Iris Clothings Limited (IRISDOREME)

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Summary from August 2024

Iris Clothings Limited Q1FY25 Earnings Conference Call Summary

Date and SubmissionDate of Call: August 5, 2024 • Submission to: National Stock Exchange of India on August 8, 2024

Key Executives PresentManaging Director: Santosh Ladha • Business Head: Harshvardhan Sharda • CFO: Neeraj Agarwal

Financial PerformanceRevenue Growth: 30% increase to INR 31.4 crores • Profit After Tax: INR 2.4 crores • EBITDA Margin: 19% • Impact on Margins: Expenses from new outlet openings

Expansion PlansNew Distributors: Five added • New Product Line: Launch of winter sportswear for children • New Outlets: Plans to open 15 exclusive brand outlets • Capital Expenditure: INR 40-50 crores for increased manufacturing capacity • Sustainable EBITDA Margin Target: 20%

Export GrowthProjected Export Increase: From 3%-4% to 5%-6% • Brand Strategy: All exports under own brand; limited third-party manufacturing

Sales ChannelsOnline Sales Contribution: 8%-9% of revenue • Key Partner: FirstCry for brand discovery

Revenue Growth DetailsYear-on-Year Growth: 30% for the quarter • Volume Growth Contribution: 22%-23% • Value Growth Contribution: 7%-8% • Average Selling Price: Approximately INR 190

Product Category FocusInfant Wear Expansion: Targeting 15% of total sales by year-end • Working Capital Improvement: Focus on reducing high inventory levels

Future ProjectionsRevenue Growth Projection for FY'25: 15% • EBO Expansion Plans: 15 new stores primarily in West Bengal and Maharashtra • Long-term Goal: 200-250 stores in three years • Average Revenue per EBO: INR 1,000 per square foot monthly • Top Distributors Contribution: 30% of revenue, mainly from western states

ConclusionInvitation for Inquiries: Call concluded with an open invitation for further questions.

Summary from May 2024

Q4 FY24 Earnings Conference Call Summary for Iris Clothings Limited

Company PerformanceRevenue Growth: 12% year-on-year, reaching INR 42.1 crores. • EBITDA Increase: 34% growth reported. • Distribution Expansion: Increased international presence, especially in infant wear.

Future StrategiesRevenue and Profit Goals: Targeting 35%-40% growth in FY25. • Operational Focus: Emphasis on operational excellence and market expansion. • Margin Outlook: Slight improvement expected in margins.

Growth ProjectionsVolume and Value Growth: Current year volume growth at 5%, value growth at 3%-5%. Future expectations of 30%-35% volume growth and 10%-15% value growth. • Margin Improvement: Anticipated increase of 1%-1.5% from product premiumization.

Capacity and DistributionWorking Capital Cycle: Increased to 325 days, expected to decrease to 170-180 days by FY'25. • Distributor Expansion: Added 10 distributors, with plans for another 10-15. • Installed Capacity: Current capacity at 33,000, targeting 35,000 for FY'25.

Export and AdvertisingExport Share: Projected increase from 3%-4% to 7%-8% in FY'25. • Advertising Spend: Expected to remain under 2% of revenue.

Store Expansion PlansNew Store Openings: 4-5 company-owned stores this quarter, transitioning to a franchise model post-Diwali. • Payback Period: Estimated at 2.5-3 years for new stores.

Key Growth DriversProduct Line Expansion: Focus on innerwear, infant wear, and sportswear. • B2B Distribution Investments: Significant investments planned. • Exclusive Disney License: Renewed annually, contributing to growth.

Margin StabilityInfant Wear Impact: Increasing sales expected to enhance overall margins. • Stable Margins: Company has maintained stable margins with expectations for improvement.

Capacity UtilizationUtilization Projection: Expected at 85% for FY25. • Funding for EBOs: Expansion will be funded through profits, not increased debt.

Pricing StrategyNet Realizations: Steady increase in pricing over the past three years, with plans for further enhancements through EBO-specific merchandise.

