Vaibhav Global Earnings Call for Q4FY26 & Full Year

Ajouté : 2026-05-23

[00:00:00]Webel Global Limited Q4 and FY '26 earnings conference call.

[00:00:05]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.

[00:00:14]Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone.

[00:00:23]Please note that this conference is being recorded.

[00:00:26]I now hand the conference over to Ms. Nishita Bhatt from Adfactors PR. Thank you, and over to you, ma'am.

[00:00:35]Good afternoon, everyone, and thank you for joining us on Webel Global Limited earnings conference call for the fourth quarter and full year ended 31st March 2026.

[00:00:45]Today, we have with us Mr. Sunil Agarwal, managing director, Mr. Nitin Panwar, group CFO, and Mr. Vivek Jain, head of investor relations. We will begin the call with the opening remarks by Mr. Sunil Agarwal on the business operations, key initiatives, and growth outlook, followed by discussion on the financial performance by Mr. Nitin Panwar. After which, the management will open the forum for the Q&A session.

[00:01:11]Before we get started, I would like to point out that some statements made or discussed on today's call may be forward-looking in nature and must be viewed in conjunction with the risk and uncertainties that we face. A detailed statement and explanation of these risks is included in the earnings presentation, which has been uploaded and shared with you all earlier.

[00:01:33]The company does not undertake to update these forward-looking statements publicly. I would now like to invite Mr. Sunil Agarwal to make his opening remarks. Over to you, sir.

[00:01:45]Thank you, Nishita.

[00:01:46]Good afternoon, everyone, and thank you for joining VGL's Q4 and FY '26 earnings call.

[00:01:55]I trust you have reviewed the results and the investor presentation.

[00:02:00]FY26 has been a year where the investments of the last few years have started reflecting in our numbers.

[00:02:08]Profit before tax grew 41% year-on-year.

[00:02:13]EBITDA margin improved to 10.8%.

[00:02:17]Our in-house brand contribution has crossed 50% of B2C sales.

[00:02:23]Nearly a year ahead of our earlier target.

[00:02:27]Germany has turned EBITDA positive for the full year.

[00:02:32]And we generated our highest ever free cash flow of rupees 272 crores in FY26.

[00:02:40]These are meaningful outcomes.

[00:02:43]And they validate the direction we are moving in.

[00:02:47]Let me briefly cover the macro back backdrop.

[00:02:51]The year had its share of noise.

[00:02:55]Precious metal prices spiked.

[00:02:58]The US went through tariff-related uncertainty.

[00:03:02]And discretionary spending was cautious across our core markets.

[00:03:08]Despite all of this, we navigated the year well.

[00:03:13]We also see the recent macro developments as supportive for VGR.

[00:03:19]The India-UK and India-EU free trade agreements, the ongoing India-US trade discussions, and the easing of US-China tariff tensions, all create a favorable environment for a vertically integrated retailers like us.

[00:03:40]Coming to the numbers for Q4 FY26, consolidated revenue stood at 935 crores, a growth of 10% year-on-year.

[00:03:52]EBITDA was rupees 96 crores with an EBITDA margin of 10.3%.

[00:04:00]One of the most encouraging structural shifts during the year was the rising share of our in-house brands, which crossed 50% of B2C sales.

[00:04:12]This was achieved almost a year ahead of the plan.

[00:04:15]Higher in-house brand contribution strengthens customer engagement, improves sourcing efficiencies, supports pricing discipline, and lifts gross margins.

[00:04:28]We expect this to remain a key driver of margin improvement going forward.

[00:04:34]Our digital business also continued to scale steadily.

[00:04:38]Digital contribution stood at around 44% of B2C sales for the year, supported by better quality better quality customer acquisition, improving retention, and stronger AI-led targeting and personalization.

[00:04:56]Our OTT, live stream, and social commerce initiatives are also gaining traction.

[00:05:03]We remain on track to reach 50% digital mix towards the end of FY 27.

[00:05:11]Lab-grown diamonds are another important new lever.

[00:05:15]LGD now contributes 11% of retail revenue at an average selling price of around US dollar 250.

[00:05:23]This is lifting realizations, supporting gross margins, and making a clear shift in leading a clear shift in consumer preferences.

[00:05:34]Moving to our geographies, in Q4 FY 26, US and Germany grew by 1 and 7% respectively, and UK grew by 1% in local currency terms.

[00:05:48]Resulting in total growth of 3% YOY in US dollar terms.

[00:05:54]The most important milestone in our international footprint this year has been Germany Germany achieving a beta break even.

[00:06:02]This is a meaningful faster turnaround than we experienced in the US and UK as we are when we launched originally.

[00:06:11]Germany is now well placed to contribute to group profitability from FY 27 onwards.

[00:06:19]Our growth continues to be guided by our four hour priorities.

[00:06:24]That is reach new customer registration retention and repeat purchases.

[00:06:32]During Q4 our TV networks reached around 127 million households globally.

[00:06:39]Our unique customer base stood at 6.8 lakh customers.

[00:06:44]Retention remained stable at around 38% and customers purchase an average of 23 pieces from us on a trailing 12 month basis.

