Stanley Lifestyles Ltd
NSE:STANLEY
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Mastercard Inc
NYSE:MA
|
Technology
|
| US |
|
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Walmart Inc
NYSE:WMT
|
Retail
|
| US |
|
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
| US |
|
Chevron Corp
NYSE:CVX
|
Energy
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
224.15
453.65
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Mastercard Inc
NYSE:MA
|
US |
|
|
UnitedHealth Group Inc
NYSE:UNH
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Walmart Inc
NYSE:WMT
|
US |
|
|
Verizon Communications Inc
NYSE:VZ
|
US |
|
|
Chevron Corp
NYSE:CVX
|
US |
This alert will be permanently deleted.
Ladies and gentlemen, good day, and welcome to the Stanley Lifestyles Limited Q1 FY '25 Earnings Conference Call hosted by JM Financials. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Mehul Desai from JM Financial. Thank you, and over to you, sir.
Yes. Good afternoon, everyone. On behalf of JM Financial, I'd like to welcome you all for Q1 FY '25 Earnings Call of Stanley Lifestyles Limited. From the management side, we have Mr. Sunil Suresh, Managing Director of the company; Ms. Shubha Sunil, the Whole Time Director; Mr. Pradeep Kumar Mishra, Group CFO; and Mr. Sri Krishna, Chief Executive Officer, Retail division.
I'll hand over the call to the management for their opening remarks, post which we can open up for the Q&A session. Over to you, sir.
Good afternoon, everyone. Welcome to Stanley Lifestyles Limited first earnings call following our successful listing on BSE and NSE on 28th June 2024. The IPO marks a significant milestone in our company's 25 years of journey, and I want to express my sincere appreciation to our shareholders, our employees and our loyal customers. We raised INR 200 crores in primary capital, which we plan to be utilizing for expansion and ensuring Stanley capitalizes on the growing premium and luxury markets.
Let me briefly introduce Stanley Lifestyles Limited. Founded in 1999, our mission has always been to deliver high-quality bespoke leather products and luxury furniture that we the customization needs of our designing high-end customers. Over the years, Stanley has been into a strong pan-India presence brand based on its innovation, find craftsmanship attention to detail and consistent marketing.
With our three different core formats of Stanley Level Next, Stanley Boutique and Sofas & More, we're able to cater to homemakers in luxury premium and value premium segments. We currently operate 61 stores spread across 25 cities among all the three formats of which 37 are company-owned and company-operated and 24 are franchisee owned and franchisee operated.
Over the past 15 years, Stanley has maintained a steady organic growth and profitability. In the Q1 FY '25, I'm pleased to report we delivered revenues of operations of INR 100.70 crores, reflecting a 5% increase compared to same period last year. Our EBITDA grew by 25.6% to INR 20.10 crores, achieving a margin of 20% and PAT increased to 8.6% to INR 3.80 crores. These results are a testament to our positioning in the premium and luxury furniture market. The launch of our new product line and optimization of our supply chain.
We have commenced localization of our leathers, which is helping us reduce dependency on imports, and we continue to improve our sustainability initiatives with installation of solar systems across our facilities. In the recent quarters, we have faced new challenges and developments, which I would like to address.
While premium and luxury housing has been witnessing tremendous demand, there has been an average 18 to 24 months delay in handover of projects sold in the past 3 to 4 years due to disruption caused over COVID years and RERA has extended the delivery deadlines to builders across the country. New homemakers constitute majority of our customer base, and we are witnessing postponement of purchase due to this handover delay. We encountered delays in opening of new stores due to nonavailability of construction labor, and we had to relocate 3 mature stores due to disruption caused by metro lines and a fire incident in one of the stores.
Despite these hurdles, we observed demand in the premium and luxury offerings, which reinforces our market positioning and growth strategy moving forward. The recent general elections also temporarily slowed high-value customer purchases. However, traction has picked up ever since.
Our new stores are typically fully operational 4 to 6 months and come to maturity in 24 to 36 months. I'm pleased to report that new stores we launched in FY '23 and FY '24 are showing promising signs of sales traction. We continue to have over 50% of our stores under maturity and remain positive about our sales with mature stores count increasing.
