Ladies and gentlemen, good day and welcome to Stanley Lifestyles Limited Q1 FY2026 earnings conference call hosted by Emkay Global. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mohit Dudeja from Emkay Global. Thank you, and over to you, sir. Good evening, everyone. I would like to welcome the management and thank them for this opportunity. We have with us today Mr. Sunil Suresh, Managing Director, Mr. Sharath as the new Group CFO. I shall now hand over the call to the management for the opening remarks. Over to you, gentlemen. Good evening, everyone. Welcome to the Stanley Lifestyles Limited Earnings Conference Call for the first quarter ended 30 June 2025. The earnings presentation has been uploaded on the stock exchange, and we trust you have had the opportunity to view it. During the first quarter of FY2026, global trade developments, particularly the recent U.S. tariff policies, have weighed on broad market sentiment. While the Indian luxury furniture sector remains structurally strong, these macro headwinds have created a more cautious consumer environment, leading to lower discretionary spending in certain segments. The luxury residential real estate market continues to be providing long-term growth opportunities. In H1 2025, luxury housing recorded significant expansion, with sales in the INR 3-10 crores price range rising by 128%, and the INR 20-50 crores homes doubling year on year. However, delays in property handovers, a trend that has been persisted over recent quarters, continue to defer purchase decisions for premium home interiors. Despite these headwinds, we started FY2026 on a positive note, with strong growth in both retail and B2B segments. Revenue from operations was INR 1087 million, an increase of 7.9% over Q1 FY2025. The retail business contributed 640 million, up by 25.2% year on year, led by the performance of Stanley Level Next and Sofas and More, which grew by 20% and 50.7%, respectively. All new stores opened in FY2025 have achieved break-even, reflecting the effectiveness of our location selection and execution strategy. This quarter also saw the addition of two new stores, Sofas and More stores, one each in Surat and Mangalore. As of the 30 June 2025, Stanley Lifestyles operates 68 stores, comprising 43 COCO stores and 25 FOFO stores. The Coco stores account for 60% of the revenue in Q1 FY2026. On profitability, gross profit increased by 16.6% year on year to INR 624 million, with margins expanding 4 to 8 basis points to 57.4%. Our focus on localization and improving efficiency in manufacturing has allowed us to optimize production costs while broadening the product mix. EBITDA grew 11.9% to INR 225 million, with a margin of 2.7%. PAT increased more than 2x to INR 78 million, with a margin of 7.2%. We have made a strategic advance in line with our growth vision with Stanley Retail Limited, acquiring complete ownership of Shraddha Decor Private Limited. We have strengthened our presence in Hyderabad. This step allows us to streamline opportunities, unify brand representation, and improve decision-making efficiency in this key market. Hyderabad is an important growth hub for luxury furniture, and we will invest in growing the Hyderabad market to achieve our long-term growth strategy. Additionally, we are pleased to welcome Mr. J. K. Sharath as our Group CFO. His deep understanding of the company, along with his strong financial and strategic skills experience, will be a great addition to our leadership team. He will play a key role in driving our transformation agenda and lead Stanley into its next chapter of growth and long-term value creation. While broader market sentiment remains cautious, our product portfolio is not directly exposed to the categories impacted by the U.S. tariffs. We do not expect any material impact on our business from these changes. Looking ahead, we remain on track to open 15 new stores in FY2026, with emphasis on high-potential real estate catchments in major cities and emerging urban clusters. The focus continues to be strengthening the Coco format and offering curated collections that align with the evolving preferences of affluent luxury home makers. The recent raids being conducted by DRI on luxury furniture importers who are under-invoicing, and the gazette for QCO on import furniture having been passed, we remain buoyant about our future growth. With differentiated brand portfolio, integrated manufacturing capabilities, and a growth presence in India's luxury furniture market, Stanley Lifestyles Limited is well-positioned to capture the opportunities ahead of FY2026. That concludes my remarks. We can now open the floor for questions and answers. