Vedant Fashions Ltd

NSE:MANYAVAR

Earnings Call Transcript 2023-Q4

[Operator]

Ladies and gentlemen, good day, and welcome to the Q4 FY '23 Earnings Conference Call of Vedant Fashions Limited, hosted by Nuvama Wealth Management. [Operator Instructions] Please note that this conference is being recorded and will be for a duration of 45 minutes. I now hand the conference over to Mr. Nihal Jham from Nuvama Wealth. Thank you, and over to you.

[Nihal Jham, analyst]

Yes. Thank you so much. On behalf of Nuvama Institutional Equities, I would like to welcome you all to the Q4 FY '23 Earnings Conference Call of Vedant Fashion Limited. From the management today, we have Mr. Vedant Modi, Chief Marketing Officer; and Mr. Rahul Murarka, Chief Financial Officer.

I would now like to hand over the call to Mr. Vedant Modi for his opening remarks. Over to you, Vedant.

[Vedant Modi, executive]

Thank you very much, Nihal. Good afternoon, and namaskar to all the participants. I'm Vedant Modi, the Chief Marketing Officer of the company. Thank you for joining us today to discuss the Vedant Fashions Limited Quarter 4 and Financial Year 2023 results. I'm joined by Mr. Rahul Murarka, the Chief Financial Officer of our company.

I hope everyone got an opportunity to go through our financial results and investor presentation, which have been uploaded on the stock exchange as well as the company's website. Let me take you through the fourth quarter and full year performance. We are pleased to report that we have achieved strong growth in the financial year. Our growth strategy is focused on expanding our retail outreach, both domestically and internationally.

We have expanded our international presence, and we are now present in 4 international countries, USA, UAE, Canada, and the U.K. In this quarter, we increased our exclusive brand outlet footprint, which is a dominant channel for the company. As of March 2023, VFL's EBO area stands at 1.47 million square feet, spanning 649 stores in 257 cities and towns globally. The national EBO footprint tallies at 633 stores spread across 245 cities and towns.

In this quarter, we have opened net square feet area of around 75,000 square feet, which includes 7 EBOs in India and 2 international EBOs. In financial year 2023, we expanded our retail footprint by 2.04 lakh square feet with 64 net EBOs open. This expansion highlights the commitment to provide our consumers with the best possible shopping experience, thereby increasing our market share with the largest share of the consumers' wallet.

In financial year 2023, our overall consumer sales growth stands at 26.3% over financial year 2022. As our SSSG growth has been 18.1% in financial year 2023 over financial year 2022. In quarter 4 financial year '23, our overall consumer sales grew by 21.2% over quarter 4 of financial year 2022, and the SSSG growth has been 14% over quarter 4 of last year.

In financial year 2023, our consumer sales growth stands at 47.1% when compared to pre-COVID financial year of 2020. While the financial year 2023 SSSG growth has been 17.6% over the pre-COVID financial year of 2020.

In the fourth quarter of the financial year 2023, our overall consumer sales growth stands at 45.8% compared to quarter 4 financial year 2020. In quarter 4 financial year 2023, the SSSG growth has been 16.2% over the quarter 4 of financial year '20. We continue to run our flagship campaign built around the theme Taiyaar Hokar Aaiye. The campaign features Ranveer Singh in a new avatar and was targeted to wedding centric audience. We ran the campaign across all channels, and it was a 360 degree campaign.

In addition to this, I would also like to highlight that we have launched Kiara Advani as the new face of the brand Mohey. We ran a campaign featuring around the theme Dulhan Wali Feeling and it depicts the saga of a modern-day bride and how weddings are a big day for them. This campaign beautifully encapsulates the theme and strongly connects with all modern-day brides. We saw tremendous performance across the digital channels that we made this campaign lighter.

With this, I will now hand it over to Mr. Rahul Murarka to take you through the financial performance of our company. Thank you.

[Rahul Murarka, executive]

Thank you, Vedant. Namaskar and good afternoon, everyone. I would like to highlight some key performance for the fourth quarter and financial year ended March '23 based upon the consolidated financial statement.

Starting from Q4 of FY '23 performance update. The company has reported revenue from operation of INR 342 crores in Q4 of FY '23, delivering a growth of around 15.3% compared to Q4 of FY '22. The company continues to report industry-leading gross margin of around 66% during Q4 of FY '23. The EBITDA margins were around 50.2%, and the EBITDA stood at INR 171 crores during Q4 of FY '23, with a growth of around 17% compared to Q4 of FY '22.

