BlueStone Jewellery and Lifestyle Limited — Q3 FY26

Bluestone Jewellery and Lifestyle Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=TFxky5AUsgc Published: 3 months ago

0:00 Ladies and gentlemen, good evening and welcome to the Blue Stone Jewelry and Lifestyle Limited Q3 FY26 earnings 0:08 8 seconds conference call. As a reminder, all participant lines will be in the listen and only mode and there will be an opportunity for you to ask questions 0:16 16 seconds after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on 0:26 26 seconds your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. 0:33 33 seconds Dvakar Bingley. Thank you and over to you sir. 0:38 38 seconds Uh thank you very much Sophali. Uh good evening to all participants in this call. Welcome to the Q3 uh and 9 month 0:45 45 seconds FI26 earnings call of blue stone jewelry. Uh before we proceed on this call, let me remind you that the discussion may contain forward-looking 0:53 53 seconds statements that may involve nonol risk, uncertainties and other factors. It must be viewed in conjunction with our business risk that could cause future 1:01 1 minute, 1 second result performance or achievement to defer significantly from what is expressed or implied uh interest forward looking statements. Please note that 1:09 1 minute, 9 seconds we've made the results and the same is available in the exchange. In case you've not received the same, you can write to us and only happy to send the same safely to take us through the 1:17 1 minute, 17 seconds results and answer your questions. Today we are the management of blue jewelry in life represented by Mr. B Singh, founder and managing director, chief officer and 1:26 1 minute, 26 seconds Mr. Gab, chief financial officer. We will start the call with a brief overview of the quarter gone past and then conduct Q&A session. With that said, I'll hand over the call to Gorup. 1:38 1 minute, 38 seconds Good evening everyone and thank you for joining us today for Blue Stones's uh third quarter earnings call. I am pleased to share that we have had uh yet 1:46 1 minute, 46 seconds another stellar quarter marking an important milestone for the company. We delivered our first quarter of reported net profit a clear inflection point in the evolution of our business model. 1:56 1 minute, 56 seconds This was driven by good revenue momentum and a very solid operating beta performance. This is not just about one quarter. It reflects years of 2:04 2 minutes, 4 seconds disciplined execution and structural investment we have made to build a scalable business prioritizing long-term value creation. What gives us confidence 2:12 2 minutes, 12 seconds is that this profitability has come alongside strong underlying growth trends and as we look ahead we see revenue momentum accelerating into Q4. 2:21 2 minutes, 21 seconds Further details on the financial performance will be covered by Rome in his remarks. Let me spend a few minutes on the broader demand environment. 2:29 2 minutes, 29 seconds The sharp rise in gold prices significantly altered the industry's demand mix last quarter. We saw the market shift towards commodity and investment categories such as coins and 2:38 2 minutes, 38 seconds chains which are typically priceled lower margin segments. Now these are the categories where we have historically chosen not to participate aggressively 2:46 2 minutes, 46 seconds given our technology-led product first approach that focuses on design differentiation and stronger gross margins. Our performance is better understood by looking at consumer 2:55 2 minutes, 55 seconds product demand. Here trends remained encouraging despite sharp bull prices. 3:00 3 minutes Festive demand in October was strong, moderated in November and then rebounded sharply in December. From our perspective, one of the impacts of 3:07 3 minutes, 7 seconds rising gold prices was that the certain entry-level product prices uh s certain entry- level price points got vacated. 3:14 3 minutes, 14 seconds In response, we uh repopulated these price points and we saw some of that result uh in uh the result of some of that in December with December exit 3:22 3 minutes, 22 seconds revenues growing approximately 35% yearonear. 3:26 3 minutes, 26 seconds A key enabler for this performance continues to be our omni channel strategy which seamlessly connects our online presence with a steadily expanding physical retail footprint. 3:36 3 minutes, 36 seconds This integration allows us to engage customers across discovery, purchase and repeat cycles which while leveraging data and inventory more efficiently across channels. 3:45 3 minutes, 45 seconds As of December end, we had approx 323 stores across 130 cities having added uh 3:52 3 minutes, 52 seconds 12 new stores during the quarter further strengthening our reach and brand presence. Our customer base grew 25% uh 4:00 4 minutes year on year to 93 uh 93,000 customers and same store sale growth of 12% year on year. Uh again I would like to 4:08 4 minutes, 8 seconds reemphasize that December SSG's uh December same store sale growth exit rates were in mid- teens while uh with January trending uh better than December. 4:17 4 minutes, 17 seconds Let me now turn to one of uh the critical drivers of our long-term growth and margins uh which is a strong cohort performance. We have been confident that 4:25 4 minutes, 25 seconds all our cohorts will demonstrate productivity uh that was seen by FI19 and FI20 cohorts to give you more color. 4:32 4 minutes, 32 seconds We are happy to share some more details about on the cohorts from various stages for 9 months uh for for YTD or 9 months 4:41 4 minutes, 41 seconds uh stores opened in FI 1920 2122 and FI 23 delivered revenues 4:48 4 minutes, 48 seconds uh yeah let me just uh preface so for uh 9 months uh for YTD stores opened in FI 19 1920 delivered revenue per store per 4:57 4 minutes, 57 seconds month of approximately 1.2 two crores stores opened in FI 2122 delivered per store per month revenue of 5:05 5 minutes, 5 seconds approximately 80 lakhs and stores open in FI23 delivered revenues uh per store per month revenues of approximately 70 5:12 5 minutes, 12 seconds lakhs for for first 9 months of the year. Uh this translates into analyzed revenues of uh 14 cr 10 cr and 8.3 cr respectively. 5:24 5 minutes, 24 seconds These cohorts comprise more than 150 stores. 5:30 5 minutes, 30 seconds Uh these cohorts comprise of more than 150 stores. And as mentioned these cohorts, all these cohorts are growing 5:38 5 minutes, 38 seconds at a pretty healthy clip. And we expect all the all the all the remaining cohorts to also eventually catch up with the FI 9020 cohorts. 