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Earnings Call Analysis
Q3-2024 Analysis
Kewal Kiran Clothing Ltd
Kewal Kiran Clothing Limited has shown commendable resilience in the face of suppressed consumer demand and challenging market conditions to post double-digit growth across its core product categories. Despite the adverse impact of a delayed winter on its winterwear segment, the company managed to exceed its profitability targets with overall market slowdown noted. For Q3 FY '24, the revenue increased marginally by 0.6% to INR 200.2 crores from INR 199.1 crores in Q3 FY '23, but more impressively, the gross margin improved significantly to 43.3% for the quarter, up from 40.6% for the same period last year, coupled with a substantial 23.4% jump in Q3 PAT, raising it to INR 33.3 crores.
Over nine months, the company's revenue operations saw a healthy 10.5% growth, gross profit increased, and EBITDA margins widened by an impressive 150 bps to 21%. This period's profitability also surged with a 33.3% growth in PAT. Additionally, the Board declared a first interim dividend for FY '24 at INR 2 per share. Despite slower winterwear sales, they remain hopeful for Q4, projecting a 15% to 18% revenue growth leading to a satisfactory close of FY '24 with double-digit growth.
Aligning with their goal to enhance brand presence, Kewal Kiran Clothing is nearly at its target for adding Killer Brand Exclusive Brand Outlets (EBOs), with a net addition of 72 stores during the 9-month period, taking the total tally to 483. Additionally, strategies are being devised to convert K-Lounge stores to single-brand outlets for brands like Killer, Integriti, or Lawman, with a transformation timeline anticipated to be about a year. Some stores may also be discontinued, although that will be a small fraction of the total number of stores.
The company navigates the challenge of increased late winters by potentially adjusting the percentage mix of winterwear, although the category will remain a staple. Pricing and strategic responses to the evolving market conditions and consumer behavior, especially concerning winterwear sell-throughs, will be key factors dictating future approaches.
Kewal Kiran Clothing anticipates sustaining its impressive performance and is targeting an 18% to 20% growth for the current quarter with stable EBITDA margins. They remain cautiously optimistic about FY '25, expecting a 15% to 20% growth, despite acknowledging the sluggish consumer market. The company is also eyeing potential acquisitions, though details are yet to be confirmed until an agreement is in place.
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Ladies and gentlemen, good day, and welcome to Kewal Kiran Clothing Limited Q3 and 9 Months FY '24 Conference Call. [Operator Instructions] Please note that this conference is being recorded.
Before we begin, a brief disclaimer. The presentation, which Kewal Kiran Clothing Limited has uploaded on the stock exchange and the website, including the discussions during this call contains or may contain certain forward-looking statements concerning Kewal Kiran's business prospects and profitability, which are subject to several risks and uncertainties, and the actual results could materially differ from those in such forward-looking statements.
I now hand the conference over to Mr. Hemant Jain, Joint Managing Director. Thank you, and over to you, sir.
Good afternoon, everyone. On behalf of Kewal Kiran Clothing Limited, I welcome everyone to the Q3 and 9 months FY '24 earnings conference call of the company.
Joining me on this call is Mr. Pankaj Jain and our Investor Relations team.
I hope everyone had an opportunity to look at our results. The presentation and results release have been uploaded on the stock exchange and our company's website.
I am pleased to inform that we have demonstrated resilient performance despite muted consumer demand and challenging market conditions. It is important to highlight that we have witnessed double-digit growth in volumes as well as value across product categories of the denims, shirt, T-shirt and trousers showcasing the strength of the company's brand to connect with consumer and the designing capability of the company.
The growth was affected on account of the winterwear segment, we saw slower pickup on account of delayed onset of peak winters. We have been able to surpass our budgeted profitability despite overall general slowdown witnessed in the market on the account of lower footfall and warmer winters.
