Electronics Mart India Ltd

NSE:EMIL

Earnings Call Analysis

Electronics Mart India Reports Strong Q1 with 17.3% Revenue Growth

Electronics Mart India Limited has reported a robust performance in Q1 FY25 with revenues surging by 17.3% to INR 1,975 crores compared to the previous year. The EBITDA margin slightly improved to 7.8%, while profit after tax rose by 20.3% to INR 72 crores. The company opened 10 new stores, bringing the total to 170 across four states. Looking ahead, EMIL plans to open 25 more stores and anticipates double-digit revenue growth for FY25. Their strategy focuses on optimizing store operations and inventory management, while maintaining a strong presence in existing markets.

Strong Revenue Growth Fuels Optimism

Electronics Mart India Limited (EMIL) has exhibited robust financial performance in Q1 FY '25, with revenues reaching INR 1,975 crores, an increase of 17.3% from INR 1,685 crores year-on-year. This growth was primarily driven by strong demand, particularly in the large appliances segment, which constituted 53% of total revenues.

Sustained Growth in EBITDA and Net Profit

The company reported an EBITDA of INR 154 crores, up 18.3% compared to INR 130 crores in the previous year. Notably, the EBITDA margin improved slightly, from 7.7% to 7.8%. The net profit also experienced a significant increase of 20.3%, reaching INR 72 crores, compared to INR 60 crores in Q1 FY '24. These metrics highlight EMIL's capability to maintain profitability while pursuing aggressive growth.

Same-Store Sales Growth: Analyzing the Numbers

Same-store sales growth (SSSG) stood at 8.6%, significantly lower than the 13.6% registered in the same quarter last year. This decline raises concerns, especially given favorable market conditions for cooling products. Specific regions like Telangana showed strong growth at approximately 30% for mature stores, while new stores in Delhi saw an 80% jump due to low base effects.

Expansion Plans Signal Confidence

Looking ahead, EMIL aims to open 25 to 30 new stores in FY '25, having already launched 10 in the first quarter. The company is focusing on solidifying its presence in existing markets such as Andhra Pradesh and Telangana, where it recorded significant year-on-year growth of 25-50% across key locations.

Operational Efficiency and Working Capital Management

EMIL's management emphasized their commitment to cash flow-driven growth and optimizing inventory. The working capital days reduced to 50, down from a temporary increase due to summer inventory buildup. This improvement reflects the company's effective inventory management strategies and operational efficiencies.

Regional Performance Insights

EMIL's southern cluster remains a strong revenue generator, although growth rates in traditional markets like Hyderabad were modest, at 4-4.5%, attributed to a high base. In contrast, new markets such as Delhi are displaying potential, with some stores achieving target sales, and overall profitability expected to grow as these operations mature.

Competitive Landscape and Margin Outlook

The competitive scenario remains challenging, particularly in cooling products. However, EMIL maintains its focus on premium offerings and higher customer service levels rather than competing solely on price. EBITDA margins are targeted at 6-6.5% pre-Ind AS for NCR regions and about 7.5-7.8% post-Ind AS, projecting stable profitability as the company scales.

Outlook for the Future

With a commitment to expanding its geographic footprint and enhancing product offerings, EMIL is positioned for sustained growth. The guidance of double-digit revenue growth and continued focus on profitability underlines a bullish outlook for investors, as the company builds on its existing base while optimizing operational efficiencies.

Earnings Call Transcript 2025-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to Electronics Smart India Limited Q1 FY '25 Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Karan Bajaj, Promoter and CEO of Electronics Mart India Limited. Thank you, and over to you, sir.

[Karan Bajaj, executive]

Thank you. Good evening, and a very warm welcome to everybody present on the call. Along with me, I have Mr. Premchand Devarakonda, our CFO. We have uploaded our results and investor presentation for the quarter end Q1 FY '25 on the stock exchange and company's website. I hope everyone had a chance to go through the same. We began the year on a strong footing, aided by our increasing presence in key markets where we operate. Revenue from operating grew by 17.3% year-on-year. EBITDA grew by 18.3% on a year-on-year basis, with margin remaining stable at 7.8%.

