Ladies and gentlemen, good day and welcome to Stanley Lifestyles Limited Q2 FY26 Earnings Conference Call hosted by Emkay Global Financial Services Limited. As a reminder, our participant line will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need any assistance during the conference call, please signal an operator by pressing star, then 0 on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sunny Bhadra from Emkay Global Financial Services Limited. Thank you, and over to you, sir. Thank you, Shiva. 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, Ms. Shubha Sunil, Whole Time Director, and Mr. J.K. Sharath, Group Chief Financial Officer. I shall now hand over the call to the management for the opening remarks. Over to you, gentlemen. Good evening. Good evening, everyone. I'm joined today by our Group CFO, Mr. J.K. Sharath. It gives us great pleasure to welcome you all to Stanley Lifestyle Q2 H1 FY26 earnings call. To begin, let me take a moment to reflect on our journey. We'll be completing 30 years in 2026, and Stanley began with a simple vision to bring world-class craftsmanship into Indian homes. What started as a modest venture has today evolved into India's only fully integrated luxury furniture brand, blending innovation with fine craftsmanship. Over the years, we have collaborated with some of the world's finest tanneries, perfecting the art of crafting premium upholstery leather for high-spec furniture. Our passion for design, innovation, and quality led us from automotive leather to sofas and eventually to complete home solutions, spanning recliners, kitchens, cabinetry, dining, bedroom furniture, and furniture for every room of a modern luxury home. Today, we operate from a state-of-the-art manufacturing facility spread across 300,000 sq ft, supported by our skilled 1,000 artisans and professionals who bring our vision of refined living spaces to life. With such exceptional talent and skills and capabilities, Stanley has been able to localize the world's finest craftsmanship to suit the tastes and preferences of Indian consumers. It is indeed deeply gratifying to see the precision and uniqueness that we bring to each of our products. We operate through three distinct but complementary business segments. Stanley Level Next, positioned in the luxury segment, offering complete home solutions. Stanley Boutique, our legacy brand, which is now moving towards complete home solutions. And Sofas & More in the value- premium segment, which is a furniture retail concept, each catering to different tiers of luxury and aspirational consumers. Our retail presence spans 73 stores across India, including nine new additions during the first half of this year. The retail business now contributes almost 70% of our total revenue. We operate through both COCO and FOFO formats, allowing us to expand efficiently across key metros as well as emerging urban centers. During the quarter, I'm happy to share that we inaugurated our first-ever Stanley Boutique Home, a complete upgraded store format from our legacy brand, Stanley Boutique, which was offering only living room furniture and now offering complete home solutions. A key milestone this quarter was our entry into the international market through our exclusive distribution and license agreement with Singer of Sri Lanka, a listed entity. We plan to open eight stores in Sri Lanka over the next three years, making Stanley's first step towards becoming a global Indian luxury brand. Our new store format, Superlative, which is being built in Hyderabad, is expected to be launched in Q4. The work is progressing as planned, and it would house all our premium as well as luxury segment. The store spans almost 1 lakh sq ft. In line with our brand philosophy and innovation, we are also diversifying into new lifestyle verticals, offering premium perfumes. This foray reflects our intent to extend brand Stanley beyond furniture, appealing to modern aspiration consumers who value craftsmanship and bespoke luxury. We will also be extending the perfumes to home perfumes as we go forward. The overall Indian furniture market is large and growing fast, estimated to reach $64 billion by 2032. In the luxury and premium furniture segment, especially, the market was valued at about $1.15 billion in 2024 for luxury furniture in India, and it is projected to reach almost $2 billion by 2033. There are several structural tailwinds driving the luxury and premium furniture opportunity. Rising affluence, wealth creation, the number of high-net-worth individuals and affluent households is growing in India, creating demand for premium home furnishings. Urbanization and changing lifestyles, more people living in premium housing, luxury residences, second homes, holiday homes. Consumers are investing more in interiors and quality design. Growth in premium real estate and luxury hospitality, luxury hotels, resorts, service apartments are increasing, which also drive high-end furniture demand for both commercial and residential segments. Access to global brands, design exposure. Indian consumers are increasingly exposed to premium luxury global interior brands, design consultants, which raises the expectations. Customization, high craftsmanship, materials, premium furniture emphasis, high-quality materials, bespoke design, and craftsmanship differentiate in the market, still dominated by mass furniture. Stanley is strongly positioned to play a definitive role in the next phase of India's luxury market growth. Over the years, Stanley has established a strong position of leadership by emerging as an aspirational luxury brand, offering consistent and innovative solutions backed by deep design expertise, craftsmanship, and strong understanding of Indian consumer preferences. This, we believe, is our greatest strength, one that creates a significant entry barrier for potential competitors. Hence, our commitment remains steadfast to deliver complete home solutions for the luxury and premium segment across India and select international markets. With that, I'll now hand it over to our CFO, Mr. J.K. Sharath, who will take you through our financial performance in detail. Thank you, and over to you, Sharath. Thank you, Sunil. That underscores our operational performance this quarter. With a solid first half behind us, our focus now shifts on the next phase of growth, scaling our retail presence, introducing new categories, and driving innovation across design, material, and customer experience. Every investment we are making today in stores, people, and processes is aimed at reinforcing our position as India's most admired luxury furniture brand. Starting with Q2 FY26 performance, our revenue from operations for Q2 FY26 stood at INR 1,054 million, marking a steady 2.3% year-on-year growth. This performance was driven by sustained strength in our retail business and the continued trust of our customers. I'm pleased to share that our EBITDA margins expanded significantly by 550 basis points to 23.5% this quarter, compared to 18% in the same period last year. This improvement reflects our focus on operational excellence and prudent cost management across our businesses. During the quarter, we signed lease