The company reported best-in-class PAT margin of 31.9% and the profit after tax stood at INR 109 crores during Q4 of FY '23 with a strong growth of 23% compared to Q4 of FY '22. Our sale of our customer was around INR 483 crores during Q4 of FY '23 with a significant growth of 21.2% over Q4 of FY '22, along with strong SSSG growth of 14% in Q4 of FY '23 over Q4 of FY '22.

Now comparing our Q4 FY '23 performance with Q4 of FY '20, whose figures have been considered basic internal management [indiscernible]. The revenue from operations significantly grew by approx. 31%, and we witnessed very strong growth impact by approx. 53% compared to Q4 of FY '20. Sales of our customers grew by approx. 46% over Q4 of FY '20, and we reported SSSG growth of 16.2% in Q4 of FY '23 over Q4 of FY '20.

Now I would like to summarize FY '23's full year performance. The company reported revenue from operations of INR 1,355 crores during FY '23, delivering a very strong growth of 30% compared to FY '22. The company continues to report industry-leading gross margin of 67.4% during FY '23 with an improvement of 0.5% compared to gross margin of 66.9% in FY '22.

The EBITDA margin was around 50% and EBITDA stood at around INR 678 crores during FY '23 with a strong growth of around 30% compared to FY '22. The company recorded best-in-class PAT margin of around 31.7% and the profit after tax stood at INR 429 crores during FY '23 with a significant growth of around 36.3% compared to FY '22. Moreover, the PAT generated during the year is approx. 140% of net working capital deployed as of 31 March 2023.

With optimization in working capital, we have been able to achieve industry-leading ROCE of approx. 95.3% during FY '23. The company had a track record of generating significant cash driven by a healthy cash conversion ratio. The company continued to generate high cash conversion ratio of around 83% in FY '23. This has been computed based upon operating cash flow over PAT during the period.

Moreover, the operating cash flow generated during the year is 116% of net working capital deployed as of 31 March 2023. The company also witnessed improvement in net working capital days from 94 days in FY '22 to 83 days in FY '23, which is computed based upon internal [ MIA ]. Sale of our customer was around INR 1,861 crores during FY '23 with a significant growth of around 26.3% over FY '22, along with a very strong growth of around 18.1% in SSSG compared to FY '22.

On comparing our performance with figures of FY '20, this is internal management MIA. Revenue from operations significantly grew by approx. 48%, and we witnessed a very significant growth in PAT by approx. 81% in FY '23 over FY '20. Sale of our customer also significantly grew by approx. 47%, along with SSSG growth of around 18% over FY '20.

Thank you, and namaskar everyone. We can now move to the Q&A session.

[Operator]

[Operator Instructions] We have our first question from the line of Tejash Shah from Spark Capital.

[Tejash Shah, analyst]

Sir, first question pertains to largely kind of trying to reconcile your SSSG numbers with the maybe traditional method of store addition or square footage expansion, which is 16%. And if I reduce the revenue growth from there, then the SSSG does not actually look very high numbers. So how should we reconcile this number with what you have given?

[Rahul Murarka, executive]

So basically, as far as reconciliation is concerned, look, the pure maths would never work because the square feet area which we add up on in a particular year is around the year, it's not in the beginning of the year. So the revenue which also gets generated is for the part of the year in that year in which we opened a store, and the full year revenue comes in the next year only. So if you'll see the trend of store opening like in FY '23, out of 2.04 lakh square feet which we opened in the entire financial year, 75,000, which is a big chunk, we opened in Q4 only.

So around 60%, 65% of area which we opened was in H2 compared to 40%, which we opened in H1. So obviously, the revenue of those square feet areas additions which happened, the full revenue would come in the next year only. So that is why the total -- I mean, if you add up on the square foot addition plus the [indiscernible] will never come across -- we'll never match with the overall revenue growth.

[Vedant Modi, executive]

If I may add to that, Tejash, if you look at it, our SSSG for financial year '23 over '˜22 was 18%, while consumer sales growth was at 26.3%. Now we've added about 16% to our overall net area. And because that was throughout the year, if you just take half of that, that is 8%, and add it to the 18%, it almost adds up to your 26.3%, which is a ballpark figure of how this whole derivative happens.

