Electronics Mart India Limited: Navigating Growth and Margins in a Dynamic Market

Electronics Mart India Limited (EMIL) has presented its Q2 and H1 FY26 performance, showcasing a period of strategic expansion alongside market-driven challenges. The company, a prominent electronics retailer, reported a total revenue from operations of INR 1,591 crores for Q2 FY26 and INR 3,330 crores for H1 FY26. While these figures reflect continued top-line growth, profitability metrics such as EBITDA and Profit After Tax (PAT) experienced some pressure, primarily due to rapid store expansion and market dynamics. For Q2 FY26, EBITDA stood at INR 82 crores with a margin of 5.1%, and PAT was INR 16 crores. For H1 FY26, EBITDA was INR 192 crores (5.8% margin) and PAT was INR 38 crores. The management acknowledged that operating margins were impacted as new stores are still in their stabilization phase, leading to higher fixed costs not yet fully absorbed.

The period was marked by volatility, initially due to a GST rates announcement that caused some deferment in purchases. However, demand rebounded swiftly following GST rate reductions on select categories, leading to a strong recovery in sales momentum. This resilience was evident across EMIL's key clusters. Hyderabad, the company's core market, demonstrated robust revenue growth of 15% year-on-year with a healthy 12% same-store sales growth (SSSG). Telangana's country market revenue grew by an impressive 23% with a 16% SSSG, and Andhra Pradesh delivered a strong 29% revenue growth with an 8% SSSG. The North cluster (NCR) also scaled up well, achieving a 38% revenue growth and 11% SSSG, and importantly, remained EBITDA positive with a 1% margin.

Strategic Expansion and Portfolio Realignment

EMIL's aggressive expansion strategy continues, with approximately 75 stores added since H1 FY24. The company's store portfolio now comprises 215 stores, with 84 mature stores (over 4 years old) contributing significantly to sales and profitability. These mature stores delivered INR 2,254 crores in sales during H1 FY26 with a strong EBITDA margin of 6.8%. In contrast, the 131 newer stores (less than 4 years old) contributed INR 933 crores with an EBITDA margin of 3%, reflecting the initial investment phase. The management anticipates that as these newer stores mature, their productivity and margins will align with the benchmarks set by the South cluster.

A notable strategic move during the quarter was the divestment of 4 IQ Apple Stores. This decision was made to realign the company's portfolio towards its core multi-brand retail business, which offers greater scalability and operating leverage. This move underscores EMIL's focus on enhancing capital efficiency and sharpening its execution in key growth areas. The company also successfully recovered the full insurance claim amount of INR 8 crores related to a fire accident in May 2025, mitigating a potential financial loss.

Product Mix and Market Outlook

The product mix for H1 FY26 saw Mobiles contributing 44% of total revenue, Large Appliances 43%, and Small Appliances, IT & Others 13%. The shift towards premium products is a key trend, with customers increasingly opting for large televisions, higher-priced air conditioners, and newer categories like dishwashers. This trend is expected to drive and improve the overall Average Selling Price (ASP). Management is particularly optimistic about the mobile category, anticipating a new wave of demand driven by upcoming technologies, upgrades, and the emergence of AI-enabled devices.

EMIL's management provided forward-looking guidance, acknowledging a revision to their full-year growth target from 15% year-on-year to a low double-digit growth. They expressed confidence in achieving this revised target and expect EBITDA margins to improve in Q3 and stabilize around 6% for the full year, potentially reaching 6.3% to 6.5% if the summer season commences early. The North cluster is specifically targeted to achieve an EBITDA margin of at least 3% for FY26. The company plans a capex of INR 25-30 crores in the next 6 months for 30 stores in the pipeline, with an additional INR 75 crores for 30 more stores in the next financial year.

Sustained Growth and Disciplined Execution

Electronics Mart India Limited continues to demonstrate a clear strategy for sustained growth, focusing on cluster-based expansion, inventory optimization, and differentiated in-store experiences. Despite short-term pressures from rapid expansion and market volatility, the company's strong performance in mature stores and key geographies, coupled with strategic realignments, positions it well for future profitability. The management's disciplined approach to capital allocation and proactive response to market changes reinforce investor confidence in its long-term trajectory in the competitive consumer durables retail sector.