Coming to the detail of our financial performance highlights for the quarter and 9 months. Standalone performance highlights for Q3 FY '24. Revenue from operations for Q3 FY '24 grew by 0.6% to INR 200.2 crores as compared to INR 199.1 crores in Q3 FY '23.
Gross profit grew to INR 86.7 crores in Q3 FY '24 as compared to INR 80.9 crores in Q3 FY '23. Gross margin for Q3 FY '24 improved to 43.3% as compared to 40.6% in Q3 FY '23.
EBITDA. EBITDA for Q3 FY '24 grew by 15.8% to INR 38.9 crores as compared to INR 33.6 crores in Q3 FY '23. EBITDA margin for the Q3 FY '24 has expanded by 250 bps to an impressive 19.4% as compared to 16.9% in Q3 FY '23.
PAT for Q3 '24 grew by 23.4% to INR 33.3 crores as compared to INR 27 crores in Q3 FY '23. PAT margin for Q3 FY '24 expanded to 15.9% as compared to 13.1% in Q3 FY '23.
Standalone performance highlight for 9 months FY '24. Revenue from operations for 9 months FY '24 grew by 10.5% to INR 641.1 crores as compared to INR 580 crores in 9 months FY '23.
Gross profit grew to INR 275.4 crores in 9 months FY '24 as compared to INR 241.4 crores in 9 months FY '23. Gross margin for 9 months FY '24 expanded to 43% as compared to 41.6% in 9 months FY '23.
EBITDA for 9 months FY '24 grew by 19.3% to INR 134.8 crores as compared to INR 112.9 crores in 9 months FY '23. EBITDA margin for 9 months FY '24 expanded by 150 bps to an impressive 21% as compared to 19.5% in 9 months FY '23.
PAT for 9 months FY '24 grew by 33.3% to INR 116.9 crores as compared to INR 87.7 crores in 9 months FY '23. PAT margin for 9 months FY '24 increased to an impressive 17.5% as compared to 14.8% in 9 months FY '23.
Further, I am pleased to share that the Board has declared first interim dividend for the financial year 2023, '24 at 20%, that is INR 2 per share.
In line with endeavor to invest further on excelling our brand presence and keep a balanced distribution strategy, we have almost reached our target addition of Killer Brand EBOs with a net addition of 72 stores during the 9-month period and taking our total tally of EBOs to 483 as on December 31, 2023.
We are also working on strategy to convert our existing K-Lounge store to single-brand store of Killer or Integriti, Lawman.
Looking forward with the ongoing improvement in market scenario, coupled with our first set of dispatch for Killer Junior, our kidswear-focused brand in Q4 FY '24 we believe to be back with around a 15% to 18% revenue growth in Q4, leading to our FY '24 closing with satisfactory double-digit growth.
With this, I leave the floor now open for the Q&A session.
[Operator Instructions] The first question is from the line of Varun Singh.
Am I audible?
Yes.
Yes. Okay. My question, Hemant, sir, is on the winterwear impact on the overall revenue. So kind of 2 questions to this. First is what would be the like-to-like growth in the retail channel for us?
And secondly, winterwear would be what percentage of overall revenue for us in the third quarter?
This is Pankaj here. Okay. The like-to-like growth in terms of tertiary sales of my entire EBO stood at 4% on a 9 monthly basis.
Okay.
And second, to answer generally winterwear's contribution in quarter 3 is the most biggest. It contributes more than 20% of the entire quarter during that period. However, if you average it out over a period of full year, okay, it comes into single digits.
Okay. Okay. Understood. Understood. And what would be the accessories' contribution to us?
Accessories' overall business of the total year contribution around 6% to 7%.
6% to 7%. Right. Understood. And my second question is on the K-Lounge store conversion. So as Hemant sir was mentioning that we would be converting it to a single-brand store. So like [ in the half ], how are we thinking about this conversion?
So for example, of all -- I mean, [indiscernible] K-Lounge to -- I mean I know the number is more than 100. For simplicity, you say 100 stores we need to convert, so what percentage of that would be converted to a K-Lounge store? What percentage would be converted to maybe the Lawman or Integriti? And what is the time period of maybe looking at 100 -- I mean converting all the stores to single brands?
