Electronics Mart India Ltd
NSE:EMIL
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Earnings Call Analysis
Q3-2024 Analysis
Electronics Mart India Ltd
Electronics Mart India has been proactive in increasing its market presence, opening 7 new MBOs in the third quarter of FY '24, with a quarterly focus on Andhra Pradesh, Telangana, and Delhi NCR. The company's strategy to enhance its brand and product offerings is reflected in their association with over 100 electronic brands and an expansive SKU count of over 8,000. Over the nine-month period, they've added a total of 21 new stores, giving them a robust network of 147 stores in multiple regions.
The company's revenue displayed impressive year-on-year growth of 21% for Q3 and 16% for the nine months of FY '24, resulting in turnovers of INR 1,789 crores and INR 4,791 crores, respectively. Their EBITDA performance was equally strong, at INR 115 crores for Q3 and INR 342 crores over the nine months, highlighting EBITDA margins of 6.4% for Q3 and 7.1% for the nine-month period.
A key indicator of retail health, same-store sales growth (SSG), stood at 13.4% for the quarter and 10.1% for the nine months. Electronics Mart is focused on bolstering its position within the markets of Telangana, Andhra Pradesh, and Delhi NCR before branching out into new territories, allowing them to better connect with local customers and fine-tune their product mix according to regional preferences.
The company's profitability has seen a substantial increase with Profit After Tax (PAT) for Q3 at INR 46 crores, showing a year-on-year growth of 109%, and a healthy annualized Return on Capital Employed (ROCE) and Return on Equity (ROE) of 20.6% and 14.4%, respectively, for nine months. The company's operational efficiency is evident from its tight working capital days of 53.
Electronics Mart's strategic financial management is illustrated through a moderate gross debt-to-equity ratio of 0.33x and a net debt-to-equity of 0.26x as of December 31, '23. Their net debt-to-EBITDA ratio stands at an encouraging 0.77x, an indicator of the company's strong ability to cover its debt with earnings.
With a positive cash flow from operations at INR 312 crores for the nine months of FY '24, the firm demonstrates operational liquidity. Additionally, the revenue distribution across product segments shows a balanced portfolio, with large appliances making up 44%, mobiles 42%, and the remaining 14% split between small appliances, IT, and others. The retail segment's strong performance accounts for 99% of revenue in Q3 FY '24, with contributions from the top 5 brands amounting to around 60% of revenues.
The company's gross margin improved from 13% to 14.2% year-on-year, despite an increase in mobile phone sales, which typically have lower margins. This increase is attributed to better product category performance and a focus on higher-margin items over the last few years, leading to a more optimized product mix that contributed to improved overall margins.
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Ladies and gentlemen, good day, and welcome to Electronics Mart India Limited Q3 and 9M FY '24 Earnings Conference Call.
This conference call may contain forward-looking statements about the company, which are based on the Board's opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Karan Bajaj. Thank you and over to you, sir.
Thank you very much. Good evening, and a very warm welcome to everybody present on the call. Along with me, I have our CFO, Mr. Premchand Devarakonda, and strategic growth advisers, our Investor Relations advisers.
We have uploaded our results and investor presentation for the quarter and 9 months on the stock exchange and company's website. Hope everyone had a chance to go through the same.
To begin with the update on the store opening front. In Q3 FY '24, we opened 7 MBOs. Out of these, 4 MBOs opened in Andhra Pradesh, 2 opened in Telangana, 1 specialized [indiscernible] in Delhi NCR.
Our company is currently associated with more than 100 electronic brands, with over 8,000 SKUs and has a longstanding relationship of more than 15 years with a certain number of brands, which operate in product categories such as large appliances, mobile phones, small appliances, IT category and others.
In 9 months FY '24, we have opened 21 stores. Our store count at the end of December 2023 stand at 147 stores, 137 -- 134 of which are MBOs, 13 are EBOs. Out of 147 stores, 125 stores are leased, 11 are owned and 11 are partly-owned and partly-leased stores. As on date, we are present in 58 cities across 4 states.