On a pre-Ind basis, we have done margins of 6.3%. During the quarter, we've driven a strong uptick in consumer spending due to a hot summer season. We witnessed robust growth, particularly from the compressor product segment, which includes air conditioners, coolers and applicators. This demand was further boosted by the heat wave [indiscernible] in India during the same period. At EMIL, we always have strong focus on inventory management, and we're fully capable of sufficing the elevated demand due to our effective inventory management.

Large appliances continue to remain a significant contributor to our revenue. As of June '24, large appliances contributed 53% towards revenue with mobile and small appliances contributed 35% and 12%, respectively. In Q1 FY '25, we have opened 10 new stores. Our store count at the end of June '24 stood at 170 stores total, out of which 157 stores are multi-brand stores and 13 are exclusive brand outlets.

As on date, we are present in 66 cities across 4 states. Currently, in Delhi NCR region, we have 24 stores, in Andhra Pradesh 44 stores and in Telangana, 101 stores and 1 store of kitchen store is in Kerala. Moving to working capital. we have seen a jump in working capital in March due to our increased inventory anticipation and a strong demand in the upcoming summer season. But as on June '24, this has reduced and it is below 50 days.

As mentioned earlier, our inventory levels will always be higher during the 2 quarters of September and March due to the festive season and the summer season. We continue to remain committed to cash flow driven growth, and we will keep working on further optimizing our inventory and supply chain. SSG For Q1 FY '25 stood at 98.6%. I'm also happy to share that we continue to remain EBITDA positive in our North cluster with EBITDA margin of 2.6%, which can be significantly scaled up further as we grow our base of operations in that region. Our strategy remains centered on solidifying our presence in existing markets before venturing into new territories.

Tailoring our product assortment and maintaining a diverse portfolio are crucial to enhancing visibility, strengthening brand recognition, achieving deeper market penetration while expanding our customer base. EMIL places great importance in understanding local market dynamics to ensure sustained profitability and growth. Delivering a unique shopping experience with an extensive range of electronic products continues to be a top priority for us.

Looking ahead, we plan to open around 25 new stores in this upcoming financial year, anticipating a robust double-digit growth in revenue for 2025. Our strategy includes optimizing store operations and enhancing inventory management to maintain cost competitiveness.

Furthermore, we will expand our reach in select geographies and reinforce our footprint in existing markets, all while nurturing and building partnership with leading brands.

With this, I request Mr. Premchand Devarakonda, our CFO, to update you on financial performance. Thank you, all.

[Premchand Devarakonda, executive]

Thank you, Karan sir. Good evening, and warm welcome to all the participants. Let me begin with the Q1 FY '25 financial overview. Our revenues for the quarter stood at INR 1,975 crores as against INR 1,685 crores in Q1 of FY '24, with a growth of 17.3% year-on-year. EBITDA for FY '25 stood at INR 154 crores as against INR 130 crores with a growth of 18.3% year-on-year. EBITDA Margin for Q1 FY '25 stood at 7.8% as compared to 7.7% in Q1 FY '24. PAT for Q1 FY '25 stood at INR 72 crores as against INR 60 crores with a growth of 20.3% year-on-year. ROCE and ROE on an annualized basis for Q1 FY '25 stood at 28.6% and 20.1%, respectively. The working capital days as on 30th June 2024 stood at 50. The gross debt to net debt -- the gross debt and net debt to equity stood at 0.28 and our net debt to EBITDA stood at 0.36x. Pre-Ind cash flow from operations stood at INR 479 crores. For Q1 FY '25, SSSG stood at 8.6%.

With this, we can now open the floor for questions. Thank you.

[Operator]

[Operator Instructions] First question is from the line of Mehul Desai from JM Financials.

[Mehul Desai, analyst]

My first question is basically on Delhi performance, obviously, we have seen some improvement in profitability here. If you can help me with SSG growth in Delhi for the growth, I mean, for the stores, I think 7 to 8 stores which were opened during the launch. How have they performed in this financial -- in this quarter? And how is the margin of those stores which were initially launched those 7 to 8 stores.

[Karan Bajaj, executive]

Okay. So Mehul, firstly, I will ask Prem, sir, to give you the complete detail later on offline because right now, I would not have the sheet with me. But just to give you a broader number, you can see the stores have been all positive there. And the major contribution would be coming in from in terms of the profitability as well as the sales would be coming in with the first set of 8 stores that we launched on the 14th August '22, so all of these stores are on track on doing INR 30 crore plus mark that we had initially targeted for the stores.