ConclusionManagement Confidence: Optimistic about achieving high growth rates despite industry challenges.

Summary from February 2024

Iris Clothings Limited Q3 FY24 Earnings Conference Call Summary

Key HighlightsDate: February 6, 2024 • Leadership: Managing Director Santosh Ladha, Business Head Harshvardhan Sarda, CFO Niraj Agarwal

Financial PerformanceRevenue Growth: • 15% year-on-year increase to INR 23.5 crores • Driven by infant wear segment and DOREME x Disney brand launches • Quarterly Decline: • 27% decline quarter-on-quarter due to inventory issues • EBITDA Margins: • Improved by 732 basis points to 23% • Expected to maintain between 23% to 25% for FY24

Future PlansExclusive Brand Outlets (EBOs): • Plans to open more in Calcutta, expected to break even in 12-15 months • Revenue Guidance: • Projected between INR 130-140 crores for FY24 • Growth expectation of 35-40% for the following year • Capital Expenditures: • INR 3 crores planned to enhance stitching capacity

Operational UpdatesEBO Performance: • Monthly run rate of INR 8-9 lakhs, with T-shirts contributing 50% to revenue • Inventory Management: • Reduced from INR 54 crores in September 2023 • Working Capital Cycle: • Targeted at around 160 days • Exports: • Currently 5% of total earnings, with plans to increase

Strategic FocusKids' Segment: • No current plans for diversification or acquisitions • Manufacturing Opportunities: • Optimism due to favorable macroeconomic conditions in India

Q&A Session InsightsFuture Performance Metrics: • Conservative estimate of a 100 basis points increase in performance • Major Customers: • Strong distributor presence in western India (Maharashtra, Gujarat, Rajasthan, Punjab) • Debt Strategy: • Plans to maintain current debt levels to enhance return on capital (ROC)

Conclusion • The call concluded with gratitude from Sarda and an invitation for further inquiries to the investor relations team.

Summary from November 2023

Iris Clothings Limited Q2 and H1 FY24 Earnings Conference Call Summary

Key HighlightsDate of Call: November 7, 2023 • Revenue: INR 32.2 crores (1.2% YoY increase) • EBITDA: INR 7.6 crores • Profit After Tax: INR 3.7 crores • New Store Contribution: Expected 7-8% revenue from new stores in FY24 and FY25

Business ExpansionNew Outlets: Two Exclusive Brand Outlets opened in Kolkata • Future Plans: 5-7 additional stores planned in Kolkata; expansion into other states in 2024-2025 • Distributor Network: Expansion ongoing

Direct-to-Consumer (D2C) StrategyCurrent Contribution: Minimal revenue from D2C platform • Growth Outlook: Optimistic about future growth with omni-channel approach

Manufacturing and LaborLabor Stability: No issues reported in operational areas

Export GrowthRevenue Contribution: Expected increase from 3-5% to 5-7% • Target Markets: Focus on Middle East and Africa

Sales ChannelsOnline Sales: Contribute about 7% of total revenue • Offline Sales: Primary revenue source • Infant Wear Demand: Strong growth anticipated, with EBITDA margins of 24-25%

Financial ProjectionsRevenue Target: INR 250-300 crores over the next 3-5 years • Capital Expenditure: Planned to support production expansion

Margins and PricingEBITDA Margins: Infant wear margins at 24-25% • Product Margins: Highest margins from infant frocks and sets • Store Setup Costs: INR 20-25 lakhs per store; total of INR 1.25 crores for five stores • Price Strategy: No price cuts; average selling prices targeted to rise from INR 350-400 to INR 500 by year-end

Volume GrowthYear-on-Year Volume Growth: 10% • Stable EBITDA Margins: Projected at 21-23% over the next few years

Seasonal PerformanceRevenue Contribution: No overall reduction from specific cities; performance varies seasonally