5:46 5 minutes, 46 seconds With that u I'll I'll ask Rumit uh to to uh to share his opening remarks and then we can open the floor to the Q&A. 5:56 5 minutes, 56 seconds Thank you Gorav. Good evening everyone and thank you for joining us today. I'll briefly walk you through the financial performance for this quarter. I'll uh 6:05 6 minutes, 5 seconds keep my remarks brief as we have detailed disclosures and materials available on the stock exchanges. uh I would encourage you to go through our 6:12 6 minutes, 12 seconds management commentary and the investor presentation which have uh lot of detailed disclosures. 6:19 6 minutes, 19 seconds Uh turning to the quarter during the quarter standalone revenues grew by 27.4% yearonear to rupees 748 crores as 6:28 6 minutes, 28 seconds mentioned earlier in our uh in our call our revenues are accounted for on retail sales basis including franchisee stores. 6:38 6 minutes, 38 seconds This means our reported growth reflects pure secondary sales to consumers even for franchisee stores offering a clean 6:45 6 minutes, 45 seconds and transparent view of demand at the retail consumer level. 6:49 6 minutes, 49 seconds Excluding inventory gains, pre-indexa margins for the quarter stood at a solid 12.1% at 90.3 crores driven by Robert's 6:58 6 minutes, 58 seconds contribution margin performance, greater number of store cohorts moving in better productivity buckets and scale benefits on corporate and corporate costs 7:06 7 minutes, 6 seconds including more importantly on a YTD basis we are at 129.6 crores of pre-invea 7:17 7 minutes, 17 seconds versus 7.4 4 crores last year YTD. This reflects a margin of 7.4% YTD as 7:24 7 minutes, 24 seconds compared to less than 1% in same period last year. This clearly demonstrates that the operating leverage is starting to reflect inhibit margins and growth. 7:35 7 minutes, 35 seconds There is still a fair runway to expand this further driven by cohort maturities and business scale. As Gorav highlighted 7:43 7 minutes, 43 seconds earlier, this was our first quarter of reported PAT of 71.5 crores as compared to a loss of 26.9 crores in the same 7:52 7 minutes, 52 seconds quarter last year. Importantly, the business generated a solid cash profit of about 122 crores for the quarter. 7:59 7 minutes, 59 seconds Contribution margin uh which is key uh uh product margin metric that we look at excluding inventory gain uh stood at 8:09 8 minutes, 9 seconds 33.3% and improvement of 333 basis points year on year. This is despite lower studied mix on a y basis of 61%. 8:20 8 minutes, 20 seconds This was offset by scale benefits, improved product mix within studded products and manufacturing efficiencies. 8:28 8 minutes, 28 seconds ENTP spends continue to show operating leverage supported by business scale and high repeat mix with repeats contributing 57.8% of revenues this 8:38 8 minutes, 38 seconds quarter. Our gold old our old gold exchange program continue to remain most competitive in the market. Overall, A&B 8:45 8 minutes, 45 seconds as a percentage of sales stood at 5.7% for the quarter, down about 129 basis points year on year. 8:54 8 minutes, 54 seconds To conclude, this quarter clearly demonstrates the operating leverage embedded in our in our model. There is 9:00 9 minutes potential room to expand Adidas significantly ahead of revenues and with the cost discipline with which 9:09 9 minutes, 9 seconds we are scaling the business. With that, we can open the floor for questions. 9:13 9 minutes, 13 seconds Soali, thank you very much. We will now begin the question and answer session. Anyone 9:21 9 minutes, 21 seconds who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove 9:28 9 minutes, 28 seconds yourself from the question queue, you may press star and two. Participants, you are requested to use handsets while 9:36 9 minutes, 36 seconds asking a question. Ladies and gentlemen, we will wait for a moment while the question keys. 9:46 9 minutes, 46 seconds The first question is from the line of Percy from Lifl. Please go ahead. 9:52 9 minutes, 52 seconds Yeah. Uh hi team. U just wanted to understand the margins here. So on a sequential basis the margins uh 10:01 10 minutes, 1 second excluding inventory gain pre-index have gone up from about 3% to 12%. So that's a 900 basis points kind of expansion sequentially. 10:11 10 minutes, 11 seconds Uh I understand that the contribution margin X inventory gain has gone up about 150 basis points and there is some 10:19 10 minutes, 19 seconds uh saving and ad spend maybe approximately about 300 basis points. So that explains about half of that 900 10:26 10 minutes, 26 seconds basis points. Uh what is the remaining half uh uh where has the uh sort of margin expansion come from? 10:37 10 minutes, 37 seconds So uh Percy uh I think uh in the last last quarter also we explained what what really happens is you have to look at 10:46 10 minutes, 46 seconds how they aggregate costbased kind of moves. So if you look at uh between Q3 10:52 10 minutes, 52 seconds and Q2 Q2 revenue was 513 crores and Q3 revenue is 748 crores. So for that 11:00 11 minutes incremental revenue that we added sequentially our aggregate cost base including everything right employee cost 11:09 11 minutes, 9 seconds store rents um uh store facility maintenance costs don't shift significantly on a quarter and quarter 11:16 11 minutes, 16 seconds basis. So this is this is the foundational uh operating leverage that is inbuilt in our business and as more 11:24 11 minutes, 24 seconds store cohort productivity kind of expands the fixed cost base re remains reasonably stagnant or grows at a modest 11:31 11 minutes, 31 seconds pace while your incremental revenue will flow through to iida at the rate of contribution margin. So 11:39 11 minutes, 39 seconds that's really the flow through uh and if you do the delta between incremental revenue that we added at the contribution level you'll pretty much 11:47 11 minutes, 47 seconds get to get to the operating leverage and the outcomes that we have delivered. 11:52 11 minutes, 52 seconds Understood. So for me just for me to get a sense of the operating leverage in Q3 and therefore actually uh uh try and 12:01 12 minutes, 1 second project annualized uh numbers because this is clearly a big quarter and there is a huge operating leverage. Uh the 12:08 12 minutes, 8 seconds question I wanted to ask you is that on account of normal seasonality 12:14 12 minutes, 14 seconds the uh uh uh monthly uh sale in Q3 is 12:22 12 minutes, 22 seconds approximately what percentage higher compared to a uh uh average for the year? Uh uh if you just sort of and and 12:32 12 minutes, 32 seconds I'm not talking about this year or anything. I'm just talking as a concept or in principle. Q3 typically the 12:39 12 minutes, 39 seconds monthly sale is how much percentage higher than uh uh annual average. If you can tell me that it'll help in 12:46 12 minutes, 46 seconds calculating the operating leverage uh uh impact for uh uh uh sort of uh uh the full year or rather what I want to say 12:55 12 minutes, 55 seconds is that adjust this 12% margin on a Q3 basis how much would it normalize work 13:02 13 minutes, 2 seconds out to a annualized basis uh uh given uh the different uh sales uh throughput uh 13:10 13 minutes, 10 seconds for the quarter versus the Yeah, Percy Gor got a side. So I think 13:20 13 minutes, 20 seconds uh see depending on how the operating revenue moves between quarters, I think that percentages that percentage changes drastically. 