[00:06:56]Technology and AI adoption remains central to our long-term strategy.

[00:07:01]During the year, we expanded the use of AI across customer engagement marketing optimization analytics content creation merchandising and operational workflows.

[00:07:15]These initiatives are already helping improve productivity scalability customer experience and operating leverage across the organization.

[00:07:25]Sustainability and community remains at the core of our business.

[00:07:30]Our Equa ESG rating was upgraded to 74 during the year reflecting continued progress on environmental social and governance practices.

[00:07:42]Under our under our flagship geo purchase fields program, we have now served over 112 million meals to school going children.

[00:07:53]Currently providing around 56,000 meals every school day.

[00:07:58]We remain committed to our long run long-term goal of 1 million meals per school day by FY14.

[00:08:07]On clean energy, we continue to meet 100% of our manufacturing power needs through solar.

[00:08:15]Two of our US sites and one site each in UK and Germany also operate fully on renewable energy.

[00:08:24]We have also committed to the uh 6 rupees payout for the year.

[00:08:30]We remain committed to a balanced approach rewarding shareholders consistently while keeping flexibility to invest in growth.

[00:08:40]Looking Looking ahead to FY27, we remain confident in our growth trajectory and currently expect revenue growth of 9 to 11% along with an improvement in EBITDA margin of 50 to 100 basis points.

[00:08:56]Backed by continued investments in digital capabilities, technology adoption, customer engagement, and operational efficiencies, we are confident to drive long-term value creation.

[00:09:10]With this, I would like to hand over the call to Nitin to discuss the financial performance in greater details.

[00:09:17]Over to you, Nitin.

[00:09:21]Thank you, Sunil.

[00:09:22]Good afternoon, everyone.

[00:09:24]Let me now walk you through the key financial highlights for the fourth quarter and full year ended 31st March 2026.

[00:09:33]For Q4 FY26, consolidated revenue stood at rupees 935 crores, a a growth of 10% year-over-year.

[00:09:42]EBITDA for the quarter was 96.3 crores, translating into EBITDA margin of 10%.

[00:09:50]Profit before tax came in at 64 crores, a strong 41% year-over-year growth.

[00:09:57]One of the sharpest quarterly profit improvement we have delivered in recent years.

[00:10:04]For the full year FY26, consolidated revenue was 3,691 crores, with EBITDA margin expanding by 140 basis points to 10.8%.

[00:10:18]Gross margin remained healthy through the year, supported by our vertically integrated sourcing model, higher in-house brand contribution, traction in lab-grown diamonds, and disciplined inventory management.

[00:10:32]Despite elevated elevated precious metal pricing and geopolitical tension, we maintained pricing discipline and protected profitability.

[00:10:45]Our product mix, lifestyle products now contribute around 35% of total sales, and we continue to target medium-term share of 50%.

[00:10:56]Lab-grown diamonds contribute close to 11% of retail revenue.

[00:11:01]And as Sunil mentioned, our in-house brands have grown 50% of our B2C sales, a year ahead of our earlier target.

[00:11:13]The business continued to be strongly cash generative. We delivered operating cash flow of rupees 305 crores and free cash flow of 272 crores, which is our highest ever free cash flow generation in a year.

[00:11:29]Net cash position stood at 296 crores as of 31st March 2026.

[00:11:37]ROCE improved to 24% and ROE to 15% reflecting much better profitability and disciplined capital allocation.

[00:11:46]We also saw operating leverage during the year.

[00:11:49]Employee cost efficiencies improved further through process optimization, automation, and increased use of AI tools across functions.

[00:12:00]Direct cost productivity also improved with sharpest product portfolio and better negotiation outcome.

[00:12:09]Our digital marketing spend continued to stay focused on higher quality of customers with stronger lifetime value, which is helping strengthening our long-term customer economics.

[00:12:23]Now, let me cover geography-wise performance in local currency terms. Q4 revenue growth was 1% in US, UK grew by 1% and 7% growth in Germany, resulting in total growth of 3% year-over-year in US dollar terms.

[00:12:44]In US, the retail landscape continued to shift rapidly towards digital-first customer discovery.

[00:12:52]With paid social media emerging as one of the most important channel for customer acquisition and engagement.

[00:12:59]Customers are increasingly discovering, evaluating, and purchasing through platforms like Meta, Apple, and TikTok, and Google.

[00:13:07]And we have been steadily scaling our presence and investment across these platforms.

[00:13:13]Our paid social strategy is driven by performance marketing, AI-led targeting, creator and influencer partnership, and platform-specific content.

[00:13:25]All are at improving customer acquisition efficiency and lifetime value.

[00:13:31]This aligns very well with VGL's omni-channel model which blends live TV, digital, and social commerce.

[00:13:42]Despite higher precious metal prices and softer discretionary spending sentiment during the quarter, we delivered growth in the US supported by improving digital contribution, healthy traction in our proprietary brands, stronger customer engagement, and better marketing ROI driven by AI-led optimization.