Coming to Q3. We have delivered robust growth of 21% in revenue year-on-year at INR 1,789 crores, and 16% year-on-year for 9 months FY '24 at INR, 4,791 crores. Our EBITDA for Q3 FY '24 stood at INR 115 crores. And for 9 months FY '24, it stood at INR 342 crores. EBITDA margin stood at 6.4% for Q3 FY '24 and 7.1% for 9 months FY '24.
Our SSG for the quarter stood at 13.4% and for the 9 months FY '24 stood at 10.1%.
We are concentrating on strengthening our position in the areas where we currently operate before exploring newer markets. This strategy has allowed us to establish our brand in the markets of Telangana, Andhra Pradesh and Delhi NCR. This is not only helping our customers with those reasons to connect with our brands, but also to familiarize them with our range of products.
It enhances our understanding of the market and the preferences of our customers. Our future plans involve further expanding our store network in Andhra Pradesh, Telangana. Additionally, we aim to gradually extend our presence through the NCR region as well.
Following our focused strategic expansion based on defined clusters, our knowledge in local market dynamics, efficient supply management and strategic inventory control have contributed significantly to retain cost competitiveness and consistent profitability.
The customization of our product assortment and maintenance of a comprehensive portfolio play a pivotal role in securing enhanced visibility, brand acquisition, deeper market penetration and an expanding customer base.
With this, I defer to Mr. Premchand Devarakonda, our CFO, to update you on the financial performance. Thank you.
Thank you, Karan sir. Good evening, and warm welcome to all the participants.
Now I would like to present the financial overview of this company. Our revenue from operations for Q3 of FY '24 stood at INR 1,789 crores as against INR 1,482 crores, with a growth of 21% year-on-year. For 9 months of FY '24, our revenue stood at INR 4,791 crores as against INR 4,118 crores, has a growth of 16% year-on-year.
EBITDA for Q3 of FY '24 stood at INR 115 crores as against INR 73 crores, a growth of 58% year-on-year. And for 9 months FY '24, EBITDA stood at INR 342 crores as against INR 245 crores, with a growth of 39% year-on-year.
EBITDA margins for Q3 FY '24 stood at 6.4%. And for 9 months of FY '24, it stood at 7.1%.
PAT for Q3 FY '24 stood at INR 46 crores as against INR 22 crores as a growth of 109% year-on-year. And for 9 months FY '24, PAT stood at INR 143 crores as against INR 87 crores with a growth of 65% year-on-year.
ROCE and ROE on an annualized basis for 9 months of FY '24 stood at 20.6% and 14.4%, respectively. The working capital days as on 31st December '23, stood at 53 days.
The gross debt to equity as on 31st December '23, was 0.33x and net debt to equity was 0.26x.
And our net debt-to-EBITDA stood at 0.77x.
Our cash flow from operations for 9 months of FY '24 stood at INR 312 crores. For 9 months of FY '24, same store growth rate stood at 10.3%. For this 9-month period, our -- about 44% of our revenue came from large appliances, 42% from mobile and 14% from small appliances, IT and others.
In Q3 FY '24, around 99% of our revenue came from the Retail segment, and the top 5 brands contributed around 60% of our revenues.
This is the brief presentation. I open the floor for questions and answers.
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] We have a first question from the line of Shrinjana from RatnaTraya Capital.
Congratulations on the great results, sir. So my question was on the gross margin side. There is some expansion on the gross margin, even if you see year-on-year, 1% sort of delta. And in terms of mix, if we see, the mix change has not been favorable particularly. So can you explain that a little bit, what was...
Can you repeat the second part of the question, please? I could not get that.
Yes. So I was just asking on the gross margin front. The gross margin has expanded year-on-year basis from 13-odd percent to 14.2%. And in terms of mix, the change in the mix is not in the favorable, right, because the phone share has increased. So can you explain that a bit?
Yes. So see, there are 2 things here. As you correctly said, the gross margins have increased. So even if you look at the previous quarter, the gross margins were a little high compared to this particular quarter.
So there are 2 major quarters that have a better gross margin than usually we have seen in the past. But now, what has happened is because we've improved a lot of other product categories, which delivered us a higher margin, so blended margin overall would look better.