Okay. The stores, generally, they are close to right now 174-odd stores of K-Lounges. Each we'll look at individually. We are doing this in a fair manner. So almost it will take a year's period to complete this conversion totally, at least a year's period, okay?
Now when you go looking at which brand it will be converted to, that has not yet been decided. We have been discussing depending on the brand mix in that particular store, in that particular area.
Okay. Understood. But none of those stores we will start -- I mean it will only be converted, meaning that we have got the locations right? Only the brand...
Some may get discontinued also because the store aging -- I would say the store aging is more than 5 years of most of the stores of all the K-Lounges.
Okay. It would be more than 5 years.
They do get discontinued, but that will be hardly a proportion of the total number of stores.
Yes, yes, yes. Understood, understood. And my last question is on Killer Junior. So like if you can give us some understanding with regards to how we are budgeting or like maybe from 1- to 2-year point of view, what percentage of our revenue we think it is possible for this category to become for us.
Varun, it's too early to comment on Killer Junior right now. The first -- okay, when we had gone for our order sheet structure, we have received a good response. Let the dispatch see -- let's evaluate the secondary numbers. And maybe second quarter of the next year period would be the right period to evaluate on where we are standing on this.
[Operator Instructions] The next question is from the line of Himanshu Upadhyay from o3 Capital.
Yes. Pankaj, there is one thing. Last quarter, we commented on K-Lounge, okay? Competition with the MBO, and MBO has evolved into shop-in-shop, okay?
Correct.
Can you exclude slightly in more detail because I could not understand what was -- what you were trying to explain. So sorry for that. But if you can help me on that.
Okay. What I'm trying to understand here is what -- okay, I'm trying to understand your question first, Himanshu. Are you trying to understand whether -- why did I open K-Lounge on the initial pay structure, is that what you want -- trying to understand? Or what I'm going to do ahead, is that what you're trying to understand.
See, I got the point that initially K-Lounge was in small cities to compete with MBO, okay? Then you stated that MBOs have evolved.
Correct.
So how have they evolved? And what has changed, okay, in terms of MBO because of which we need to relook at our K-Lounge store strategy. So that is what I'm trying to understand.
In that period, okay, those cities, which are majorly Tier 2, Tier 3 or Tier 4 cities, those cities had not yet evolved and they didn't have brand exposure. So generally, all the stores -- family-owned stores, whatever they were selling, they were selling a set of multiple brands. And this is how the K-Lounge concept had come into picture at that time.
But now when you go to the stores, they have already exposed themselves. I have -- EBO stores have also coming into Tier 2, Tier 3 and Tier 4. So now what has happened is they have got -- retail has been exposed to such cities.
So now those stores, which were family-owned stores, maybe generally contributing to all categories or maybe all brands in set format of 800 to 1,000 square feet, they have evolved to a 5,000 or 6,000 square feet family-owned stores, where they're selling ladies, kidswear, menswear, everything together and the shop-in-shop in a very organized format. And this is where we are looking at taking ahead K-Lounge for.
Okay. Okay. So that's why you said that K-Lounge, the sites, these will also be relooked and redesigned and replanned?
K-Lounge was the size of 800 to close to around 1,500 square feet. So they are as per our retail single brand retailing now. So that's the reason I'm looking at conversion.
Okay. And out of this 174 stores of K-Lounge, almost everyone would be in size lesser than 1,500 square feet?
Yes, most of them. Close to around 98% or 97% of the stores are less than 1,500 square feet.
Okay. So that's why almost everyone will be changed to Killer, or let's say, Lawman?
[ Whatever stores ], they will definitely look at. I mean I'm saying that the store aging has also been more than 5 years period for most of them. So I was anyways looking at revamping of the stores.
And see, most of our [Technical Difficulty]
Yes, Himanshu?
Hello, sir?