[00:14:03]Importantly, the in-house jewelry casting line we opera- operationalized in the US during the year continued to help us to mitigate tariff impact on our shipments and product gross margins.

[00:14:19]In the UK, headline revenue was flat during the quarter and on the back of weaker consumer sentiments, the impact of elevated metal prices on discretionary purchases.

[00:14:33]However, underlying performance improved meaningfully.

[00:14:37]Specifically, Ideal World continued to be strong momentum with a healthy double-digit growth of 15% while TJC declined by 7%.

[00:14:46]Overall, UK EBITDA improved substantially by 220 basis points year-over-year supported by strong gross margin, disciplined cost management, and an improving product mix.

[00:15:01]In Germany, we delivered growth of 7% year-over-year supported by continued strength in lower live TV commerce and improving digital adoption.

[00:15:13]The Germany business achieved EBITDA breakeven for FY26, which is a notable milestone for us.

[00:15:21]It is expected to contribute positively to group profitability from FY27 onwards.

[00:15:28]Mindful souls, our digital first acquisition also continued to its steady performance with strong gross margin and delivered tangible cross learning benefit across the group.

[00:15:41]On dividend, the board has recommended a final dividend of rupees 1.5 per share subject to shareholders' approval.

[00:15:49]Including the interim dividend already paid, our total FY26 payout works out to around 37% of our free cash flow, reflecting our continued focus on consistent shareholder returns.

[00:16:03]Thank you. We can now open the floor for Q&A.

[00:16:09]Thank you.

[00:16:11]We will now begin the question and answer session.

[00:16:14]Anyone who wishes to ask a question may press star and one on their touch-tone telephone.

[00:16:20]If you wish to remove yourself from the question queue, you may press star and two.

[00:16:25]Participants are requested to use handsets while asking a question.

[00:16:30]Ladies and gentlemen, we will wait for a moment while the question queue assembles.

[00:16:39]Our first question comes from the line of Aditya Jhaver with AK Investments. Please go ahead.

[00:16:46]Yeah.

[00:16:47]Thanks for the opportunity.

[00:16:50]Uh I have a question. I would like to interrupt you but Hello. Yeah.

[00:16:54]Hello. Yeah, Aditya, please be a little louder. You're not quite audible. Thank you. Yeah, yeah.

[00:16:59]So, I have a question So, regarding the margins in FY22, we did roughly about on a 2,000 crore revenue base a 15% or 13 to 15% margin.

[00:17:13]And currently going forward FY27, we are doing roughly about 4,000 crores of revenue.

[00:17:20]And still we are inching up at 11% EBITDA margin.

[00:17:24]So, I just wanted to understand what I mean uh what it takes to inch up the margins higher. That is my first question.

[00:17:36]Thanks, Aditya, for the question. So, margin uh in FY 22, uh we have launched Germany operation, which initially led the lower margin for the initial period.

[00:17:49]Now, past financial year, we made the Germany business break even, and that now will start contributing in our similar kind of margin ratio uh over the years what we have seen in US and UK, will improve our margin lines. Apart from that, our initial investments in our uh as we are expanding in our digital footprints in in platforms like Meta or TikTok or the all paid media channels, which is uh which is required to require investment in in in these kind of platforms, resulting lower margin compared to FY 21.

[00:18:28]But, all of these results, if you see the last 3 years, our margin is steadily improving from 7% to 11% from FY 23 to 26 now. And we confident that our margin is continuously improving in upcoming years as we have guided 5,200 basis point year-over year improvement uh next year we have given a guidance.

[00:18:50]Okay. And these investments we have to continue for the growth. So, the operating leverage kind of I mean, it will happen slowly, but it will not be uh even though our base is becoming larger, but it won't be that big.

[00:19:06]Is it right?

[00:19:07]>> Yes.

[00:19:08]Uh so, we we expect that margin will continue to Uh operating leverage will continue to come in the business with especially the technology development and the AI initiatives what we have, we see the operating efficiency across all the platforms.

[00:19:25]And we expect that the leverage predominantly will come from HR and SG&A and shipping kind of cost platforms. But it will continue to improve and and for the foreseeable future we don't see that the we should not achieve the the peak margin of 15% we have achieved. But uh the in terms of uh like precise guidance, it is uh it is not right time to say, but our margin will continue to improve and it can be achievable to our peak level we have seen 15% in the earlier years.

[00:19:59]In coming one or two years basically.

[00:20:03]Possible? Possible.

[00:20:06]Yeah, it's a gradual improvement as we have seen the past 3 years improvement you have seen it. It will be a gradual improvement.

[00:20:12]Okay. Next my question is in the medium term. Now since we have the presence in Germany and it is being stabilized, I know you earlier talked about Japan uh or any other geographies, but I wanted to specifically ask why management is reluctant to start the business in India when we have there is a spirit in India who's ready to contribute or ready to pay up?

[00:20:38]And uh still why aren't we focusing on India? When will be the time that we'll be focusing on India and create an optionality for the company?

[00:20:50]Yeah, let me take that. So this is Sunil. Uh thanks Aditya for the question.

[00:20:55]So in India the television shopping is not really you know that took off in India.