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Arvind Arora from A Square Capital. Please proceed. Hello. Am I audible? Hi. Hi. Yeah. Sir, congratulations on a good set of numbers at the retail side. So, sir, can you please provide a break-up of retail and non-retail? Retail and non-retail. Okay. Sorry, one moment. So, yeah. So the domestic retail revenues, we have grown 25% compared to Q1 of 2025. Okay. So what is the absolute number? Absolute number is 100 and sorry, what is it? Domestic retail. Let me tell you, the domestic retail number for us in the current quarter was around INR 64 crores. In the comparable last June quarter, FY2025 Q1 was INR 51 crores. We see an overall close to 25% growth in the domestic retail business. Revenue. Revenue. In the B2B and the OEM business, our current quarter revenue is INR 28.3 crores, and Q1 of 2025 was INR 22 crores. So we have about 27% growth there. Apart from this, we have our franchisee and accessories business. There, the revenues have dropped from INR 27 crores in the last quarter to 16 crores in the current quarter. Okay. Okay. Understood. So, yeah. The growth has come more from the Coco stores. Understood. So, sir, our focus is also on B2C business, correct? Yes, absolutely. Okay. So, sir, last time you allocated that our target would be to become a 1,000-crore company in the next three years, correct? Correct. So where we are as of now, I'm considering the PAT that we targeted like 12%-15%. But if I compare quarter-on-quarter PAT margin, that's also declined from 9% to approximately 7.2%. So what is the reason for this decline? Which one are you talking about? Current quarter decline. What one quarter? Quarter-on-quarter, if you see our PAT percentage has increased from 3.8% to 7.2% from last. I'm talking quarter four to quarter one, the last quarter that just completed before this quarter, and Q4 financial year 2025. So basically, when you look at our business traditionally, we are seasonal in terms of this. Usually, our Q1 and Q2, you have to normally compare it with the first quarter and second quarter of last year because almost I can say more than almost close to 60% happens between Q3 and Q4. Okay. And, sir, next question is last time you mentioned that we also would be having a discussion with builders if there is any requirement. So any update on that part, any discussion that we are having with anyone so that we can scale up our business? These are ongoing processes. Our broad vision, what you mentioned, remains very much the same, and we are definitely heading towards that. So these are all ongoing processes. Yes, we have just enabled with a particular project in South Bombay. We have got an order for a few mock-up kitchens there. These are ongoing processes. Okay. Okay, sir. Thank you. Thank you, sir. All the best. Thank you very much. Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of Yogi Zaveri from Molecule Ventures. Please proceed. Thank you for the opportunity, sir. So first, our question is on the Coco retail side. So there is 25% growth. If you can share the number for the last three to four quarters, what was the growth in Q4 and Q3, Q2, YoY basis in retail business? You're asking us to share the numbers of what? Are the quarters you want us to share the numbers? Q4, Q3, and Q2 quarters of last year, what was the growth year on year each quarter? If you can have. You want the growth percentage? Yeah. Yes. The growth percentage in retail business for the last year's quarters. So if you actually look at year on year, it is always better for us because, as I mentioned to you, Q1 and Q2 will look a bit suppressed because of season being in Q3 and Q4. Okay. So if you look at this quarter, if I look at, we have compared to last quarter, we have grown at 25% Q1. So I got that, sir. But if you can provide me last year's number so we can map the growth rate. So if you don't have that right now, what I can ask is that this amount of growth, 25%, have you seen anywhere between the recent quarter last year or in FY2024 or this double-digit 25% growth after a quite long time? Hello. One minute. One minute. We understood. We're just working on the numbers. We'll just tell you. Sure. Sure. Yeah. So if you look at our numbers from the last time Q1 to Q2, we grew by 8%, and then we grew by 10% quarter on quarter with the previous quarter. And then we have grown by 16%, and now we have seen a 25% growth. So this is a progressive growth which we are seeing. And I don't think earlier in the past, at least in the past two years, we had any quarter where. Quarter-on-quarter such a growth. Quarter-on-quarter such a 25% growth. So sir, this 25% growth is YoY, right? This quarter compared to last year's Q1? Correct. But the stated numbers you said, 8%, 10%, and 15%, it is quarter-on-quarter for FY2024. Yes. Yes. It's a quarter-on-quarter. Quarter-on-quarter growth. Okay. So year on year would be on the similar range or it would be flat? No. No. Year on year, there will be a degrowth because our last March quarter, we had done retail revenue of more than INR 72 crores. Now we have INR 65 crores. Okay. Got it. So year on year, it would be degrowth for last year in