Yes. Himanshu?
Can I speak now because there was some...
Yes. You're audible, sir.
Yes. So what I was saying was most of our K-Lounge and Killer brand EBOs are franchisee-owned, franchisee-operated okay? What are the franchisee owners' thought process in terms of K-Lounge? How are they thinking? And what are they saying that what sizes they think they want to do? Or is there any feedback they are giving on K-Lounge because we are reevaluating that whole product and will be coming up with that K-Lounge. So some thoughts on the feedback from the franchisee owners and how are they thinking.
We have been trying to explain them for this conversion, okay? But during this period, the Killer exclusive stores have also been opened in Tier 2, Tier 3 and Tier 4 cities. So I have been showing them these numbers to them and that has become easy. So that's why we said that we'll be doing things in a pilot phase, not one at a time structure till here. So whenever we do this, we have been explaining that this has been the performance and this is your performance where we have been monitoring. So it was becoming easier for me for conversion.
Some has been resilient not to go ahead with or when to take that call for. And that's why we are giving them time. At least we'll see one phase of the people who will be shifting over and then decide on the other phase.
And generally, the larger format K-Lounge what we want to launch, will these be completely different franchisee owners? And have you started working in market trying...
So the commercial perspective, everything will be a different format. My sense that the management is still thinking on how the entire model will be. When we have set with that, definitely, we'll come back to you on that.
Okay. And one question on -- though I understand it is still new, but what is our sales or distribution strategy for Killer Junior because what we see is earlier whoever our distributors or MBOs and all those, they were generally in small towns, cater to only the men or kidswear or separate stores, okay. So are we going initially only with our distributors who are taking the product? Or we are adding new distributors for kidswear or exclusive who sell only kidswear?
First of all, when you said regarding the MBO perspective, kidswear, the primary perspective of the channels would be MBO and LFS, that's one. And MBO has been growing for us. It will be a mix of all distributors. It will be a mix of the current distributors as well as new distributors.
Okay. Okay. So we have started adding new also?
Yes.
The next question is from the line of Ankit Babel from Subhkam Ventures.
A couple of questions. Sir, since last 4, 5 years, we have been witnessing late winters. Now every player, be it in the FMCG segment or innerwear segment selling thermal wear or even the garment players like you all have faced problems. Nowadays winter generally comes in the January month and even in the second half of January month, and every player starts their EOSS in December month.
So in that scenario, sir, what would be your future strategy on winter products? Now assuming that winters will always be late, you'll have to come out with an early EOSS. So how are you going to make margins on the winter product? Because now it seems that this segment will always face margin pressures. So would you increase your prices to that extent that even if you have to opt for early EOSS, you can still make reasonable margins? Or in order to be competitive, this will always be a low-margin product for you and you are okay with the volatility going forward? So my -- so in a nutshell, what is your future strategy on the winter products?
Ankit, first, okay, we have to answer the question is whether we can go away with this category. As a retail format as well as winter as a [ cap of the ] season, we definitely cannot go away with this category irrespective of how the business is. That's the first aspect.
The percentage mix can definitely vary. When you said about the price mix and structure, yes, definitely, there has been a shift over in terms of winterwear, in terms of the month. Yes, this time, maybe it was not extreme winter, but the pre-winter was fantastic this time. So you have to evaluate all the balances, takes and balances and go ahead with.
Regarding the new pricing, whether the category will be there, the mix, the percentages, we are yet to take a call for the next few weeks. Maybe quarter 2 would be the right period for us to define whether because we'll know exactly what has been the carryforward [ store ], how the winterwear went, how - what was the sell-throughs and that would be the right -- after getting all the trend analysis, it will be better to answer that question for.
No. Again, sir, I'm slightly looking out for a different answer to my question is that will you assume that winters will always come in January and then you will form your strategy or...
This is not what we look at. We will definitely plan. As I said, that winterwear as a category you can't go away with. That's one. Now what percentage mix you will plan is a secondary question.
