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Another weak quarter; revenue/EBITDA declines 2%/9% YoY YoY.

* Customer sales grew 4.6% YoY to INR3.5b, driven largely by ~5% YoY store additions as SSS declined 2% YoY.

* Consolidated 2Q revenue declined 2% YoY to INR2.6b (weaker vs. our estimate of +1% YoY), due to low wedding days and the transitory impact of GST implementation.

* Vedant Fashions closed net 13 stores (net closure of eight domestic EBOs and seven SIS offset by two EBO additions internationally). However, net area inched up 3.5k sq ft QoQ to 1.79m sq ft (up 5% YoY).

* Gross profit (GP) declined 7% YoY to INR1.9b, as gross margin contracted 375bp YoY to 71.6% (355bp miss). Including job work charges, GP declined ~6% YoY, with margins contracting ~270bp YoY.

* Employee cost increased 14% YoY (8% higher), while other expenses declined ~7% YoY (10% lower).

* EBITDA declined ~9% YoY to INR1.1b (8% miss), driven by weaker revenue growth and lower gross margin.

* EBITDA margin contracted ~340bp YoY to 42.1% (~220bp miss).

* Pre-IND AS EBITDA for 1HFY26 came in at INR1.39b (down 8% YoY), with margins at 25.5% (down 420bp YoY).

* Depreciation/Finance cost rose 12%/9% YoY, while other income rose ~3% YoY.

* As a result, reported PAT declined ~16% YoY to INR0.56b (14% miss).

* For 1HFY26, revenue grew at a modest 7% YoY (on a low base), but remains ~5% below 1HFY23 levels, while EBITDA/PAT declined 1%/2% YoY.

* OCF (post interest and leases) stood at INR186m (vs. INR55m outflow YoY), driven by favorable WC movement. FCF (post interest and leases) came in at INR74m (vs. INR77m outflow YoY).

* Overall WC capital days declined to 201 (vs. 247 YoY), led by a sharp decline in receivable days to 158 (vs. 220 YoY), partly offset by lower payable days at 20 (vs. 35 YoY). Inventory days were broadly steady YoY at ~63.

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