[00:21:01]So for us to get into India it will be only digital uh entry.

[00:21:06]Now uh for our own business in Western world, our three countries, the digital is nearing maturity.

[00:21:14]Once we feel comfortable with our full maturity digital, we will look at India as a potential uh market for us.

[00:21:24]Okay, that makes sense. And also, I have one other suggestion for the management.

[00:21:29]I know we are paying a good amount of dividend, but uh our stock price is down really from the peak from 1,000 to 230 odd.

[00:21:39]Uh we would request the management to go for a buyback so that it helps in the EPS boosting. So, that will create more shareholder value rather than dividends.

[00:21:52]Yes. I'll take that check. Okay, yeah.

[00:21:54]Thank you, Aditya. Thanks for the suggestion. We'll keep you in mind.

[00:21:59]Thank you. A reminder to all participants, you may press star and one to ask a question.

[00:22:09]The next question comes from the line of Pradeep Meti with RGI. Please go ahead.

[00:22:16]Hello.

[00:22:18]Please go ahead. Am I audible?

[00:22:20]Yes, Pradeep.

[00:22:22]Yeah, uh just moment ago, uh you have already told that our in-house brand already achieved 50% of total revenue.

[00:22:29]But in the investor presentation, it uh it is already uh written that uh our in-house brand mostly contributing uh to gems and jewelry products of 80 to 85%.

[00:22:40]But uh just moment ago, already uh and you also uh already said that uh in midterms, uh we will achieve the lifestyle product 50% of total revenue.

[00:22:53]I would can say that both uh two statements are contradictory.

[00:22:57]Can you explain?

[00:22:58]Yeah, so thanks, Pradeep. Yes, let me explain that. So, total in-house brands uh uh is 50% of our total B2C business.

[00:23:08]Now, if we do a sales bifurcation of in-house brands, that is 85% of in-house brands is through jewelry and 15% of in-house brands through our lifestyle products.

[00:23:22]The other ratio that we are suggesting guiding for the business is whole whole together that our total sales of business 35% of total sales of business coming through lifestyle products.

[00:23:34]So, both are the different things.

[00:23:41]No, I am telling you you told that that 50% in mid-term lifestyle product will increase to 50%.

[00:23:48]But already you have said that jewelry product in in-house brand jewelry product is 80 to 85%. Then how can you say that?

[00:23:58]In in-house brand jewelry product is majority product, but you are calling telling that lifestyle product will increase.

[00:24:05]In percentage term.

[00:24:08]Lifestyle product will increase in percentage terms. Our mid-term target is 250%.

[00:24:14]It is combining in-house and external brand and our umbrella brand both.

[00:24:20]So, the number we have reported in in-house brands is only the 85% 15% ratio of our 50% of total branded ratio.

[00:24:30]But if we have more confusion that we can have a separately email chat and then we will explain you better. Okay, okay. Then I will I definitely will do.

[00:24:38]And another question is can you comment on the tax for next year? Means FY27.

[00:24:44]Uh what what do you mean? Taxes? Taxes.

[00:24:48]Yeah, yeah, taxes and all.

[00:24:50]You have already told in the FY26 that it will remain in the line of 20 to 22%.

[00:24:57]Uh so, can comment on that.

[00:24:59]Can you comment on that?

[00:25:00]Got it. So, our tax rate ETR will be sitting around 22% for the upcoming years.

[00:25:08]Okay. And the next question is that in TV broadcasting expense, can you comment on that? It will increase in percentage term or remain in percentage term or it will increase in absolute term but decrease in the percentage term in terms of revenue.

[00:25:20]Yeah. So, that the the line we continuously investing to expand our digital share. We expect that this will continue to be around in 20 odd percentage uh that line.

[00:25:34]Okay. Okay, thank you again.

[00:25:38]Thank you.

[00:25:40]The next question comes from the line of Sahil Sharma with Talmes Capital Management. Please go ahead.

[00:25:48]Yeah, hi. Thank you for the opportunity.

[00:25:51]Uh So, sir, I just wanted to understand uh you think volumes have declined across the board in both TV and digital by about 9 to 10%? Why why?

[00:26:00]Uh which seems quite significant. So, how should we see this? Like is this reflective of a broader macro and demand trend or are we seeing increased competition?

[00:26:11]Sure. So, your portfolio is pretty wide and we offer every day a new new product of 5200 every time based on customer need or market trend how it's going on. As the recent period, lab grown demand is pretty high. So, lab grown is around $200 price coin. So, that to fulfill that demand our our average ticket size is going average ticket size is increased. So, volume is impacted. So, and also increased metal prices also driving higher price point customers.

[00:26:46]So, we actually look into it more in in of the our number of quality of customer acquisition and and total sale of each platform is a two performance of of our overall business.

[00:27:02]So, declining volume doesn't mean that the the customer is less buying. It is the product portfolio is shifting where we see more quality of customers and more lifetime value.

[00:27:14]Okay, understood. So, so you are not seeing any sort of slowdown in demand at this point, especially given the inflationary environment that we are living in right now.

[00:27:25]Yes.