So I would say that these stores are on track and all positive -- EBITDA positive, whereas you would see a major growth coming in from these stores and the contribution that happened, which are 96% growth from the Delhi region, 6 stores are actually opened on 30th of March, which then contributed to a certain number during the summer period. But because of the first set of 8 stores that were launched in August '22, they contributed to a higher share of cooling products during the summer peak period.

[Mehul Desai, analyst]

Okay. Understood. And secondly, how has been the performance in your key market of Telangana in terms of revenue?

[Karan Bajaj, executive]

So Telangana and Andhra both have done really well, especially the [indiscernible] market. So Andhra Pradesh on a whole has grown up by almost [ 25% ] to 50% kind of a number, same thing with Telangana [indiscernible] stores whereas Hyderabad as a cluster where we have the maximum number of stores on a very high market share, that particular cluster has grown by almost around 4%, 4.5% because it stands on a very high base. And then we didn't open any new stores in the last couple of years, Mehul. So that is where you would see a lesser growth coming in from the bigger geography that we operate in versus a new geography that we had entered in the past few years.

[Mehul Desai, analyst]

Understood. And lastly on the [ math ] reaching store-level profitability of [ 3.3% ]. By when do you think we can touch this 5% kind of number. Are you targeting it in FY '26, '27? Or what is your estimate that these can be at 5 to 10 kind of [indiscernible].

[Karan Bajaj, executive]

Right. Mehul, first, it will be too early to comment on it right now that when exactly it would be, but we hope it happens as soon as possible because we've seen the first set of stores doing really good for us. Then what happens is that though the set of stores that are delivering profit, there has been a little drag in from the number of stores that we would open up, like, for example, before Diwali, we plan to open another 5 or 6 stores. These are big stores. So the denominator itself being lower will be a higher drag on the total profitability for that cluster in the coming times. So we would look at this stabilizing at least by '26, that is what the plan is, and say, by FY '27 or '28, then we should be looking at the similar kind of numbers that we would get back on in Hyderabad.

[Mehul Desai, analyst]

Okay. and store addition guidance of '25 to 30 stores remains intact, right?

[Karan Bajaj, executive]

Correct. So that was the initial plan of '25, 30 stores, out of which 10 stores have already been launched in the first quarter across the region that we operate in '25 more stores are getting ready across the region. So hopefully, this financial year will end up very comfortably doing around 30-plus stores.

[Operator]

[Operator Instructions] Our next question is from the line of Raj Mohalutra from HM Financials.

[Unknown Analyst]

So my first question was, can you please share the sales growth between subsegments within the large appliance category?

[Karan Bajaj, executive]

Yes, sure. So ACs grew by 50%; refrigerators grew by around 8.5%; washing machine, there was a growth of around 2.5%. That was the largest compliance category that we would look at; and television grew by around 8.5%, 9%.

[Unknown Analyst]

Okay. Got it, sir. And sir, I had a second question. Second question is which cities would you be targeting in terms of Tier 1, Tier 2, and Tier 3 cities within the north cluster.

[Karan Bajaj, executive]

So right now, we are operating in NCR. So the initial plan was that we would start our operations across the geography of NCR. So that would be -- I would not consider them as Tier 2, 3 towns. But a store, which would be considered as Tier 2, say, for example, we are planning to open store in Najafgarh, Nangloi, Burari in the territories of NCR region, they would be considered as a Tier 2 town only for us, technically in terms of the portfolio of the product mix in that particular store.

Whereas Rajouri Garden, Lajpat Nagar, Janakpuri., Pitampura would be all considered as a Tier 1 or a main primary metro store kind of concept that we would look at.

[Unknown Analyst]

Okay. Got you. And sir, I had a follow-up question on my first question. You mentioned it in the terms of [indiscernible], but I wanted in terms of SSSG for the large appliances.

[Karan Bajaj, executive]

Sorry, I didn't get your question, you wanted to...

[Unknown Analyst]

When I asked my first question, you mentioned about overall growth. But I wanted in terms of SSSG growth for large appliances, if you could please...

