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Electronics Mart (EMIL) had a steady quarter on expected lines and results were largely in line
with our estimates. Revenues were up 8% /23% YoY for Q4FY23 and FY23. Q4 being seasonally
strong quarter for larger category like AC and coolers has been lower due to intermittent rains
which had impacted sales. However, growth in the category has recovered well in the first two
months i.e April and May due to higher temperature. Break Even for stores is expected in 12-
14 months and Delhi/ NCR stores are on track for the same (~8 months since opening). Stores
opened during Corona across Telangana and Andhra have started to perform too and are
expected to contribute positively to the company’s growth. SSG stood at 17% for FY23. Margins
during Q4FY23 stood at 6.8% while for FY23 it stood at 6.2%. Higher business promotions and
ads due to new region additions led to lower margins YoY for Q4 and FY23. Management
expects margins to be in the range of 6.5% to 7% for next few years while expects revenues to
grow at ~25% CAGR from near2-3 years. PAT in Q4 was up 2% YoY and 18% higher for FY23. 24
new stores were added during FY23 across the regions and expects 25-28 new store additions
(Telengana-5, AP-10 & Delhi/NCR-13) during FY24.

Overall, the companys endeavour remains to ramp up its store performance with various
initiatives. EMIL’s cluster-focused expansion strategy will help the company to build depth
and scale in its targeted geographies. EMIL’s plan to build its presence in the NCR region
will provide diversification benefits from its current concentrated presence in South-India.
Considering its FY23 performance we have tweaked our estimates accordingly and remain
positive ahead. The company valuations have been reasonable compared to peers and we
maintain BUY with PT of ?90.

Q4FY23 Result Summary 

Revenues were up 8% /23% YoY for Q4FY23 and FY23. Q4 being seasonally strong quarter
for larger categories like AC and coolers which has been lower (-17% YoY) due to intermittent
rains which had impacted sales. However, growth in the category has come off well in
the first two months i.e April and May due to summer. Gross margins were higher due to
plugging leakages across costs that are directly proportional to the revenues, credit card
charges, cashbacks and NBFC charges so it tried to plugin and re-negotiated terms with
these NBFCs and Banks.

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