Looking forward, we have a pipeline of 11 stores across 3 new formats planned for FY '25, which will further -- which will further strengthen our presence in key markets. Our focus remains on capitalizing on the growing demand of premium and luxury housing in India and our industry knowledge, strategic presence and strong brand awareness will position us for further success. The diverse product range we offer, combined with our commitment to design, innovate and our exceptional customer service will be our key drivers of our growth going forward. At Stanley Lifestyle, we are deeply committed to create long-term value for our shareholders, our customers and our employees.
Our management team is dedicated to maintaining high level of transparency, upholding the highest standard of corporate governance and ensuring sustainable growth. We remain focused on delivering consistent performance and executing our strategic plans efficiently. Thank you for your time. I now hand over to our CFO, Mr. Pradeep Mishra.
Thank you, Mr. Sunil Suresh. Good afternoon, everyone. I would like to present Stanley Lifestyle's financial performance for quarter 1 FY '25. Since our IPO, the company has delivered revenue from operations for the quarter of INR 100.7 crores, marking a 5% growth compared to quarter 1 FY '24. Our EBITDA grew by 25.6% to INR 20.1 crores with a margin of 20% PAT increased by 8.6% to INR 3.8 crores. These results reflect our focus on driving operational efficiency and maintaining profitability in a difficult macro scenario. Looking at our revenue contribution from different perspective, our B2C business accounted for 78% of the total revenue for quarter 1, while B2B segment contributed 22%. From a store format, our COCO stores represented 61.5% of the total revenues and balance coming from franchisee and accessories.
Geographically, our business in South India accounts for around 83% of our total revenue, which will continue to moderate in the near term. Our Pan-India distribution underpins the reach of Stanley Lifestyle luxury brand in the market. Despite operational challenges such as supply chain disruption, continued delay in residential property handover and low consumer sentiment, we have managed to navigate these issues effectively to ensure consistent profitability.
Turning to our balance sheet. Stanley Life Science maintained a strong financial position with a net cash balance of INR 199.5 crores. Regarding the IPO proceeds, we have strategically allocated the funds to expand our retail network, open new stores and renovate existing locations. These store additions are planned to target upcoming premium residential markets where we are underrepresented. Our investment in backward integration, particularly with metal processing machinery and better sourcing of leather and localization initiatives will further strengthen our operational efficiency and reduce costs. Looking ahead, we expect to continue growth in the coming quarters, driven by our store expansion, new product launches and the overall resilience in the luxury market in India. We are optimistic about achieving our financial and strategic targets, though we remain vigilant of potential short-term operational challenges. Our focus on point-of-sale technology enhancements and sustainability initiatives will also contribute to our long-term success. We will be happy to answer any questions you may have on the company's recent performance.
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Rupam Jaiswal from InvestWell Agents.
Good afternoon, Sir. Thank you for giving me this opportunity. I just wanted to know what is your -- like what kind of growth strategy you have and what plans you have for the company's future?
See, we -- from a company, if you have understood the company, we drive in the tailwind of premium residential market. And we see a very -- what we have seen in the last 3, 4 years is a very strong sales cycle, which has happened in the last 2, 3 years. What needs to -- for us to really grow very efficiently would be to see when the sales cycles get into a handover mode, when the residential properties into a handover mode.
So that's -- that cycle is delayed beyond our control. I know there's a lot of industry reasons for that. However, as a company, we have continued to expand our retail footprint. We are strengthening our presence in regions where we feel these trends are very strong, and we are readying ourselves to capture this trend when it starts. I hope I've answered your question or if you look for something specific, please let me know.
Yes, sir, I just got the view. I just wanted to know like if I see the quarter-to-quarter, your EBITDA margin has gone down. Like is there any specific reason for it? Or is there any segment like we faced margin hit?
Yes. What has happened quarter-on-quarter is -- I'm assuming you're referring to quarter 4 of FY '24 and quarter 1. What is -- as a reflection, we like we have continued to expand our retail presence from last year and quarter 4. And because of quarter 1, April and May, our sales were not reflected of the retail presence that we had. So there is a huge operating leverage cost in terms of high store running costs, which we incurred in quarter 1, which did not yield sufficient results or revenues in the top line. And hence, that has been one of the major reasons for us to not be comparable with quarter 4 performance.
