Global Economic Scenario
In 2023, the global economy exhibited resilience, bouncing back from the impacts of the COVID-19 pandemic despite geopolitical tensions such as the Russia-Ukraine conflict and cost-of-living challenges. Inflation, which peaked in 2022, is now receding faster than expected, having a milder impact on employment and economic activity due to supply-side improvements and the central banks proactive measures. Additionally, global inflationary pressures are easing due to resolved supply constraints and tighter monetary policies, with projections showing a decrease from 6.8% in 2023 to 5.8% in 2024 and further to 4.4% in 2025. Moreover, labour markets have softened, characterised by reduced job vacancies and a slight uptick in unemployment. Furthermore, wage growth remains contained, showing no signs of spiralling.
In the latter part of 2023, economic growth surpassed expectations in the United States and major emerging
(Source: International Monetary Fund, OECD)
Way Forward
The global economic outlook remains optimistic, with inflation receding faster than expected and economic growth showing resilience despite geopolitical tensions and cost-of-living challenges. Labour markets have witnessed improvement, while wage growth has remained contained. Economic growth surpassed expectations in 2023, driven by both government and private expenditures. Projections suggest that global growth will stabilise in 2024, underpinned by strong performances in the U.S. and certain emerging markets. To enhance productivity and maintain debt sustainability, targeted structural reforms are necessary. Furthermore, multi- lateral coordination is crucial for resolving debt issues and mitigating climate change impacts. markets. This growth was fuelled by increased government and private spending, real income gains, and reduced disruptions from the COVID-19 pandemic.
To counter inflation, major central banks raised interest rates, while households continued to contribute to economic activity by using savings accumulated during the Covid-19 pandemic. Global growth stabilised at 3.1% in 2024 and is projected to increase slightly to 3.2% in 2025. This growth is supported by strong performances in the U.S. and emerging markets, along with fiscal stimulus in China. Despite disinflation and steady growth, the risk of a severe downturn has lessened with balanced global growth risks. Additionally, targeted structural reforms are crucial for improving productivity and ensuring debt sustainability. Furthermore, multi-lateral coordination is required to resolve debt issues and address the impacts of climate change.
Indian Economic Scenario
The Indian economy displayed remarkable resilience, with the IMF projecting a GDP expansion of 6.7% for 2023-24. This growth is driven by strong manufacturing momentum, urban spending surpassing rural demand, and increased investments. The RBI has revised its GDP growth forecast for 2023-24 from 6.5% to 7%, while the Finance Ministry anticipates a growth rate exceeding 6.5%. Infrastructure development, including the construction of new roads, highways, and rail tracks, plays a critical role in this growth trajectory. The governments focus on revitalising growth includes reinvigorating the financial sector, streamlining business conditions, and enhancing physical and digital infrastructure to boost connectivity and competitiveness in the manufacturing sector. Moreover, the nations industrial manufacturing sector has received a significant boost, attracting interest from global technology giants seeking to expand their supplier networks.
Despite geopolitical factors, India continues to attract global investors owing to its robust macroeconomic fundamentals, which include low unemployment, a balanced supply and demand scenario, favourable growth and inflation rates, and supportive monetary and fiscal policies. According to estimates by the Centre for Monitoring the Indian Economy (CMIE), inflation is anticipated to decline to 4.3% in 2024-25 from 5.4% in 2023-24. The Indian economy is expected to sustain its growth momentum, driven by private consumption, private investment, and government policies aimed at improving infrastructure and the business ecosystem.
Outlook
Indias economic outlook for 2024 appears promising, due to initiatives aimed at enhancing infrastructure and business conditions. Major institutions like Moodys are revising their growth forecasts upward, estimating it to be between 6.4% to 7.2%. This optimism is fuelled by a strong performance in 2023 and a robust domestic market. Additionally, key drivers include government spending and a revitalised manufacturing sector. Investments in connectivity and favourable monetary policies are expected to attract more investors, further boosting economic expansion. Despite challenges like inflation and geopolitical factors, the countrys strong fundamentals, including a robust private sector, are likely to support growth. Overall, the Indian economy demonstrates potential for continued upward momentum. (Source: RBI, Press Information Bureau, Department of Economic Affairs)
Indian Consumer Durable Industry Scenario
India is poised to become the fifth- largest consumer durables market globally, solidifying its position as one of the fastest-growing electronics markets worldwide.