13:30 13 minutes, 30 seconds Okay, as we saw between Q1, Q2 and Q3 also where Q3 is at around 12%. Now last year Q4 was around 460 crores and what 13:39 13 minutes, 39 seconds we are seeing right now is approximately so we are trending at almost 35% growth over the last Q4 and let's say if that continues full year would land somewhere 13:47 13 minutes, 47 seconds between 620 to sorry uh this Q4 will land somewhere between 620 to 630 crores I'm just giving you telling you how to 13:54 13 minutes, 54 seconds look at it now if you do the same calculation here also that okay on 748 cr we had 90 cr of day 14:04 14 minutes, 4 seconds then Q4 4 with those numbers Q4 would be approximately let's say 120 crores lesser than Q3 14:12 14 minutes, 12 seconds right your revenues right so revenue revenue for Q4 would be approximately 120 cr lesser than Q3 right 33% of that of 120 14:23 14 minutes, 23 seconds would be approximately 37 40 cr approximately 40 40 42 cr right so 14:30 14 minutes, 30 seconds Q4A hence should be let's say lesser by that And then that should serve the base for subsequent understood. Understood. 14:39 14 minutes, 39 seconds Understood. 14:39 14 minutes, 39 seconds And that's how that's how we calculate it is in back of the envelope calculation. That's how we do. 14:45 14 minutes, 45 seconds Okay. Okay. Okay. Understood. See, I'll probably take this offline because I think it's a little more complex than that because we'll have to look at it on 14:52 14 minutes, 52 seconds a per store basis also because as the number of stores are getting added, the cost base would also increase to that 15:00 15 minutes extent. But anyways, I'll take that uh offline. Um uh also I wanted to understand one more thing that you said 15:08 15 minutes, 8 seconds that the there were some entry price points which were unaffordable and therefore I mean the product merchandise 15:16 15 minutes, 16 seconds uh this quarter was very less at the entry price points. Uh is that also a factor because those entry price points 15:24 15 minutes, 24 seconds may be at a uh sort of lower margin. Uh so is that uh like a factor which is 15:32 15 minutes, 32 seconds driving the margins to an extent and because you are repopulating those price points uh uh will that versus this 15:39 15 minutes, 39 seconds quarter again see a margin drag yeah peri so we generally don't so in 15:48 15 minutes, 48 seconds our data we don't see that it's not that let's say sub 20,000 or sub 30 30,000 product are uh have lower gross margins 15:56 15 minutes, 56 seconds or lower contribution margins that kind of a trend is not there in data. Uh so there's no implication of that. The only implication of those price points being 16:03 16 minutes, 3 seconds wicked was that see JV traditionally or historically we have been very strong in entry- level price points which is where we acquire a lot of customers and then 16:11 16 minutes, 11 seconds kind of grow with them over time. uh with those price points being vacated we believe that the our growth suffered in 16:18 16 minutes, 18 seconds November and let's say uh first one week of December and which is so we started work on that let's say early in the November and then it took some time for 16:26 16 minutes, 26 seconds us u so I think it our growth did get impacted because of our growth got impacted because of that but in terms of 16:34 16 minutes, 34 seconds percentage shift in the gross margins or contribution margin that is not a trend that we have in auditor understood and lastly if you can give 16:42 16 minutes, 42 seconds some idea on how do you look at uh store additions on an annual basis this year as well as next year. 16:52 16 minutes, 52 seconds So uh so this year I think we we will be in that 6570 uh kind of range right we 16:59 16 minutes, 59 seconds closed at 320 through 323 uh so y in that 70 kind of handle uh uh versus 17:08 17 minutes, 8 seconds March 25. I think next year uh we'll come back to you once we finish uh finish this year. Uh so when we discuss 17:16 17 minutes, 16 seconds Q4 is when we can give you better color in terms of how we're looking at next year. 17:22 17 minutes, 22 seconds Okay. Yeah. Uh that's it from me. Thank you. 17:28 17 minutes, 28 seconds Thank you. The next question is from the line of Danchuans from MK Global. Please go ahead. 17:37 17 minutes, 37 seconds Yes. Hi. Hi Barov. Thanks for taking my question. So I just wanted to sort of del deeper into on the growth front. So 17:45 17 minutes, 45 seconds it is a tad lower versus that reported by PF in both uh the traditional jewelry space as well as the space that you 17:54 17 minutes, 54 seconds operate in. Uh even when you say that this is the kind of number uh that also is 18:01 18 minutes, 1 second materially below what the others have reported right. So uh can you uh sort of give us more granular uh explanation as 18:10 18 minutes, 10 seconds in what exactly uh led to us lower growth for us? 18:16 18 minutes, 16 seconds Sure. So uh so okay so first of all very different operating environment uh this last quarter was compared to how things 18:24 18 minutes, 24 seconds generally are uh with with gold being that volatile and it's the most volatile territory that I have seen the gold in. 18:31 18 minutes, 31 seconds Now what that results in uh so basically two things uh so what that results in that actually increases the demand for 18:39 18 minutes, 39 seconds commodity products like gold coins, whole chains with very little margin and gold bangles with very low margin etc. And that is 18:47 18 minutes, 47 seconds where a sharp increase in uh that demand comes from and all almost all the traditional jewelers are heavily indexed on those and whereas we are extremely underindexed on all those products. 