[00:27:26]Sunil, would you like to comment on this?

[00:27:28]Yeah, so we uh So, as I said, we are very agile in assessing the customer environment with macro environment and customer demand.

[00:27:39]So, whatever the current environment, whether recessionary or or the positive, we will adapt and bring the products suitable for that period of time.

[00:27:51]So, volume may not be the right parameter for you to look at it.

[00:27:57]The number of customers, repeat purchase, the retention rate, and the reach. These four Rs are the best way to look at our business.

[00:28:05]And the overall revenue and profitability.

[00:28:10]Understood.

[00:28:11]Uh and so on the own brand, you know, as a percentage of revenue has reached over 49% and 85% is the of that will be jewelry. So, uh I think it would be over 64 to 65% of the jewelry revenue is now coming from own brands.

[00:28:29]So, do you see the share of jewelry revenue from own brands increasing further? Like uh and and like how do you see it in the next 3 to 5 years? And uh you mentioned that it would be margin accretive. So, would it be margin accretive on an EBITDA level given uh you know there could be higher advertising spends uh in the own brand segment.

[00:28:54]Yeah, so having higher own brand ratio is margin accretive.

[00:29:00]And as we increase the ratio across jewelry and LST product, the EBITDA margin will increase. We don't have precise calculation for that because that is still very dynamic. But it helps in margin accretion because the uh customer with our own brand has better repeat purchase and better retention.

[00:29:22]And we can give better value to them with our own brand than the third-party brands.

[00:29:29]And and on like the share increasing further, do you see it increasing further?

[00:29:35]Yes, it will continue to increase. I do not have exact guidance on that because we we constantly push it and then but we also call me the customer pool.

[00:29:45]Uh but we'll continue to increase it. At what ratio will increase in coming years, I don't have guidance on that yet, but it will definitely continue to increase in the foreseeable future.

[00:29:57]Okay, and can you just give a little more color color on the sharp increase in the ROUs?

[00:30:05]What has led to this increase?

[00:30:09]Yes, let me take this. So, ROE is primarily primarily driven in our growth in our PAT. So, our company's PAT is grew sharply during the quarter and year-over-year growth. So, that is leading in our ROE number. But if we normalize the net credit that we have gotten this year, we're still having an improvement in our ROE to 15%. Sorry, sorry. I was asking about ROUs, the right right of use assets.

[00:30:42]Oh, yeah. Okay, now got it. I got it.

[00:30:44]So, I understood that. So, we have taken a one lease signed a lease in UK.

[00:30:51]Uh we around in February. So, that resulted in a higher higher ROI. But, the existing building that we have, we will vacate and move in a new buildings by the end of like during this financial year.

[00:31:04]So, ROI increase is mainly related to the the new lease we have signed for the UK premises.

[00:31:12]Uh so, would that result in a significantly higher depreciation cost going ahead in the Yeah, depreciation will be similar in line that for this financial year compared to the next financial year.

[00:31:26]Uh but, we have a resulted savings in terms of our we as we are consolidating our four buildings operation in one building. So, operational efficiency, faster acquisition deliveries, all around we will get the benefit in our our operational cost side.

[00:31:45]All right, understood.

[00:31:47]Great. Thank you so much.

[00:31:49]Thank you, sir.

[00:31:51]Thank you, sir.

[00:31:52]Participants, you may press star and one to ask a question.

[00:31:59]The next question comes from the line of Shreyansh Jain with Swan Investment Managers. Please go ahead.

[00:32:09]Hello. Can you hear me?

[00:32:11]Yes, yes. Sure.

[00:32:13]Uh hi. Congratulations on a good set. Uh so, my first question is over the last 3 years, our mix has consistently improved from say TV to digital. And I'm I'm just looking at that percentages, you know, from 38% to 41 odd percent right now digital, right? Uh and the other thing that you also mentioned is that we're having a lot of sales from lab grown diamonds, which is about 11% of your sales right now. And also gold has to an extent played a big role in the in this growth, right? But when I look at your gross margins over the last 3 years, it hasn't improved that much, you know?

[00:32:55]And we were also made to understand that as your business mix moves more towards the digital side, your gross margins tend to be better on that side. So, why aren't we seeing a commensurate improvement on the gross margins? Or is it that the TV business that we're ending up doing is at a far lower gross margins that we used to do historically?

[00:33:15]Can you just help us understand this piece?

[00:33:24]Hello? Let's see. I'll see.

[00:33:26]Hi. So, gross margin side, it is uh what I see actually it is improving trend, but but but the main reason I can see is only in the gross margin as we we have a B2B sales share increased. Though the B2B sales uh EBITDA margin is very close to our channel's EBITDA margin, but B2B gross margin is much lower as the B2B doesn't have like a fixed cost of digital or content broadcasting. That's what That is why we we you are seeing in the overall console result that it is a flattish over the years. But like in the current quarter, we have seen around 180 basis point improvement in the gross margin. And the full financial year also 40 basis point improvement in the gross margin. And as digital share is expanding now further and which might be next year a significant half of the business size is from the digital, then gross margin will further expand in future.