In 2023-24, the Indian consumer durables industry maintained its growth trajectory, fuelled by technological innovations, evolving consumer preferences, and increased awareness of durable, energy efficient appliances.
The rise in demand for premium products, coupled with an improving economy and positive consumer sentiments, has propelled the consumer durables industry forward in 2022-23.
With expectations of sustained growth, the industry anticipates a 7-9% growth in 2023-24. Brands are gearing up for growth across various markets, with premium, value-added, feature-rich products expected to remain key drivers.
In 2023-24, premiumisation emerged as the reigning trend, with consumers willing to invest in innovative features and high aesthetics. The growing affluence in India has significantly influenced consumer preferences, especially in the home appliance sector. With higher disposable incomes, evolving lifestyles, and exposure to global products, there is a clear shift towards premium appliances.
Over the past few years, the domestic consumer electronics, and durables market has witnessed remarkable growth.
In 2021-22, the Indian appliances and consumer electronics industry reached a valuation of US$ 9.84 Billion, with projections indicating a doubling in size to US$ 21.18 Billion by 2024-25. Indian consumer electronics manufacturers have expanded their export horizons, venturing into developed markets like the U.S. and Europe, which were previously limited to neighbouring countries, the Middle East, or African nations.
Next-Generation Smart Homes
Consumer durables brands are focussing their energy and investments on connected appliances to meet the growing demand for tech-enabled products. The Covid-19 pandemic has shifted consumer behaviour, prioritising health and tech-enabled features. Currently, smart appliances have a penetration rate of around 5% in India, driven by over 500 Million smartphone users, mobile connectivity, and easy-to-install applications.
The growth of this segment is significant, with higher revenue generated by smart appliances due to their relatively high prices, attributed to technological advancements and value addition. Younger consumer groups, particularly those interested in smart speakers and smart lighting systems, are driving the growth of the smart home market in India. Government incentives and subsidies for energy efficient appliances further support the growth of the smart appliance market. Additionally, products like water heaters, light bulbs, chimneys, and water purifiers, among others, can be operated via smartphones or voice command features. Various players are integrating smart devices from different brands to offer comprehensive solutions. Overall, the smart appliance market in India is expected to expand rapidly, driven by technological advancements, changing consumer preferences, and government support.
Consumer Durable Sector Growth Segmentation
3-Year CAGR (2019-20 to 2022-23)
Sectorial Demand Catalysts
Growing Disposable Income
Indias per capita disposal income is expected to reach 2.14 Lacs in 2023-24, up from the earlier estimate of 2.12 Lacs. The rise in the middle-class and increased disposable incomes has led to a growing demand for smartphones, laptops, and home appliances.
Increased Internet Usage
Indias internet penetration rate was 52.4% of the total population at the beginning of 2023-24, with the number of internet users expected to rise steadily by 4.28% between 2023-24 and 2028-29. This increase in internet usage is anticipated to fuel the growth of the consumer durables industry.
Government Policies
The Indian government has implemented several policies to strengthen electronics manufacturing and attract foreign investment to the sector. This strategic initiative has led to a notable uptick in demand for electronic goods within the country.
Technological Upgradations
The rapid evolution of technology has spurred the introduction of cutting-edge electronic products, including smart home devices, wearables, and virtual reality headsets. These innovative offerings have significantly contributed to the expansion of the electronics retail industry.
Rapid Urbanisation
According to the United Nations, Indias urban population is expected to surpass its rural counterparts by the year 2050.
In between 2021-22 and 2046-47, the nations urban population is anticipated to increase by 328 Million, exceeding the total population of the United States. Moreover, this rapid urbanisation trend is projected to drive sectorial growth.
Competitive Pricing
As the middle class expands and disposable incomes rise, consumers are increasingly inclined to invest in electronic goods, ranging from smartphones and laptops to home appliances.
E-commerce Growth
E-commerce is expected to register a remarkable CAGR of 27%, reaching US$ 163 Billion by 2025-26. This growth rate is almost three times that of the overall retail market and is anticipated to translate into the growth of the consumer durables industry.
Low Penetration
The consumer durables market in India is underpenetrated compared to that of other countries and offers headroom for growth.
Increased Working Population
The share of Indias working-age population in the total population is expected to reach its highest level at 68.9% by 2029-30. The increased working population is anticipated to drive the growth of the sector.