So do you plan to reduce the percentage mix?
Could be. I need to evaluate on an overall basis, what has been the carried forward also. This I will come to know after the season is over.
Okay, okay, okay. Sir, second question is since last couple of quarters, you have been discussing on some potential acquisitions. So what's the update on the same? Are we still contemplating it or looking out for players? Or what's the status on the same, if you can highlight?
We are still evaluating the perspective, Ankit, on that, the same thing.
Okay. Still evaluating.
[Foreign Language] the process is on.
So what we need to understand, I understand that you must be evaluating it, but the ticket size of the acquisition, would it be large, small? Will it -- our current cash balance would it be suffice to that?
I don't want to comment till the things have already fall in place.
Okay, okay, okay. And how are you looking at the current quarter growth rates considering that there would be the end of season sales in the winter products, which might have some pressure on the margins. But at the same time, your kids junior products would be there on the shelf...
Ankit, okay, we'll be able to achieve for this quarter 18% to 20% growth and the EBITDA margins will also be maintained for this quarter.
EBITDA margins for this quarter, again, in that 18% to 20% range?
Yes.
Okay. So I was just wondering that there would be pressure on the winterwear products. And at the same time, you'll be ramping up your kids junior product. So that could be pressure on margins? Or you still feel that you'll maintain it because last year it was around 19.6% so.
I feel that I'll be able to manage the margins.
Okay, okay, okay. And next year, again, should we look at 18% to 20% top line growth with similar margins, is it fair to assume?
Hard to say that we'll -- okay, if the markets -- looking at the market scenario, we will reevaluate in such a way that we say that the numbers should be around 15% to 20%. [ That ] will increase the base structure.
The next question is from the line of [ Anik Mitra from Finomics ].
Hello? Am I audible?
Yes, yes. You are.
Sir, my first question is related to the conversion of stores. So what kind of top line growth impacting the margin we can witness with this conversion of stores? This is my first question.
How does that relate to the margin structure? There will be a conversion perspective where K-Lounge is already selling Killer as a major proportion. So I don't think there will be a change in -- a proportional change in revenue may be there because the performance would be a little better in terms of the ASP. But I don't think there will be a change in margin.
Okay. Got it. And sir, you are referring 18% to 20% growth in Q4 FY '24 in the top line.
15% to 18% is what I'm saying.
15% to 18% in the -- like for Q4 FY '24?
Q4.
Is it year-on-year or month-on-month -- sorry, quarter-on-quarter?
Y-o-Y.
Y-o-Y. Okay. And 15% to 20% -- another 15% to 20% for FY '25?
Yes.
The next question is from the line of Jatin Chawla from RTL Investments.
My first question is for 4Q you guided for a reasonable pickup in revenues. So are you seeing any signs on the ground of this weak consumer sentiment that we have had for the last few quarters starting to turn around?
There has been a sluggish movement in the consumer market. But we are looking that quarter 2, we'll still be able to -- quarter 4 we will still be able to achieve the numbers of 15% to 20% growth perspective.
[Foreign Language]
[Foreign Language]
Market understanding has also been there. We have been closing structure. The pipeline also we are looking at and that's why we are giving a revised estimate. That's why we said that we'll be growing in the fourth quarter by 15% to 18%, right?
Right, right, right. Yes, my commentary was just from an industry perspective also that whether are we seeing any early signs of things starting to turn around. From what you are saying, it seems that is not the case. This is kind of more complete specific efforts that you are working in. Hello?
Yes.
Yes. Okay. Got it. My second question is with the brands that you have, Killer, Lawman and Integriti, I'm new to the company, if you could kind of spend 2 minutes just broadly explaining the positioning of each of these brands in the marketplace.
See, as far as Killer is concerned, Killer caters to the premium price point like denim prices range from INR 2,799 to INR 3,899. Lawman caters to fashion and partywear segment. Denim prices range from INR 2,199 to INR 2,999. Integriti caters to premium mass market. Denim range around INR 1,799 to INR 2,499. And Easies caters to casual office wear segment.
