The Ebitda-margin dip seen in the third quarter was an exception and Electronics Mart India Ltd. is confident of recovery in the coming quarters.
Speaking to NDTV Profit, Chief Financial Officer Premchand Devarakonda sees margins recovering to the 7% level by the end of next financial year, with improvement starting to reflect in the books in the fourth quarter.
The company registered an Ebitda margin of 5.2% in the third quarter against 6.5% in the year-ago period. The Ebitda margin for the nine months ended December 2024 stood at 6.4%. "Q3 was an exceptional quarter, so it will happen once in a lifetime," he said.
According to Devarakonda, margin growth typically depends on the product mix. He added that categories like larger appliances, which include refrigerators, drive better margins.
"Normally, it (product mix) changes in the first quarter when the movement of white goods is higher compared to the other categories. This means the contribution coming in from the sale of white goods will be better. So if the trend continues, it means people will have extended summer, so we will have improved margins," he added.
Commenting on how he anticipates the margins to move in the coming quarters, Devarakonda said: "This year, we might end up at 6.5%, but from next year onwards, we are optimistic. We will be able to sell the attachments along with the products, so those things will contribute to better margins."
Electronics Mart registered a 31.2% fall in its net profit at Rs 31.5 crore in the December quarter versus Rs 45.7 crore in the year-ago period. This was despite a 6.2% rise in revenues to Rs 1,885 crore from Rs 1,775 crore in Q3 of last financial year.
Devarakonda revealed that the company is planning to open another 30 stores in India, including six in the National Capital Region, for expansion. He said Electronics Mart India is open to acquiring properties for its stores instead of a lease.
"It is on a case-to-case basis. If we get a good deal at a good location, we might look at the option of acquiring the property, otherwise, our strategy is to keep the ratio of (unclear) stores at 1:6," he said.
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