18:58 18 minutes, 58 seconds Secondly, almost all the jewelers report primary sales. Uh whereas we only we only report retail sales. So and whether 19:07 19 minutes, 7 seconds that is uh whether that is traditional jewelers, whether that is carrot lane, whosoever is it's just it's a mix of primary and secondary sales. So so there 19:14 19 minutes, 14 seconds has there's generally delta between that and uh the retail sales also. Um so uh so these are the two major differences 19:21 19 minutes, 21 seconds and then uh that merchandising issue that we noticed in our inventory somewhere in end of October and early November and I think these are the three 19:28 19 minutes, 28 seconds reasons why uh why the growth numbers are uh are lower. Uh but we see that as a one-off I think in stable environment 19:36 19 minutes, 36 seconds things will kind of revert back to normaly. uh and also in our December exit rate and our January uh rate. So 19:43 19 minutes, 43 seconds basically on our continuing run rate we see almost 35% of growth which is that keeps us happy. That's a good enough 19:54 19 minutes, 54 seconds so but however still reported almost 40% growth. So there may not be such a material difference between primary and 20:01 20 minutes, 1 second secondary u but I take your point that uh at least the growth has sort of improved for you uh in December uh and 20:10 20 minutes, 10 seconds subsequently in Q4 as well. Uh so and second question from um u LGD space perspective we seeing 20:19 20 minutes, 19 seconds so Dwanchu uh Dwanchu just just on the first bit uh that it is not materially different I think if you look at last 20:27 20 minutes, 27 seconds quarter their reported revenue growth was 32% and retail sales was 25 so it is 20:35 20 minutes, 35 seconds different at least historically uh so maybe I think you should just see what what the retail sales these numbers are 20:43 20 minutes, 43 seconds uh fair fair enough. So uh thanks for the 20:50 20 minutes, 50 seconds clarification. Uh the other part was on the LDD space. So we are seeing incremental investments uh across 20:58 20 minutes, 58 seconds players and we have also sort of increased our investment in Ethereal. So any uh incremental views on this space 21:05 21 minutes, 5 seconds in terms of how we are sort of planning to ramp up our presence would be helpful. 21:13 21 minutes, 13 seconds Yeah. So very early days for uh lab grown. We are seeing some good traction uh in uh in lab grown uh brand ethereal. 21:22 21 minutes, 22 seconds Uh they have uh they have very few stores uh and it's it's more of it's a very it's kind of a discovery phase and uh uh it seems to be doing well and 21:31 21 minutes, 31 seconds hence they've decided to put in some more money. It's very and like I said it's a very early stage uh for that for that product segment per se. So I think 21:40 21 minutes, 40 seconds we'll have to see we'll have to observe how it evolves and then then take a firm opinion that 21:48 21 minutes, 48 seconds Gorov any assortment difference that you can help us better understand in terms of how uh Ethereal is sort of playing 21:56 21 minutes, 56 seconds this space and versus how Gluestone is playing and also any customer segmentation that you can help us better 22:04 22 minutes, 4 seconds understand is it the same customer being targeted by both blue stone material or 22:11 22 minutes, 11 seconds uh they are entirely separate consumer segments that are being targeted uh by bunda brands. 22:18 22 minutes, 18 seconds Yeah. So okay so the way it is being run is so ethereal which is a subsidiary we have 74% holding in that but rest 26 22:26 22 minutes, 26 seconds rest of the equities with the founders nit and shar so we generally have a very low touch approach in the sense we we encourage them to discover their own 22:35 22 minutes, 35 seconds products we encourage them to discover their own uh customers and so on. So there's not too much of an operational overlap between blue stone and ethereum. 22:45 22 minutes, 45 seconds I mean they've been uh in the business for around five six months and I think these are they are also discovering what kind of products work for them what kind of products do not work from them for 22:54 22 minutes, 54 seconds them. There's not a very so we have not started with a very strong point of view that okay these are the products that are exactly going to work in lab sense it's a very very it's a it's very very 23:02 23 minutes, 2 seconds early days for that. So they are also doing their own discovery. So it's kind of a founder company where we have 72% holding and Nation Sharat run it. So I 23:11 23 minutes, 11 seconds honestly do not have a very strong point of view on what kind of products should work for them. It's their job to figure it out. 23:21 23 minutes, 21 seconds Thanks for thanks for taking the question. 23:27 23 minutes, 27 seconds Thank you. A reminder to all the participants you may press star and one to ask a question. The next question is 23:35 23 minutes, 35 seconds from the line of Sorab Jen from HTSC life insurance. Please go ahead. 23:42 23 minutes, 42 seconds Yeah. Hi Gorav uh and uh just wanted to understand. So if I look at the Y expense line item, right? So uh other 23:51 23 minutes, 51 seconds expenses X of A&P uh that have gone down by 11 cr. So what explains that? 24:01 24 minutes, 1 second that is primarily driven by our improvement in contribution uh contribution margins. 24:08 24 minutes, 8 seconds So, so on the manufacturing scale and efficiencies, we had couple of new factories uh which had which had come 24:15 24 minutes, 15 seconds up. So as as they uh as they build process efficiency through time and as we as our scale is growing the capacity 24:24 24 minutes, 24 seconds utilizations or man capacity utilizations keep expanding there is that operating leverage that that flows through on the direct cost. 24:33 24 minutes, 33 seconds No I'm saying that if I uh I'm talking about the absolute number so absolute number has actually absolutely come down by 24:40 24 minutes, 40 seconds yeah yeah sort of I'm talking about I'm talking about absolute numbers itself. 24:45 24 minutes, 45 seconds So, so, so if if the productivity at a uh at a factory level is is X which is 24:53 24 minutes, 53 seconds which is a new factory uh over time as people build more more process efficiency the amount of people time 25:02 25 minutes, 2 seconds material etc that you that you need to spend on uh that goes down. 25:07 25 minutes, 7 seconds So there is that absolute operating leverage that comes because you're pushing up man capacity utilization. So there is there is that factory related 25:16 25 minutes, 16 seconds cost that sits in other expenses which is contract labors, job workers etc. 25:23 25 minutes, 23 seconds So there is a fair amount of operating leverage that comes from there even on an absolute cost basis. 