Got it, got it.
And they have a different segment, different price points and different categories.
Understood. And in the last 2, 3 years, we have seen Zudio really scale up very fast. So has there been any impact on your kind of mass brands, the Zudio kind of slightly...
As far as Zudio is concerned, Zudio is mainly in the retail chain -- only in the retail chain format. And their prices is different than what we are selling in the market. Our price point is different than the Zudio's price point. So I don't think so the Zudio has impact anything on our sales.
[Operator Instructions] The next question is from the line of Chirag Shah from White Pine.
Sir, my first question is with respect to your store addition. So you are closer to your Phase 1 target of 500, 525 kind of number. So how do you look at it from here on?
And also, if you can comment on your distribution. You had, if I recall, like 80 or 90 distributors serving some 3,000-odd MBOs. So how are you looking at that from here on? This is the first question.
On the retail front, as we said, that we'll be having 80 to 100 stores year-on-year perspective and we are in line with that. That's one.
Secondly, on the MBO perspective, MBO has also been growing along with the company.
So sir, from here on, we are still looking for 80 to 100 stores. That's how we should refer on an annual basis?
Only on EBO basis, right?
Yes. EBO basis are looking to add 80 to 100.
Yes.
Okay. So sir, second question is just if I look at your Q2 and Q3 results, okay, if you can just comment on your realization mix because in Q2, if I look at it, your jeans contribution was lower Y-o-Y and your ASPs were down. In Q3, jeans contribution has seen significant jump on Y-o-Y basis. You're seeing ASPs are significantly lower, realization that you gave in the presentation. So how should one look at it, if you can give a comment on that, it would be helpful.
So if we are looking at core categories, on my core categories, which is jeans, shirt, T-shirt, trouser, on a 9-month basis, have been growing on all the 4 categories. The mix has changed in terms of winterwear, and that's the reason the average ASP is giving a wrong mix structure for it -- to you.
Okay. So you are saying the Q3 had a slightly adverse winterwear contribution. That is what is driving this ASP?
The winterwear category actually has been -- is a lower -- is a higher ASP product.
Yes, yes. That's what I'm saying. So you're saying that in Q3 F '24 current quarter versus last year, so this year, the winterwear contribution has been significantly lower as compared to last year.
Which is true.
That is the reason why ASPs have gone down from [ INR 767 to INR 681 ]. That is the primary reason.
That is one of the reasons. Second reason would also be -- the total mix is a combination of apparel and accessories.
Yes. Okay. Okay. That would be another -- one other reason. I just noted that. Sir, one last thing. You made a comment that given the market scenario, you are looking at 15% to 20% growth next year. So are you relative -- versus last 2 quarters, you are turning more positive on the market scenario? Or how should -- what was your intent when you made that comment, it would be helpful. Hello?
If you look at my number structure, as I said for the 9-month basis, my all 4 categories, which are my core categories, has been growing. And that's the reason I'm saying that my first 2 quarters maybe the next year period, I'll be growing at 15% to 20%. Except for winterwear, which was planned for, has [indiscernible] otherwise. So whatever we have to plan is for the quarter 3. Quarter 2 will not be a problem.
Okay. Sir, my question was more with the market rather than company. We understand that you are striving 15%, 20% kind of a growth. You are saying that the subdued market environment is your base assumption on which you're targeting 15%, 20% kind of a volume growth? Is that the way we should look at it that neither improvement or deterioration in the market outlook?
I'm saying that we will be at this percentage.
There's 2 things. This will be among Killer Junior Kids launch [Foreign Language] So that's why we say we will grow by 15% to 20% plus, see, every time you cannot take away market -- every time the market sentiment is low. Maybe the market sentiment will also better than what the Q3 is.
Okay. Okay. So if the market sentiment turns better, then this number could actually see a -- could see an uptick?
