platform, and then we are converting them into the neighborhood. I'll give you a very, very interesting case study that we have done. When we ask people, what is the biggest reason for you to shop at Lenskart? Invariably, across surveys, we say 60% people say it's quality, followed by style. But you know, you'll be surprised, despite having 2,200 stores, you can do a survey yourself that what is the biggest reason for you to not shop at Lenskart? People will say, "I don't have a neighborhood Lenskart store in the vicinity." So yeah, coming to your second question, has this trend been the same? Last year, we saw a similar trend of both SPSG and SSSG. You know, we are a very hyperlocal business. And in fact, I would say a pin code is a very, very large base for us. Within a pin code, there are multiple markets, and then there are micro markets. Unfortunately, I think we do not track enough data traditionally to be able to segment these consumers. We look at mobility patterns. So if I am sitting in BKC, people are coming to BKC at a particular latitude, longitude from what area, and where are they going to? Do they come during the day? Do they come in the evening? Are they coming, you know, lunchtime? Defines what a market is. I think markets and catchments cannot be seen in the way we have seen them traditionally. You know, there are more data points that need to be applied. Today, you have so much data point about with quick commerce or food delivery patterns that are happening. So that is how at least we look at it right now. We continue to go deeper in every pin code, and we will continue to. Very clear, Peyush. Thanks and all the best for coming quarters. Thank you. Thank you very much. A request to all the participants. Kindly restrict to questions per participant. We join the queue for a follow-up question. Next question is from the line of Ayush Rastogi. Please go ahead. Hi, thank you so much. A couple of questions from my side. Correct me if my observation is wrong, Peyush. First would be in terms of implied ASP for 2H FY25, it seems, you know, a high jump from 5,500 sort of a number to 9,000. So can you just let us know what has led to that? And again, from 2H of FY25 to 1H of FY26, if we see, there has been a sharp drawdown in terms of ASP from 9,000 to 5,000. That's the first thing. Second question would be definitely the margins, you know, have been very good in this quarter, or maybe you can say in the 1H also. But most of it, it has come on the back of, you know, a reduction in the other expenses, which can be attributed to the marketing spend. So going forward, what's the thought process for the marketing expense? Like, can one expect the same momentum to continue, or like, should we expect maybe a, you know, a bit increase in the marketing expense, which can, you know, dent the margins, or maybe like, it's just the operating leverage that we would be having as a lever going forward? So these are the questions from my side. Let me take the second question first. I think on the margin expansion, like we discussed earlier, there are three fundamental pillars. First is the product margin improvement. So if you see in the international markets, we added about one percentage point of product margin in this period. Second is marketing efficiency. And we spoke about marketing already. India has seen about two percentage points improvement year-on-year on marketing spends, whereas we have invested more in international on the marketing side. Then in the other expenses, you'll also see incentives and commissions have been going down because as we are not adding new franchise stores, the relative share of the franchise commission expense keeps going down, and that brings some operating leverage, right? At the same time, you will see overall, you know, fixed cost operating leverage through technology and fixed infra cost. So I would say, like Peyush earlier mentioned, the steady state margin in this category globally are about 25%, right? Pre-Ind AS. Pre-Ind AS. And we have added about 10 percentage points in the last few years. Our priority continues to be growth, and margin is a normal outcome because there is positive correlation between growth and profitability for us. Yeah. And Ayush, thank you. I would just like to add to that the product margin expansion would also continue in this category. If we look at our international business and we look at mature markets to new markets, we see a delta there because our international markets require technology and supply chain integration, which happens in a phased manner. As markets get integrated, we start seeing margin leverage coming into the picture. Even in India, moving forward, we will see further margin improvement with economies of scale, more backward integration that is coming into the category as we set up our Hyderabad plant and we integrate more frame manufacturing into India. Plus, you know, we have launched brands like Meller, which are premium brands, which inherently have a higher margin there. So I think there is opportunity for further, you know, net margin improvement in the business, and like Abhishek said, the steady state margin in our category is around 25% pre-Ind AS. It is not something that we are committing that would happen in the next two to three years. It is a long runway because growth is our big priority. But in the long term, that is where I think the business will move towards. And Ayush, can you just clarify on the first question? When you're looking at the ASPs, which period and which geographies are you referring to? On the international front, for 2H FY25 versus, you know, 1H of FY25 or 1H of FY26? Yeah. So if you see overall growth in international markets, Ayush, you'll