Company Overview
Electronics Mart India Limited (referred to as EMIL, our Company or We) is a prominent retailer specialising in a wide range of multi-brand consumer durables, electronics, and electrical appliances. As the fourth-largest retailer of consumer durables and electronics in India, our Company has a rich history dating back to 1980, when it started as a sole proprietorship named M/s Bajaj Electronics in Hyderabad. Over the years, we have evolved, undergoing a significant transformation in 2010-11, when we transitioned into a partnership firm, while retaining our original name. Furthermore, in 2018, Bajaj Electronics transformed into a public limited company, adopting the name Electronics Mart India Limited.
We forayed into consumer durables and electronics retail with our inaugural store in Hyderabad.
By 2020-21, we had established ourselves as the top revenue earner in South India, particularly in Telangana and Andhra Pradesh. Moreover, as of 31st March 2024, we operate 160 retail stores across various regions, encompassing 24 cities in Andhra Pradesh, 31 cities in Telangana, 1 city in Kerala and 5 cities within the Delhi-NCR region.
We have consistently expanded our retail footprint, with the retail business area growing from 1.23 Million square feet in 2022-23 to 1.48 Million square feet by 31st March 2024. Operating through three primary channels-retail, wholesale, and e-commerce- we derive 98.74% of our revenues from retail, while wholesale and e-commerce contribute approximately 1.26% to the total revenue from sale of products.
With a mission to make technology accessible to every household in the nation, we take pride in offering a myriad of durable products at competitive prices. Our Companys extensive product portfolio comprises over 8,000 Stock-Keeping Units (SKUs) sourced from a wide array of renowned consumer durable and electronic brands.
These products include mobile devices, laptops, home and kitchen appliances, home entertainment systems, cameras, and personal care items. Additionally, as of 31st March 2024 we have a retail presence in 61 cities or urban agglomerates, operating 160 stores with a collective retail space spanning 1.48 Million square feet. Furthermore, among these stores, 147 are Multi- Brand Outlets (MBOs), while the remaining 13 are Exclusive Brand Outlets (EBOs).
Major Strategies
Widening the Horizon
At EMIL, our expansion strategy focuses on fortifying our store network in established clusters and strategically penetrating new markets to fuel long-term growth. In the next two years, our Company aims to open 45 new stores, with a keen emphasis on Tier-I and Tier-II cities. Among these, 20 outlets will be strategically positioned in the Delhi- NCR region, while 25 will be strategically located in the southern region, specifically 15 in Andhra Pradesh and 10 in Telangana. Additionally, by adopting this approach, we aim to solidify our foothold in pivotal regions and capitalise on both existing and emerging growth prospects.
Increasing the Purchasing Ability of Customers
Our Company acknowledges the advantages of consumer financing, as it enables an increase in the average selling price without affecting sales volumes negatively. To streamline the financing procedure, we invest in integrating our systems with financing entities, thus reducing payment processing time. We offer consumer financing alternatives through credit and debit card EMIs, as well as through specific fintech firms. By providing these options, our Company aims to enhance the accessibility and affordability of our products for a wider customer base.
Optimising Costs through Technological Investments
EMIL prioritises maintaining peak operational efficiency, evident in our focus on various aspects like planning, sourcing, vendor management, logistics, quality control, pilferage control, replacement, and replenishment. Additionally, we aim to elevate our operational efficiency and enhance our supply chain management capabilities. To achieve this, EMIL plans significant investments in upgrading and acquiring technological systems to boost productivity. Moreover, our Company intends to expand and modernise our warehouses to improve inventory and supply chain management efficiency. These initiatives are designed to streamline operations, optimise costs, and ensure timely delivery of products to customers.
Providing Diversified Products to Enhance Sales
At EMIL, we are committed to enriching the shopping experience for our customers by expanding the product portfolio, with the goal of becoming a comprehensive one-stop destination for consumer durables. By diversifying our range of offerings, we aim to provide customers with a broader selection of choices. Leveraging our Companys longstanding partnerships with reputable brands, we plan to introduce new products launched by these brands, further enhancing EMILs offerings and meeting evolving customer needs.
Fostering Development within the Workforce
To enhance workforce capabilities, EMIL has incorporated comprehensive training programmes aimed at meeting evolving customer needs and delivering exceptional customer support. Employees are encouraged to take initiative and advance within the organisation, supported by a culture that values talent discovery and growth opportunities. Our Company is dedicated to strategic recruitment and retention practices, ensuring a skilled and motivated team. Moreover, effective attrition management strategies are also in place to maintain a stable and productive workforce.