So I would say it would remain in a similar range going forward as well. So definitely, since the time -- the last couple of years, we've worked really hard to make sure that the product mix is optimized, we emphasize more on margins and make sure that our gross margin levels increase.
So that is what we've done, and that is what you see the delivery today happening because of that reason. The work that we've done in the last couple of years to make sure that our gross margins from about 13.7%, 13.8% increased to 14.1%, 14.5%. So that is what we had worked towards.
And on the second question for the product mix would be definitely as a mobile phone as the category is increasing. But at the same time, what we've done is we've tried extracting more of accessory business being our tempered, chargers, cables. We're adding up those categories as well as audio categories, headphones, TWS, along with mobile phones as an attachment, usually, when you attach up that particular category along with mobile phones, you would definitely see an increase in margins there as well.
So it all that put together helped us increase our gross margin, even though the product mix got a little varied towards mobile phones during the last quarter as well.
Right. Understood. And congrats on the great delivery, sir. Just one more follow-up on this. So on the last call, I think you mentioned that there is some accounting change also, wherein the incentives that we were earlier recognizing as a part of the sale. Now in the bill value itself, we are getting the deduction there, so that gets subtracted from the cost. So is that also affecting the margins and figures?
So if I say in other way, what was happening is not from the sales, but from the purchase that we used to take in now it comes in invoicing, not as a separate credit note that we used to get, you would see a little dip in the incentive income that we will be receiving in the last few quarters.
It's because now most of the brands are trying to push them through invoices and everything in the bill itself, so that the other operating incomes become a little lesser. That was the plan and so that the cash flows also get better. So that was the whole plan.
But we're trying with a lot of brands because we've been working with them for so long with the same accounting practice. It's very difficult to change them now. So the major component still remains on invoicing, but there are a lot of other schemes like sell in sell out, cash discounts, price drop schemes, defective schemes, marketing and everything comes as opposed to a sellout, yes, for sales support for us.
[Operator Instructions] The next question is from the line of Sanika from Sapphire Capital.
In the previous call, we had given a margin guidance of 6.7% to 7% going forward. And this quarter, we can see a slight dip in the margin.
So is it because quarter 3 is seasonally weak or something? Or -- and going forward, can we expect to come back on track to 6.7% to 7% kind of margin?
Yes. So Sanika, this quarter is a little heavy If you talk about the EBITDA margins going a little down compared to the previous quarter. But that definitely would be there because we went a little aggressive on our marketing strategy that we had planned.
There were other costs like business promotion and all, were a little higher and directly proportionate to the business that we would do. And this being festive period, all retailers and the market is a little more aggressive in terms of discounting and in terms of promotions and all. So that is where we had to put it under line under the same way. So that is why you would see that 0.2%, 0.3% difference in that number.
But I would say things going forward also would look similar. And just being the largest quarter for us in terms of revenue also, we had to make sure that our marketing spends are higher, especially in Delhi.
So subsequently, Delhi, we spent around INR 5.5 crores additionally than our budgeted number for the cost of marketing there being higher compared to the regions that we operate in AP, Telangana and Hyderabad. So that's why you would see definitely a dip.
But again, it is in line with the gross margin that we had expected, an expense that you would bear for that particular quarter, looking at the revenue that we generated.
Okay. So going forward, we can expect to come back to our stated guidance, right?
See, actually what happens is like in this coming out Jan, Feb, March, like for example, last year, PR marketing spend would be similar, for example. But then, this year, if the summer start a little early in this region, then we would need to expand our marketing budget.
Like last year, the marketing budget got split into 2 quarters majorly because Dussehra and Navratri started in September. So our marketing budget got split between 2 quarters in Q2 and Q3 for festival period because -- whereas this year, it was strictly only in 1 quarter.
So you would see that impact of the cost going up for a few things. Same thing with summer this year, like Jan, Feb, March, right now, it is a little cooler in Delhi and North region. So our spends are next to 0 there.