Also H2 for us is slightly more better -- for season, H2 for us is definitely better than H1. So normally, we compare our track record with Q1 to Q1 of last year.
Thank you. The next question is from the line of Rohan from InCred Capital.
Sir, with respect to what you were talking about earlier with respect to the units being delayed in terms of delivery, by when do you expect maybe this pent-up demand for us to sort of unlock?
So these are cases we follow regularly and look at what is happening from the RERA perspective. There are various city clusters where projects are delayed beyond others. For example, Bombay and Bangalore, there are more delays compared to Hyderabad and Delhi for that matter. So we are expecting a solid delivery to start happening perhaps by H2. And most of the projects that were delayed are now coming almost into completion stage, and we expect a very good housing handover to happen in H2 -- starting from H2 of this year. And there's a lot of pipeline for the next 2 years.
Sure, sir. And just one more question. In terms of your read historically, have we seen better demand from, let's say, new unit sales? Or has there been also a healthy contribution from renovation?
Okay. That's a very good question. In fact, for us, in most of the markets in the segment where we have presented, most of the business comes from new homemakers except for certain markets, matured markets like Bombay, where there is a renovation and restoration that happens. Most of the other cities for us, it is always the new home that we actually gives us the more opportunity for business.
Sure, sir. And just one final one. In terms of your read, largely we've otherwise been an urban play, but now we're also going into Tier 2. So what is your read on what do you expect maybe in terms of growth from your non-metro markets going forward? Do you think it will sort of outpace your mature stores going forward?
So we are fairly, I would say, calibrated in terms of expanding, and we do not wish to expand to too many Tier 2 and Tier 3 markets because since luxury furniture and home making is a once in a 10-year kind of a cycle, customer often tends to come to the nearest metros. So we rather expand in the same metro cluster rather than go to too many smaller Tier 2 and Tier 3 cities.
That is what we are doing right now. And that is working out well for us because some portion of our sales come, for example, Bangalore comes from catchment markets from other towns. So we don't see ourselves, at least from the COCO perspective, company-owned, company-operated stores, we don't intend to expand too much into Tier 2, Tier 3 markets. It doesn't suit our business so well because most of the high-end customers tend to come to the nearest metros for high-ticket purchases.
The next question is from the line of Abhishek from Naronlia Financial Advisors.
I just wanted to get a hand of how much the split between the new homeowners will be making a purchase and what will be the renovation or maybe contract manufacturing, the split of the revenue between these markets?
Sorry, we couldn't hear you very clearly.
Yes, I think you are too close to the mic, if you can be little away and we can hear you better, please.
Is it clear now?
Yes.
I just wanted to understand what is the revenue split between as a new homeowners and other like a renovation or contract manufacturing because expecting the entire revenue to be driven by new homeowners will be getting the new home alloted is little too optimistic don't you think?
No. So I think, like I said, when I look at the quantum of new housing that has been sold over the last 5, 7 years, and the quantum of new housing that needs to be get delivered, we remain very optimistic. I think we have moved in the right period in the right time, in the right cluster. So when these homes come for delivery, we will definitely be able to get a larger chunk of these new home markets. As of now, we could say that depending on the market, 65% to 70% comes from new home makers as far as our business is concerned. So where we are going is that we are very carefully following the trends. And today, RERA does permit us to understand where the development is happening where the premium houses about INR 3 crores to INR 4 crores are coming up when the project started and when they're expected to deliver. So based on that, we have expanded our catchments.
And sir, what's your future outlook regarding contract manufacturing?
Contract Manufacturing has something been there from a legacy perspective. We will continue to do contract manufacturing, and currently, it's an 80-20 split between B2C and B2B, we see that being similar going forward also. We are getting some inquiries and we want to continue doing B2B also because it gives us the scale and flexibility.
In contract manufacturing, we manufacture for as OEM to bigger entities.
Global players.
Global players, yes.