[Tejash Shah, analyst]

I see SG&A efficiency in the last 2, 3 years, it has been made on. In fact, employee cost, in particular, we have, again, in this quarter also, we have reduced it Y-o-Y and sequentially, both. And then the same is true for the whole year as well. So I just wondered, how should we think about SG&A efficiency going forward? And where do you like it to settle so that the business also doesn't suffer, but profitability also improves or remains healthy?

[Rahul Murarka, executive]

So as far as the employee cost is concerned, Tejash, one of the major reason why the employee cost decreased at a financial level is because of the restructuring of the director [indiscernible]. So total -- I mean, if you see a [ debtor revision ]-- the debtor revision has reduced from 2.1% of revenue to 1% revenue in FY '23 because of the restructuring of debtor revision, as we explained in earlier calls. So that is one of the reasons why on an overall level, you are seeing a decline or a similar numbers of HR cost and not a growth.

[Vedant Modi, executive]

And just adding on to that whole piece, when we talk about the overall efficiency of our company, I think we've been able to demonstrate extremely high gross margins throughout the year. And we're comfortable in saying that 66%, 67% gross margin is what we expect the long-term trend to be. When we talk about PAT margins, while we deliver 31%-plus in some quarters, we are comfortable in seeing a 50%-plus number. And as you are aware, Tejash, these are -- some of the numbers, in terms of efficiency, are a global benchmark now. So we've been able to do tremendous start. The idea is to maintain it as we move forward in the numbers just mentioned.

[Tejash Shah, analyst]

And the last one, if I may. Looking at the healthy cash flow generation and the very capital-efficient model that you have created, how do you want to allocate capital going forward? Because that question will keep on like -- it will gain materiality as we go forward. So how do you think about the allocation of capital going forward?

[Rahul Murarka, executive]

So Tejash, the company is debt free. And whatever cash we are able to generate on a particular financial year, 83% of PAT, a significant number, that is sufficient enough to run the business. And you have seen that we also have believed in distributing the excess cash which we have to our shareholders. Like last time also, we had declared a dividend of INR 5 per share. And this is also based upon the performance of the company. The Board of Directors have decided to propose INR 9 per share as dividend.

So unless we have any M&A, which we are not sure when it will happen or it will happen or not in the future, cash we will use for the business for expansion, of course, to the extend required. And always, our endeavor would be to give it back to the shareholders.

[Operator]

We have a next question from the line of Varun Singh from ICICI Securities.

[Varun Singh, analyst]

My first question is on revenue growth. So if I look at the yearly revenue number and compare it with FY '19 numbers, so we see that roughly 13% to 14% is the revenue CAGR, which is coming up. So Vedant, my question is, how do you look at this number? Do you think that we could have done much better? And even going forward, how should we looking at the revenue growth given this context?

[Vedant Modi, executive]

So the number which we strongly follow when you look at SSSG or 4-year CAGR -- so the number in our reference is currently in the FY '23 to FY '20 SSSG, which at 17.6%. So that comes to a 5.5% sort of a 3-year CAGR. Now while we may not be exuberant with that number, we are not unhappy either, given the kind of environment we are operating in currently. However, the endeavor is to be a good single-digit SSSG number as we move forward.

[Varun Singh, analyst]

And sir, my second question is, how do you see competition from, for example, Ethnics in the pockets where the stores would have opened up?

[Vedant Modi, executive]

Sure. So I won't be able to comment on a single organized retailer. However, in totality with all the organized retail competition that is opening up across the country, what we've also kind of spoken in our last call is that everywhere we have seen organized retail open up next to our stores, the performance of that store is actually better than the state average when it comes to SSSG. So this is a phenomena we are witnessing across the board and in most of the stores.

So that is really fantastic to see that the overall market is growing, and it is most likely a faster shift from unorganized to organized, which is what we understand currently. And in addition to that, as we've mentioned that the mode that entailed our industry are very large. Given the fragmented supply chain, the very difficult understanding of consumer preferences as it varies every 50 kilometers. And then the kind of brand mode we have created with Manyavar. So many recent study that we conducted with one of the best market research survey revealed that Manyavar [ NXTG ] has a 98% awareness while we have a 95% to 96% consideration.