But if you look at South, probably in the next 15, 20 days, we start the summer period here. And according to the sales growth, we would look at expanding and promoting the cashback offers and marketing and all of that.
So there is -- it is more like a seasonality of a business that would come in. And then definitely, then there would be a little less or a higher number in the Q1 of next financial year. So it is more of seasonality, but we would remain in the same range, and it would all depend on what the sellout is and what the revenues that we're generating on the floor a daily basis.
Okay, okay. And for the next 2, 3 years, what kind of revenue potential are we looking at and what is our expansion strategy?
So expansion strategy would be to open around anywhere between 25 to 30 stores comfortably. So we've already identified a lot of stores in the existing markets that we are operating today.
Like for the first 9 months of this year, we've opened 21 stores. Last quarter itself, we opened 7 stores. And there are another 7 to 10 stores that are in the pipeline to open up in this quarter. So on this year count, we would be upward to 35 stores that we'll be launching and kind of a similar number in the next couple of years. That's the plan.
But most importantly, we don't attribute our growth coming in from the newer stores. So to give you an example, last quarter on a growth of almost INR 300 crores, the contribution coming in from the 7 stores that we opened in Q3 was hardly INR 11 crores -- INR 10 crores to INR 11 crores. The rest of the growth came in from the existing stores.
So usually, we would attribute the store growth in the next couple of years from the new stores that we open in the last 12 months from that particular year. So that is what we look at.
And number 2 would be, we would look at a very comfortable number of 15%, 18% kind of a growth coming in for the next few years very comfortably. Until and unless there is a new technology product that comes in or a new change in technology that helps us grow better. But what we see in the next couple of years, the product or the technology would remain same.
So that is where we would see this kind of a growth coming in from the existing stores.
[Operator Instructions] The next question is from the line of Krishna from Capitalmind.
Yes. So first, congratulations on great set of numbers. We can see that operating leverage is kicking in slowly. So I have a couple of questions. I'll start with first one. So sir, what is the -- generally, what is number of months that we take for the new store to breakeven on operating front?
Okay. So Krishna, there are 2 things here. So the existing market that we are operating is suppose Hyderabad, AP and Telangana, the brand is recognized. So here, you will look at a 10- to 12-month kind of a breaking period, whereas the newer markets that we are operating like in Delhi NCR today, from the first store till what today we are at, we've seen the projected numbers to go around 18 to 20 months, and that is what we're delivering today.
So now once we establish, the brand is more recognized, the more number of stores we keep adding after that, then it will come on to a more similar level that we would expect in our existing geography. But right now in Delhi NCR region, it would be around 18 to 20 months, and AP, Telangana region would be around 12 months.
Got it. Sir, my second question is that you said the current number of stores on the North cluster is generating around 0.2% EBITDA margin, but you are expecting that to slowly move to the current 7% range, which the South cluster is managed to get it.
So any time line you have it, sir? I mean, the current 20 stores, which we have in NCR, when can we see the margins to go from current 0.2% to around 7%?
So, Krishna, right now, these stores have been operational for around 14 months. We have another 7, 8 months of breather for these stores to grow. So right now, we are quite confident because last quarter also it was a similar number.
And then once the summer sets in, because last year we missed on the summer periods in Delhi because it was cold then and started pouring a little early. So North summer went for a toss last year, especially the cooling products where we have the highest margins.
This year, we're expecting that to be in line with our expectation of a sellout for ACs and air coolers. That will fetch us a little more higher margins. So I think we would like to give it another 6 to 8 months for it to develop further and come down to -- come up to the same level as what we're operating back home in Hyderabad.
Got it, got it. I just have 2 more questions, sir. So one is that, I can say that we are slowly getting our presence in Kerala. So is that our next area of growth, sir, region of growth in Kerala?
No, Krishna. Kerala was as an acquisition for existing business of the [indiscernible], the kitchen business that we are into. So that was just a franchise takeover from them. So there's no other plans, won't be opening our multibrand stores right now there. We are concentrating only on Delhi NCR and AP, Telangana region.