25:31 25 minutes, 31 seconds uh sorry uh to push this further uh so I'm just saying that if the units have gone up in the manufacturing facility uh 25:39 25 minutes, 39 seconds I understand the per unit cost might come down because of the utilization increasing but how can the absolute cost come down I'm not able to understand 25:48 25 minutes, 48 seconds that because because your man yeah so your man productivity if you needed 20 people 25:55 25 minutes, 55 seconds to create a piece because the process efficiency scale etc are not there. Now you need need lower 26:03 26 minutes, 3 seconds lower number of people to do the same task. 26:08 26 minutes, 8 seconds So the so the absolute cost sort of actually comes down. Second is we've also done some consolidation in terms of building scale right we operate three 26:16 26 minutes, 16 seconds factories. So there is some redistribution of you know the products etc that can get manufactured. So we can build more competence in single 26:24 26 minutes, 24 seconds factories where the productivity that we get uh for the same throughput continues to expand. So there is there is some 26:32 26 minutes, 32 seconds part of that on the manufacturing side that happens. Okay. 26:39 26 minutes, 39 seconds Okay. Fine. Uh second thing is the on the&t expenses side. So what is the range we should expect for the uh like 26:47 26 minutes, 47 seconds uh full year going forward? uh was this this year have closed 9 months at about 7%age 26:54 26 minutes, 54 seconds uh which is my degree over about 300 basis point lower than uh the last 9 months of FI25. So what is the number 27:03 27 minutes, 3 seconds that we should build in here uh like the absolute number at about uh 40 45 cr is that the run rate we should build it for 27:10 27 minutes, 10 seconds the for on a quarterly basis going forward. 27:15 27 minutes, 15 seconds So uh as we were expanding stores rapidly uh we firmly believe that there's significant uh operating leverage sitting on BNP also because the 27:24 27 minutes, 24 seconds same uh advertising same promotion spent now we have more st uh more stores to actually tap into the demand being generated by that right so so we I think 27:33 27 minutes, 33 seconds historically it was 12% 9% and so on uh and we expected it to come down to around 6% at 6% we'll be scaling it you 27:40 27 minutes, 40 seconds know proportionally in the revenues so I would say so I think YTD is 6.8% 8%. Uh but we would like to since it's these 27:48 27 minutes, 48 seconds are early stages for the brand also we would like to keep it kind of pegged at around 6%. Go forward. 27:56 27 minutes, 56 seconds Okay. Okay. Thank you. Thank you. 28:02 28 minutes, 2 seconds Thank you. The next question is from the line of DJ Sha from Aender Spark Institutional Equities. Please. 28:13 28 minutes, 13 seconds Yeah. Just wanted to know what was the revenue per square feet that we clocked this quarter and what was that number last same quarter. 28:25 28 minutes, 25 seconds Uh I think the metric that we look at and which we've also uh detailed out in the management commentary and goro spoke about in 28:34 28 minutes, 34 seconds opening remarks is revenue productivity per store per month uh by cohort. 28:41 28 minutes, 41 seconds So those those are the metrics that we should look at given given where our 28:47 28 minutes, 47 seconds gross margins are. Um uh and the kind of store productivity and absolute contributions that we generate 28:56 28 minutes, 56 seconds for a 10 cr or a 14 cr store the rent or the opex would be like about a cr. 29:03 29 minutes, 3 seconds So so really from a per square feet basis etc. it really doesn't uh is something that we don't don't track and look at. 29:13 29 minutes, 13 seconds No, so the reason uh I asked this is uh because it's it's partly pertaining to the previous participants questioning 29:20 29 minutes, 20 seconds that if we do that math and then and you're saying that we as a company we don't follow that but if we do that math this quarter looks like more of an 29:28 29 minutes, 28 seconds excellence on cost discipline uh more coming from cost discipline than than the operating leverage uh because 29:36 29 minutes, 36 seconds that number hasn't moved much apparently and uh and a lot of uh cost discipline 29:43 29 minutes, 43 seconds is visible in our uh production cost and and uh cost line items below that which which the previous participant also 29:50 29 minutes, 50 seconds highlighted. So just wanted to know that how to think about this quarter were you surprised on the productivity of the 29:57 29 minutes, 57 seconds store or where was this quarter an excellence on cost discipline that we were kind of uh uh promising for a while now. 30:08 30 minutes, 8 seconds I think uh I the way to see this is I think what we've been always saying is that ours is a fixed cost fixed cost 30:17 30 minutes, 17 seconds model right u where there is tremendous amount of operating leverage which will be driven by store productivity you know 30:24 30 minutes, 24 seconds so it's not about cost excellence uh it is about absolute operating leverage so I think the way to think about this is 30:31 30 minutes, 31 seconds quarteron quarter our cost base has not shifted right so if I was running 300 stores in 30:38 30 minutes, 38 seconds Q2, I'm still running 300 plus stores in Q3 with the same cost base. But as my revenue is revenue base is expanding, 30:47 30 minutes, 47 seconds right? And if you see a trend for the last four, five, six quarters, that's pure operating leverage pages that is 30:53 30 minutes, 53 seconds paying playing out. Um it's it's not only you know just we've cut cost or 31:00 31 minutes anything like that, right? It's it's just pure operating leverage where there is incremental revenue which has a high flow through rate given our gross margin 31:08 31 minutes, 8 seconds profile and contribution margin profile which is significantly different from any other player that you may see in this category. 31:17 31 minutes, 17 seconds So the flow through rates are way way higher than you would see in any other player. So so which is why it surprises I understand where you're coming from. 31:24 31 minutes, 24 seconds It surprises because the the close rates are so high but then you have to compare the difference on the contribution 31:32 31 minutes, 32 seconds margin of ours versus generally the category that people operate with. 31:37 31 minutes, 37 seconds Perfect. Thanks a lot and all the best. 31:42 31 minutes, 42 seconds Thank you. The next question is from the line of Sanitya from Unicorn Assets. Please go ahead. 31:49 31 minutes, 49 seconds Hi. Uh so my question is like kind of follow from the previous question. I think everyone is confusing. This is operating leverage or cost cut whatever. 