Coco business? That is primarily because you can't compare these quarters because of the seasonality in our business. Generally, our H2 is heavier on the revenue side because of the festival season, sales, etc. So that is. No, no. I understood that, sir. What I'm trying to ask is that there was 25% growth in Q1 FY2026 compared to Q1 FY2025. Now I just wanted to know the growth rate, what was there in Q1 FY2025 compared to Q1 FY2024? Same goes for Q2 FY2026? So that number we don't have right now with us. Maybe we can. It was definitely not anywhere close to 25%. Normally, I think if you look at year on year last two years, we have managed roughly single-digit growth only quarter on quarter. We will share it with you. Not a problem, but we don't have it handy right now. Sure. I will get that offline. Now the second question was on the same store sales growth. So what was SGR, SSSG this quarter, and you said in the PPT it got improved on that side. Yeah. So generally, this is one of the key metrics which we track for our SSSG. So this SSSG growth has been varying somewhere from higher single-digit to double-digit depending on the stores and the locality and the region, etc. Okay. And any things which you have done to improve that compared to previous year? A lot of things, sir. This is an ongoing process. I think, like Sunil said, we very frequently look at our store placing, the product placing, and also we look at how the stores are performing, and a lot of advertisement and marketing-focused activities happen to make sure the footfalls come in. A lot of multiple factors play in, and also a lot of things are also dependent, like if you have high rains and monsoons, there may be challenges in certain cities on the footfalls, so there are multiple factors which happen. Our objective is always to make sure the stores are prepared and the conversion. Will it be sustainable going ahead? The double-digit or high single-digit growth, would it be sustainable? Yes, definitely. Because also you must understand that a lot of our stores are now coming to maturity. Stores which we have opened in FY2023, FY2024 are now coming to maturity. So we feel that in the due course of next whatever, six to 18 months, almost 70%-80% of our stores will be more matured stores. And the trend is that in a four-year window, when you look at it, usually the year one, the business what the store gives is about 60%. Second year is about 70%-75%. Third year is about 80%. And the fourth year is optimization at about 100%. So now the maturity stores are getting higher because last year, as we told, we slowed down on our expansion plan. We did not rush into the market because we were not getting conducive real estate. But of course, having waited, now this year we have started rolling out our stores better. Okay. Now one thing I'm not able to understand is the breakup part. So INR 64 crores revenue was from the Coco business, which grew 25% this quarter. INR 28 crores was from B2B business, which grew 25%. So the INR 16 crores which you said in B2, B2C, so we include that in FOFO revenue or what? So where do we record that revenue? So FOFO is part of the franchisee and accessories business. So we have the retail business, we have the franchisee and the accessory business, and then we have the B2B OEM business. So these are the main three clusters which we look at. Yes. I know the three verticals, but so out of INR 109 crores, INR 64 crores was from Coco. INR 28 crores was from B2B. Yeah. And what about? So that INR 28 crores, does it include B2B, B2C also or just B2B part? No. The franchisee is separate. So the second segment is the franchisee and the accessories, which is about INR 16 crores. Okay. So B2B, B2C, what was the revenue where you changed the model from credit to cash and carry model? What was the revenue of that? What is the revenue for that? That business has stabilized now. For the quarter, we have done about INR 2.5 crore because of a change in the model from credit to cash. There was some disturbance in the overall revenue growth there. But now we see that that market is sort of stabilizing. Stabilizing it. And. And we have collected also. We have collected all the old money. Plus now all the customers, we have our own cash, so we don't carry any credit risk. Okay. So basically, Coco business grew 25% this year. And B2B also this quarter, sorry, my bad. And B2B also grew 25%. And Fofo was down 9% YoY. So I'm not able to map the difference. So because of just Fofo 9%, the overall revenue growth was only 8%. And the other two main driving business grew 25%. So. No. I'm not able to. Okay. I'll give you the math. Our franchisee and accessory business for the last quarter was INR 27 crores. That de-grew by 40% from INR 27 crores to INR 16 crores. This is Q1 or quarter and quarter? Quarter on quarter. If you can provide YoY, it will be helpful. This is YoY, the number which we are talking