Perfect. Perfect. Sir, one last question. So you said that the majority of the growth will come from the existing stores -- so -- because the new stores will have some time to mature. So -- and we have been doing the same-store sales growth upwards of 13%, 14%, which is very healthy.
So do you think we can sustain this same-store sales growth above 12%, 13%, sir, for the next 2, 3 years?
Krishna, I hope we sustain that kind of a number. But then see like this year, it definitely helped us with the 5G rollout. The ACs went up. 5G rollout was good. Last year, television during the World Cup sold really well.
So a lot of categories. Audio picked up, accessories picked up. So a lot of categories apart from the core business also picked up and started doing very well. So we're concentrating on those businesses as well to develop an existing timing from the existing stores.
But because the stores are at a very high base anyway, it becomes very difficult for it to keep sustaining at that level. But at a 10% growth is what we are quite comfortable. We'll try to achieve that number at least going forward.
[Operator Instructions] The next question is from the line of Manoj Gori from Equirus Securities.
So.
So my question is on the Delhi market. So see, if I look at the EBITDA margin performance probably for the first half, you said like you have done somewhere around 0.4% kind of EBITDA margin, which currently for the 9 months, it's close to around 0.2%.
So obviously indicating that there have been some losses into Q3. And probably, if you look at, this was seasonally in terms of festive season, it was a heavy quarter for the Delhi stores.
So though the store, say, a revenue growth seems on the higher side at 60%, but do you feel like it was somewhat below our expectation, and probably the scale was benign and, accordingly, we faced challenges in terms of EBITDA?
Sir, yes, definitely yes, as you said very correctly, if I look at the blended EBITDA margin that we delivered this quarter particularly and for the first 9 months, it would come to 0.2%, it would look a little lower than the last quarter is because though we had generated revenues of around INR 55 crores last quarter versus INR 83 crores this quarter, the numbers on the top line definitely were higher.
But then at the same time, we spent over INR 5.5 crores on advertising, which was not attributed in Q2. If I look at that number itself, that itself is around 4%. So that is still a very big number. So we could have added more stores, which are in the pipeline.
So once the stores are going to come in probably next Q3, if you look at it, we'll have a similar marketing budget, but with double the number of stores available there for us to sell. It is a strategic plan that we -- this is more like an investment that we're doing right now to make sure that the brand is recognized and the stores that are in the pipeline at the opening in the next couple of months are also they sale out really well at the beginning.
It was a strategic move, we could have saved this money, we could have saved a little more money here and there and made this number look better. But our strategy was a little different. We're looking at a long-term strategy for Delhi. So Delhi has to be given 2, 3 years for it to grow, so we're nourishing the baby right now.
So this is an investment that has gone through. And we're quite happy actually with the performance that we've done in Delhi.
Right, sir. Sir, so in the medium term, probably from FY '25 or FY '26 point of view, looking at the complete Delhi operations or the North market, how do we see margins moving up? Probably, any aspirational targets that you have set or probably given that you would be having a strong visibility on the overall market?
Where do you see these margins moving probably from 2 years, 3 years, like not any specific number if you can highlight, but at least some trajectory, whether it would be towards mid-single digit? Anything on that?
So sir, right now, if I look at the existing market, we are hovering around 7% plus. And if I try and start comparing that, because the productivity cost per year on an average is upwards of INR 60 crores, INR 70 crores, in Hyderabad city, INR 40 crores in the Telangana market and INR 32 crores in the Andhra Pradesh market.
So what happens is that if I calculate the cost of running the store, expenses, rentals, manpower, electricity and all that, put together, versus Delhi as a market, the cost of running all these stores are a little expensive there. So if I look at the actual number there, I do not expect it to reach 7% mark immediately in the next 10 months, 12 months or 14 months. But it definitely would be upwards of what it is today.
And what would happen is that even if these existing 13 stores that we operate today are 12 multi-brand and 1 exclusive brand outlet, even if they become profitable in the next 10, 12 months and start giving out of the higher number of EBITDA, what would happen is the newer stores will pull down these numbers because we need for the next couple of years, our plan is to add up another 20-plus stores, 14 are in the pipeline, 6 open up in the next 45 days.