agreements for several new stores as part of our expansion journey. This naturally led to a rise in amortization and finance expense as we invest ahead of growth. These are forward-looking investments that strengthen our presence and prepare us for the next phase of growth. Our profit after tax for the quarter was INR 60 million, up 5.3% from INR 57 million in Q2 FY25. While higher amortization and finance costs for new store additions had a short-term impact, these are strategic investments that will strengthen our retail footprint and drive future growth. Coming to our half-year financials, for the first half of FY26, our revenue from operations stood at INR 2,141 million, reflecting a healthy year-on-year growth of 5.1%. This performance was driven by the continued strength of our retail business, with a higher contribution coming from our COCO stores. Our gross profit margin improved by 330 basis points over the same period last year, supported by better procurement efficiencies, greater localization, and increased insourcing of manufacturing processes, all of which helped us deliver a richer and more efficient product mix. The EBITDA margins expanded by 320 basis points to 22.1% in H1 FY26, compared to 18.9% in H1 FY25. This improvement reflects the benefit of disciplined cost optimization and the operating leverage achieved as our retail networks continue to scale. Our profit after tax for the first half of the year stood at INR 138 million, a robust 45.3% increase compared to INR 95 million in H1 FY25. This performance underscores the strong fundamentals of our business and the growing operating strength of Stanley brand. We feel confident about the trajectory we are on. The fundamentals of our business are solid, and our balance sheet is resilient. We believe we are well-positioned to deliver consistent and sustainable growth ahead. We will now open the floor for questions. 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 Shubham Biswal from Convergence Capital. Please go ahead. Hello, Arvind. Hello. Yes, please go ahead. Yeah. Yeah, PCR efforts, localization efforts are fructifying and leading to expansion in gross margins. So, Sunil sir, I wanted to understand, you know, so our business, I think, cannot rely on conventional metrics, right, like sales per sq ft, because we are not trying to optimize for the, or, again, I think trading density also won't be that relevant in this business. So what are some of the internal metrics that you keep a track of? Is it ASP, for example, because I saw in one of the announcements where you are mentioning how you have taken a price hike recently during the festive season? Are there any such metrics that you use internally to, you know, gauge your business direction in terms of store maturity or anything else? Yeah, that will be my first question. Sure. Thank you very much. Yeah, you're right. Our business cannot be typically measured with retail mantras of same-store measurement. So, as a premium retail brand, we have the flexibility and we have the pricing power. So what we normally do is, for us, we have metrics where we have to understand that currently, I want you to know that all our stores are profitable. So we have clear metrics. You know, the first three months to four months, the store has to start breaking even. There's an order-taking process. And then beyond that, the store starts scaling up. From our experience, it is understood that the store, normally, the new store normally delivers about 50%-60% of its true potential by the end of the first year, goes up to about 70%-75% second year, and only after the third year, it comes to its optimum level. That's how we measure our store metrics, and that's how we keep an eye on our, you know, store breakevens as well as store profitability. Okay, sir. Thank you, sir. That was helpful. Sir, also, I would like to understand, our business mostly involves grudge purchases. So these are purchases that customers typically make at the end of any house purchase, because of which, you know, they are reluctant to buy these products, and they usually keep it till the last. So, in these cases, sir, are we looking to transition our business into some sort of an annuity model? I know it won't be completely possible without diluting our positioning, but are we thinking in terms of, for example, I was looking at the boutique homes and the boutique home solutions that we were offering. Is it a step to transition into some kind of an annuity where the purchase cycle gets shortened, for example, some sort of service model or, you know, to expand the LTV of a customer? So, are we thinking in that direction, sir? Like, that will be my second question. Yeah, to give you a briefing on this, see, primarily, we were typically a furniture brand, a loose furniture brand, which would normally sell usually sofas and living room furniture. But from 2021 onwards, we have started moving towards creating a luxury format called Stanley Level Next, where we are offering complete home solutions. The average ticket price of a customer spending with us was roughly about INR 200,000, you know, around 2020. But now, in Stanley Level Next with complete home solutions, it is pivoted to almost about INR 2,500,000. That is because of the changing dynamics in the Indian residential construction industry. Today, most of the builders around the country who are offering premium and luxury homes sell their products as what is known as warm shell condition. In the warm shell condition, the customers will only need what is known as fixed furniture and loose furniture. Seeing that opportunity, we moved our luxury offering into complete home solutions. Now, we are doing the same thing into our premium offering also. With the Stanley Boutique Home, we are offering complete home solutions, where normally the customer who seeks the furniture first comes in for a kitchen, then he comes in for a wardrobe, then he comes in for the loose furniture. That's the journey. That is what we are tracking. Okay, sir. That was extremely helpful, sir. Just two final questions, sir. Sir, one was the thing about the JVs. I think we mentioned about it. I think it was in the past quarter. We mentioned about the potential for JVs. Okay. To understand how the JV works, usually, if you have observed in, like, outside, then how we can emulate this thing. And so, how does this work exactly? How does this JV thing work? Yeah, that's what I want to understand, sir. Yeah. I want you to understand that as the premium and luxury consumption in India is just about starting, there are a lot of European brands who are looking at, you know, collaborating with companies such as Stanley, which has the knowledge, which has two, three decades of understanding. So, that's how we are in touch with a couple of them. Eventually, they will all have to come to India, like how car companies have come and had joint ventures with Kirloskar or with, you know, Jindal or whatever it is. So, like that, we have the infrastructure ready, we have the market knowledge, we have an excellent manufacturing capability and good understanding of design and build. So, by the time, you know, if they come as a startup