see about 26% growth year-on-year. Within that, the volume growth is about 16%-17%. And the price growth or the ASP growth is about 9%, right? And one of the reasons it can be attributed to is because of the currency impact, right? We do not report currency, constant currency financials because we have a natural hedge in our business. We earn revenues in multiple currency beyond INR, JPY, Singapore dollars, Thai Baht, Saudi riyals. But at the same time, we also import raw materials into India. So they kind of offset each other, and the net impact is not really significant. That is the major reason for the ASP increase that you see in the international markets. In the past trends also that we have seen, the overall currency impact in our net financials is insignificant. Okay, the implied for 2H of FY25 seems to be, you know, way too high from 5,500 to almost 9,000. So like, how much would have been, you know, would have been led by the effects and how much would have been led by, you know, the increase and then again the sharp reduction? The currency impact that I have is about 8%-9%. The remaining, I'm not able to correlate the numbers. We'll just check. We'll get back to you. Why don't we check that again and maybe towards the end of the call if you can get an answer? Sure. Thank you so much. Thank you. Thank you very much. Next question is from Shrenik Bachhawat. Please go ahead. Hi, am I on? Yes, sir. Hi, team. Good morning. Shrenik from Mahindra Mutual Fund. Thank you so much for the opportunity and congratulations on the good set of numbers. My first question is, can you throw some more detail light on how the growth path will look in the international markets and how do we look at the store additions in the international markets over the medium term? And also, I've seen the Bhiwadi factory, which is very impressive, but how does the manufacturing operation and supply chain operations work in international markets? Hi, sorry. Thank you. Can you repeat the second part of the question once? So how does the manufacturing operations and supply chain operations work in the international markets? Like India, we have a great amount of backward integration and our own manufacturing capacities. Do we have our own manufacturing capacities in the international markets as well? Yeah, I'll answer that. Thank you, great question, and I'll answer the second question first and come back to the first one on how we look at growth in international. So, you know, our international markets are relatively new. Over the last few years, the vertical integration has been progressively increasing. We run a hybrid approach where India, you would assume, I would say, is the core of supply chain. And then the last mile is local. Usually, all the high-value activities happen in India, and then the low-cost activities happen locally. We have not yet fully integrated our supply chain across international. In markets like Singapore and Dubai, our supply chain is well integrated because these markets have matured, where unit economics are also now very similar to what we see in India in terms of growth, payback, et cetera. Whereas in other markets, every quarter that passes by, integration is happening right now. So we operate at a hybrid approach. I think overall, as a business philosophy in international, supply chain technology is very centralized. In fact, I would say all financial, HR, all these functions are run centrally. What we do locally in every geography is marketing and design, right? Which is very, very core for us to succeed in any market. You know, whether it is the design that works in the market to develop styles. I think traditionally, eyewear players have missed is that design. You know, and I've seen even the most global players, when they sell their products, they sell the same product that they sell in the U.S. as what they sell in Asia. But if you look at the preferences of consumers and even the face shape, they are very different across these markets. And at least the wins that we saw in UAE and Singapore came out of designing to the market, collaborating with partners to the market. So that is very local. Our marketing is largely content-led and social media-led, which again, it makes very, very big sense to do it. So I think we have arrived at a very, very good balance here, which ensures that we run a very, very low-cost operation, but at the same time, we do what is needed locally. So to summarize, I think supply chain integration is underway. It is not where India is, but in the times to come, it will get there. Coming to the first question on how we think about international. See, I would say international is following our trajectory in India. We are about three years behind India. But one thing which is very heartening for us to see in international is that the operating leverage and profitability is kicking in sooner than it kicked in India. In India, actually, we see profitability come in at a much later stage. But because a large part of the pillar systems, whether it is supply chain and the knowledge that the company has on how to market and the strategy, we are seeing this kick in. If you see our international business, you know, and we did not see this in India this early. It was pre-Ind AS negative 4.3% in FY23. And it has already reached about 5.9% in H1 FY26. Now, this is not forced. This is again coming, I think, large part of what you see here is coming out of the pillars that we have established locally in India. One thing for us to note is that in international, our margin is about 75% versus 63%-64% in India, right? Which is 10%, 11% higher. And in mature markets, even higher than this. Now, this is another 11% and in the higher markets, even