[Karan Bajaj, executive]

SSSG growth for large appliances. Okay. So I'll give you that number in detail as well. So the Hyderabad cluster, you would have seen a growth of almost around 7% to 8% on the cooling products across categories that would be AC, refrigerators and coolers, right? Because of the base being very high. We look at that number. If I look at say, a Delhi cluster, that number for the first set of 8 stores would look somewhere around 80% growth because the base was quite low. And if I talk about Andhra up country and Telangana country stores, the SSSG for a mature store, which is operational over 1 year, you look at a number of around 30% approximately.

[Operator]

[Operator Instructions] Our next question is from the line of Puja [ Mehta ] from JSE Securities.

Line from Puja [ Mehta ] has been disconnected. Our next question is from the line of Dharshit from [indiscernible].

[Unknown Analyst]

Sir, my first question would be, sir, you mentioned in the presentation that the same-store sales growth is 8.6%. But as in last year quarter 1 '25, our same-store growth was 13.6%. And in fact, quarter 1 is typically high on the cooling products. And at this time, the entire industry has done extremely well on the cooling products. Now Hyderabad, I understand is a big market for us where you just mentioned that the SSSG growth was 7% to 8%. But other parts of the country, SSG growth itself was very, very high. So I want to understand why that overall SSSG growth so low like at 8.6% despite the AC market doing so well? And are other markets also doing so well. That would be my questions.

[Karan Bajaj, executive]

Yes. how we would look at it is that our SSSG would contribute to multiple categories, which have a very high base, for example, mobile phones, they contribute around 35% of the total top line; televisions; kitchen appliances; then you have washing machines and theaters on the same time. So when I look at this breakup compared to the other players, smaller, bigger players in the market, where base is smaller. So if I give you an example of a Delhi or Andhra country stores or Telangana country stores, we would look at a much higher number than the competition is because the base was lower.

And on that base, when you add up I'm talking about only SSG for mature stores, not even the new stores added to that particular cluster then you would look at a much higher number, say, at INR 175 crores in Telangana countries almost INR 250 crores, which is almost a 40% jump there. Same thing with Andhra Pradesh, we did a INR 2,236 crores last year versus [ INR 334 crores ] this year, which is almost a 50% jump in that particular cluster. When I look at that cluster, which has a smaller base, you look at that jump number being very high in terms of the absolute percentage but internally, you would also look at the absolute value of growth that has come in. So that is equally significant for us to look at when we grow, right?

[Unknown Analyst]

Understood, sir. Understood. Sir, would that mean that this 8.6% is a value growth. So would that mean that the premiumization theme that you were looking at, actually, in the summer products has not played out as well and people are not -- so maybe the pricing has not increased or the premium product sales has not increased. Would that also mean that.

[Karan Bajaj, executive]

Yes. So again, for cooling product, what happens is that cooling the maximum premium you can talk about a 3-star and 5-star that would be a higher differentiation in that. And that also the gap within last few years have come down. So today, a 3-star and a 5-star would actually wouldn't be at a higher price difference and more than 4% or 5% in terms of absolute value. And plus, with the PLI schemes coming in, a lot of aggressive manufacturers have not increased their pricing this season as well. So you will not see an absolute value growth coming in, the quantities increased mainly. So you will see more of volume growth compared to a value growth coming in the season.

[Unknown Analyst]

Understood. sir. sir, also in the presentation, we mentioned that summer product which is typically April to June, last entire year was INR 1,700 crores. So would that mean that a large appliances, say, which come in the quarter which -- this quarter was around INR 950 crores. So this is what I was not able to understand that the large appliance sale was INR 982 crores, but the April to June quarter, we mentioned last year was INR 1,700 crores. So if you could just help explain that discrepancy.

[Karan Bajaj, executive]

One second, if you can repeat your question once again, please, I just...

[Unknown Analyst]

Yes. In your presentation, Page #28, you mentioned the summer season revenue, which is from April to June, which is the quarter 1, which would mean that the entire quarter 1 large appliances sales would be the summer season sales. But sure, the number is INR 1,700 crores for last year. Whereas our quarter 1 sales for last year was INR 828 crores. So what is this discrepancy or...

[Karan Bajaj, executive]

Last year, quarter 1, this number was -- the total quarter number for FY '24, you're saying last year, right? So that was around [ INR 1,651 crores. ]

It was around INR 1,600 crores for Q1 versus, say, approximately INR 1,900 crores this year, which for cooling product specifically was INR 780 crores last year versus INR 982 crores this year.