[00:34:23]Since the B2B is hardly I think 200 odd crores out of 3,700 crores, and also you know, the volumes have you know, dropped off from where we used to do is to what what we used to do historically.

[00:34:37]So, that is why you know, the question that you know, we we we're not able to see the kind of gross margin improvement that we were earlier looking at.

[00:34:49]Yeah, so I see as the gross margin 1% improvement from FI 21 sorry FI 21 to FI 2019 last 3 years from 64.6 we are at 65.5 and in last 3 years your digital has improved by 3%. Lab grown has become 11% of your sales where ideally your gross margin would have been higher.

[00:35:13]Volumes have sort of dropped off so your ASPs have gone up. So, just these three four things when I look at look at these things and then try to sort of come to the gross margin number, I feel are we doing the traditional TV business at a lower gross margin than what we what we used to do historically.

[00:35:31]So, margins wise it is slight but time to time we do a inventory clearance.

[00:35:37]But overall broadly we look into it that year over year are we getting an improvement in our overall margin or not and that we are seeing in past 3 years though the it is not maybe a like significant amount of percentage higher but still 100 basis point higher in past 2 3 years.

[00:35:55]And and now we are seeing more traction on the higher gross margin side in our paid media sales channel.

[00:36:03]So, that share is increasing in a recent period. So, that will drive more higher margin coming years.

[00:36:12]Okay, let me add to this you know, in the last financial year has been the tariff addition to the business and the cost of tariff was there.

[00:36:23]Although in jewelry we were able to start casting US and bringing to India and making it. So, we saved tariffs on some portion of the jewelry.

[00:36:31]But overall, the tariff intensity was substantial and the metal price spike was there.

[00:36:37]In spite of that, we were able to expand the margin during the year.

[00:36:41]The digital has helped to some extent, but it was more of an internal discipline of improving margin that has seen the growth in margin and therefore the profitability and ROC and otherwise.

[00:36:56]So, given the circumstances, I believe that we have done pretty well with our margin profile.

[00:37:04]But my second question is that obviously employee costs as a percentage of sales have improved by about 200 odd bits in the last 3 years. And now when we're seeing 50 to 100 bits of margin improvement going forward and Mr. Panwar also mentioned that some of it would come through from employee costs. So, just trying to understand you know going forward for the next 2 years which where which significant line item should we see improvement coming from?

[00:37:34]That's one piece and second is what is the kind of top line growth we should ideally look at because I'm just looking at the constant currency full year numbers for US and UK. Nobody can obviously understand the macro, but UK's flat and US is 3%. So, could you help us understand what are you looking at for the next 2 years in terms of constant currency growth in two three geographies?

[00:37:59]Yeah, so constant currencies there's still a lot of noise of the currency fluctuation and the tariff uncertainty.

[00:38:09]So, we are just giving one guidance in INR for mid-term of around 10 to 12% for next year. We're giving guidance of 9 to 11% of overall revenue growth.

[00:38:23]Now, business as we go more towards digital where we have more conviction of growth then we can give you know local currency guidance going forward. At this time because of the macro and business transition we are not giving that constant currency guidance.

[00:38:44]Got it and the margin improvements are where where will that come from 50 to 100 bips?

[00:38:51]Because already improved the employee cost by 200 odd bips.

[00:38:56]Yeah, so first it will come from gross margin improvement. Then the employee cost improvement. Shipping may have some leverage but the in current in the Asian crisis the war have whatever growth we had last year all the margin leverage we had last year in shipping that won't be available for this financial year.

[00:39:18]But if the business growth stays steady then there may be a room in shipping as well.

[00:39:24]SG&A I don't see leverage because we will continue to invest into whatever the saving we do on TV to continue to invest into and digital.

[00:39:34]We continue broadcasting this day at around 20% what we mentioned earlier.

[00:39:39]The leverage to sum it up leverage will come from margin improvement and HR cost.

[00:39:45]Okay, all right. This last question so when I look at your other expenses except for CNB so that has increased by about 16 odd percent in this quarter all right. So what has led to this 16% growth and the second thing is that we've taken a write-off of about 25 odd crores in the mindful souls piece right. So just trying to understand what what has happened in that period I think it's just one one and a half year old business and And we aren't we totally to take that right off or or you think so fundamentally something has changed in that business?

[00:40:26]I shall I take this question? So, the other line which is increasing mainly related to our uh the traveling and the the uh different office expenses that we have incurred for the initial into setup the uh the warehouse in in UK and also the some of the technology expenses that we have given driven in in AI side that we have done resulting other expenses are slightly higher compared to last year.

[00:41:01]Uh but that we see that it is in temporary in nature.