here, it will take them a couple of decades to establish. So, they normally look at, that has been their global trade. They look at, you know, companies that are aligned to the segment, what they're manufacturing, and usually give us license contracts. So, that is what we are looking at going forward. Perfect, sir. Thank you, sir. And one final question, sir. I saw we have done a small acquisition, I think, to enter into the perfume segment. Now, I understand that this is an unrelated segment. So, what I want to understand is that, are we kind of entering this into the segment full-fledgedly? Like, are we trying to make this a product-driven where we are trying to optimize for, you know, by entering GT and see, you know, making it a full-fledged product thing or just like an accessory kind of a thing where we can just put it in the store itself? So, because the thing is that if we are planning it like a pure product approach where we are trying to optimize, it takes up a lot of bandwidth, management bandwidth. So, how are we thinking about this? Is it just an accessory or how are we thinking about this, sir? Yeah, that's my final question. That's a very, very good question that you're asking me. So, I want you to understand, as a 30-year-old company moving from a premium position to a luxury segment, lifestyle extension becomes a part and parcel of the business. You must understand that, you know, furniture acquisition happens probably once in 10 years. So, we need relevant products for younger customers to touch our brand way in advance, like how we pivoted starting automotive seats in the past, then we moved into sofas and now into complete home solutions. These are lifestyle extensions of brands. They're very much related to a premium and luxury business, and it is not going to take much of our time. We also saw that there was a big gap, and India is also now consuming a lot more Oud perfume, which is not the typical deodorant. India has moved from a deodorant market to a cologne market and from a cologne market to a Oud perfume. These are very unique perfumes that we have created with a French collaboration, and then we are launching them in the segment where we are actually competing with a luxury international perfume brand. Very uniquely crafted, piloted only in our store, the response is very good, and that's what we want to extend our brand into a slightly, you know, lifestyle brand. In the future, we also want to introduce home perfumes. That's also a large business. I want you to please understand that the global luxury business, product business, is almost $400 billion. All luxury brands have extended their products into various things. Somebody who started life as a, you know, a bag manufacturer makes sunglasses, perfumes, whatever it is. So, we have to have touch points. So, thereby, we said we have to extend it to fine perfumes. Perfect, sir. Perfect, sir. Yeah, because I was just thinking that, you know, it takes a lot of. So, is there a dedicated team that we have set up for this perfume? We are not thinking about it that much. It's very low for now. So, is there a dedicated team, sir, like a marketing team that we have set up for this, or how is it? At the moment, it is what I call as a simple laboratory stage. We are just piloting. Like we said, we will not really have too much of bandwidth. It is part and parcel something that is a small little laboratory we have created in our facility. So, it doesn't take much of a bandwidth. We have an expert perfumer who has worked in France, who has curated 24 different notes, and we just started sampling, and the response has been fantastic. Great, sir. Thank you, sir. Thank you for patiently answering my questions. All the best, sir. Yeah. Thank you. Next question is from Khwahish Jain from Ants & Bees Investments. Please go ahead. Hello. Am I audible? Yes. Yeah. Good evening. So, my first question was that we have guided in an earlier earnings call that we were targeting a thousand-crore revenue over the next two, three years. So, despite flat growth in previous years and considering the luxury furniture market in India is growing only about 5%-6% year to year, how are you planning to achieve growth meaningfully ahead of the industry, and what specific strategies will drive this target? Yeah, very good question. Thank you, and you must understand that after listing just about a year ago, we have gone through certain major plumbing changes in the system. There's been a lot of technology implementation. We could not haphazardly grow because the old platform would not sustain this kind of growth. So, we had to go through certain changes, introduction of Salesforce in the front end, introduction of SAP HANA in the back end. So, a lot of technology has been already implemented. Yeah. So, yeah. So, basically, with this correction, you already see that our EBITDA levels are starting to increase considerably, and we are being very, very meaningfully trying to get the right locations. So, this will be a slow ramp-up, but definitely, our target of thousand crore holds very good. That is an unchanged target. We will definitely reach there. Okay. Thank you so much, sir. My next question was that you had mentioned that companies focusing on increasing raw material localization with the target of 80% localization in 24-36 months. So, is this timeline still achievable, and what would be the impact on material costs and margins in numbers once fully implemented? Also, if you could specify which key materials are being localized, like wood, leather, or hardware components? Yeah. So, primarily, we are going to focus on our number one raw material, the expensive raw material, which is leather. As of now, we have been fairly successful, and that also shows in our gross profit improvement in the H1 of this year. We continue to, you know, source, but we have to be extremely careful not to, you know, kind of compromise on the quality. So, that is a long-term process. A lot of Indian companies do not have the capabilities, so we are getting in Italian expertise and going about in an organic manner. But we remain very confident that it will be localized to almost 70%-80% in due course over the next one year. Okay. So, could you please shed some light on what would be the impact on material costs and margins after localization? Yeah. I think we should be looking at a saving of roughly between 20%-25% once we localize completely. As of now, we are having a benefit of about close to 15% on the BOM because leather is a significant purchase item, and it's almost 50% of our BOM. Okay. One last question that you had mentioned that the model has been shifted to cash and carry. So, but the receivables haven't shown a meaningful decline. So, could you clarify what explains this trend? Yeah. So, our model is for the branded business of furniture. It's always been cash and carry. There was one particular trading item where we were giving credit that now we have changed to cash and carry, and we are seeing a meaningful increase in that, you know, going steadily, but we are still maintaining the cash and carry policy as of now. Okay. Okay. Thank you so much. Thank you. Thank you. Next