Summary from July 2023

Iris Clothings Limited Q1 FY24 Earnings Conference Call Summary

Date and SubmissionDate of Call: July 24, 2023 • Transcript Submission: July 27, 2023, to the National Stock Exchange of India

Key Executives PresentManaging Director: Santosh Ladha • Business Head: Harshvardhan Sarda • CFO: Niraj Agarwal

Financial Performance HighlightsRevenue: Increased by 3.8% year-on-year to Rs. 24.2 crores • EBITDA: Rose by 49.4% to Rs. 6.4 crores • Profit After Tax: Increased by 76.1% to Rs. 3.1 crores

Strategic InitiativesLicensing Agreement: Successful partnership with Disney for co-branded apparel • Expansion Plans: • Opening five exclusive brand outlets (EBOs) in West Bengal • Potential locations in Udaipur, Ahmedabad, and Hyderabad • First store expected to open within two months • Export Markets: Engaging with retailers in Dubai, Portugal, UK, and USA

Product DevelopmentSportswear Launch: Offline launch with online availability expected by December • Sales Channels: Online sales currently at 10% of total sales, with growth anticipated • Inventory Management: Preparing for peak sales in early 2024; undergarment production started

Financial ProjectionsRevenue Target: Projected revenues of around Rs. 200 crores over the next two years • Capital Expenditures: Funded through internal accruals and bank debt, focusing on EBOs

Cotton Usage and Supply ChainMaterial Composition: 95% of sales from cotton, 5% from blended yarn • Sourcing: Fabric purchased from suppliers; yarn sourced from operational high-quality mills • Margin Guidance: Minimum EBITDA margin of 20%, potentially dropping to 19% if raw cotton prices rise

ConclusionCapital Expenditure for EBOs: Rs. 1.5 crores planned for the year • Investor Engagement: Management invited further inquiries through the investor relations team

Summary from May 2023

Company OverviewDate of Call: May 5, 2023 • Key Executives: • Santosh Ladha (Managing Director) • Harshvardhan Sarda (Business Head) • Niraj Agarwal (CFO) • Specialization: Kids' apparel under the DOREME brand • Distribution: Expanded across 26 states in India

Business Updates for FY23Licensing Agreement: Partnership with Disney for apparel featuring Disney and Marvel characters. • Product Launches: • Successful sample launch in November 2022. • Phased product releases planned for FY24. • New product lines: accessories for infants, sportswear, and upcoming undergarments. • Manufacturing: Uluberia facility authorized for Disney-branded products.

Distribution and E-commerceNew Distributors: 18 added to the network. • International Shipments: Expanded market reach. • Platforms Launched: B2B platform for distributors and D2C e-commerce site.

Financial PerformanceQ4 FY23 Revenue: INR 37.6 crores (up 14.8% YoY). • Full-Year Revenue Growth: Only 1.2% due to lower sales volumes. • EBITDA and Net Profit: Declined, but margins expected to improve in FY24.

Strategic Focus for FY24Capex Target: INR 3 crores to increase production capacity. • Growth Strategy: • Expand distribution network. • Leverage new product categories. • Enhance online business and brand visibility.

Marketing and Operational InsightsOnline Marketing Strategy: Performance marketing via social media and Google Ads; converting offline customers to online sales. • Working Capital: Currently at 180 days, target to reduce to 110 days in 2-3 years. • Price Adjustments: Price hikes implemented due to raw material costs, now stabilized.

Partnership with DisneyCo-branding: Products featuring Disney characters with a royalty of 12%-14% for a one-year license. • Marketing Budget: Increased to INR 2 crores for FY23 from INR 0.75 crores the previous year.

Future ProjectionsExpected EBITDA Margins: 20-20.5% for the next year. • Net Margins: Anticipated to exceed 10%. • Production Capacity Goal: Increase to 35,000-36,000 pieces per day in FY24. • Inventory Levels: Decreasing, with undergarment launch expected next quarter.

Conclusion • Management expressed pride in growth and invited further inquiries.