[00:41:05]Uh the other point about the Mindful Souls, Mindful Souls current business initially we structured based on the we hired growth and the forecasted based on the uh the double-digit growth basis the initial impairment testing that we have done it. Though conservatively we have taken this year that the that that number of however that number of uh growth percentage not coming but the business is still good profitable business for us and there's a cross learning is pretty high that we are uh we are having uh the US, UK, and Germany all three business are learning from Mindful Souls. So, come considering that we we perceive that that business is is is it's very fruitful for us. But but now the recent investments that we are seeing and changing of our digital strategy in Mindful Souls focusing more on the the one of single items, we are seeing that this quarter started seeing the positive numbers of Mindful Souls but the the the the right off is mainly related to the conservative impairment testing that we have done it. Uh so initially we forecasted that business will be recovered uh all the invested money within 5 years. Now it is increased to 7 years. So the potential it may be reversed in upcoming years if the the business perform well. Uh, but for now because of the initial year we haven't converted well from my Google search, that is why the right of is coming up 25 crores.

[00:42:35]Okay, thanks and all the best. I'll get back in the case.

[00:42:39]Thank you, sir.

[00:42:41]The next question comes from the line of Sheel Kumar Shah with Samiksha Capital.

[00:42:46]Please go ahead.

[00:42:49]Yeah, hello. Am I audible?

[00:42:51]Yes, sir.

[00:42:52]Yeah, thank you for the opportunity.

[00:42:54]Uh, so considering the current micro environment in US and UK uh, particularly elevated gas prices and inflationary pressure, could you give us some color qualitative color on the current trends that you are observing in uh, April and May so far?

[00:43:14]Uh, certainly. Yeah, so I'll take that.

[00:43:17]So we are seeing better digital traction in both the geographies.

[00:43:23]But the television audience is still a bit stressed owing to the inflation.

[00:43:30]The gas prices are high and interest rates are getting higher.

[00:43:34]So we are comfortable with our guidance that we gave of 9 to 11% growth year over year in overall for the group.

[00:43:44]Uh, and I'm leaving out the Germany also. The Germany is seeing better traction this current quarter than it did last quarter.

[00:43:52]So all in all for the group we are comfortable to see the growth in revenue as well as profitability in uh, current quarter and for this financial year.

[00:44:04]Okay, thank you.

[00:44:08]The next question comes from the line of Pulkit Singhal with Dalmus Capital Management. Please go ahead.

[00:44:15]Thank you for the opportunity.

[00:44:17]Uh so we need to I think one of the uh concerns is that you know US market particularly has been growing at low single low single digit on the last three consecutive years.

[00:44:29]I mean I mean we've been making a lot of investments on the digital side. We've been trying a lot of things. How do we get comfort that it's going to grow going ahead?

[00:44:37]What is it that you're seeing? Is there something that you're doing that gives you comfort on this going ahead uh that it grow higher?

[00:44:43]Yeah. I think that's a good observation.

[00:44:46]So we have over the course of last 31 years we are public. We've transformed our business multiple times.

[00:44:55]From B2B to B2C to big and motor to TV to uh jewelry to lifestyle and to now digital.

[00:45:02]So last three years have been our transformation journey from purely TV dependent to TV {slash} e-com and more and more towards e-com.

[00:45:12]While giving improved EBITDA, improved margin and amidst the German initial build-up negative margins.

[00:45:23]So your question of US given the our investment into digital and my conviction of us being on the right track gives me confidence that in mid to long run US and UK both geographies will get to double digit growth for us.

[00:45:44]Uh because we put those investments in place and the teams in place.

[00:45:48]You talked about double digit constant currency growth you're expecting for both the markets eventually. Yes in in mid to long run, yes.

[00:45:57]Any initiatives you want to touch upon AI or otherwise that that gives confidence that you're doing something new which is kind of giving you that uh confidence or visibility.

[00:46:08]The number one is AI is now completely integrated into our digital efforts.

[00:46:15]From uh uh scanning the competitor environment, all meta ad library, other data for what is working, what angles are working.

[00:46:26]So, we scan that and then we create the creatives for meta or for ad learning based on that intelligence through AI.

[00:46:36]And then we create landing pages of for those customers clicking on that ad with the help of AI.

[00:46:43]And then we analyze with AI where the customer is bouncing from through uh the there's Microsoft service and that integrated with AI.

[00:46:54]We're able to watch real time where the conversion is slowing down, where the customer is bouncing.

[00:47:01]And that is helping us getting to improve the conversion and uh customer customer instant growth.

[00:47:10]That gives me a lot of confidence. So, from product identification to creative angles to making the creative AI and landing pages and analytics.

[00:47:21]Completely driven on the marketing side.

[00:47:23]And we're also using AI in our operations to for supply chain and demand forecasting into back end supply chain analysis and optimization.

[00:47:36]So, it's quite across the board we're using AI and it's only going to accelerate.

[00:47:41]And we're not doing centralized AI.

[00:47:43]We're encouraging all our team members to use AI with with certain security guidelines to utilize AI to improve their results and their contests across the company going on for best AI use and people are getting handsomely rewarded for the good AI use that they demonstrate.

[00:48:06]Right. And these initiatives on AI demand generation or marketing, when have they started and when do you think it can reflect in terms of some real impact as in terms of significant impact in terms of demand generation? I mean, how old are these initiatives?

[00:48:23]And how do we understand They started few months ago. So, it probably it just don't switch on one switch and go on.