31:58 31 minutes, 58 seconds So let me ask you this way. Suppose say gold prices today 1.5 goes to say two lakh so like 33% rise and let's say our 32:07 32 minutes, 7 seconds mix is like 50 60% for the gold. So uh assuming both the numbers let's say our 32:15 32 minutes, 15 seconds on average our goes up not by the volume just plain prices like 15 20% up. Do you 32:22 32 minutes, 22 seconds think that out of the that extra 15 20% uh like 33% contribution margin most of it would flow down? That's what you're saying. 32:36 32 minutes, 36 seconds See I think I think the simple point that we are making is that there are 323 stores and the cost base of that that 32:46 32 minutes, 46 seconds operating those stores and operating business is sort of already embedded. So incremental revenue that we are 32:54 32 minutes, 54 seconds generating has a very high operating leverage and that is predominantly driven by aging. Right? And this quarter 33:03 33 minutes, 3 seconds please I I encourage all of you to look at our cohort performances. I think historically we've got feedback that uh 33:11 33 minutes, 11 seconds you know tell us how your other cohorts are kind of doing and this quarter uh we have kind of given some color on how how 33:20 33 minutes, 20 seconds our cohorts are doing and there are unit economics that you can model to those revenue productivity numbers and that 33:28 33 minutes, 28 seconds will kind of explain that why there is so much operating leverage in our business. So it's not about just gold price 33:36 33 minutes, 36 seconds um uh you know u u moving from one one lakh to one lakh 50 or two lakhs. It is about how fundamentally our business 33:45 33 minutes, 45 seconds operating model is structured and where we are in in that in that journey of operating leverage. So we are still in 33:52 33 minutes, 52 seconds that early days and as I mentioned in my opening remarks there is still significant room for uh margins to uh to 34:01 34 minutes, 1 second expand as we continue to build scary in the business. 34:17 34 minutes, 17 seconds Hi yeah sorry uh so uh secondly on the contribution margin only so we have depicted uh so since that like old 34:25 34 minutes, 25 seconds stores you can say or the mature stores have given like 40% gross margins 35% kind of contribution margins and 25% 34:34 34 minutes, 34 seconds kind of a beta adjusted a bit do you think this number is the core or do you think there is further room for even 34:41 34 minutes, 41 seconds this number to expand looking the way things are going in this quarter or you are looking forward. 34:51 34 minutes, 51 seconds So I think one contribution margins are not impacted by just aging right 34:58 34 minutes, 58 seconds because contribution margins are more fundamental to the product mix that we carry, the merchandise we carry and the 35:05 35 minutes, 5 seconds way we price our products. uh I think the the delta uh of aging actually shows 35:13 35 minutes, 13 seconds up more uh in the operating IITA. So operating IITA for this quarter was 12% 35:21 35 minutes, 21 seconds on a pre-index basis uh 7.4% 4% for YTD and as I mentioned there is there is 35:29 35 minutes, 29 seconds still runway for uh for the operating margins that we've seen YTD to expand further because there is still lot of 35:38 35 minutes, 38 seconds vintage driven growth. Uh if you look at our FI 1920 cohorts are at 14 cr revenue productivity 35:46 35 minutes, 46 seconds and the other cohorts are at 10 8 and a 8 8 and a half or 8.3. So obviously 35:54 35 minutes, 54 seconds there is room for them to scale further right at least to 14 and that is that is what we see at the minimum. 36:02 36 minutes, 2 seconds So that as these continue to ramp up there will be there will be more operating leverage that will flow through because the cost base of these 36:08 36 minutes, 8 seconds are not going to extend work and I would really request you to please guide like thoroughly on the 36:17 36 minutes, 17 seconds store expansion going forward because right now the growth looks tremendously coming even the cohort level looks good to be like next two years but beyond 36:26 36 minutes, 26 seconds that for growth visibility I would request you to please share from going forward the expansion module. 36:34 36 minutes, 34 seconds Thank you. 36:42 36 minutes, 42 seconds Thank you. Before we take the next question, a reminder to all you may press star and one to ask question. 36:51 36 minutes, 51 seconds The next question is from the line of Karan Gupta from ACMIL. Please go ahead. 37:00 37 minutes Yeah. Hi. Uh uh my question is again on the 37:06 37 minutes, 6 seconds previous participant on the on the margin side operating with the 37:13 37 minutes, 13 seconds margin side. So let me say can you I can't hear 37:21 37 minutes, 21 seconds can you please come to speak there is a lot of background just 37:33 37 minutes, 33 seconds uh hello now I think it's audible loud and clear 37:39 37 minutes, 39 seconds yes please see it yeah so So on the margin side uh how much uh the 37:48 37 minutes, 48 seconds margins we can do when uh our most of the stores are aging towards 37:56 37 minutes, 56 seconds 14 cr uh band annually. 38:04 38 minutes, 4 seconds So I I think the way to think about it is that add 10 10 to 12 crore kind of 38:11 38 minutes, 11 seconds productivity uh the store level pre-index margins margins are at about 22 to 24%. 38:20 38 minutes, 20 seconds And as Gorov mentioned, you load about 6% A&P and then some leverage on the 38:28 38 minutes, 28 seconds corporate cost. uh longer uh as as broader cohort productivity gets to that 38:34 38 minutes, 34 seconds 10 11 cr kind of number the baseline margin for the business is going to be in in like low teens at at the minimum 38:43 38 minutes, 43 seconds with significant investment um continuing on the&p uh so I think that's that's sort of 38:52 38 minutes, 52 seconds where the trajectory should go to uh so we are at 7 7.4% 4% YTD which is which is why I mentioned in my commentary 39:00 39 minutes there is significant room and significant runway for for expansion 39:06 39 minutes, 6 seconds so 20 to 24% on display that I mentioned at the store level aida 39:16 39 minutes, 16 seconds and then you load am and uh corporate cost. 39:20 39 minutes, 20 seconds Okay. Okay. You know how how many stores uh out of 23 are running at uh 10 to 12 or 14 color 39:30 39 minutes, 30 seconds of uh run rate and percentage sums or how many are in a I I think uh we we 39:40 39 minutes, 40 seconds have given a lot of disclosure already on cohort. I don't think you see many companies uh giving these kind of 39:47 39 minutes, 47 seconds disclosures. uh I don't think we can go beyond this because there is a lot of competitive data here. uh so uh so I 39:55 39 minutes, 55 seconds think overall the cohorts are are large enough 50% 50% of the data I think you showed already. 