question is from Darshil from Crown Capital. Please go ahead. Hello. Good evening, sir. Thank you so much for taking my question. Hopefully, I'm audible. Yes, you are. Yeah. Hi, sir. So, sir, just wanted to, you know, understand, like, in terms of growth this year, where do we see ourselves as, you know, like, what is the guidance that, you know, you'd like to give for growth for the coming year? So, basically, as I mentioned in my previous answer, that, you know, we have done certain plumbing changes, and for that, we are seeing, witnessing a robust growth in our gross profit, our EBITDA, including our PAT. So, these corrections have been done. Yes, there have been certain global headwinds, and there have been delays in project handovers, but we remain confident that we will meaningfully grow going forward. Yeah. And my main question was towards our top line because if we can see from the last three years, we are somewhat in a range of, like, you know, 400 crores. So, just wanted to, and even in the first half, we are in the similar run rate. So, just wanted to, you know, get your opinion that, while we've done fantastic on our bottom line and costs as well, but how will our top line also increase? Like, what are the levers that, you know, we can push forward for top line increase and, you know, and we have, like, a, you know, double-digit 15%-20% growth coming forward years. So, yeah. If you look at the last three years carefully, you'll understand that we have shifted our model more towards the COCO business in the major metros. That is the most important changeover. Our COCO business has significantly grown, even this H1, by almost 23%. That is where the real change is coming. That is exactly what we want to do. We want to focus on a modern retail COCO brand business, and that is how we are, you know, kind of looking at growing our business going forward. With the kind of, you know, monies that we have raised and meaningful investment into new stores, mostly COCO stores, we believe that we'll significantly grow, and our target of 1,000 crores in three years remains very intact. Okay. Okay. That remains intact, right? Fair enough, sir. I was just wanting to know, like, in terms of perfume industry, while you've explained, you know, what all we are doing, but we need, you know, to have a lot of branding costs because, like, the existing players, like, we'll be competing with the, you know, high-level brands and everything. So, we'll have to build that own brand. So, how do we look at that? What kind of investment will we have to do? Will we be burning some money out there or, you know, I don't, and, like, I think perfume has really good margins, but what is the investment, like, we are looking for? So, will it break even in the first year of sales or, you know, just some more, you know, a roadmap for how we expect the, you know, perfume business to perform? Yeah. At this moment, as I mentioned, we have taken this as a small extension in our brand. We are only selling it, piloting it in our Stanley Level Next stores, and the results have been very good. The margins are extremely high. But also, we will not be investing in marketing or anything of such in the past or one or two years. We will normally be using these kinds of products to do a lot of gifting to our high-end customers, gifting to architects and interior designers as a touch point. So, there is no major, what you call as investment, significant investment that's going to go. It is just a piloting that we have done, and I don't see any kind of a bandwidth dilution. In fact, there's a, I would say there's a fabulous brand extension that happens with products like this. Okay. Okay. Fair enough, sir. Just last question from my side. So, over the next, you know, one to two years, because we know we're opening a lot of stores, so what kind of, like, you know, CapEx are we investing, like, in terms, like, this year and next year, if we, you know, we can bifurcate it year-wise CapEx that, you know, we're planning to do, sir? Yeah. I think we will remain very much in line with the prospectus. We don't see any major requirement coming in terms of CapEx. We have managed our funding very well, and we are going to go very meaningfully. Again, we are not going to come under pressure just to kind of open stores. We have to get the right locations, the right real estate. We are very fussy about these kinds of things because when you're positioning and creating a luxury brand, these are very important aspects. So, I think we will stick to what we have in the prospectus. Sir, if I remember correctly, it was around, you know, 140 crores, right, like what we had aimed for that plan, right, sir? Yes. Yes. Yes. Yes. That is, we are very much in line with that. Okay. Okay. Fair enough, sir. I'll get back in the line, sir. Thank you so much. Thank you. Thank you. Next question is from Madhur Rathi from Counter Cyclical Investments. Please go ahead. Sir, so does Stanley brand is owned by the company or the promoters? The company. Right, sir. And, sir, in the consolidated balance sheet, I can see that intangible assets have increased from 5.3 crores in March 2025 to 42 crores in September 2025. Yeah. So, this is basically the brand which was acquired from the promoters. They were sitting under a capital work in progress because the transfer of the IP has now happened in the company's name through the normal route process. It is capitalized, and it has gone as intangible assets. So, basically, how much have we paid to acquire that perfume brand from the promoters? Before, not in the current period. Before the IPO, they had paid INR 37.5 crores and acquired all the Stanley brands, and this was pending to be approved by the agency of transfer to the company name. This happened during the current H1, and they have capitalized that as part of intangible assets. Right, sir. Now, going forward, I wanted to understand that what is our price positioning? Let's say vis-à-vis IKEA. So, are we pricing our products at par, at premium, or discount to them? No, no, no. IKEA is way lower. We don't play in that segment at all. In fact, we, you know, we start much higher. They play in what is known as a value and mass segment. We start with a value premium, then we have premium, and we have luxury. Right. And how much is the average CapEx that it takes us to set up a new greenfield store? It depends on the three different formats. The luxury format can take anywhere between 7 to 10 crores. The premium format will take between 3 to 5 crores, and the value premium can take anywhere between 1.5 to 2 crores. Once we open the store, how many months or years does it take for a new greenfield store to typically break even? We follow a break-even within the first six months, and then a complete ROI within the 24 to 30 months maximum. Right, so as of now, are all our 19 stores profitable? As of now, all our stores are profitable. Okay. That's great. Sir, so going forward to now, this 1,000 crores that you alluded to, sir, by when do you realistically foresee us reaching that number? We have been very clear that we will take 1,000 working days. So, you can say almost between three and a half to