[Unknown Analyst]

Okay. Because you mentioned summer revenue April to June, which is the quarter 1, and that is INR 1,700 crores. So that's what I didn't understand. What was the discrepancy?

[Karan Bajaj, executive]

Yes. I hoped I cleared your doubt or do you want to understand it better with the team later on?

[Unknown Analyst]

Sure sir. So we can take this offline. And sir, my last question would be we have trade receivables of INR 180 crores, but [ are the ] retail store? So which means that cash is typically -- the transaction is on cash and not trade receivables. But I understand that this trade receivables would relate to our wholesale book. But our wholesale revenue is only INR 60 crores. So what explains this high trade receivables for us?

[Karan Bajaj, executive]

Yes. Our CFO, Prem sir, would like to answer this please.

[Premchand Devarakonda, executive]

Actually, trade receivables, the amounts due for settlement by the banks and NBFC. It is not mainly on account of the wholesale sale. Normally, the turnout -- the settlement -- in case of NBFC sales, that means when the consumer -- when the customer arrives the NBFC credit so that settlement takes 3 to 7 working days. So those are the amounts due from the NBFC and the second thing is the dues from the credit card settlement. And third thing, we will have the credit -- I mean we do a lot of creditors that is incentives, which are accrued on the cutoff date that the settlement happens in the subsequent quarter.

[Unknown Analyst]

Understood, Sir, of this INR 181 crores, INR 40-odd crores is more than 6 months. So would that be related to the wholesale business?

[Karan Bajaj, executive]

Wholesale would not be of that much. So wholesale business itself is not that big. So that would be pertaining to the credit note income that we would be getting in. So we could accrue this income, whereas the [indiscernible] will be quarterly, annually and biannual for which until unless we don't actually receive the amount realization from the company, we don't take them in our books until and unless and then show them as receivables.

[Operator]

[Operator Instructions] Our next question is from the line of Shreya from Anand Rathi.

[Unknown Analyst]

So my first question is like what is the difference between -- on the store economics in NCR region and versus in AP and Telangana. And my second question is like how -- what is the strategy to begin with competition in NCR.

[Karan Bajaj, executive]

Okay. So the store economics in terms of the CapEx and the OpEx of the store, the CapEx more or less renames the same in all the geographies in the country until unless we are cutting down on the site, so per square-foot rate would remain the same, whereas site might maybe. Usually, we look at 10,000 square feet store. So the CapEx might vary for 8,000 versus 10,000, 12,000 square feet store. So that would be on a broader level for CapEx expenditure. Whereas in OpEx and running of the store, we would look at targeting at least INR 25 crores to INR 30 crores wherever we open a store for year 1. That is how we do our math that our rental should be around 2%, 2.5%, 3% year 1, manpower under 2%. So the cost of running the stores PAT from Hyderabad, say, because of the stores are mature now, it would be around, say, 6% to 7% of store operation costs.

Whereas in Delhi, it would be around 10.5%, 11% today initially because stores would increase their productive rate and then from there on, come down to a similar level of margins or expense that we would look at back home. And on the second question, in terms of the competitive scenario, why we entered Delhi was because it runs on a similar product category of the brands or the product mix is very similar to what we do back home. So we would have, in terms of differentiation, our [ USP ] has never been pricing, so we never go out to compete on pricing, but we would like to showcase more of premium, better store locations, the display would be a little more enhanced in terms of the categories that we would display on store, bringing more technologies on the floor every day [indiscernible] exclusive brands or more international brands as well getting our private label and exclusive licensing deal.

So that has been the philosophy of the company. That is how we feel that a few of the competitive edge that we have over our competition would help us grow better because Delhi itself is a very big market and the consumption is going to be huge in premium there.

[Operator]

[Operator Instructions] Our next question is from the line of [ Yu Modi ] from AP Capital.

[Unknown Analyst]

Sir, how is your EBITDA margin guidance for the NCR region for the full year and overall pre-Ind AS [indiscernible] EBITDA margin guidance.

[Karan Bajaj, executive]

Sorry, can you do a little slower, please? The second question, I didn't understand.

[Unknown Analyst]

What is your overall full year pre-Ind AS EBITDA margin?

[Karan Bajaj, executive]

For NCR or for the total group you're saying?

[Unknown Analyst]

For both, sir.