40:07 40 minutes, 7 seconds Yes. Yes. So that's that's a good enough base for you to uh draw conclusions on where these cohorts can trend to. 40:17 40 minutes, 17 seconds Okay. Yeah. Thank you. Thank you very much. 40:22 40 minutes, 22 seconds Thank you. The next question is from the line of Subhanu from Threehead Capital. Please go ahead. 40:29 40 minutes, 29 seconds Yeah. Uh thank you. Good evening. Uh and congratulation for this kind of modest performance. Uh uh hello. 40:39 40 minutes, 39 seconds Yes, you are. Can you hear me? Great. 40:40 40 minutes, 40 seconds Okay. Uh uh sir uh as you mentioned uh our store store opening guidance for this year around 65 to 70 uh but if I am 40:50 40 minutes, 50 seconds remember right last quarter uh rumit said around uh hit target 40:57 40 minutes, 57 seconds around 75 to 80 uh are you reducing your guidance? 41:03 41 minutes, 3 seconds No we were we were in the 70 70 kind of handle and I think we should be broadly in that uh in that territory. I don't 41:10 41 minutes, 10 seconds think there's a significant uh deviation right so maybe the upper end uh I think we'll be we'll be in the 70 kind of 41:18 41 minutes, 18 seconds handle right so plus minus 5 obviously we have to look at the operating environment and be a little tactical about it 41:25 41 minutes, 25 seconds okay uh uh my next question will be uh this quarter we uh s positive quarter uh 41:34 41 minutes, 34 seconds this pack positive quarter will be sustained for next couple of quarter or this will be sustained 41:44 41 minutes, 44 seconds See, I think it's uh it's hard to give uh a an absolute forward-looking statement, but let let me try and address that question in a way that uh I 41:53 41 minutes, 53 seconds think fundamentally uh there is there is enough operating leverage in the business um which is which has got 42:01 42 minutes, 1 second demonstrated in the past three quarters particularly you've seen uh uh seen it in Q3 as well. Uh so so we see still 42:11 42 minutes, 11 seconds runway for margin improvement versus versus where we are on YD. Um and that's where we would like to leave leave this at. 42:21 42 minutes, 21 seconds Okay. Okay. Uh so what kind of SSD we are targeting? 42:29 42 minutes, 29 seconds So I think in his uh commentary Gorav had mentioned that uh December XSGs were in mid- teens and January is trending better than December. 42:41 42 minutes, 41 seconds So I think I would just reiterate that statement that Gorov had made uh in answer to that question. 42:49 42 minutes, 49 seconds Okay. Okay. Uh thank you and Mr. Brook. 42:57 42 minutes, 57 seconds Thank you. The next question is from the line of Ab Sakaria from weekend and company. Please go ahead. 43:05 43 minutes, 5 seconds Good morning. So uh comparing quarteron quarter performance. Okay. Uh if you talk about Q3 of 24 it there was a loss 43:14 43 minutes, 14 seconds of around 27 cr and Q3 of 25 there's a pat of around 69 cr. 43:22 43 minutes, 22 seconds So the huge difference it is because of the valuation gain or uh actual operational 43:29 43 minutes, 29 seconds or quantity performance and what will be the valuation gain part if you can just highlight on that. 43:39 43 minutes, 39 seconds Yeah so we've disclosed the inventory gain uh for the quarter it's 58.9 crores. So even if you adjust for that uh we have a positive bet. 43:51 43 minutes, 51 seconds Okay. And any any any particular reason means uh what has been changed in this particular quarter because I I've been 44:00 44 minutes observing that you know we have been making a losses for quarter and quarter also even in the Q 2 Q1 44:08 44 minutes, 8 seconds so and even in the last year. So any particular or major changes which you have made so that we have been positive in this particular quarter three. 44:20 44 minutes, 20 seconds Okay. 44:22 44 minutes, 22 seconds It's it's just the way our business uh business is structured just the way we've we've scaled the business is very very different from what you see 44:29 44 minutes, 29 seconds typically with traditional big box retail uh given we are we are more omni channel driven so there is there is a 44:36 44 minutes, 36 seconds front-loaded cost base that is sitting um in our P&L and as our stores build vintage as the broader absolute revenue 44:46 44 minutes, 46 seconds scales there is operating leverage that is flowing in both at store level and at um uh corporate costs uh uh&p level. So 44:55 44 minutes, 55 seconds I think that is that is what is kind of playing out. Um and and as I said there is there is still runway to continue to 45:03 45 minutes, 3 seconds expand. Uh okay thank you and best wishes to the company. 45:12 45 minutes, 12 seconds Thank you. The next question is from the line of Gopal Navandhar from SBI Life Insurance. Please go ahead. 45:21 45 minutes, 21 seconds Uh hi. Uh am I audible? Yes, you're audible. Please proceed. 45:26 45 minutes, 26 seconds Yeah. Yeah. Yeah. Yeah. Thank you. Uh congratulations the team uh for good performance on profitability. Uh two two 45:34 45 minutes, 34 seconds three things here. One is uh what is our uh gross debt and net? 45:48 45 minutes, 48 seconds Sorry. So gross debt is about 650 uh crores. Net debt is about 222 or not cash. 46:05 46 minutes, 5 seconds Hello. 46:08 46 minutes, 8 seconds Yeah. Yeah. 222 crores is net debt and 650 crores is gross debt. 46:16 46 minutes, 16 seconds Okay. And inventory inventory at at the end of the quarter. 46:26 46 minutes, 26 seconds Yeah. Yeah. 228. 46:35 46 minutes, 35 seconds Okay. So I think if I recollect it right, last quarter we had net cash 46:42 46 minutes, 42 seconds and lower inventory. This quarter we only added uh 10 stores. 46:48 46 minutes, 48 seconds Uh and uh this matrix is where I think uh uh we are uh you know kind of not 46:56 46 minutes, 56 seconds able to uh optimize. Uh so let me just throw some more color on inventory and 47:04 47 minutes, 4 seconds we can see uh you know uh inventories coming down. 47:10 47 minutes, 10 seconds So so Gopal uh you know bulk of the change 47:16 47 minutes, 16 seconds in inventory is actually driven by uh movement in gold price on the hedge 47:22 47 minutes, 22 seconds positions right. So this is bulk of the change between Q2 and Q3 is coming from marktomarket on hedge positions. So it's 47:32 47 minutes, 32 seconds uh it's largely driven by that 47:41 47 minutes, 41 seconds and uh uh in terms of uh network addition uh how should one look at uh next year and year after? 