Opportunities Expanding the Footprint
At EMIL, our strategic vision revolves around adopting a peripheral and concentric expansion strategy, targeting adjacent states to unlock fresh opportunities. By proliferating our Companys presence in current cities through the establishment of additional stores, we aim to access new catchment areas within these urban centres and optimise our infrastructure. Aligning with EMILs customer-centric ethos, we remain committed to modernising our stores. Furthermore, at EMIL, we seek to enhance our infrastructure to offer a comprehensive display of products encompassing a diverse range of brands and price points.
Sponsored Events and Sales Promotion
EMIL offers promotional avenues to enhance brand visibility and garner media attention with a reasonable investment. This helps our Company effectively engage with our target audience. As a key component of our marketing approach, we host an exclusive contest named Indias Biggest Festive Offer during festive occasions like Dussehra or Diwali.
This contest offers customers the thrilling chance to win significant cash prizes, with rewards extending up to 10 Million, along with the opportunity to win small passenger cars.
Threats
Technological Advancements
In the dynamic electronics industry, EMIL needs to remain agile and adapt to the latest technologies and trends to stay relevant. Lagging could mean losing market share to more innovative competitors. Therefore, it is crucial for our Company to embrace new products and foster continuous innovation to remain competitive and propel our growth trajectory.
Competition
In recent years, the Indian electronics retail sector has become increasingly competitive. This heightened competition is anticipated to shrink the catchment area of EMILs stores. Furthermore, customers now have a wider range of choices, strengthening their bargaining power. As a result, store operators are employing aggressive discounting strategies, which could potentially reduce gross margins.
Financial Performance
EMIL had a robust performance this year, achieving a 15.42% year-on-year growth in revenue to reach Rs 62,854.06 Million, compared to Rs 54,457.10 Million in 2022-23. Both EBITDA and PAT showed substantial improvement, rising by 33.75% to Rs 4,495.15 Million and 49.81% to Rs 1,839.83 Million, respectively, compared to EBITDA of Rs 3,360.83 Million and PAT of Rs 1,228.13 Million in 2022-23. Additionally, the margins improved, with the EBITDA margin reaching 7.15% and the PAT margin standing at 2.93%, both higher than in the previous year.
Profit and Loss Statement (in Rs Million)
Particulars | 2023-24 | 2022-23 |
Revenue from Operations | 62,854.06 | 54,457.10 |
Growth (%) | 15.42 | 25.21 |
Cost of Goods Sold | 53,706.70 | 47,050.24 |
Gross Margins (%) | 14.55 | 13.60 |
Employee Expenses | 1,114.82 | 940.45 |
% to Revenue from Operations | 1.77 | 1.73 |
Total Operating Expenditure | 58,358.91 | 51,096.27 |
EBITDA | 4,495.15 | 3,360.83 |
EBITDA Margin (%) | 7.15 | 6.17 |
Finance Cost | 1,076.73 | 985.41 |
Depreciation | 1,056.86 | 853.79 |
Other Income | 100.44 | 110.42 |
PBT | 2,462.00 | 1,632.05 |
Total Tax | 622.17 | 403.92 |
Profit After Tax | 1,839.83 | 1,228.13 |
Key Ratios
Particulars | 2023-24 | 2022-23 | % Change |
Per Share Data (?) | |||
Basic EPS Face Value Cash Per Share* | 4.78 | 3.63 | 31.68 |
10 | 10 | - | |
2.17 | 5.22 | (58.43) | |
Profitability Ratios (%) | |||
EBITDA Margins | 7.15 | 6.17 | 15.88 |
PBT Margins | 3.92 | 3.00 | 30.67 |
PAT Margins | 2.93 | 2.26 | 30.22 |
Turnover (Days) | |||
Inventory Days | 66 | 60 | 10 |
Debtor Days | 11 | 9 | 22.22 |
Creditor Days | 2 | 2 | - |
Return Ratios (%) | |||
ROE | 14.41 | 13.79 | 4.46 |
ROCE | 17.61 | 14.86 | 18.55 |
Valuation Ratios (X) | |||
P/E | 40.07 | 18.25 | 119.56 |
EV/EBITDA | 17.79 | 9.17 | 94.00 |
EV/Revenue from Operations | 1.27 | 0.57 | 122.81 |
Market Cap/Revenues | 1.17 | 0.47 | 148.94 |
Price to Book Value | 19.16 | 6.63 | 188.99 |
Solvency Ratios | |||
Debt/Equity | 0.52 | 0.61 | (15.23) |
Debt/EBITDA | 1.59 | 2.16 | (36.44) |
Current Ratio | 1.97 | 1.90 | 3.83 |
Quick Ratio | 0.73 | 0.86 | (14.44) |
*Reduction in cash per share is due to utilization of IPO proceeds during the FY 23-24
Human Resources
EMILs talent planning and management approach is meticulously designed to align with both short-term objectives and long-term aspirations. Our Company strategically decides whether to foster talent internally or acquire it externally for critical leadership positions, ensuring a robust talent pipeline. Strategic roles are carefully matched with key talents, facilitating internal mobility and development plans.