And then an additional of another 10 stores in FY '25, '26 as well. When we keep on adding up these stores, a total of 40 stores we operate -- 35 to 40 stores in operation in the next 3 years, there will definitely be a downside coming in from the newer stores that we open up until and unless they stabilize.
So as for the next couple of years, we're not worried about this number. What we are looking at is EBITDA at least to be positive for us for the next couple of years, that the sales is good enough for us to sail through in Delhi as a market. So that's the plan for now.
Sure, sure. I completely agree with that. Sir, my -- if you look at probably on the future expansion plans into North market, so just to understand from a return profile point of view, are we looking to buy out properties? Anything we have identified so far or we will continue to work on the lease model?
Sir, majorly it is going to be a lease model itself because, right now, our expansion is happening at the peripheries like Najafgarh, Burari, [indiscernible] a few areas outside Gurgaon. So those areas definitely, we'll do a rental model only. But the clusters, as I said on previous calls also, the clusters where our competition is quite big or where the clusters are a certain size, where we feel that safe is the clusters when Reliance, Croma, Vijay Sales or any other local partner put together between INR 100 crores, INR 200 crores as turnover.
Those kind of places, we would like to buy properties because that's where the competition is going to be intensive in the future, and the markets are going to keep growing. So for a smaller cluster, we are not interested to buy. Only on bigger clusters, which are upward of INR 100 crores, INR 200 crores. That is where we would look at buying out.
But right now, major expansion of buying out in the major pockets of Delhi has been complete,d, like Lajpat Nagar, Janakpuri, Pitampura, Rajouri we've completed, only 1 or 2 locations in Gurgaon are left right now. But at the same time, we're not able to find a property. So probably, once we do it, we might buy out those properties, if required. But apart from that, there is no major plan of buying out properties in Delhi.
Sir, last question. So if I look at the Indian home appliances space and probably the categories in which you are present into, so normally, what we expect is these categories are likely to grow into double digits in volume terms.
Now when I look at your guidance, probably not guidance, but the aspirational target of SSG of close to around 10%. So obviously, that goes well with the category growth rates. But also on the other hand, you do agree that there has been a shift happening from general trade to large organized players.
So that should actually lead to higher SSG numbers on a sustainable basis. Correct me if I'm wrong or probably, I'm missing something on the understanding part.
Manoj ji, very well said in terms of -- you're absolutely right in terms of the market moving and shifting from the general trade to organized trade. But then 2 things. It depends on the particular category. Like mobile phones, definitely yes, are moving from general to larger format stores majorly.
But when you consider consumer durables, especially in the modern cities or developed cities, already 90%-plus share is with the organized retailer. So only limited share is with the general trade partner for consumer durables specifically.
Again, kitchen appliance is a category. It is a general trade market today. We're talking about mixie, geysers, all that -- that kind of catergory is still for the general trade, very predominant in that category. If you're talking about Tier 2, Tier 3 towns, if you're talking about underdeveloped markets or cities which are just about to grow now or states like Orissa, Goa, these kind of places or if I talk about East completely, apart from Calcutta as one city, all these are driven by general trade players or even up North, upwards of Punjab and Jammu Kashmir, Haryana, that few of the belts there is all driven by general trade market. But the market that we've been operating predominantly, majorly say in AP, Telangana are all major organized trade market.
So I don't -- I would not say that the consumer durables growth there would be coming in from majorly or we would have to grow a little more higher. But mobile phone, that shift, you can see because the ASPs on mobile phone has shifted now upward of INR 28,000, INR 30,000.
So that kind of sales of phone, people would not want to go to a small mom-and-pop store. They would like to go in a bigger format store, experience the device, check on the financing options there, see all the other offers, cashback and stuff like that, and then particularly buy from a bigger store and not from a small store in that category, at least.
[Operator Instructions] The next question is from the line of Miyush Gandhi from Cognizant Capital.
Am I audible?
Yes.
Congratulations on execution. Very good job there. I just wanted to understand the free cash flow that we reported for 9 months, seems to be a very big number. So does this go down in Q4 before we fill the inventory for the AC business?