The next question is from the line of Mehul Desai from JM Financial.
So first question is on the gross margins from Q4 of FY '24 to Q1 of FY '25, there is a drop in gross margins. So can you explain the reasons for that? And also, how is your current trajectory as far as leather localization is on the leather localization, if you can give a response on these 2 aspects first.
Let me answer the localization piece first, and our CFO will answer the GP-related question. As far as localization is concerned, since we do operate in the luxury segment, and we have been importing our raw materials, especially finished leather from Europe. It is not easy for us to localize very quickly, though we have started the process almost 1.5 years, 2 years ago, close to about 30%, we have already localized and now we are seeking some technical know-how with Italian Tanners, and we are starting to further localize, while the raw material, which is the hide will come from Europe, the value addition will be done in India and that itself is a tremendous saving for us. So this process, I feel is going to take us another couple of years by the time we come to almost 70% to 80% of localization. We commenced this operation about 1.5 years ago today, we are at about 30%.
On gross margin, quarter 4 gross margins were 56.5%, and current quarter 1 is about 53.2%. What really impacted was because of shipment, which is the import leather from sea because of the sea freight going up and also the delays in arrivals of the shipments, we had to airlift lot of leather or a lot of imported goods for our supply chain. So that really impacted us in quarter 1. Along with that, there was a small increase in ForEx, which caused certain cost escalations. Another point was we had a huge -- we reviewed in one of our locations or subsidiaries we had 12 transactions where we had a bulk sale agreement at a little lower than our retail margins, which got reported in quarter 1.
Okay. Secondly, if you can throw some light on Kitchen KCD portfolio launch, which was -- which happened last year, how is that shaping up? And how do you see that going ahead also?
Yes. So while we have successfully launched our KCD in Bangalore, only Bangalore last year in September, and we have done the pilot marketing here. We're happy to say that we have taken close to about 150 projects and executed close to 100 projects in Bangalore.
Now having gone through the learning curve and the challenges that we faced in terms of last mile installation and so on and so forth. We have constantly been focusing on getting a 5-star rating from our customers because in the premium and luxury business, it's very important that we get a 100% customer satisfaction report. So that has been our main focus. As we speak, I think at this point in time, we are convinced we have been able to successfully launch and succeed this in the Bangalore market. While the stores have been put up in Bombay and Hyderabad, they're going to start marketing it one city at a time, and there will be a gradual ramp-up as far as this is concerned. We are hoping that in about 1.5 years time, they will be pan-India present with our kitchen brand.
Okay. And sir, can you just split your revenue growth and give us a segmental revenue in terms of your store format as to how Stanley Level Next, Stanley Boutique and Sofas & More have grown in revenue in this quarter?
Sorry, what is the question there, sir?
The question is, if you can give format-wise revenue growth of your spend for the quarter for Stan, how much is Stanley Level -- next grown in the quarter, Stanley boutique growth and Sofas and -- more growth?
Compared to last year's Q1?
Yes, yes.
So of all the 3 formats, Stanley Level Next has reported a growth of -- from quarter 1 to quarter 1, almost 35%. And Stanley Boutique and Sofas and -- more have almost been flattish to negative to almost like negative 5% growth in other 2 segments. So our luxury segment is really showing significant growth. Stanley Boutique had its own challenge where a few stores were under renovation and hence, it is a little flattish. And sofas & More for the first time in this quarter 1 is showing a flattish to little negative kind of a growth.
Okay. And lastly, how has been the trend in A&P spends?
[indiscernible]?
Advertising spend.
Advertising spend.
In fact, I think we have been respective and reduced our advertisement spend in Q1, considering that markets are fairly subdued, and we didn't get initial response. So I think we have ended up spending what is about.
3.4%.
Compared to?
Versus 5.5% last year.
Were reduced by almost 2%. Yes.
Okay. Got it. Got it. And lastly, sir, this gross margin, obviously, the impact that you said because of certain shipment ForEx. Do you think -- are the things normalizing from Q2 onwards and you think whether we'll stay at 53% or you can move back to that 50%?