[Karan Bajaj, executive]

Okay. So NCR, so the overall number that we're looking at, pre-Ind AS would be around 6%, 6.5%. That is what we're looking at and post IND AS it would be around 7.5%, 7.8% kind of a number.

[Unknown Analyst]

Sir, lastly, how much...

[Karan Bajaj, executive]

Yes, you tell me.

[Unknown Analyst]

Sir, how much those have you seen in our sales, excluding the compressor products?

[Karan Bajaj, executive]

In Q1, you're saying the sales growth for other categories, within compressor products?

[Unknown Analyst]

Excluding compressor products.

[Karan Bajaj, executive]

Mobile and IT would be around 10% to 12%. That was the number that was the growth for quarter 1 for that category and around a similar number for Televisions.

[Operator]

[Operator Instructions] Our next question is from the line of Manoj from Equirus Capital.

[Manoj Gori, analyst]

So my question here is, if you look at the gross margin profile during the quarter, we have improved by roughly around 30 basis points on y-o-y basis despite large appliances growing significantly faster versus the other product categories? Are we seeing any incremental price competition in the industry, probably in the north markets more because if you look at this year, it was a dream run when it comes to the compressor-driven product categories. So ideally, we would -- we could have done better. But can you throw some light how situation is at the ground level with regards to competitive scenario.

[Karan Bajaj, executive]

So Manoj, the 2 things very correctly, you said that though there was an increase of almost 0.3% in the gross margin level, and that would mainly get attributed towards the cooling product increase in retail in the product mix during that quarter. But unfortunately, summer in Hyderabad or that is where our biggest base is didn't pan out for a whole of 90 days. It was just majorly for 30 or 40 days or the first beginning of the season. Whereas the second half of the quarter contributed well from the Delhi NCR region during the heat wave. And then again, the base being smaller there, though we could see 100% growth in that region for cooling products, but the actual contribution on the top line was negligible. So whereas other categories also equally contribute.

So if I could say that the other way around would be the third and the fourth week of June actually didn't perform really well in the existing markets where we have a really big base. So all put together is the number that we would see. But then overall, said very correctly like NCR being a new region for us with limited store that we operated, we did well. But again, there is a huge scope of growth there in the coming times because the markets are all of newer customers expanding and opening new stores there. That is what the plan is. Once we do that, once we establish, we could see a major chunk coming in the next couple of years from that region, especially during the cooling period, the cooling product, compressor sale period that is Q1. And then maintaining the base in Hyderabad is what is epitome here because we are sitting on a very huge base in the southern region.

So I think overall, once with the new clusters coming up, Andhra, Telangana upcountry stores and all of this other clusters that we now expand and grow will start to contributing in a higher number on a higher number, then you would see a change coming in, in the future as well, we see probably a higher growth coming in and you would see a correction on our margins, that would be coming in the next 2 to 3 years.

That is what we look at right now. And on the second question for growth, definitely, yes. We are striving to work harder deliver much better numbers. Obviously, competitive scenario is there. We're talking about cooling products being sold from every mom-and-pop store, whereas in the cooling season, it has more to do with the supply and the installation deliveries rather than the pricing itself. So the competitive scenario was less on pricing discounting and more on the availability of products in the region, faster deliveries, typically locating our warehouses, inventory management. They are the points that would help us sell better during the cooling season.

[Manoj Gori, analyst]

Correct. my question here, again, second question would be on the store metrics. So if you look at the Southern stores, obviously, you are far more profitable. But do you expect given the North markets would be somewhat different to our core markets, even there the margin profile of the profitability level should be similar to Southern markets or probably that would be a tad lower given the competitive scenario over there? And so that means any broad indication on the profitability levels between the 2 markets?

[Karan Bajaj, executive]

So Manoj, again, correct understanding that different geographies will play different for gross margins and especially for cooling products or products which get desperate to give our margins to a small-and-pop dealers or anybody online, off-line. So we have to be very careful on this trend. So you work with a very selective brand is what we display on a storefront so that we can maintain our margins across categories and retain our gross margin.

So right now, we don't see a major change in gross margin levels between our Northern cluster and Southern cluster, it would all remain more or less in a similar line, whereas the expense in that particular cluster would be a little higher initially compared to what we do back home. So once the stores get matured and start increasing the productivity, we will look at a similar expense ratio as well.

