MONTECARLO - Monte Carlo Fashions Limited Share Price

In the Q1 FY26 earnings conference call for Monte Carlo Fashions Limited, management provided an optimistic outlook for the company, highlighting a 10% year-on-year increase in operating income, reaching INR 139 crores. However, they reported an EBITDA loss of INR 6 crores and a net loss of INR 16 crores.

Management emphasized several key points for the future:

1. Sales Growth Drivers: The online segment is a significant growth driver, with notable performance from their own website. A remarkable 100% increase in footwear sales was noted for Q1, with expectations of continued growth.
2. Expansion Plans: Monte Carlo is on track to open 40 to 45 exclusive brand outlets (EBOs) across India, focusing heavily on the Western and Southern regions, aiming to enhance their retail footprint. The company currently has opened 3 new outlets and targets 35 by year-end.
3. Logistics Partnerships: Collaboration with Blinkit, Swiggy, and Zepto aims to enable 30-minute delivery services to enhance customer convenience and speed.
4. Digital Transformation: A strategic partnership with Salesforce is set to improve customer experiences and operational efficiency through enhanced data integration across online and offline platforms.
5. Financial Guidance: The company is maintaining a revenue growth guidance of around 10% to 11% and an EBITDA margin target of 19%. Management hinted at the possibility of revising these figures upward after Q1 due to positive sales trends.
6. Market Sentiment: Management expressed optimism about the upcoming festive season and good monsoons, which historically lead to strong winter sales. They stated that they are currently not facing significant headwinds and expect tailwinds due to economic improvements and consumer demand.

Overall, Monte Carlo Fashions Limited is positioning itself for growth through strategic expansions, enhanced digital capabilities, and market optimism.

1. Question: My first question is on the sales returns and rebate and discount part. So, it has increased in this quarter. Why is that increased?
   Answer: Sales returns are around INR15 crores this quarter, which is a slight increase of INR7 crores compared to the last quarter. This rise correlates with increased sales. We anticipate a decrease in returns in the upcoming quarters, as prior year sales returns normalize. Rebate and discount levels remain almost stagnant.

2. Question: What are your plans for MCFL Ventures since the objectives have changed?
   Answer: We plan to invest in solar, renewable energy, and logistics warehousing. Our sister companies have shown returns of around 20% to 25% on investment, prompting the establishment of this venture.

3. Question: What will be the average price of all your products, and what is the average ticket size per buyer?
   Answer: Our average selling price in summer is about INR1,100, while winter products are around INR1,500. The average ticket size per retail buyer stands at roughly INR3,500, excluding MBOs and other business metrics.

4. Question: Are you still maintaining your earlier revenue growth guidance of 10% to 11% and margins at 19%?
   Answer: We currently maintain this guidance, but after this quarter, we might revise it upwards based on performance. There's potential for both revenue and margin improvements, subject to the results we see.

5. Question: Can you provide a geographical split regarding rural, urban, and semi-urban areas?
   Answer: We don't have specific numbers right now, but I can confirm that our CFO would be able to provide more detailed insights if you reach out via email.

6. Question: Any plans to export to the UK after the recent FDA approval?
   Answer: We have commenced online exports to Europe and the Middle East, albeit at lower volumes. As demand grows, we may consider opening a warehouse based on the responses we receive over the next six months.

7. Question: Can you share the KPIs for the new stores targeting 35 by the end of the year?
   Answer: We're seeing sales of about INR6,500 per square foot, with expectations to increase to INR7,500. The first 15 stores have been a test and have shown promising results. We're confident in future expansions, likely adding 50 more stores following this year's targets.

8. Question: What's the CapEx target for adding 40-45 EBOs, and when will operational leverage kick in?
   Answer: About 90% of our new stores are franchise-operated, requiring no CapEx from us. For company-owned stores, CapEx is approximately INR2,000 per square foot, but our franchise model allows us to reap benefits without heavy investment upfront.

9. Question: How do you expect revenue growth trends to materialize in light of good weather?
   Answer: We maintain an existing growth forecast of around 10% and could potentially revise upwards based on strong orders and positive sales trends observed in July, especially with seasonal festivals approaching.

10. Question: What is your current view on profitability, considering expenses have risen?

Answer: We're expecting at least a 100 basis point improvement in EBITDA margins this year compared to last year's 17%. We anticipate better profitability in the upcoming quarters as returns stabilize and sales volumes improve.