No. I think it will definitely improve because we have taken a small price hike, point number one. Point number two, we also see the shipment cost stabilizing just at this point in time, plus also the localization. So these three items should kind of bring us back to our previous GP.
We are also working on a lot of internal operating efficiency on leather, the way we process and the leather that is supposed to start yielding results, which we will see the impact from September, October onwards. So all these -- so we are taking a lot of steps other than price increase to improve internal efficiency to offset this cost. What we believe is from quarter 2 onwards, we should come back to our 56 wheels -- I mean, like all these scenarios and those onetime bulk sale that we had in quarter 1, without that, we should go back broadly to our quarter 4 margins.
Yes, for you to also understand in our times when we have certain store count which are below maturity at a higher level. These things tend to kind of impact us a little bit. So we try to balance it out.
The next question is from the line of Jaspreet Arora from [indiscernible].
My question was around the real estate units or a quantum of stock to be delivered. What's your broad sense? How much is expected to be delivered in the next two years versus what was actual in the last two years, just to understand the kind of demand that could be there?
Broadly, our data shows that close to about 30,000 units have been sold above INR 3 crore in the past 4 years of which I think almost 85% of the projects have been delayed. I'm talking about fully sold inventory, which are delayed in terms of handover, and we are not mentioning what has been sold in the last 12 months. We're talking about properties that we sold about 24 months ago. So we believe that where we were expecting let us say, 100 homes being delivered, only 15 have been delivered in certain key markets. So there has been a sustaining delay primarily because of COVID shutdown and return of employees and so on and so forth. So we are expecting starting Q2 onwards, better inventory handover and thereby, we are expecting also better business. And meanwhile, I think we have expanded our store count in the places where this inventory is supposed to come in.
Okay. You mentioned the ticket size of INR 3 crores and more. Did I hear that right?
Correct. Yes.
Okay. And this is the segment where the most premium offering is, that's why the Stanley Level Next is that?
[indiscernible] this is in the center for Stanley Level Next, we are safe to say, INR 4 crores and above, Stanley Boutique is between INR 2 crores and INR 4 crores. And Sofas & more is INR 1 crore and above. Again, when I look at all India pricing, Bombay will again be almost 2x of that.
And just to clarify, this is 85% of the 30,000 units that were sold in the last and beyond, which are delayed and should see light of the day in the next maybe 12 to 18 months or 12 to 24 months?
Correct. And also it will add because also a lot more units have been sold post that.
Right. And this is -- again, just to clarify, this is pan-India. This is not necessarily our catchment area or where our existing stores are. It's not that, right? It's all India?
No, it is top 5 cities.
I'm sorry. So it's top 5, and therefore, it is entirely relevant to our markets because we are there in top 5?
Yes. Though we are more penetrated in the south, and that is where a lot more inventory also. So yes, you're right, this is in the top 5 metros.
Sir, second is around the store count. I think we are about 61, if I saw that number correctly over the next 3 to 4 years, what could be our target? Or maybe how soon can we go into the triple-digit number?
So we are planning 11 stores this financial year. We are more or less on track for that. Having said that, we are not one of those companies who want to rush into a store opening because real estate plays a very important role in our business and finding the suitable real estate still remains a very big challenge. So in my mind, it is planned in such a way that we plan to get to about 100 stores in the next 3 to 4 years and a very meaningful growth without losing any stores for lack of business and due to bad locations. So we have been more and more careful understanding urban planning, where metros might come and disrupt even if you open a store. So a lot of research is being done, so they are cautiously moving forward.
Interesting. Got it. And therefore, over the next 3 to 4 years, given the existing store count and the new upcoming -- do you -- and the mega -- the real estate unit units to be handed over, do you think we could easily do INR 900 crores, INR 2,000 crores of top line in that period, 3 to 4 years?
That's the target. That's the very clear target primarily, and more than the top line also, we are focused on making sure that we're able to get our bottom line also growing parallelly.
Got it. And around marketing, I noticed there is a fair amount of presence in Tier 2 towns and obviously, it is, as you said, the catchment areas. So Tier 1, sir, our product and brand is fairly established at mild and is probably is #1 by far and probably would be facing competition only from the imported brands. But when it comes to Tier 2, how are we like kind of positioning it or using -- what kind of marketing strategy are you using when it comes the tier 2 towns?