[00:48:31]It started almost a year ago and in recent weeks and months it started accelerating.

[00:48:38]I cannot predict how much it is resulted in substantial increase. I cannot say that.

[00:48:45]But I'm comfortable with the guidance that we've given you and we hope to meet or exceed those guidances.

[00:48:54]Understood. Thank you and all the best.

[00:48:58]Thank you, Pulkit.

[00:49:00]The next question comes from the line of Mehul Manjwani with 40 cents. Please go ahead.

[00:49:07]Hello, sir. Thank you so much for the opportunity.

[00:49:10]Sir, last few quarters we were kind of our business was there was some uncertainty due to tariffs. Uh So, can we say that the tariff-related uncertainty is out of the way right now or uh we have to wait for one more quarter or so?

[00:49:31]You know, with the current administration, Mehul, you can never be certain.

[00:49:36]So, but I can only say that it is uh uh whatever the circumstances, we we we are very agile and pretty much multi-country uh logi- operations and logistics that we'll be better than competitors.

[00:49:52]Right. So, uh uh uh another question related to this is that since you have reported a very good set of numbers So, if the tariffs related uncertainty wouldn't be there, wouldn't have been there, we would have been significantly better?

[00:50:12]That is very hypothetical question.

[00:50:14]Difficult to answer.

[00:50:16]But there is it is a fact that uncertainty can cause disruption.

[00:50:23]But I look at uncertainty sometimes too as an opportunity to make a difference.

[00:50:29]Or do something better than competitors are not doing.

[00:50:32]So, difficult to say. Hypothetical and very difficult to say.

[00:50:37]Right.

[00:50:38]Sir, on our products, another question is related to certifying. Are our products certified by an external agency or there's no requirement as such for our customer base?

[00:50:53]Okay. Yeah, yeah, yeah.

[00:50:55]>> yeah. So, our products like lab diamonds or lab grown uh those are certified products and customer also looking for certification to get a trust and authenticity. And regulatory requirement also is in in UK to assay the silver and gold jewelry item. So, that also certified.

[00:51:17]Uh so, most of the product in branded product side we certify. Uh and in the product the certification varies based on product price range and product brand related. But I would say that uh the the our our the trust we have created and value generation that we have created uh across the years uh the customer believes and customer trust is there and we do a certification also there for our customer if we Okay, sir. My question is lab grown diamonds. You know, since when have been uh selling these products uh Uh sorry, I didn't get that last part.

[00:52:02]Uh when I >> question since since when are we uh into the business of lab grown diamonds? Uh we have you started started in the last couple of years or Yeah. So, lab grown category picked almost around 18 months back.

[00:52:19]And that category was pretty much nil for us. Uh lab grown diamond, but now that category within 18 months it is picked to uh almost 11% now.

[00:52:30]Okay.

[00:52:31]Uh thank you so much for all the question answers and wish you the very best.

[00:52:36]Thank you.

[00:52:38]Thank you. The next question comes from the line of Parth Dhanam, an individual investor. Please go ahead.

[00:52:46]Can you hear me?

[00:52:48]Yes.

[00:52:49]The first question is about the unique customer which has gone down.

[00:52:54]So, how do you see that panning out?

[00:52:56]Maybe next 2 years, 3 years.

[00:52:59]Sure.

[00:52:59]Hi Parth. So, the customer number we are constantly looking and refining our customer persona and portfolio. And where we see a more value or quality of customers that we have targeted. In the past years that we have targeted very low price point customers and then we have seen the lifetime value for those customers were not high, then we deliberately moved to the more quality of customers where the customer we get more repeat like beauty items and the the lab grown and the the other gemstone items. So, that we have expanded and that they are naturally slightly high price point items and the the quality of customers cost is also high, but longer time it gives value.

[00:53:44]So, overall unique customer we we monitor based on how many quality of customers we acquiring.

[00:53:51]Uh so, the number has gone down because of mainly those one-off customers which were earlier not giving value inflating the last year number. And now the focus is more on the quality of customers.

[00:54:04]But do we see that increasing? Maybe not immediately, but at least 2 years down the line?

[00:54:10]Because we have this Germany doing very well. We have two acquisitions.

[00:54:15]Uh if I recall from the past calls, we have been investing in customer acquisitions and all.

[00:54:22]So, do you see that?

[00:54:25]Yeah, we are seeing that the recent uh improvement led through AI and the digital marketing the whole across platform that we have created of content generation.

[00:54:37]So, that is resulting a the acquisition of higher number of customers with lower cost. And we see that that number will continue to improve.

[00:54:49]Okay, sure. Thank you.

[00:54:50]Thank you.

[00:54:53]Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to Mr. Sunil Agarwal for the closing remarks.

[00:55:07]Yeah, so thank you everybody for your participation and gave some of questions.

[00:55:12]If you If you have any further questions, please feel free to reach Vivek Jain at Web Global or Disha or Amit Jain at Axis.

[00:55:24]And they'll take care of your questions.

[00:55:26]Thank you so much.

[00:55:29]Thank you, sir. Ladies and gentlemen, on behalf of Web Global Limited that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.