[Foreign Language]
[Operator Instructions] The next question is from the line of [ Aejas Lakhani ], an individual investor.
Sir, my question were on the retail and non-retail growth. If you look at our retail performance, you've been down year-on-year by 8% despite adding stores. So any commentary on what is happening in the retail segment, whether it is the EBO, which is pulling it down or LFS channel, which is pulling our performance down?
That [ we will ] defer. Okay, on a 9-month perspective, retail has been growing.
Sir, my question was regarding the...
This was for the quarter, right?
Yes.
Okay. The quarter -- the EBO has been growing. EBO is not a percentage. And since retail is a mix of the retail and LFS, that's the reason it has been pulled out. That's the only reason.
Okay. So any specific comments on the LFS channel, which has sort of pulled down our performance? Is it related to certain product as winterwear or certain stocking, which has not happened with our LFS partners?
Some of the LFS partners have been carrying inventory in terms of winterwear. That's the reason there has been a shift of month for the next season's sales.
Understood. Understood. And sir, if we have to compare our winterwear performance this year versus last year Y-o-Y, I reckon we had also preponed some of our sales in Q2. So if we look at a like-to-like number for winterwear as a category, what would the growth rate be? Or what has the performance been?
Winterwear this year has degrown for us.
Sure. So what would the numbers look like, sir, and an absolute number if you look at?
On category mix, we generally don't give. But I'm saying that the category mix has degrown this year.
Sure. And are we left with any of the winterwear inventory with us, which might be liquidated at a cost going forward or some discounts that you have to give in the coming quarters?
Some of the inventories for the winterwear stock and adequate provisions have been provided for the same.
Okay. Okay. Sure. And sir, my next question is on your cost control measures, right? If you look at your employee cost and OpEx cost, it has been in a tight band. So any -- is there anything that you're holding back on, which could possibly come in the next few quarters?
Not on the employee cost. Which is the other category you said?
The other expenses.
I don't think there will be a drastic change in both the sides.
Sure, sure. And sir, on the gross margin side, we have done well versus our previous quarter. So is it that you've taken some price hike in certain categories? Or is it the raw material benefit that we're getting? And are these gross margins sort of sustainable going forward?
The raw material prices, which has gone down, that's the reason also you see there has been expansion in terms of the GP margin. We think that it will get normalized in the next 2 quarter structure.
Okay. So will we be passing on this benefit in terms of any schemes or discounts or reducing our prices?
Maybe I will do some marketing perspective or I may decrease the price structure or -- it depends on how the competitors evaluate the same also along with it.
Sure. Sure. Got it. And sir, your entry into the kids segment, it looks promising, but as a group, you must have thought of some numbers of scaling this in your business mix. So if you could share some light on that, any percentage of your revenues that should come from kidswear or any numbers on scalability?
As I said -- [ Aejas ], it's still under incubation stage. Let's discuss this on quarter 2 of the next year.
Sure.
Sir, are you through with your question, sir?
Yes, yes.
[Operator Instructions] The next question is from the line of Chirag Shah from White Pine.
Sir, just one question, if I can ask. Sir, would it be a right statement that winterwear you had lower margin for...
Sorry, your voice is cracking. Your voice is cracking.
Is it better now?
No, sir.
Not audible.
Hello?
Yes, sir.
Is it better now?
Can you speak, sir?
Yes. Hello?
Yes?
Is it the right comment that winterwear as a category for you is a lower profit margin category?
Winterwear -- okay. The company manufactures jeans, shirt and T-shirts, winterwear as well as [ knitwear ] as a category company outsources it. That's why definitely what you're saying is could be comment -- considered as correct.
As there are no further questions, I would now like to hand the conference over to Mr. Hemant Jain for closing comments.
Yes. First of all, thanks to all my participants. I would like to once again thank all of you for joining us on this call today. We hope we have been able to answer your queries.
Please feel free to reach out to our IR team for any clarification or feedback. Thank you all.
On behalf of Kewal Kiran Clothing Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.