about. I'll give you the complete breakup. On the retail side, we had INR 51.2 Cr, which is now 64.1 Cr. This is on the retail revenue side. Franchisee and accessories, we were having INR 27.3 Cr last quarter. This quarter, we have INR 16.3 Cr. There is a 40% decline here. This is mainly on account of the D8 brand, which moved out of the company. Last year, we clocked in INR 10 crores on account of this. On a franchisee model of a brand, Stanley Effici, there is an 11% degrowth that has happened in franchisee and accessory business. The third is the B2B or OEM sector, where we have clocked in 27% growth. Last year, the number was INR 22.2 Cr versus now INR 28.3 Cr. If you total the entire thing, last quarter, we have clocked in 100.7 Cr, and this quarter, we have clocked in 108.7 Cr. Okay, so major growth was affected by FOFO business model, and that was also due to D8 stores closure. Correct. Right. Correct. So when do you expect FOFO to rebound? Because if FOFO will recover in a short period of time, then the overall picture would look quite different compared to what we have right now. FOFO, also if I talk about, it is two segments that is broken into. So one is the product placement, and other one is the secondary sale. On the secondary sale, we are around 12% up from the last quarter. However, in the product placement, because we have opened two SLN model of stores last quarter versus now we have opened SLN level of store. So there is a gap that is on account of the product placement. Primary sales. On the secondary sales, we have seen a growth of about 2%. Secondary sales is B2B, B2C? Yeah. It is a franchisee business, what we are talking about, and FOFO business. It's a B2C business. Okay. So if you can just brief me about what are these two models? I'm not heard about these models. If you can explain in very brief, what are these models and what is happening? Basically, Coco model is a company-owned, company-operated model, wherein we own the stores and we operate the stores. Yes. Yes. Secondary model is whereas we'll appoint a franchisee, and the franchisee will open the store, and they will operate the stores. Again, 100% sold out. We don't give any credit there. We don't offer any discounts. It's all a cash and carry model as far as Fofo is also concerned. Okay. And the franchisee will have a Stanley store, and they will sell it to the customers. Okay. Got that. But the decrease from INR 27 crores to INR 16 crores in FOFO, so what exactly? That's largely because of the D8, because INR 9.6 crores was there last year, which because of the change in this brand, we no longer have that. As we have acquired the Hyderabad business, and our Hyderabad partner had a different store, which revenue was captured last financial year under the name of D8. That was nothing to do with Stanley. They were importing and selling furniture in that particular brand. Now that is not reflecting in this quarter. That is a gap. Got that. So degrowth was mainly on that side. So when do you expect to recover from that, this much degrowth? So basically, now we are expanding further in Hyderabad stores. We have planned to open three stores in the next two quarters. So we are going to go a lot more stronger in Hyderabad going forward. Okay. Got that. And just last thing, if I may ask, in PPT on slide number three, so you have written FOFO revenue was INR 12.5 crores this quarter compared to INR 13.7. So I just got a little confused on that side. So what exactly is that? This is actually revenue. If I talk about the Stanley brand revenue year on year quarter, last quarter versus this quarter. Okay. So you have excluded D8. So out of 27, you have excluded the D8 revenue. Yeah. Right, so that is only Stanley brand thing, what we are trying to demonstrate. The revenue was 13.7 versus 12.5, and the degrowth has happened. Okay. Okay. Got that. It only includes Stanley, so you have excluded D8 in that slide revenue. Yes. Yes. Right. Right. Right. Going ahead with the store opening in Hyderabad, we can rebound. Three to four stores are planned in Hyderabad, right? Three stores have already been signed up, and the work has just commenced as far as Hyderabad is concerned. Sure, and just last on B2B part, so in earlier calls, you were saying that there are two to three customers you are in talks with, US customers for B2B contract manufacturing, so will we have any impact because of this tariff issue in ongoing? Luckily for us, despite it being an American customer, the discussion what we are doing is for their domestic requirement as well as for their Middle East requirement and not for American requirement. So we have not been impacted in any way as of now. So you will supply non-US business for the non-US business? Correct. We will supply for the international business, which is India and Middle East. Sure. Got that. Thank you so much for explaining in detail. Thank you very much. All the very best. Thanks. Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of Mohit Dudeja from Emkay Global. Please proceed. Mr. Mohit, your line has been unmuted. Hi, sir. Good evening. Congratulations on a great set of numbers. So, two questions from my end. Manufacturing efficiencies have led to margin expansion almost north of 430 basis points. So, what specific initiatives have driven this, and is this margin sustainable, or we can expect any further gains? And second question is, could you elaborate on the acquisition of Sastra Decor Private Limited, and how it will benefit Hyderabad market penetration? Okay, so yes, actually, if you look at where we are at this point in our journey, with scale, I think we can definitely look at further improvement in terms of efficiency. Localization as far as leather has continued and played out well, and there is a lot more to do. We believe that there will be a constant improvement with scale improving as we expand our business going forward, so that answers your first question. Second question, Hyderabad for us has been a very important market because the consumption of luxury furniture, primarily because of the sizes of homes and villas, is a very strong market for us, and acquiring our partner who had various other businesses and was not able to focus mainly on our business is going to tremendously help us going forward, so we have just about started our expansion there. Now we have currently three stores. We are adding three more stores in the next two quarters, and we'll continue to invest in Hyderabad because it is, in our opinion, it's as big or a bigger market than our home market of Bangalore. Okay. Just to follow up on this, these three stores, are they Coco or FOFO? Hyderabad now everything is Coco. So what we have done is systematically we have made sure that in the major six cities, which is Delhi, Bombay, Chennai, Bangalore, Pune, and Hyderabad, now we have acquired most of the partners, and all our stores are going to be Coco. These are all markets which we have been present for more than a decade, and we are very aware of the market conditions, and we want to grow in these markets primarily under the Coco format. Okay. Thank you so much. That's it from my end. Thank you. Participants who wish to ask a question, may please press star and one at this time. The next question is from the line of Hitaindra Pradhan from Maximal Capital. Please proceed. Hi sir. Hope I'm audible. Just an accounting question. The EBITDA margins that you disclose are post-rent or before-rent? So as we are using the Ind AS method, the rental doesn't fit into the P&L, the capitalized form of ROU. So these are index numbers. Okay. Okay. These are post-index numbers, right? Yes. Yeah. So what are your current rentals as percentage of revenue? Rental expenses? Actually, what happens is it all depends on the maturities of stores. And yeah, currently, we have a lot of stores that are fairly new. When you look at it on a global perspective. What is it currently, the rentals? So on our complete retail business that we have on the top line, it is somewhere in the tune of 12%-13% on that revenue, on my retail revenue. On an overall COCO, on a complete company level, it will be somewhere into the tune of 6%-8%. Got it. 6%-8% on the transferable. So just to confirm, you mentioned about your revenue ramp-up from the first year to fourth year. Can you just again mention that again? I measured two numbers, basically. So the revenue ramp-up of your Coco stores? Can you repeat that question? Your revenue ramp-up for Coco stores? So how does the revenue ramp-up happen from first year to fourth year? Yeah. Okay. So normally, what we have seen as a trend is when we open a store in a new market, the first year, the revenue is roughly about 55%-60% of the true potential of that store. Second year goes to about 65%-70%. Third year, about 80%-85%. And finally, on the fourth year is where we say it's around 95%-100%. So that's how the store usually has shown us the signs of ramp-up in the past. Got it, sir. That's helpful. Thank you. Thank you. Thank you. Participants who wish to ask a question, may please press star and one at this time. To ask a question, please press star and one now. As there are no further questions from the participants, I now hand the conference over to the management for the closing comments. Over to you, sir. Thank you all for taking the time to join us today and for your continued interest in Stanley Lifestyles Limited. As we continue to navigate opportunities ahead, we remain committed to delivering consistent growth and value in the coming quarters. As always, if you have any further questions, please feel free to reach out to our investor relations advisor, Churchgate Partners, and we'll be happy to address all your queries. Thank you once again. Thank you. On behalf of Stanley Lifestyles Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.