Vaibhav Global Limited (VGL) has submitted the transcript of its Q4 & FY25 Earnings Conference Call, held on Thursday, 22nd May, 2025. The call featured management including Mr. Sunil Agrawal (Managing Director) and Mr. Nitin Panwad (Group Chief Financial Officer).

Key Financial Highlights for Q4 & FY25:

• Revenue for Q4 FY25 grew 7.7% year-over-year to ₹850 crores. For the full year FY25, revenue reached ₹3,380 crores, an 11.1% increase from ₹3,041 crores in the previous year.
• Gross margin for Q4 was 62.1%, with a cumulative margin of 63.1% for the full year, remaining within the target range of +62%.
• EBITDA margin stood at 8.3% for Q4 and 9.4% for the full year (down from 9.7% in FY24).
• Profit after tax for Q4 was ₹34 crores, an impressive 62% year-over-year growth. Annually, PAT reached ₹153 crores, marking a solid 21% year-over-year growth.
• Digital business now contributes 41% to overall sales, registering a five-year CAGR of 15%. VGL aims to achieve 50% sales mix from digital businesses by FY27.
• Lifestyle products comprise 33% of total sales, with a medium-term target of 50%.
• The 'Budget Pay' EMI option contributed 39% to retail revenue in FY25, with bad debts maintained at 1% to 1.5% of budget pay sales.
• The company generated healthy cash flows, with free cash flow at ₹127 crores and operating cash flow at ₹162 crores. Net cash position remains robust at ₹170 crores.

Market Performance:

• In local currency terms, Q4 growth was 1% in the US, 2% in the UK, and 18.7% in Germany.
• The US market showed resilience with modest growth, reflecting market share gain amidst a challenging environment.
• The UK retail industry faced challenges, though Ideal World continued strong growth, offsetting softness in TJC.
• Germany significantly outpaced the market, achieving EBITDA breakeven in Q4, with confidence for better profitability in FY26 (slight profitability) and EBIT positive in FY27.
• Mindful Souls delivered a 7% PBT margin in Q4, maintaining steady performance.
• Excluding acquisitions (Mindful Souls and Ideal World), VGL's growth was approximately 4.5% in rupee terms.

Management Commentary and Outlook:

• Mr. Sunil Agrawal noted that while US consumer sentiment remains challenging due to economic uncertainty and tariffs, VGL is faring better than peers, with mid-single digit growth in the US for the first one and a half months of the current quarter. He highlighted the benefit of VGL's vertically integrated model and global sourcing base.
• He also mentioned the signing of the India-UK Free Trade Agreement and encouraging US-China tariff discussions as positive macro developments.
• For FY26, VGL expects revenue growth of 8% to 12% with operating leverage. For subsequent periods, mid-teens revenue growth with operating leverage is projected.
• Gross margin guidance for FY26 is between 62% to 63%. Operating leverage is anticipated from HR (talent diversity, AI automation) and SG&A (shipping cost consolidation, automation).
• Mr. Nitin Panwad confirmed that VGL strategically shipped additional inventory to the US ahead of anticipated tariff disruptions, providing a distinct advantage.
• VGL is exploring a tie-up with Indian Post for single packing services from its SEZ unit, expected to start in June, which could reduce freight costs and leverage 'De Minimis' benefits for duty-free goods to US customers.

Other Highlights:

• Unique customer base reached a record 710,000, up 21% Y-o-Y (7% Y-o-Y excluding acquisitions). New customer acquisition stood at 410,000 in Q4, with a retention rate of 44%.
• VGL was assigned a 'Strong' ESG rating of 72 by ICRA ESG Rating Limited.
• The company served its 100 millionth meal through its 'Your Purchase Feeds…' mid-day meal program.
• VGL generated 1.1 million kilowatt-hour of solar energy in Q4, meeting 100% of its manufacturing units' power needs, progressing towards carbon neutrality by 2031.
• The Board recommended a final dividend of ₹1.5 per equity share, bringing the total dividend payout for FY25 to 65% of earnings.