So thank you very much. Yes, definitely, so -- definitely in Q4, we've already started stacking up a lot of inventory for air conditioners. And we're seeing a little favor of summer falling in place in this region at least. So by the end of Q4, you will definitely see a similar number that you've seen last year at the end of 31st March or probably a little higher. But in the same line only because AC and coolers needs to be picked up and kept as inventory available with us. So we will see definitely a decline in the cash flows there and increase in the inventory levels during that period. And Miyush sir, our CFO would like to add something there, please.
Sir, normally, what happens at the end of the season, you can see the free cash flows will be on a higher side. But at the beginning of the season, it will definitely go down. That is the scenario.
Sir, that I understand and completely appreciate it. What I was just trying to figure out was that given that this year, our margins are much better than last year, do we end up at -- in a free cash flow positive situation or you still feel we will still be negative? That's what I was asking.
It will be positive. Definitely, it will be positive. And secondly, yes, that's what -- so it will be positive.
Okay. Fair enough. Karan, I just wanted your perspective. The general understanding in the market, at least from the FMCG side of the industry is that there is a slowdown in the rural areas. We also have substantial operations in rural areas.
So what is your sense? Is that K-shaped recovery something which you're also observing or it's not true for the consumer durable space?
Miyush, we have not felt that in the last 6 months or so, we've not seen that the consumption is reduced or we see -- we don't see that effect in the stores there. Definitely, yes, the Tier 2 stores that we opened are majorly in the last 2 quarters only, so for us to judge also and tell them because the base is 0 there for us. And when we started operations, definitely we will see growth coming in those stores month-on-month.
But probably, I will tell you an example of where we've been operating in Tier 2, Tier 3 towns in the last 4, 5 years, we are there. Even they are growing and there is a demand, especially for premium products increasing in those sectors there. I'm talking about 85-inch and 75-inch televisions, [indiscernible] or Apple devices or high-end mobile phones, there definitely we see an increase. So we don't see a slowdown there at all. So that is -- that momentum is quite positive for us, even in Tier 2 and Tier 3 towns.
Okay. Fair enough. And did I -- correct me if I'm wrong, you mentioned 35 stores for '25 financial year. Is that the number we should look for or that's a little higher?
35 this year. We only opened 21 stores in the first 9 months of this year, and then another 7 out of which were in the last quarter. We will end up opening another 7 to 10 stores in the next 45 days, out of which a few of them we opened last week as well.
So 35 -- 30, 35 stores is very comfortable that we'll open. We've already identified. The paperwork is done. So there are already 10 stores in the pipeline that will open up in the next financial year because they're getting ready. So they won't be opening up before 31st of March. So that's why we know that another 10, 12 stores we will open up next year, which we've already signed up for. And then another 20, 25 locations is what we've identified across Delhi NCR and AP, Telangana.
So we are quite confident that we very comfortably will end up opening 30-plus stores in the next financial year as well.
So 35 you're talking about this financial year. This -- I mean, because we were at 21, you said 7-odd are ready. And then we would reach to 28. And then you're saying another 7 will get opened. So 14 stores in this quarter itself. Is that right?
No, no. So 21 we opened in the first 9 months of the year. Out of which 7, we opened last quarter itself.
Okay. So 28 -- around 28 odd this financial year '24 and 30-odd or 30 plus in the next financial year. Would that be a fair understanding?
Yes, yes.
Fair enough. And in the last couple of quarters, we had actually disclosed this revenue from sale of these warranties and guarantees by the -- offered by the third parties. Would it be possible for you to share in this quarter how has that number moved?
Because that was kind of adding a lot of profit.
Miyush, I'll take it offline with you because I don't have the exact number right now. Because we have increased our sales for other categories, that would include [indiscernible] warranty, accessories, audio in one head. So that overall put together, there is an increase of almost around -- quarter-to-quarter, there is almost increase of around INR 24 crores, INR 25 crores.
Out of which, you could attribute say 50% of it towards [indiscernible] warranty and 50% of it towards other categories.
Okay. Fair enough. Yes, that's it from my side.