four years from the date of IPO. So, when you look at 1,000 working days, so that is the target we have, and I think we will definitely reach that in the next whatever within the next three years. Okay, sir. Great. Sir, thanks a lot. And sir, what kind of Capex are we looking at to reach there? We have adequate funds. We will not need any funds because now the age and maturity of the stores has started. So, like I have been telling you, that when we start a new store, it gives only about 50%-60% of its true potential in the first year, goes up to about 60%-70% the second year. So, in the third year, it reaches about 80%-90%, and normally around the fourth year is when it is fully matured. So, when you look at our new stores, we are starting the aging process, so I think we will not require any more funds to get to our target. Got it, sir. Thank you so much for your time. Thank you. Next question is from Sumit, an investor. Please go ahead. Hello? Yeah. Yeah. Am I audible? Yes. Go ahead. Yeah. Hi, sir. Hi. I just wanted to know. I have a few doubts. First, regarding the 1,000-crore target which you have given for from the IPO time from 3.5-4 years, so you have a timeline like this is more of perhaps to reach that target, but in past three years, you haven't been growing, like, there is not even a double-digit growth in your revenue number, so how are you thinking of reaching that 400-450 crores revenue to 1,000 crores in coming two, two, two and a half years? Again, I'm repeating myself so that, you know, I have a lot of clarity. I repeated this a little while ago. You must see what is happening in terms of how we are growing. For the last three years, we have been very steadfast in acquiring our COCO partners, and we have today COCO stores in the top six metros of India. Our store count was barely 20-25 three years ago. Today, we have expanded to almost 72 stores. This is what it is. Essentially, also there has been a shift in our business. Our COCO has grown even H1. This year, we have grown by almost 20-23%. That is the shift that is happening. Once you realize that the shift is more towards modern retail COCO business and the format, what we have changed from new furniture to complete home solution, it is a very clear trajectory that we are, you know, chasing, and we will reach the number. I hope I'm able to convince you with that. Yeah. I'm okay with this answer. Second, the marketing spend. So, like, I've been tracking your company and I've been reading a lot of newspapers on a daily basis. So, I see your ad, like, for the sale ad, like, it's coming for the past two to three months, like, in Business Standard somewhere, sometimes some other newspaper. So, when is this sale period going on, and how much do you spend on this marketing? Sure. Now, very interestingly, our marketing spend throughout our journey for the last 10, 15 years being a profitable company has always remained in a single digit. We have never exceeded a single digit. So, our customer acquisition cost has been very well controlled. As you rightly said, normally in the season period between September and December, we always go on what I call as a sale, but those sales are technically for floor stock that are there, and they are always refurbished with new products. That's how we generate footfall into our stores. This sale is not only for the Boutique one and the Sofas & More which you are telling. No, no, no, no, no, no. This is for all the three formats. See, for Sofas & More, it is usually a lot of promotion, and nationally we go on a sale, not nationally because Sofas & More is more strong in the south. We go on a sale at least four times a year. But for Stanley, we normally go season and off-season. We go for a sale between September and November, and then again between February and March. Okay. So, and sir, one more thing, like, in your website, like, whenever we see a product, we don't see the pricing of that product. So, how does the customer know that this product is on sale or it is not on sale? Like, how can one distinguish between them? Yeah. So, normally we don't have a price tag policy because everything is customizable. In the Stanley Level Next, almost 85% of the business we do is custom-made as per customer requirements in terms of colors, different configurations of products, so on and so forth. In Stanley Boutique, it's about 70%. In Sofas & More, we have a price tag on the product. That is about 50% customization and 50% off-the-floor sale. So, we are not a typical what you can call as a trader retailer who actually imports something and puts a tag on it. We are a bespoke manufacturing brand. So, people come in, touch, feel, understand, and then they select whatever color, whatever configuration they want. It is not compulsory that they have to buy what they see because we can customize, we can deliver to them in between six to eight weeks. That's the specialty of our company. Okay. Perfect, sir. Sir, last question regarding the margin. Sorry, I joined late to the call. I just wanted to know what is the reason, like, why the margin, like, bumped up so high, and what was the localization rate in leather and everything? I think we, like I mentioned to you, post our listing last year in June, we have undergone a lot of small plumbing changes. We have more efficiencies that we have introduced. We are technologically upgrading ourselves. We have Salesforce, and we have SAP S/4HANA being introduced in our company that's a work in progress that will complete by this year end, and due to all these changes and also the localization, we have definitely seen a very good improvement in our EBITDA as well as our gross profits as well as our PAT. Okay, sir. And sir, this Q2 only, you opened a lot of stores in Q2. Because of that, only you are seeing that the 6.3 crores is the kind of the increment in the leasing cost and everything. So you are seeing that this kind of momentum of opening of stores, this will continue for the H2 of FY26 also? We plan to open about 15 stores in all in the current year, 25, 26. Out of that, we have already opened eight or nine stores. But what happens is, like, we have already made an announcement. We have started a new format under a Stanley brand called a Superlative, which are large format stores. This is about one lakh sq ft of space which we have taken in Hyderabad, and as we speak, the work is under progress, and the interiors are being done. Because we have already taken the lease and the agreement is already signed, you will see that impact coming because of indexation in the amortization section. That's why that impact we have in the amortization section. Okay. Thank you. Thank you so much, sir. All the best for the conversation. Thank you. Thank you. Next question is from Arvind Arora from A Square Capital. Please go ahead. Hello. Am I audible? Yes, sir. Please go ahead. Yeah. So, sir, like, venturing into a consumer vertical is a strategic decision, what I understood from you. So, is it like a margin activity, and what would be the revenue that we are targeting in this vertical? So, basically, like I was mentioning earlier, this is a product that we have introduced as a brand extension with