more differential for us to create value for the customers. And secondly, the myopia rates in our markets is very, very high. In India, we are talking about 60%. In Southeast Asia, the government declares myopia rates at 80%. If you go to the government of Singapore website, they say 83% of people get myopic by the age of 18. So the demand is increasing very rapidly. In fact, I would reiterate that the demand in the markets that we operate is also growing very rapidly. In fact, the demand is moving towards D2C brands. But the solutions that are available in the market, A, do not cater to the styles that the consumers, sorry, the consumers are used to. Plus, the price points at which they are available are very, very high. Now, if you look at kids at about 12 years or six years, a large number of kids get myopic. The solutions available in these markets cost into hundreds of dollars. And we, with our supply chain, centralized supply chain, and with our economies of scale, are able to provide products at even a much larger differential in these markets that we do in India. So I see the opportunity here very, very large. And it is a multi-market approach, I would say. International, I would say one should take a longer-term view. We are very positive. In fact, we are very excited. Growth is what matters to us there. And we are taking a very calibrated approach. In FY, till three, four years back in India, we used to open only 50 - 100 stores a year. And then, as we calibrated into markets, we expanded this journey. And our geo analytics platform right now, we are scaling to international as we speak right now, our Tango Eye, which allows us to do retail analytics. And that is why you see same-store growth coming into this category right now. But what you see in international is a combination of markets. When you look at certain mature markets, they are actually very similar to India. So we are very, very excited and positive about India, about international. I think it is even stronger than India in many ways. Thank you for the different answers. One question from Indian manufacturer. Sorry to interrupt, but we are losing your audio. Okay. Am I audible now? Hello? Yeah, can you be closer to the... Yeah, thank you. Please go ahead. Yeah, just last question. So on the India manufacturing bit, I believe, if I'm not wrong, our Bhiwadi capacity had come up three years back. And now we are planning a large CapEx. So is it that every four years we'll have to plan a large CapEx to cater to the strong growth that we see in India, or incrementally we'll have to plan much larger capacities so that we can delay the large CapEx every incrementally? Yeah, see, overall, I want to mention that our CapEx is divided into two parts. There is a structural CapEx of building civil infrastructure, which is not the majority part of CapEx. It is a relatively smaller percentage of the CapEx. And because we are so positive on the latent demand that is coming into both India and international, it is better to invest in it ahead of time because it takes, you know, approximately two, two and a half years for the infrastructure to come up. And then the machinery, which is the larger part of the CapEx, is normalized and invested in closer to how we see the demand coming up. That being said, you know, right now we are investing in Hyderabad, but you know, as we speak, our Bhiwadi utilization is already at 64%. Our Hyderabad plant is still about 18-24 months away. By that time, this utilization will go up further. That is when, you know, this plant would come in. I do want to iterate that through these factories, we are not just, you know, creating backward integration. We are actually taking customer experience to the next level, which is what is driving this growth. Which I mentioned about in the market creation today, we are delivering in 58 cities next day, okay, through one factory in Bhiwadi, right? As we see, when we move from four days to one day, the demand that got unlocked was very, very massive for us because even sitting in the same city, people were not able to do that. Overall investment in Hyderabad is also to create that customer experience right now. It is not necessarily to say that every, you know, dollar needs a CapEx investment. We have capacity right now. But right now, we have to think about long-term. We are just scratching the surface. But it is. I know we have capacity, but at the same time, we have higher demand than the capacity we will create, you know, we have in the next few years. Yeah, and look, we are looking to expand in the next three years, 3x of the current capacity, which will be in anticipation of the growth that we are seeing. So this is an upfront investment. Yeah, and it is in a phased manner. Look, civil infrastructure, if I'm investing $1, it's about 20% of that $1, $0.20 of that $1. Remaining of that happens in a phased manner like we did in Bhiwadi. So I think we feel quite comfortable about it. Thank you for the detailed response. I just want to add to this, one of the things that we are also doing increasingly now is moving frame manufacturing into India. And that we see we are able to manufacture in India and save at least 20%-25% on the cost when we do it in India. And our ability to do back engineering innovation is much higher. Our lead time reduces. So working capital also becomes better. So these investments are also fueling margin expansion, lead time reduction, higher innovation, which is what India needs right now. And what we have done in Hyderabad particularly is we have opened, you know, we are the location is very strategic. It is about seven minutes away from the airport. And so the access we get into the international markets