47:53 47 minutes, 53 seconds So, so I think next year on an absolute basis maybe after Q4 we'll be able to give you a more uh more concrete number 48:02 48 minutes, 2 seconds but but fundamentally if you see at least our last you know 2 three year trend I think we've been in that 70 uh 48:12 48 minutes, 12 seconds 80 kind of handle right uh broadly so that's been that's been the historical 48:19 48 minutes, 19 seconds trend and at our end uh uh see There is uh there is a large enough distribution 48:26 48 minutes, 26 seconds uh that we already have right obviously there is significant room to continue to expand network um if you compare us to 48:33 48 minutes, 33 seconds lot of the peers u and you just map our our city presence to let's say the large 48:40 48 minutes, 40 seconds peers city presence there is significant growth runway both on city and density. 48:47 48 minutes, 47 seconds So from a medium-term perspective there is there is significant runway to keep expanding the network 48:57 48 minutes, 57 seconds but absolute number gopal I think maybe after Q4 we can come back to you on what we're looking to do in FI27. 49:06 49 minutes, 6 seconds Yes. Uh and one more thing uh considering that you know this increase in the gold prices earlier our plan was 49:15 49 minutes, 15 seconds to uh reduce cocoa stores and convert them into PCO uh considering the you know kind of investments uh it needs for 49:24 49 minutes, 24 seconds new store. uh will that plan be delayed or will will uh still uh you know uh consolidate uh from poco to poco. 49:37 49 minutes, 37 seconds So, so the consolidation is happening from Foco to Coco uh and that I think will continue um 49:47 49 minutes, 47 seconds because that is a very expensive capital structure that we are running uh uh related to what what our cost of capital 49:55 49 minutes, 55 seconds is. So that consolidation obviously makes economic sense uh uh and is a and 50:02 50 minutes, 2 seconds is uh patre uh so that that piece will continue Gopal there's no change in that thought process or strategy. 50:14 50 minutes, 14 seconds Okay. Okay. Thank you. Thank you very much. Thank you. 50:22 50 minutes, 22 seconds Thank you. The next question is from the line of Devanchu Bansson from MK Global. Please go ahead. 50:35 50 minutes, 35 seconds Dwanch proceed with your question. 50:38 50 minutes, 38 seconds Yes. Hi. Uh thanks for the follow-up opportunity. Uh sorry I was on mute. Uh I wanted to build on Gopal's question. 50:44 50 minutes, 44 seconds So you indicated that uh the mark to market has been built upon the inventory this quarter. Can you call out the 50:51 50 minutes, 51 seconds quantum of that? Uh as in what is the uh MTM uh loss that has been to the inventory? 51:01 51 minutes, 1 second MTM loss. There's no MTM loss. If you're hedged, your inventory gets marked up, right? For uh so so that's about it. I 51:09 51 minutes, 9 seconds mean there is I mean I I don't want to call out you know how much of it is but but you can actually see how much the gold has moved between September 30th 51:18 51 minutes, 18 seconds and December 31st, right? So, so it's an easy calculation. 51:25 51 minutes, 25 seconds Yes. So, uh basically uh that means right side. So, when Brix is in an increasing environment, right? And on 51:34 51 minutes, 34 seconds your hedge contracts, you'll be uh having some losses, right? So, that that has built upon the inventory, right? 51:40 51 minutes, 40 seconds Which you have the amount uh which which has led to this increase in inventory. Is my understanding correct? 51:49 51 minutes, 49 seconds It's there is I mean it's a marktomarket right? So if you're if you're if you're borrowing through GML the value of uh 51:58 51 minutes, 58 seconds GML will go up and the value of inventory will go up. So this this happens on leased gold. This happens if 52:06 52 minutes, 6 seconds you're hedging through GML. This happens if you're hedging through futures. 52:11 52 minutes, 11 seconds So no that's fair. 52:14 52 minutes, 14 seconds And this is not Yeah. And this is not specific to this is not specific to us. You can look at any balance sheet. 52:21 52 minutes, 21 seconds No, that's fair. I understand that. So the intent of uh the the intent of asking this was as in can this uh uh 52:29 52 minutes, 29 seconds loss sort of come up in P&L for future quarters. Right. So I just wanted to get some sense around that. 52:36 52 minutes, 36 seconds I think I I I think the why will there be a loss on a hedged inventory? I think 52:44 52 minutes, 44 seconds foundationally you need to look at how hedge accounting works. Um you will be 52:51 52 minutes, 51 seconds realizing the value at spot and if gold prices go up you mark uh your liability 52:58 52 minutes, 58 seconds goes up your inventory goes up. If gold prices go down your liability goes down inventory goes down and you sell you 53:05 53 minutes, 5 seconds sell at spot. So really I don't understand the question. I mean uh that's not how hedging works. And 53:13 53 minutes, 13 seconds hedging is protection to the P&L. 53:18 53 minutes, 18 seconds No, fair enough. So maybe I just wanted to repeat my question. So suppose you sold say 100 kgs of gold, right? Um uh 53:27 53 minutes, 27 seconds but uh this quarter you may not have sort of closed those particular contracts uh and that might have added 53:35 53 minutes, 35 seconds uh uh uh to the MTM of hing laws. So I just wanted to check that whether uh in PNL we have 53:44 53 minutes, 44 seconds it's it's I I I think we can maybe take it offline because this will Sure. Sure. Sure. No issues. Yeah. This 53:52 53 minutes, 52 seconds will give a wrong reflection. So I understand that. 53:55 53 minutes, 55 seconds Yeah. Yeah. I think I think what you are saying is incorrect. Uh you need to understand how the hedge accounting works uh and how hedging fundamentally works. 54:05 54 minutes, 5 seconds And I'm happy to address this offline, but to reiterate, hedging doesn't create a loss. Fair enough. Fair enough. 54:13 54 minutes, 13 seconds You are covered on the price and you realize that spot always. So, yeah. 54:22 54 minutes, 22 seconds Sure. Yeah. 54:28 54 minutes, 28 seconds Thank you. A reminder to all the participants, you may press star and one to ask a question. 54:41 54 minutes, 41 seconds Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for the closing comments. Thank you and over to you, sir. 54:52 54 minutes, 52 seconds Thank you. Thank you everyone uh for joining us today uh and look forward to being in touch with you for the next quarter. Thank you and have a good evening. 55:04 55 minutes, 4 seconds Thank you very much. 55:06 55 minutes, 6 seconds On behalf of Bluestone Jewelry and Lifestyle Limited, that concludes this conference. Thank you for joining with us today and you may not disconnect.