a very small capital infusion, and it's a high-margin business. We are just piloting it. It's in a very early stage, and we will not have any major time or money spent on this. We are piloting it in our own stores, and it's just a pure brand extension into what is known as not the usual deodorant or cologne market. It is called as Oud perfumes. These are expensive perfumes starting at about INR 7,000, INR 8,000, going up to almost INR 20,000. These are being piloted in our stores. There has already been a small and steady, you know, development. So, we are just piloting it. It's too early stage, and I don't think we are going to rush into anything right now. It's a product extension. We use it as a gifting to our high-net-worth individuals. We use it as a gifting to our architects and interior designers. Then, how are you planning to sell it at stores or we can sell it online as well? No, no, no, no. At the moment, we are only selling it on our stores, and like I said, it's a touch and feel. We have 24 different aromas that we have created. Everything has been created by a French master who is a decorated person who does high-quality perfumery, so we are just about entering this. Hopefully, like you said, in the future, we will make it a standalone brand, but until that, it is just being in gestation period, sold only through our stores. Is there any other product, sir, that you are keeping an eye to launch in, like, perfume? We have men's shoes also. We have started. That has also been there for a while now. That also has passed the proof of concept. It's a highly profitable business. See, what happens is, in the furniture business, normally there we are positioned in the premium and luxury segment. Our customer base is almost 45-year-old people. We don't have any youngsters touching our brand and our products. So, to get a little younger people between 30 and 45, we have decided to go into the perfume and personal goods such as shoes and beds. Very good insight, sir. Sir, and recently you announced that there is a reduction in pricing due to festival. So, will this impact our margin going forward in quarter three? No, but if you really look at it, we have improved our margin significantly, and I think that is because we had the benefits, and, you know, we are continuing to work on, you know, making sure that our bottom lines are always expanding. So, is it like so, sir, this discount we announced after 23rd September, so technically that will fall from quarter three, correct? So, is my understanding correct? Not really. We already have some portion of those orders coming in in the Q2, and we also have visibility on how order taking happens. We don't see any impact of the price reduction happening on our margins. So, then, is it like, sir, our volume is being increasing due to discount? Because what I understood, we are seeing them, correct, when customer comes to us, they do not look at price. They need their product for their needs. So, pricing play, how this reduction in price will help us, like, to get more customers or something like that? Sorry? No, we didn't get your question. Can you repeat again, please? Yeah. I'm saying, sir, we sell as a brand, correct, and then like a luxury product. When customer comes to us, they need a product. So, discounting of 2%-5% will not get, like, save their pocket, correct? So, then, how this discount will help us in achieving the volume? Basically, you see what happens is there are a lot of value seekers who basically, you know, want to come to acquire the branded products. So, we drive that footfall into our stores. Okay. So, is there any uptick due to that, sir? Am I audible? Yeah. Basically, what really happens is with our, you know, offers that we go on an annual basis, we get our volumes because the number of stores are also increasing now, so we get more volumes that give us more benefits in our manufacturing and efficiency improvement. So, right now, we are at a tipping point. But with the volumes increasing, I think our margins also will definitely increase. So, that is how we look at this, and, you know, further with the localization, we're able to also get a higher margin. Hope I've answered you. Yes. Understood, sir. And, sir, lastly, you... Sorry for interrupting, Mr. Arvind. I would request you to rejoin the queue for any more questions. Okay. Thank you. Thank you. Next question is from Devanshu Bansal from Emkay Global. Please go ahead. Yes, sir. Hi. Thanks, sir, and congratulations on a good margin performance. Sir, I specifically wanted to check on this one lakh sq ft space that you talked about in Hyderabad. So, what exactly are we sort of doing there? Because it is, like, in my opinion, almost 25%-30% of our overall retail space. So, do you foresee that revenues also at a mature level would be to discount from this space? So, basically, these are larger format hybrid stores. They're markets where we have been present for more than a decade. We understand the consumption. We understand the level of, you know, luxury housing coming in this market. And to kind of gain better traction, we are taking these long-term rental properties and opening large format stores, offering our premium as well as our luxury format. So, it becomes a compulsive place for home makers to come to shop, and we give a very good experience. We have the first one in Bangalore, and this is the second one that we are opening in Hyderabad. Sir, that's fair, but still, one lakh sq ft is a huge number, right? So, our typical store size is 10,000 sq ft, right? So, I want to, why I'm checking this is, do you see that the market potential itself is such that this can sort of consume such kind of a store? And typically, our model also is not so much inventory-led, at least in Level Next, and it is more curated, more bespoke kind of work that we do for our clients. So, typically, we have thought process around inventory stocking at such stores and the revenue throughput that we are targeting. So, I wanted to sort of check on that. One lakh sq ft is actually the super built area. The effective carpet area will be almost about 60,000-65,000 sq ft, where we have almost six floors which are dedicated to various segments of housing. We have in the premium, we have further broken down. We are giving a customer a complete home experience. And like I said, they become a very compulsive. It is also something that we have already done the proof of concept in Bangalore. We have two large stores here. We understood that furniture is a once-in-a-10-year kind of a purchase, and customer likes to see a large choice. They move around in the market. With our experience and our proof of concept, we are doing this. We have a similar plan for cities like Delhi and Mumbai also, only in the major cities of Bangalore, Hyderabad, Mumbai, and Delhi, where we have a vision that, you know, in terms of we have a visibility of a lot of high-end inventory of housing coming in. We want to come up with this superlative format, which is a hybrid of sorts, you can call it. Very interesting, and, sir, lastly, from Bengaluru perspective, what's the throughput that such stores typically sort of command? Is it like more 50 