is very large. And just wanted to get back to the previous question on the ASP. I think the numbers you are looking at are not like-for-like. Probably the volume which you are considering for H2 FY25 or the full year FY25 is excluding Meller and the shareholder letter which represents data including Meller for H1'25. So hence the delta which we are getting reduces the volume, which is showing a higher ASP. There is no material movement in H1'25 to H2'25 on ASP. Of course, we can connect offline to go through the reconciliation post the call. Thank you very much. Next question is from Nomura, Mihir Shah. Please go ahead. Hi, Peyush and team. Thank you for taking my question. This is Mihir Shah from Nomura. Firstly, congrats on a good set of numbers. Usually, when one looks at the throughput per store in a metro versus a Tier 1 or two, there is a materially higher difference between both of those stores. But we believe your throughput appears, you know, between the metro stores and the Tier 1 doesn't appear to be much materially very large. Wanted to understand if that is a correct understanding and if so, what is driving high throughput per store in the Tier 2 stores similar to the ones that are in the metro stores? So that's question number one. Thanks, Mihir. Great question. I think I would say it is slightly better only in Tier 2. That's been our learning. See, I think what we are seeing is that the availability of more high-quality and professional opticians in Tier 2 is relatively lesser than what you see in a metro and a Tier 1. And there is, in fact, even a larger set of population which is coming into the category for the first time in these markets as we go increasingly there. When we look at new people that enter into the category, for them, Lenskart is a preferred choice for the majority. What we are seeing, and we are seeing this across, right? We have now thousands of Tier 2 plus stores. Even this year, we have added 94 odd stores in Tier 2, 93, 94 stores in Tier 2. What we are seeing here, in fact, is lower rentals, similar throughput, slightly larger size stores which are coming into the picture. I think in the longer term, these stores will do very well. We have ourselves been very, very pleasantly surprised or presently happy with the demand that is coming in. Whether we look at Ayodhya or you look at Srinagar, the demand for eyewear consumption that we are seeing coming into these markets is very high. I think they are looking at this category very differently. You know, it is almost like when you skip a generation because, you know, when you know a lot of people did not get to the laptops, they got to the same straight to the mobile. So I would say I would attribute it to that. I recently spent, you know, last year, the whole management team, we went to Vellore and we drove from Chennai for about four, five hours, and the store is not even in Vellore. It is actually towards the edge of Vellore, just near VIT, and we spent about a day there and we were amazed to see the way people look at fashion there. I think for a lot of us, we have a pre-notion about this category that it is not fashion. I should not change my glasses that often. But when we see the new incumbents in the category, they are coming with a very, very clear and fresh mindset. You know, they don't see why should I not buy two pairs. In fact, their demand is, why when will you have an offer which will allow me to buy three pairs? So I think the demand here is going to continue to be high. And we are also quite pleasantly happy with what we are seeing there. Interesting points highlighted, Peyush. Thank you for that. Secondly, I wanted to just check if you can possibly share what is the average ASP difference for you versus the other players in the international markets like Singapore, Japan, you know, Saudi Arabia. I mean, and maybe even for India, if you can, if you have done some study on what is the average pricing and the differential between you and the other folks. Thank you. And I'll come back in the queue for other questions. See, firstly, I want to say thanks. Great question. I think, see, we don't price to competition. I think, and for over a decade now, I think we have been very obsessed with customers and not competition. I think we look at accessibility. We look at which is the category. And we also are quite empathetic towards certain segments. One thing I would tell you about India is the price at which I feel we are able to today provide a pair of glasses to a customer would largely be similar to what it would cost the majority of the market to, you know, as a retailer to buy that pair of spectacles, right? So the differential is large. I think we have been, you know, one thing which we are super obsessed about a company is cost, right? I do think as a discipline for over a decade right now, and it doesn't stop. I mean, we run it, we run Kaizens every day that passes by, every quarter that passes by. And there is always more that we find. We have a dedicated commercial team in the company and a set of engineers which are trying to find efficiency in every corner, every inch of a box to a packaging to a tray to a process engineering that we look at in international, and then, you know, and then there are certain products where we also invest for in the long term. I'll give you an example in international, you know, from a market like Singapore. You know, we feel that in the years to come, kids as a category is going to be very big because kids used to be 20% myopia. Today, it is 40%, 50% in India. In international markets like Singapore, where data is very well published, this number is already 60%, 70%, and by the age of 18. So we are investing heavily in this