So now again, from a brand perspective, these are unheard of numbers in the fashion retail space. So we are very confident about our brand and the kind of modes we'll have. And as the internal number suggests, business is strong and we are continuously expanding.

[Operator]

We'll move to the next question from the line of Aliasgar Shakir from Motilal Oswal.

[Aliasgar Shakir, analyst]

Yes. I had a question on the performance of Mohey and Twamev. So we have done the levy -- heavy lifting over there, and we've been seeing that confidence in the Q4 key measurables that we have been tracking has also been doing well. I think we also now opened the independent stores over there. So I just want to get a sense of what is the feedback on the ground. What is the situation? And those key measures that we've been tracking in the flagship stores, how have they been doing in the independent stores? Do you see the confidence here to now scale this up very quickly in a good period of time, maybe 30, 40 stores in a couple of years?

[Vedant Modi, executive]

Thank you for the question. So the independent stores for Twamev are planned to start going live by end of this week. So first flagship in Bangalore has its soft launch on Friday, with Delhi and Hyderabad being followed very closely and also Pune. So Twamev is set for 4 flagship stores in the coming quarter or so. When it comes to Mohey, again, flagship stores are in the pipeline and they will start to open extremely soon. So I can't comment on how the performance has been on those independent stores yet because we are going to go live with them extremely soon.

However, when it comes to the performance of Mohey and Twamev within the flagship outlets, we've seen tremendous growth and both the SSSG growths has been faster than the company average in the financial year. And all the frontline data that we're getting, which is feedback on product, be it conversion rate, inventory terms that we're able to achieve in both of these brands, this continuously improves over the years. So we are very confident regarding the independent store concept as well. However, there will be new interesting things that we understand in terms of how do we market the brand separately so we'll be able to bring in footfalls to the exclusive stores, which would be an interesting space to kind of see over the next few quarters.

[Aliasgar Shakir, analyst]

Okay. So scalability from here will be dependent on how these stores perform or, I mean, we have a pipeline to already at 30,40 stores cumulatively on these brands?

[Vedant Modi, executive]

So take, for example, we are expecting about 8 to 10 stores in Twamev and 10 to 15 stores in Mohey as the pilot. And based on the results we gained from these pilots is when we take the decision on scalability of the model. However, we are very confident, and what we've done with our business development strategy is divided the stores into different pockets of regions and at the same time, also, dividing them into multiple business development strategies.

For example, trying out of high street where consumers walk versus trying out to high street where consumer enter with a car versus a mall store that is extremely famous in the city. So we're trying out every single permutation and combination to understand the model as well as we can in the first few quarters itself.

[Aliasgar Shakir, analyst]

Right. And these will be in '24, right, FY '24, these store additions?

[Vedant Modi, executive]

Correct.

[Aliasgar Shakir, analyst]

Second question is on the digital transformation we spoke during last quarter, which was likely to see a launch of Phase 1 in this quarter. So can you share any details about it? What are the areas we should see benefit? Has the launch happened and things about there?

[Vedant Modi, executive]

Absolutely. Thank you for that question. And the Phase 1 launch has already happened. So if any one of you are interested, you can just go to manyavar.com and see the Phase 1 come to life. And we have seen tremendous numbers on the back end. However, I don't want to comment too much on it currently because it's only 2 to 3 weeks of data, where we've seen a significant rise in conversion rate, significant rise in average time spent on our website. So we are seeing the experience having grown phenomenally.

What we are really interested in is the Phase 2 which kicks in 2 to 3 months from now, when we will start to connect the digital and the physical world. What that will kind of entail at that time is, let's say, what we witnessed is a lot of grooms surf the website before they end up in the store. So what we're trying to do is create a profile of that groom, which is what kind of sherwanis are they interested in, for example. Do they like brocade or which color do they like? And then we'll pass on this information to the store when the person ends up booking an appointment. So all of this is going to start come to life on our new platform in the coming 2 to 3 months.

[Aliasgar Shakir, analyst]

And the Phase 1, you mentioned, will be on manyavar.com where you can, as a customer, build your profile and things like that.

[Vedant Modi, executive]

Absolutely. So Phase 1 is just a starting point where the new skin is live, a very fast website using all the global practices. So the page fees, website, et cetera, which is Google -- which Google offers you, we've seen tremendous [indiscernible] there. And our SKU is also improving after the launch of our first phase.