crore plus annual throughput for such stores? Yes. The first store we opened, though, it was not completely moved into this. We opened in 2017. That is also roughly 100,000 sq ft of a super built-up area. And those days, we were mostly what you call as a loose furniture brand. Only after 2021, 2022, we started moving over towards full-on solution. This store easily gives about INR 50 crores of throughput. The Hyderabad store, our target is to reach a much higher number going forward. Typically, what is the time duration these stores take to get mature, sir? Because that 2017 and 2025, typically, is it like six, seven years of gestation that is there, or it can be earlier? No, no, no. The formula will remain the same. Whether it is a 5,000 sq ft or a 50,000 sq ft, our formula is to start breaking even within the first six months, ROI maximum of 30 months, not more than that. Okay. And by when are Delhi and Mumbai, these large format stores expected to open? Are we tying down the property? Yeah. Unfortunately, though, the amazing market and a lot of premium and luxury housing is coming up. Unfortunately, we are not getting desired real estate, especially in cities like Bombay. Unfortunately, the rental expectations are extremely high. So, we are a little shy. We will not just rush into it. We are negotiating for build-to-suit properties. It might take a little longer, but we will make meaningful investments. Very encouraging, sir. Last question from my end. From a growth perspective, this year, obviously, headwinds, it has been slightly muted. So, for FY25, what's your outlook? Maybe if you can share both on revenue and margin front, that will be my last question. So, the focus remains, like I said, after our IPO, focus remains on what I call as the, you know, structural changes within the system in terms of introduction of very important HR, human resources, as well as important technology in our system. So, that has been the focus even this year. But as you see that, we are very steadfast in our growth in the COCO format. So, that is how we believe that we have to go forward. So, we are not, as I said, also very, from the very beginning, I have very clearly communicated to all our investors that, you know, we need to have a little bit of time appetite when we are building a brand that has to play in the premium and luxury market. We cannot rush into it. So, we will continuously definitely grow, but you'll see some exponential growth coming some next year because most of the stores have been established and are coming of maturity now. Thank you, sir. Thank you. Thanks for taking my questions. Thank you very much. Thank you. Next question is from Vireesh Sangwan, an investor. Please go ahead. Hi. My question is on the international foray, like the Sri Lanka one. You have partnered with a company called Singer. So, can you explain me the dynamics of the partnership and how much who will spend the money in the expansion here, like it's who we are planning? If we will be spending some money, and if yes, how much? How will it work? No, it is a completely cash-and-carry transaction in terms of a COCO model, franchisee-owned and franchisee-operated. Singer is a listed entity with 400 showrooms in Sri Lanka. They are the dominant electro-domestic player. They wanted to get into high-end furniture. That's how they approached us, and we have given them the license for Sri Lanka to represent our brand. We have a manager who will make sure that our brand is well-managed. The first store is expected to come up in Q4. We will pilot it for three to six months, and then with that, we have to, the plan is to open between six to eight stores. There will be no cash investments from our side. It will continue to be a cash-and-carry business. Okay, and they will be exclusive stores of Stanley, correct? Correct. They will be the exclusive partners. We will not supply to anybody else, and they will be opening what we call mono-brand showrooms and shop-in-shops in some of their large format stores. Got it. Got it. Thank you. And I have in both interviews like we are planning something similar in Jakarta and that includes the UAE market. So, will those be? Can you just brief like what's the plan? So, basically, our target was originally to go to the Saudi market because cities like Jeddah and Riyadh are expanding very big, and the opportunity for premium and luxury furniture is a great opportunity in those two markets. While Dubai has been there for a long time, but I think it is already slightly overrated, and in terms of rentals, it was not suitable. So, we had targeted to go into the Saudi market, but unfortunately, we realized to be present there, we had to have a presence in three countries to go in a COCO format. We don't want to have a local partner there. It's a lot of interest. So, we decided to start with Sri Lanka and Indonesia, Jakarta, because Jakarta also we have a strong inquiry in the same COCO format that should materialize in the due course of the next few quarters. That's what we are waiting for. Once we have the presence, we will plan to go with the COCO format in countries in Saudi Arabia, especially in cities like Riyadh and Jeddah. Okay. Thank you. And my last question would be on the automotive segment, like the seats that we do. Can you explain like how do we reach out to the customer? Like, is it through the OEMs, or how do they reach? And why I'm asking this, sir, is because I do see, if you can correct me, I do see them as maybe prospective customers, like having some high-end cars. They can be prospective customers for our maybe the furniture or the lifestyle goods that we have. So, yeah, just some insight on that front. And how big is that? Thank you for asking this question. It's a very relevant question. The brand started as a custom automotive seating brand almost 30 years ago. Next year, in April, we complete 30 years as a company. So, when it started that way, you know, those days, we did not have the real luxury cars. We had mostly the premium cars such as Opel Astra, Ford, and, you know, Cielo and Maruti 1000 and so on and so forth. Those cars never came with leather seats. So, we used to do a lot of customization. We had dealer network across the country, and that's how Stanley became a Pan-India brand. By 1999, we already had about 100 dealers across the whole country from Kashmir to Kanyakumari. So, that's how the brand Stanley grew as an automotive custom seating brand. But we realized that when we got into diversified into furniture, we realized that the actual luxury cars started coming in. So, the customers started migrating towards the German cars such as BMW, Audi, you know, Volkswagen, or whatever. So, there, the cars already came with seats. So, we took our entry through OEM. We became OEM supplier to quite a few companies in the past to force the developers to distribute. Those companies shut down, then we had a whole company in Toyota, which we still have. We do almost about 40-50,000 car seats with Toyota as a tier two vendor to them. But our customer automotive business has remained very tight and very small. But today, the topography has completely changed. We have very high-end