KHADIM - Khadim India Limited Share Price

The outlook provided by Khadim India Limited management indicates cautious optimism, particularly with the anticipation of an improved consumer demand in the upcoming festive season. Managing Director Rittick Roy Burman highlighted the expectation of a pickup in demand, especially as the festive season approaches earlier this year. He expressed confidence in capitalizing on this opportunity and emphasized a strategic focus on enhancing sub-brands such as British Walkers and Sharon, which have shown promising growth.

Key forward-looking points from management include:

1. Anticipated revenue growth: Management aims to leverage the festive season to boost consumer footfall and sales, which may help improve the current revenue from operations of Rs. 957 million reported for Q1 FY "˜26.
2. Margin recovery: While Q1 2026 gross margin was affected at 47.7%, management expects a slight improvement in margins post the festive season, anticipating that festive sales will be executed without discounts.
3. Expansion strategy: The company plans to open 7 to 10 company-owned outlets along with aggressive expansions of True Franchise Model (TFM) franchise outlets, with about 12 to 13 stores launched recently contributing around Rs. 5 crores in turnover.
4. Partnership and product diversification: Khadim has entered into a strategic partnership with Skechers to offer their footwear in select stores, enhancing product offerings amid expanding sales channels.
5. Digital initiatives: An ongoing focus on improving e-commerce logistics is aimed at increasing the online contribution to total revenue, currently at 1.34%.

Overall, management is committed to optimizing the brand portfolio to meet evolving consumer preferences while navigating the current economic climate with a focus on growth and profitability.

1. Question: Could you please provide an update on the listing of KSR Footwear?
Indrajit Chaudhuri: "We have submitted our application to both the BSE and NSE. We are currently waiting for any queries from the BSE. We anticipate receiving approval from either BSE or NSE by the end of this month or early September."

2. Question: In light of the potential GST reduction, will we stop offering discounts in upcoming quarters?
Indrajit Chaudhuri: "No, we will continue with discounts for now, as we are unsure when the GST changes will take effect. Rittick added that we may not offer discounts during the festive season, depending on market conditions."

3. Question: Can we expect similar gross margin levels in Q2 as in Q1?
Indrajit Chaudhuri: "Discounts will continue till August 31, after which margins should improve during the festive season as we plan to avoid offering discounts then."

4. Question: Can you elaborate on the challenges affecting gross margins?
Indrajit Chaudhuri: "Our gross margins decreased due to price cuts on Khadim products contributing around 2.5% to margin decline, alongside increased discounting. We expect margins to improve in Q2 as discounts will be minimized during the festive week."

5. Question: Regarding franchisee sales weakness, can you elaborate?
Indrajit Chaudhuri: "Sales from franchises have dipped, causing us to limit primary sales, leading to stock accumulations at the franchisee level, thus reducing our overall sales."

6. Question: What about the bis inventory clearance?
Indrajit Chaudhuri: "Most BIS inventory has been cleared. Some will remain, but discounts are being offered to liquidate remaining non-BIS inventory."

7. Question: What percentage of your portfolio falls below Rs. 1,000?
Indrajit Chaudhuri: "Approximately 70% of our portfolio is priced below Rs. 1,000, which could benefit significantly from a potential GST reduction."

8. Question: What improvements in volumes are expected from price cuts on Khadim brand products?
Rittick Roy Burman: "We've noticed that the volume degrowth in lower price points has stopped and expect decent volume growth in the coming quarters as footfall improves."

9. Question: Can you elaborate on the Skechers partnership?
Rittick Roy Burman: "We started our partnership with Skechers in June at 10 high footfall stores. Initial responses have been positive, and while we can't share specific numbers yet, we expect growth in the higher price point segment."

10. Question: What is Skechers' partnership model?
Indrajit Chaudhuri: "It's a buy-and-sell model where we purchase designs and sell them at a marked price, allowing for discounts on certain articles."

11. Question: What are the prospects for Khadim's athleisure segment?
Rittick Roy Burman: "The athleisure segment is at an early stage, contributing just 1-2% this quarter, but we expect to see growth as we add more stores."

12. Question: Any plans for premium segment offerings?
Rittick Roy Burman: "We've launched premium products in our British Walkers sub-brand, priced from Rs. 3,799 upwards, and have received positive feedback."

13. Question: What are your store expansion plans for FY '26?
Rittick Roy Burman: "We plan to open 7 to 10 company-owned outlets, while focusing more on collaborating with franchise partners and have currently opened 12-13 TFM (True Franchise Model) stores."

14. Question: How are you managing cost and planning for growth?
Indrajit Chaudhuri: "We are focusing on expanding in the East, looking for quick breakeven opportunities. Digital and marketing investments are ongoing but selective based on performance."

15. Question: What steps are being taken to mitigate the softness in demand?
Indrajit Chaudhuri: "We've increased discounts to boost sales and are hopeful for an uptick during the early festive season, especially in Bengal."