[Operator]

We have a next question from the line of Sameer Gupta from India Infoline.

[Sameer Gupta, analyst]

First question is that if I look at the secondary sales growth performance on a second half basis, which is clubbing the previous quarter and this one, I see a Y-o-Y growth of only 7%. And this is over a retail area addition of 16%. So growth has been kind of weak if you include both 3Q and 4Q, which takes in a whole wedding calendar. So how are you so confident of still achieving a high single-digit SSSG growth going forward? And what is going to drive this improvement in the near term?

[Vedant Modi, executive]

We've discussed this before. Overall, what we have witnessed is that last year, Q1 was heavily impacted. That's why weddings moved from Q1 to across the year, which spilled over the dates throughout the financial year 2022. However, because financial year '23 did not have much of a COVID impact and, typically, the entire year was clean. That's why weddings were happening normal in Q1, Q2 and Q3, Q4 also normalized. Particularly, what we see in a given financial year is we do 36%, 37% of our business in H1, while the remaining happens in H2. However, this year, that figure moved to 42% and 58%. So what we are expecting is those numbers will normalize and it goes a 1-year thing to happen this year.

[Sameer Gupta, analyst]

Second question is on the EBITDA margin. If I look at full year EBITDA margin, it is at 49.5% on a post-Ind basis. This would be around 41% on a pre-Ind basis, historically, the highest. Are you comfortable with those high margins, first of all? Second is that going ahead with Mohey and Twamev plus pricing competition, how do you look at these margins? I mean, is it safe to build some contraction at this point on such a high base?

[Vedant Modi, executive]

So again, commenting on the PAT margins, while we've delivered more than 31%, we are comfortable in seeing with 30% in the short term as we move forward. Even with our newer brand, we've been building efficiency with the game so that the margins are able to match up for the company's average margin when it comes to gross margin. So that as these brands scale up, they are not eating away from our company's margins. On the other hand, when it comes to Manyavar, we have a very strong cost efficiency built in that brand. So we are able to produce anything almost 25% to 50% cheaper when it comes to other organized players in the market. Now that gives us the bleeding room in terms of having very tight prices yet being able to have the kind of margins that we offer.

[Rahul Murarka, executive]

And just to add upon, Vedant is giving reference of PAT because post Ind-AS is 116, your PAT has become more relevant than EBITDA. I mean, your question was on EBITDA. So that's why I was just clarifying. But when, internally also, we review, we feel that a little more relevant to compare on PAT-level rather than EBITDA after the introduction of Ind AS.

[Operator]

We have a next question from the line of Priyanka Trivedi from Antique Stockbroking.

[Priyanka Trivedi, analyst]

So my first question is if you could give us a sense on how your international stores have been performing. And what is the contribution to your revenue from these stores?

[Vedant Modi, executive]

So while the contribution to our revenue would be very low, it would be in the 1% to 2% range, what we've witnessed over the last couple of years is very good traction when it comes to our international stores. We've grown at a 26% CAGR from pre-COVID levels. And the growth was extremely good during the COVID years. However, as we moved out of COVID, what we've seen is the international buyers coming back to India as NRIs and shopping here. So that growth has slightly plateaued, but still, the kind of CAGR that we witnessed, we are very confident in expanding to much newer countries and to much newer cities that we haven't explored in the international cities yet. So the path from here when it comes to countries we've already entered in, such as the U.S. and the U.K., look very good to us.

[Priyanka Trivedi, analyst]

And sir, my second question would be, what would be the contribution of groom versus non-groom sales during the quarter?

[Vedant Modi, executive]

So again, during the quarter, there's something which we don't give out as a number, which is groom versus non-groom. But on a typical yearly basis, about 45% to 50% of our business comes from grooms or brides.

[Operator]

We have a next question from the line of Prerna Jhunjhunwala from Elara Capital.

[Prerna Jhunjhunwala, analyst]

I would like to understand the channel mix as well. How do we see the contribution from the other channels like MBO and LFS and online channel as you're investing to digital platform? So how is that share moving?

[Vedant Modi, executive]

So just breaking it down into 2 components, which is MBO and LFS, one, and e-comm, the other one. So as a company, the dominant channel for us is EBOs. And strategically, EBOs, are a much more important channel compared to MBOs and LFS because we're able to give consumers the kind of experience the brand wants to give to them. And the kind of sizing of the stores that they're opening now is to be able to cater to their needs with a much higher average bill value that we see from every other format.

