Whalesbook
📉 The Financial Deep Dive
The Numbers:
Aditya Vision Limited posted a strong Q3 FY26 performance with Revenue surging 28% year-on-year to ₹649 crores, up from ₹508 crores in Q3 FY25. Gross Margins saw a slight improvement to 15.8% from 15.6% YoY. EBITDA stood at ₹53 crores, yielding an EBITDA margin of 8.2%. Profit Before Tax (PBT) before exceptional items grew 21% YoY to ₹38 crores, though PBT margins moderated by approximately 33 basis points. Profit After Tax (PAT) reached ₹27 crores, a 13% YoY increase. This growth came after an exceptional expense of ₹1.5 crores for additional provisioning for new labor codes. PAT margins moderated by around 38 basis points compared to the previous year. Crucially, Same-Store Sales Growth (SSSG) recorded an impressive 17% for the quarter.
For the Nine Months FY26 (9M FY26), Revenue grew 15% YoY to ₹2,047 crores. EBITDA reached ₹177 crores with an EBITDA margin of 8.7%. PBT before exceptional items was ₹128 crores (7.3% YoY growth), with PBT margins moderating by 47 basis points due to store addition costs. PAT (excluding exceptional items) grew 8% YoY to ₹96 crores. The 9M SSSG stood at 5% for FY26.
The Quality:
While revenue growth is strong, the moderation in EBITDA and PAT margins warrants attention. The gross margin improvement is positive, but increased operating expenses, marketing efforts, and costs associated with opening new stores led to a compression in overall profitability margins compared to the prior year. Management attributes this to temporary expansion-related costs.
Management Commentary and Strategy:
Management expressed confidence in their business model and expansion plans. They detailed how Q1 FY26 was impacted by adverse weather, and Q2 saw a temporary shift in product mix due to an extended monsoon, affecting margins. Q3 marked a significant step-up. The company added 4 new stores in Q3 FY26, bringing the total to 192, and is on track to exceed 200 stores by FY26. Expansion is planned in Madhya Pradesh and Chhattisgarh. Margin moderation was explained by higher operating expenses, marketing activities in UP, and new store opening costs, which management believes will be offset by operational leverage as stores mature. Inventory levels are controlled, with opportunistic stocking of ACs due to OEM discounts and BEE norm changes. The company projects 20-25% revenue growth for FY27, anticipating a strong Q1 FY27 due to pent-up demand. Funding is deemed sufficient via internal accruals and bank lending.
🚩 Risks & Outlook
Specific Risks:
Key risks include the execution of aggressive store expansion, ensuring profitability and operational efficiency from new outlets, and potential market headwinds affecting consumer spending. The ability to manage operating expenses effectively as the store base grows will be critical for margin recovery.
The Forward View:
Investors should monitor Same-Store Sales Growth (SSSG) for established stores and track the operating leverage benefits as newer stores mature. The planned geographic expansion into MP and Chhattisgarh will be a key growth driver to watch. Continued revenue growth trajectory and margin improvement will be critical indicators in the upcoming quarters.