market. We also are very empathetic towards kids. So in a market like Singapore, where average kids' glasses would cost $300-$400, our starting price point for kids' glasses for two pairs, including lenses, is $50. So that delta is very wide. So I think we play, depending on a combination of markets where the growth is going to be for the future, what do we need to do for the present? And then the strategy is very different when it comes to the premium segments. But we want to be a brand for all. We operate at all price points. But one thing which I would say we do at all price points, whether you buy at $10, $50, or you buy at $400, the value differential you would get at Lenskart would be 60%-70% is what we aim towards in getting there. Of course, this value differential grows much higher as you go towards premium price points. And we do not differentiate on quality and promise across price points. So you can buy an INR 1,000 product from us, and you can buy an INR 20,000 product from us. Our service levels for you is going to be, in fact, our store staff today is not incentivized on value. They are incentivized on the number of customers, not just in India, but globally. So our view on this is that we do not look at what competition is doing. We look at what is the unlocking. Even as GST came in, I think we were very clear that India needs blue lenses. Now I don't think this is driven by competition, but we just think with India being one of, and Asia being the areas where screen time is so large, everybody will feel better if, you know, their eyes will be better if they wear blue protection lenses. So we priced, we made, we slashed the prices there the most. Great. Thank you, Peyush. Wishing you guys all the very best. You guys are doing a good job on the product side and the services side. Thank you and all the very best. Thank you, Mihir. Thank you. Thank you very much. Next question is from [Nomura], [Amit Purohit]. Please go ahead. Yeah, hi, good morning. Thank you for the detailed press release and explanation on all the questions. There's two things I wanted to understand. On the competitive scenario, what I wanted to know is that there are many unorganized guys as well, and you have highlighted in the DRSP also the share of organized is pretty low. I try to look at what are the key differentiator unorganized guys would be probably offering maybe a relationship, a specific brand, or a quicker delivery. Whereas now with the new facility in Hyderabad, some of these things will be addressed by you. Just your thoughts on why are the unorganized guys not able to launch some one plus one free offer? Is it because of the backend infrastructure that they lack? And that becomes an added advantage for us. And plus the quicker delivery comes in. So probably next two, three years, we may have seen a better growth, even faster growth, and not just 20%. Is that a scenario possible? Thank you, Amit. See, I think yes, faster growth is what we aspire for. Faster yet managed growth is what we aspire for. I think one of the things that we have built Lenskart on, and I think you can walk into any Lenskart store globally. One number, you know, I can understand a store staff not knowing their sales, but they would definitely know their Net Promoter Score, right? And that is a number that we see is a leading indicator of our growth, and under any circumstance, that number supersedes even our expansion, right? We would never let that number drop, not in India, not in international, and we started our journey in Net Promoter S core from 40- 48 - 50, and the journey to 60- 70, and now 79. What we have seen is that once you cross 70, every point takes more work than the last 10 points ever took. So I think for our, you know, what we have seen is that it is difficult. I would say I have never even really looked at, and at the company, we do not obsess over competition. I think everybody in India is considering the problem the way it is. And globally also now, we need more players to unlock accessibility in the market. And everybody plays their role. And like you said, local opticians or the unorganized opticians bring a level of touch and personalization. But our endeavor is to go deep into customer. I would say people buy from Lenskart. Of course, there are fundamental pillars of quality, of the way we cut our lenses. But it goes beyond these pillars. It goes into the culture and the fabric of how we work. We believe in the principle that good is not good enough. I mean, I'll give you an example. When we say delivery next day, we have a choice to measure it using average, or we have a choice to measure it using P99. So when we say we deliver next day, we deliver it not 80% next day, and then the balance 10% will come in the second day, and then the last 10% will have a three to four day tail. That is what we have seen in most of the logistics ecosystems, you know, around, and that is why we had to invest in a proprietary logistics ecosystem where we commit ourselves that either we will deliver next day, or we will give you 50% of your money back. And that gets credited without you asking for it. You don't need to make a call. And that pushes the bar every day. And that is why we deliver with 95%, 96%, 97% reliability. This is just one example of how. So I think why people, you know, this is a slightly longer answer of why people choose Lenskart. It's not one answer. I think it's because what we believe is good today is not going to be tomorrow. We don't think we have found any mousetrap. Even if you look at packaging today, we are moving towards sustainable packaging. We don't need to. I don't think the market today is talking about sustainable packaging. A market like Singapore, we