On the other hand, when we talk about online, online is a very strong channel for us when it comes to non-wedding players, such as festive buying for Diwali or even wedding attendees buying online. So that channel is continuously growing from a business perspective. However, as we were discussing earlier with the new digital experience going in, we see omni-channel and digital experiences will become a very big component as we move forward into the future. So that is why manyavar.com would really hop on to all of those sort of nuances. And we've seen a 40% sort of a CAGR in our online channel over the last 3 years, which is compared to takeover channels. That has been good. And with large-format stores and MBOs, while we continue to expand, yet it's relatively slow when it comes to the commitment we have towards EBOs.

[Prerna Jhunjhunwala, analyst]

Okay. And secondly, as we are doing our -- we are opening larger and large format sizes, do we see same-store sales growth for the company increasing much higher than today, at least in the near term?

[Vedant Modi, executive]

No, I mean the size of the store does not play any role there. As we've mentioned, a high single digit, good single digit, kind of a SSSG is what we endeavor to achieve, and that is what our targets are. With higher stores, what we're able to do is increase our average bill value and provide a much better experience to our consumers. And typically, we only open larger stores in areas where we see their potential to already exist.

[Prerna Jhunjhunwala, analyst]

So this quarter, this year, when we've opened very large stores is -- higher than our average size is a coincidence. Maybe it will normalize in next few years. Is that how we…

[Vedant Modi, executive]

So strategically, we're opening larger stores, and that will be the strategy moving forward. So while this quarter may have been slightly abnormal in terms of the average, however, the typical average we've had of about 2,400, 2,500 square feet is also going to increase from here on.

[Operator]

We have a next question from the line of Archana Menon from Morgan Stanley.

[Archana Menon, analyst]

My first question was to Vedant. You mentioned market share gains in your opening remarks. So could you share some numbers around that? Where is the market share currently? And where was it, say, last year?

[Vedant Modi, executive]

Yes. So in terms of market share, we don't have exact numbers, right, in terms of what kind of market share that we have. What I was kind of referring to is that with our expanding reach of stores and square footage, that is what we endeavor to do. So while there is no exact market research report that will done over this year, I won't be able to comment on that. But if I refer back to financial year '20 numbers, then at the men industry, men ethnic wear industry scale and size, we were doing about 8% to 10% business. While talking about organized, we were at about 30% at 40%.

[Archana Menon, analyst]

And your sense is that would have grown from there?

[Vedant Modi, executive]

Sorry, I couldn't get you.

[Archana Menon, analyst]

Sorry. So that number from 35% would have -- should have increased in the last 2 years.

[Vedant Modi, executive]

That is our endeavor. However, I won't be able to comment on it exactly, as we've not done any research on those lines in the current year. However, from our understanding, we always try to increase our market share. So -- yes.

[Archana Menon, analyst]

My second question was on the wedding season for the upcoming years. Are you seeing or expecting any seasonality there or change versus our normal in the upcoming quarters?

[Vedant Modi, executive]

So again, I think this year that we had just concluded, which is financial year '23, was, again, slightly -- we were coming out of COVID and things were still not normal. And the year was still -- we were trying to understand how, post-COVID, things would impact. However, we see next year is -- now that we're completely out of COVID, would return back to normal terms with about 36%, 37% of our business happening in H1 and the remaining in H2. And while April has slightly low weddings, May and June have very good wedding dates in the coming quarter. And across the year, we are very confident with Q3 having good wedding dates, Q4 having good wedding dates. So it all looks like the historical trends we've been operating, very comfortable current -- new financial year.

[Archana Menon, analyst]

And would you like to share any comments on how Twamev and Mohey will scale up in F '23 in terms of numbers? Is it fair to assume that they could be between 20% to 25% of your revenues now?

[Vedant Modi, executive]

So they are not 20% to 25% of our revenues, because Manyavar has been scaling at a rapid pace by itself as well. When we talk about other brands, when we had done our IPO back in those days, we have given out that at that time, about 50%, 60% of our revenue came from other brands, and Manyavar contributed 24%. And the other brands have been scaling faster, so that number has slightly increased, but that encapsulates Mebaz in it as well.

[Operator]

We have a next question from the line of Ankit Kedia from PhillipCapital.