The next question is from the line of [ Rajvi Shah ] from Bright Securities.
I just had a couple of questions. The first one is can you shed some light on the product mix this quarter as many festives were there?
Yes. So the mobile mix was around 40%. The appliances was around 44%. And other categories was around 14% for small appliances, IT and other categories. So that was the major split this quarter.
So there was a decrease in the larger appliance as a category and increase in mobile as a category -- mobile and IT. Large appliances, televisions grew, whereas refrigerators and washing machines were more or less flat only this quarter. The ASPs went up though in that category, but the volume of that product category in refrigerators and washing machines were more or less flat.
Okay.
Air conditioner was the maximum growth, if you look at Q3 versus Q3. So air conditioners grew by almost 50%.
Okay. Sir, I just had one more question. What guidance can you give on the future revenue growth?
So guidance for the revenue would be in the same line that we've been delivering in the past, probably a little more -- I would not say we do not want to go a little more aggressive because the majority of stores coming in the next few years would be in Delhi NCR region.
So the market size is big there though, but it will take us a little more time to establish those stores and make sure that they reach a certain threshold that we expect them to be at. So for the next couple of years, it would be in the same line. So we would not go aggressive in terms of the numbers.
But because of the store expansion, the contribution on the store to develop over a period of 12, 14 months, and these are delivering us the expected numbers would be there. So we would be in line with what we're doing right now and for the next couple of years, that is the strategy.
[Operator Instructions] The next question is from the line of Dolly Choudhary from Niveshaay Investment Advisers.
Congratulations on a great set of numbers. I just had one question. So as we know, the NCR is a big market for the company. But at the same time, I think it's very competitive also. So I just wanted to know what specifically company is doing to attain the market share there?
So Dolly, I would say that, that is our business secret, so I would not like to -- but actually, on a serious note, it is a technology product that we're selling, right? So most importantly, you've got to sell a product category that is prevalent in the market today, the brands that are prevalent, customers come in for an experience that is what we try to improve.
So right now, we spend a lot of money in our back end, in our front end, store experience, product category, they should add up new product categories, bring everything under 1 roof, give a better retail experience. That way, not only we're competing with our offline peers, but even competing with the online space as well. So that is really important that your aftersales service, your team on the floor, everything makes a lot of difference when you want to compete with your competition.
And price is not just one factor, maybe if you ask me. We never consider price to be a major factor in differentiation. I think the product mix, the brands that we deal with, the new categories that we've launched and growing in those product lines, giving out the best service to the customer, that is all put together is what makes a lot of difference.
So like overall, we are targeting on customer experience?
Yes, yes, yes. For example, in terms of the -- not only that, but in terms of marketing now, we start spending a little more on, say, Google ads, a little more on YouTube, a little more on digital than the predominant print media that we used to do.
So we try experimenting with that as well quarter-to-quarter. We are doing a lot of events. Like last week, just finished the Comic Con event where we attracted a lot of people, over 80,000 walk-ins were there for that event where there were kids between 18 to 24 years of age, who are pure gamers.
So we could increase our gaming laptop as a category. So these smaller events, but we are starting to -- trying to strategize individually for every category. Like for kitchen appliances, we're doing events for cooking shows and stuff like that.
For every category, we want to emphasize our depth of product display that we have, conducting individual events, this is apart from the regular prints or radio that we've been historically doing.
The next question is from the line of [ Pooja Kamdar ] from GC Securities.
Sir, I just have one question. So have we encountered more sales through credit facility on a Y-o-Y basis? And what percentage of revenue is it?
It's not much of a change, [ Pooja ], which is like probably hardly a difference of 1%, 2% increase in the credit card sales, whereas NBFC still remains the highest contributor.
Second would be credit card. Third would be wallets and cash. So NBFC still is a prevalent category for us.
That was the last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Thank you. So I would like to thank all of you for joining into the call. I hope that we were be able to answer all your questions. And for any further queries, you may get in touch with our team or SGA, and we'll be happy to address all your queries. Thank you once again.
On behalf of Electronics Mart India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.