[Manoj Gori, analyst]

So lastly, we obviously understand the growth trajectory in terms of new store openings into north markets. So can you elaborate a bit in Andhra market the reason why we have sharpened our focus over there. I know you have spoken about this in the past. But can you just reiterate like what are the key reasons that we are able to see that we are going aggressive in AP market as well. And what is the growth potential? How we see this market evolving in the next 5, 10 years? That would be helpful, sir.

[Karan Bajaj, executive]

Right. So Manoj, the AP always was on card for us to expand and grow. But we really wanted to do an organic approach. So if you look at our competition there, a few of the bigger retailers out of single individual cities would have a, say, player out of Guntur had 10 stores where we had only 1 store earlier. Vijayawada, somebody's got 10 stores. We have 2 stores. So every city, Nellore is very big. Vijayawada.

So the thing with Andhra Pradesh is a market is a very big, but again fragmented between different cities and the almost 10 to 12 big cities, large cities, where we started with [ one-man ] store each few years back, and we wanted these stores to mature, stabilize. And then we wanted further down then expand into the other clusters in areas, cities where we were not available. That is why you would see a higher jump coming every quarter in that particular region.

So from last year in Q1, we were at 30 stores this year, we were at 44. Last quarter, FY '24, Q4, we were at 41 and increased 3 more stores in Q1 FY '25. So another 10 to 12 stores are in the pipeline coming in for that particular region because not only untapped markets are getting open now with along with existing stores where Vijayawada, Guntur Nellore, Visakhapatnam, those cities also we've added 2 or 3 stores. So you would see both exiting markets as well as new markets coming up. So that is why for the next couple of years, you would see a ramp in growth coming in Telangana upcountry market as well as for the Andhra upcountry market.

[Operator]

Our next question is from the line of Ashish Rath from [ JK ] Securities.

[Unknown Analyst]

So I have 3 questions to ask. So the first question is what growth rate should we expect in our average ticket size for the upcoming years?

[Karan Bajaj, executive]

Okay. So actually, the growth rate for ticket size, I think except few categories, it will be difficult now because everything getting manufactured in India and market getting competitive, especially for the premium products, we would not look at a major growth in the prices until and unless the technology change. So like, for example, a 75-inch ultra HD television would cost you INR 1.5 lakh whereas a QLED would cost you INR 2.5 lakhs. So until unless there is an 8K television that comes in that particular segment where the price or the ASPs would increase to INR 3.5 lakh to INR 4 lakh that is where we would see an increase in price. But apart from that, we would actually see the volume growth coming in rather than an absolute value growth in those particular ASPs or categories.

[Unknown Analyst]

Okay. Okay. And the second question is how much inventory do we stock up in new stores, which are yet to be fully operational?

[Karan Bajaj, executive]

So the inventory, how we do it. So over-the-counter product initially, yes, the newer stores will have low productivity. So for the over-the-counter counter products where the stock has to be available at the stores like kitchen appliances, small appliances, IT products, accessories, laptops, televisions, 32-inch televisions, 42-inch televisions, these kind of categories all kept 1:1, 1:2 kind of a ratio. And once the productivity of the store increases and we know the throughput or the potential of the particular store, then we increase the inventory at store for this particular product.

[Unknown Analyst]

Okay. Okay. Understood. And lastly, what has been our same-store sales growth in the NCR?

[Karan Bajaj, executive]

Sorry, which region.

[Unknown Analyst]

So what has been our same-store sales growth in the NCR?

[Karan Bajaj, executive]

So in the NCR, for the first set of 8 stores that we had opened up, those stores are upwards of 70% growth. Then there's nothing to be proud on that or I would not say that 70% is something that you don't look as a benchmark number. But the cooling season did very well this year where last year, it wasn't that high. So that is why you would see that such a big number of growth coming in for that particular SSG.

[Operator]

As there are no further questions from the participants, I now hand the conference over to the management for closing comments.

[Karan Bajaj, executive]

Thank you, everyone. I would like to thank you all for joining in the call. I hope we were able to answer all your questions. And for any other further queries, you may get in touch with our CFO or team or Mr. [indiscernible] and we would like to address all your queries there on. Thank you very much.

[Operator]

Thank you. On behalf of Electronics Mart India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.