car consumers who actually buy new cars with leather seats, but they come to us for further customization because they want a specific color or they want a specific design. So, we are still catering to a very HNI clientele in our aftermarket. It's a small business. The aftermarket business generates about INR 7-8 crores a year, and it has been very steady. But the beauty is that we are able to interact with very HNI customers who most normally became brand ambassadors and also buy furniture from us later on when they need it. Thank you. Thank you. That's all the questions from my side. Thank you. Thank you. Thank you. We have a follow-up question from Madhur Rathi from Counter Cyclical Investment. Please go ahead. Sir, thank you for the question. I wanted to understand regarding the gross margin improvement we've seen from close to 50% pre-IPO to 60% currently. After the leather localization and other gross margin improvement trend that you have mentioned, sir, to what extent can we expect to improve our gross margin further over the next few years? See, currently, the improvement has come because of multiple factors. One is the localization of one of our main raw materials, which is leather, which we are progressing well. And like Sunil mentioned earlier, localization is a long-term process because we don't have that kind of capabilities and technical expertise in India. So, we have got some Italian people to work on it, and we are progressing well. Close to 45%-50% we have already localized, and we can go up to 70%-80% in localization. The other benefit is coming because of enhanced product mix and also insourcing of certain manufacturing processes. In the earlier period, we were subcontracting some piece of our manufacturing processes, which we have on a strategic basis bought in-house over a period of time. That is also now giving us the margin benefits. We believe this should give us another. Maybe currently, we have already got about 10%-15% benefit in the leather localization. Maybe we can get another maybe five to eight%, yeah, further in the leather cost, which we can get the benefit. So, sir, currently, if I consider our raw material going at 40% of our revenue, how much would be leather as a percentage of total? 50%. Normally, leather is around 50% as a benchmark of our raw material cost. BOM, yeah. So, sir, is it fair to assume that we can expect a further 2%-3% gross margin improvement from the current 60% to 60%-63%? It will be a slow and steady one, but that is the endeavor for us to reach there. Got it. Sir, just a final question from me, sir. What was the reason for shift from this franchisee-owned model in the metro city to company-owned model? Sir, was it to keep the return that you were giving to franchise with us so that we can, whatever growth comes in the future, to benefit from that, or was it something else? So, multiple reasons. One is that when you are, you know, moving from a premium to a luxury segment, it becomes important that the touch and feel and the experience center, you know, we are able to have it at a very high standard. So, we demonstrated that success in Bangalore, our home market, over the last 10 years. We grew the cluster very well. So, now we wanted to kind of ensure that in other markets also we are able to expand. Also, the dealers have various other businesses, and they're not fully, you know, invested in expanding only our business. And what happens is if you have multiple dealers in the same city, there's always a bloodbath for pricing and discounting. So, we took this decision that we knew this market, they have the potential. So, one by one, we have acquired our franchisees, and now we have got our own COCO stores in the top six markets of India. Sir, what kind of economic benefit have we achieved from the same manager? What is the further benefit can we expect on the margin or revenue trend going forward? See, please understand that we are in the process of creating a premium luxury brand. So, we will always ensure that we are able to also get a premium luxury, you know, bottom line. That is our endeavor throughout our history. We have a demonstrated track record of almost 12-15 years of profitability, and that is exactly how we want to continue going forward. Got it. Sir, what would be the biggest threat for our company? What would be the biggest threat in stealing our business, sir? Would it be the cheap, not cheap, but like similar price Chinese products that are being manufactured, or would it be the architect sourcing their product rather from Stanley, maybe outside India or from a different dealer? So, sir, just trying to understand the supply chain and where we can expect growth for us. These are all challenges that you rightly mentioned. There is a lot of finished product being imported from all over, from Europe, from Dubai, from China. Definitely, I have no doubt of expecting the COCO to come with a finished product. Hopefully, that will give us a stronger foothold. But otherwise, also, I think our motive has always been customization. You know, as furniture speaking, a product that people enjoy for years to come, maybe even decades to come, they need an after-sales service. Traders can bring in anything from anywhere, but they'll not be able to give a service. As an established 30-year-old brand in India, being a pan-India brand, we have a different mindset of customers who want to value us because they believe that they will not be given our after-sales service. so, we have our own box, customization being one of it, which is a very important thing. We are not a typical trader retailer. So, that is what we have built. And I don't think it is extremely easy for someone to start to follow and catch up with what we have done over the years. Got it. Sir, would a majority of customers be direct customers? You're right. At the moment, I think largely we are reaching because of our promising brand visibility and, you know, brand also having catered to 100,000 customers over the last three decades. We have a lot of goodwill that happens from word of mouth. So, largely, 80% of our business still comes from probably even the larger comes directly from B2C. But now we are introducing a strong business development team starting next year. So, eventually, we will also go towards, you know, attracting a lot of good talent in terms of architecture interior business coming into our foray. Thanks. Madhur Rathi has been disconnected. In the interest of time, that was the last question for the day. I will hand over the call to the management for closing comments. Thank you, everyone, for joining the call today. I would like to conclude by reiterating our confidence that we are making strategic investments that we believe will drive sustainable and long-term growth for the company. Thank you once again for your time, patience, and insightful questions during today's discussion. For any further queries, please reach out to our investor relations partner, Adfactors PR. We'll be happy to assist you. Thank you very much. On behalf of Emkay Global Financial Services Limited, that concludes this conference call. Thank you for joining us. You may now disconnect the line.