have already moved to sustainable packaging. So when we look at our business, and consumers look, we believe that satisfaction is not good enough. It is all about delight. It is all about whether we will become a part of the dinner conversation today or not. And so decisions are based on that. Every Tuesday, the whole management sits for the first two hours in the morning, 9:00 A.M. to 11:00 A.M., and we do a call with store managers across the globe where they tell us what customers are saying. A chart is made. I have a detailed, I have a dedicated person in my CEO office who's then tracking every detail. And that detail is what matters in the long term. You know, in airport, I was there, you know, a few days back when we had come for the IPO ceremony, and someone I bumped into the airport, they said, "I'm shocked that they deliver glasses to my gate in our airport store just within 20 minutes." So I can place an order in the airport store. There's a remote optometry which is 24 hours, which happens sitting in Kolkata. And after you place an order, somebody brings it to the lounge or to the door. I think that last mile of customer experience is what brings customers back into the Lenskart ecosystem. Sure. Thanks a lot. Just one thing. This Hyderabad facility will further improve our logistics and deliverability? Absolutely. I think there is no end to this because, like I said, this is a Kaizen. We will improve it before Hyderabad comes up further. And with Hyderabad, we will take it to the next level. I mean, we have worked very hard to make sure that this location is close to the airport, and every minute counts in our business. So yes, today, Bhiwadi, where we are, is about two hours away from the airport. This is seven minutes away from the airport. So there is going to be. In Singapore, we just launched a two-hour service, and we have seen amazing response and unlocking of demand like never before for contact lenses. And we continue to experiment and innovate to make the service better and better every day. Sure. The last question is just on trying to get some data points on the balance sheet side. There are some intangible assets, which is figuring in Q2 balance sheet, which is intangible assets under development. Is that any explanation on that? Yeah, Amit. Abhishek here on the balance sheet side. This is a good question, good catch actually. This is the goodwill and intangibles that we have capitalized as a part of our purchase accounting for the Meller brand. So it is, you know, we don't capitalize any internally generated software or any R&D. This is something which is part of the goodwill purchase account. Sure. Thanks a lot. Thank you very much. Next question is from Pallavi Deshpande. Please go ahead. Yeah. I just wanted to understand on the Crizal lens that we offered in Singapore, it's not widely offered in India. Any particular reason for that? You know, I will check, but we do not offer Crizal lenses in Singapore. There could be a pilot that the team could be doing. I will recheck on it, but we do not offer Crizal lenses. We offer lenses. It could be a pilot. If you saw it, I understand. But what we do is we offer lenses in four categories. And maybe we are doing A/B testing to see how customers understand or maybe a quality check. But we offer Lenskart lenses. Then we offer Ondes lenses, which is the next segment of lenses which we are supplying in India also and also in Japan. And then we have two more brands, Rodenstock and Tokai. Tokai is a Japanese brand. Why we got into our portfolio and exclusively in India and now expanding to other markets is they use neuroscience technology. We were earlier importing these lenses. Now we are manufacturing these lenses in our factory in Bhiwadi. Our latest addition is Rodenstock, which is a German lens, which we are also now manufacturing. But I look into it and thank you for pointing it out. But right now, our strategy is to create lens brands for the future. And where we find specific use case or an R&D, then we try to do a license partnership and try to manufacture it ourselves. Right. My second, just, you know, what do you say? Observation or guidance would be that, you know, on the Blue Block lens, maybe more needs to be done in terms of quality. I've been using one Lenskart Blue Block lens, and it's been giving me a headache. So just a pointer on that side. That's all from my side. Thank you, Pallavi. Thanks for the feedback. I'll be in touch with you. Thanks for sharing this feedback. We do take this very seriously. We invest actually in the whole science of our Blue Block lenses. From material to monomer to coating is done by our R&D. We'll be getting in touch with you within minutes of this call, and I'll be speaking to you to take this feedback, and we'll do everything that it takes to get you satisfied. Yeah. This was not for my satisfaction. I'm just saying that since you said, you know, you've said it twice on the call today that you want to take this more widely. So I'm just worried about any damage to the brand in case it's not fully, you know, prepared in terms of quality. No, no, absolutely. Every feedback is crucial for us. Thank you. Thank you. Thank you very much. Ladies and gentlemen, we'll take that as a last question. I'll now hand the conference over to Mr. Nikunj Mall for closing comments. Thank you, everyone, for joining. For any further questions, please feel free to reach out to me or write us at investor.relations@lenskart.in. We look forward to seeing you again in next quarter. Thank you. Thank you. Thank you, everyone. Thank you very much. On behalf of Lenskart, that concludes this conference. Thank you for joining us, and you may now leave the meeting. Thank you.