To comprehensively address organisational training needs, we conduct a spectrum of programmes covering technical, functional, and cultural aspects. This proactive approach not only enhances skill enhancement but also nurtures a cohesive organisational culture. In fostering a proficient frontline workforce, EMILs HR department diligently scouts for fresh talent across various channels.
Additionally, our Company is committed to nurturing a dynamic and motivated workforce through our human resource policies, placing paramount importance on identifying and nurturing talent internally.
Employee performance undergoes diligent evaluation, with in-house promotions serving as tangible rewards for exceptional dedication and contributions. EMIL prioritises internal talent growth over external hires, fostering a culture of recognition and advancement within the organisation. Besides regular salaries, our Company offers performance-based incentives to showroom employees and senior executives, further incentivising excellence and driving engagement. As of 31st March 2024, our workforce stood at 2,629 employees (excluding 3 Executive Directors), embodying our commitment to nurturing and retaining top talent.
Risk Management
EMIL has established a comprehensive risk management policy with multiple core objectives. The primary goal is to proactively identify, assess, quantify, minimise, manage and mitigate all existing and potential material risk exposures. This is crucial for safeguarding our Companys brand value through strategic control and operational policies. Additionally, EMIL is committed to adhering to
relevant regulations by embracing best-in-class practices.
To effectively fulfil these objectives, the policy outlines a structured and disciplined approach to risk management. This methodical approach helps navigate and resolve various challenges related to risk with precision and accuracy.
Environmental The Company has started accessing the Environmental Risk which may impact the business operations of the Risk Company.
Internal Control Systems
At EMIL, we have implemented a comprehensive Internal Financial Control (IFC) framework as per Section 134(5) of the Companies Act, 2013. This framework is tailored to suit the nature and complexity of our business operations, meticulously documented to cover all financial and operating functions. Aligned with the Companies Act, 2013, and the Guidance Note issued by The Institute of Chartered Accountants of India, its primary objective is to ensure the accurate maintenance of accounting records, reliable financial reporting, and compliance with relevant laws and regulations.
Our Company upholds a robust system for internal audit, risk assessment, and mitigation. Led by an independent firm of Chartered Accountants, boasting over three decades of experience, the Internal Audit function operates independently and reports to the Audit Committee. This setup ensures an external perspective, industry best practices, and benchmarks are considered.
The Internal Audit function devises an annual internal plan, approved by the Boards Audit Committee, that addresses key process risks, adherence to operating guidelines, and statutory compliance. Additionally, it offers recommendations for monitoring and enhancing operational efficiency. Significant internal audit findings and agreed-upon action plans are periodically presented to the Audit Committee for review.
The Committee monitors the advancement of action plan implementation, ensuring the adequacy and reliability of financial reporting, internal control, and risk management frameworks. The operating effectiveness of internal controls is routinely tested as part of the Managements control testing programme. After thorough testing and assessment of outcomes, the Board, with the agreement of the Audit Committee, determined that EMILs Internal Financial Controls were adequate and functioned effectively as of 31st March 2024.
Cautionary Statement
This report contains statements that may include forward-looking remarks within the meaning of applicable Securities Laws and Regulations. It is important to note that numerous factors could cause the actual results, performances, or achievements of our Company to be materially different from any future results, performances, or achievements. Significant factors that could impact our Companys operations include changes in domestic and international economic conditions, alterations in Government regulations, changes to the tax regime, and modifications to other statutes.
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