[Ankit Kedia, analyst]

Sir, do you think -- in the market, we have seen in the percast category, you have taken some price increases. The entry-level product prices have increased. So can you just elaborate on that? Given the push we are seeing in kurtas, why has the entry-level pricing increased in that category?

[Vedant Modi, executive]

So Ankit, if you refer to the entry level pricing at a company level, we have not really increased the entry-level pricing. However, at a store level, because of the way merchandizing mix changes, those entry-level prices could have changed. So let's say a very premium store like Lower Parel, the entry level might have moved from INR 2,000 kurta to a INR 2,800 , INR 2,700 kurta. However, when it comes to the whole fleet, the entry-level price points have remained same.

[Ankit Kedia, analyst]

Sure. And you alluded to the bigger stores. Now, we're opening 20,000 square feet stores, what we have done in Hyderabad, Delhi. So how does the footfall in that store move? And the smaller stores around in the area, how are they impacted? Because the 20,000 square feet stores is really a big flagship store, which will pull the crowd.

[Vedant Modi, executive]

So the typical move that we make is if the productivity of an area is extremely high, we've created a scientific understanding of how big a store we should open in that area. So take, for example, a 20,000 square feet we just opened in Jubilee Hills. And it used to have a smaller store next to it. And that smaller store continued to perform really well. So while it may not be doing those tremendous numbers that is used to before, it still continues to beat the company's average when it comes to productivity. So the store is still self-sufficient in terms of operating itself and continues to be very profitable. And the lower stores, on the other hand, are able to attract newer consumers as well. And the average bill value that they're able to provide is unheard of when it comes to the rest of the fleet.

[Ankit Kedia, analyst]

So is the inventory also very different in the smaller store versus the big stores?

[Vedant Modi, executive]

Yes. I mean there is less inventory. And in some areas where there is a very big store next to smaller store, we also are taking course of changing those stores to the only kurtas and jackets versus having, let's say, everything from a sherwani to a [indiscernible]. And if a consumer walks in, then the staff of that store themselves take them to the newer store, which carries all the inventory.

[Ankit Kedia, analyst]

And my last question is for Rahulji, the other expenses in the quarter have hardly grown, Y-o-Y basis. Can you just share, given that wedding season has also shifted partly from quarter 3 to quarter 4, have we curtailed our A&P spend in quarter 4? And can you share the pre-Ind-AS rent for full year FY '23?

[Rahul Murarka, executive]

So the quarter spend, same for marketing cost, is 3.6% of revenue. And in the previous year also in Q4 FY '22, it was 3.6% of revenue. So from a percentage of revenue prospect, it has not changed. From absolute value terms, it has increased from quarter to quarter.

[Vedant Modi, executive]

And Ankit, I would just like to add on top of that, it's also because marketing calendars in our organization has one at an annual level. So Q3 is when we kind of have all the campaign launches planned for. And we also did big events in quarter 3. For example, we did a sponsor in the world cup as well. And thus, all of those properties carry the higher absolute value. So at a yearly financial level, we closed A&P at about 5%, which is what we had planned for. And yes, so we don't kind of look at marketing at a quarter level but rather at an annual level.

[Operator]

We have a next question from the line of Yajash Mehta from Kotak Mahindra AMC.

[Yajash Mehta, analyst]

My apologies if I have missed this. On a quarter-on-quarter basis, we've seen the revenue go down. As per my understanding, didn't Q4 have a higher number of wedding days? And if that was the case, then why did we see a decline in revenue? And secondly, if you could just give a sense of the cash conversion cycle.

[Vedant Modi, executive]

I'll take the first part. So we had kind of explicitly explained this in our last earnings call as well. That people tend to actually get married in quarter 3, which is the November, December period. However, because the number of wedding days were extremely low, that's why there was a slight bit of spillover from quarter 3 to quarter 4. Weddings dates are not exactly proportional to the number of weddings that will happen in the quarter. It is spillover. So that's why we had also said that the numbers might come closer, but there is no chance that Q4 would actually be higher than Q3. And this is a historical trend in the life cycle of our company, where I don't think there is still a single Q4 that has done better than Q3.

[Rahul Murarka, executive]

Because there are festivals also, like major customers like Diwali. That also happens in Q3 only. So because of the festivals and wedding, Q3 is the heaviest part of [indiscernible].

[Yajash Mehta, analyst]

And my second question, as I mentioned, if you could just give me a sense of the cash conversion cycle.

[Rahul Murarka, executive]

Yes. So cash conversion ratio, the [indiscernible] PAT is we have been able to generate INR 358 crores of operating cash flow during FY' 23. And [indiscernible] PAT has been around 83%. So this is the -- I mean, this is a cash conversion ratio which we have been able to generate in the current year as consumer historically as well.

[Operator]

We have a next question from the line of Aman from Carnelian Capital.

[Aman Agrawal, analyst]

So my question was on the retail space. Like currently, we are going for larger new stores, like around 4,000 square feet. So if you can give a rough idea, like, how much is the mix for Manyavar, Mohey, Twamev, et cetera? Any idea on that?

[Vedant Modi, executive]

So Mohey would typically be, depending on the size of the store, somewhere between 25% to 30%, 35% of a store. Whilst Twamev has not given any specific area and EBO, it's just along with Manyavar products. So Twamev does not require any spacing of its own. So that's the kind of split we have in any flagship store that is larger than 3,000 square feet.

[Aman Agrawal, analyst]

A follow-up question on that, sir, like when we are talking about around 16% kind of retail CAGR --space. So like, does that include this Mohey area also, like the standalone Mohey from stores we are opening? Because if we look from just Manyavar standalone point of view, like, even with the higher number of stores, the actual retail space growth for Manyavar would be lower. Like it will be in low double-digit kind of a number.

[Vedant Modi, executive]

Yes. So again, any retail growth numbers that we've given have always been at the company level. That's the way our format have always been up until now, which is the Manyavar-Mohey flagship concept and the standalone Manyavar concept. However, as we have no format moving forward, we don't expect the 16% CAGR to change too much. The endeavor is always to beat that number. However, given the kind of supply side and demand side that you have to maintain and the kind of cost efficiencies we keep in mind, that's a good target that we've set for us [indiscernible].

[Aman Agrawal, analyst]

Just one more question on demand outlook. Like, are we seeing any slowdown? Because lots of players in the consumer sector are seeing some slowdown in their businesses. So any slowdown we are witnessing in our business?

[Vedant Modi, executive]

It's very difficult for us to comment on any slowdown or anything on those lines. Our business is heavily dependent on wedding dates as one big factor. And typically, what we've seen throughout the years, even in cases of a very large slowdown or a very good consumer behavior, the change is plus/minus 2% at a SSSG level, which is the kind of effect our business may have. But at an overall level, the big dependency that we have is on wedding dates, which seems very good for the overall financial year that is upcoming.

[Rahul Murarka, executive]

As far as weddings are happening, we are a kind of essential category.

[Operator]

Thank you very much. We have a next question from the line of Rajesh Vora from Jainmay Venture Advisors.

[Rajesh Vora, analyst]

One question, Vedant, you touched upon was non-Manyavar brand in the time of IPO was close to 34% of revenues. Twamev was launched 2002, but acquired in 2017. Mebaz, Manthan -- so is there a challenge to create another Manyavar set of brands for you? How do you look at it from 30,000 square feet?

[Vedant Modi, executive]

So again, as a company, we've always been calculative in our steps, and we are focused on achieving efficiency with any of the brands. So we don't want to scale at the count of efficiency. So with all the new brands that we have, be it Mohey, Twamev, or Manthan, we've gotten them to a position, especially Mohey and Twamev at this moment, that they are now ready for the next level of deal. And that is why we've taken the strategic goal of starting to open exclusive brand outlets, which will start to pour in over the next quarter.

We would actually like to study those exclusive brand offers that we open, understand the kind of potential that this model has, kind of fix it if anything requires fixing, and from that point on, move on. And what we've really gained over the years is the synergy from the brand Manyavar. So building Manyavar has allowed us to understand how to manage supply chain in this industry. We've built extremely strong data models that are now being able to use across our brands and, therefore, improve all their efficiencies.

[Operator]

Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to management for closing comments. Over to you, sir.

[Vedant Modi, executive]

Thank you very much to everyone for joining us for the quarter 4 earnings call. It's always a pleasure interacting with all the analysts. It's a very good learning for all of us. Thank you very much. Hope to see you next quarter.

[Operator]

Thank you. On behalf of Nuvama Wealth Management, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.