A Very important question, well asked. We are actually now looking at the number of airports that have come up in Tier 2 and planning to do some airport advertisement as far as our catchments are concerned because mostly our customers do take flights into larger cities. That is one of the things in the plan. Secondly, wherever possible, we are also planning to do some amount of roadshows in certain key Tier 2 towns so that we are able to attract the right set of customers. Thirdly, which has already started, we have a business development team, which has actually started networking and connecting with architects, interior designers of Tier 2 and Tier 3 towns. We have also started conducting what we call as familiarization trips we get architects and interior designers to our facilities, show them everything, how it's made, how it's designed and thereby, they become our most piece in those catchment areas.
And in terms of growth level, sir, the top 5 Tier 1 towns versus our top 5 in Tier 2 towns, is there a drastic difference in terms of the aspiration level, the ticket size and the growth that we're witnessing? Or is it not too much of a difference?
There is definitely -- if you look at the wealth spread, I think the major metros, the wealth is more uniformly spread. And when you look at the HNI count, there are also a lot more in the urban top 5 metros of the country, in fact, top 3, 4 metros of the country. However, having said that, there are larger ticket opportunities because there are sufficient rich people in smaller towns and cities of our country, and they tend to go for what you call as villa construction. They don't do -- they don't depend on builders to give them their apartments or penthouses. They do their own large homes, and they are very expansive large homes and they need a lot of furniture. So we are tapping into both these segments. But then when you look at the real HNI housing or the luxury housing, it is more an urban phenomenon at this point in time.
Understood. And just last question. I remember listening to one of your interviews where you mentioned that the triggers for this organized furniture market and lifestyle market could be a change in the import duties because of the influx of huge imports. Just wanted your thoughts, what's your thought on how soon this could be? And what's the kind of impact it could have on branded players like us?
So I think already -- what is the role that's important. So already the Indian government has got a compulsion for BIS certification while a lot of the retail traders have requested, they have extended a 1-year time frame already 6 months have done. So that itself will be the first barrier for free import of furniture from various countries. So we believe that while this process of what we call is blocking pre import has already started. It will definitely come into full play probably 12, 24 months from now. The government also is working very clearly with a lobby of furniture manufacturers to give -- Yes, PLI to manufacturers. So things are already happening. So we expect that this should come into full play in maybe 12 to 24 months.
Both of them?
Both of them -- and they're jointly together, they will come in together.
And the first point, you mentioned did you mean BI certification for all the manufacturers who have units outside India?
Absolutely. Already, that has come into play. And I think like I said, we have given...
Just for chairs and seating.
Just for chairs and seating right now, they have implemented BIS certifications for some components which are used in seating solutions. Slowly, they will -- we are expecting what we understand is this should get -- the scope of this should get expanded and include furniture as a category also. And if that happens, it will be a huge tailwind for us.
The next question is from the line of Abhishek Jain from InvestWell Agents.
Sir, I have got most of the questions have been answered. Just want to know about your focus on the contract manufacturing. Since it's a legacy business, what kind of opportunity do you see going ahead? What is your vision in INR 1,000 crores of revenue target? Where do you see your contract manufacturing division?
Our main focus continues to be our B2C business because we see tremendous opportunity in terms of premium housing just now. while India is maturing steadily from a basic needs and necessities to lifestyle and then finally from lifestyles to travel and automobile luxury. In this space, a lot of HNI Indians are entering what is known as housing luxury. That is a little matured pace in a developed country. And as the country develops, a lot of people are getting into what we call as premium housing.
So we will continue to invest in ensuring that we are able to play an important role in premium housing where branded furniture and custom furniture comes into play. That will constantly remain our absolute focus. While B2B has been a legacy business for us, and we have already set customers for over multiple years, and we have a good opportunity to also grow with their needs for global requirements. We already started exporting our furniture to certain countries. To hedge the ForEx, we will also continue to keep the B2B business in a similar position where it is with a 2080 formula going forward also.
The next question is from the line of Avinash from Piramal Financial Services.
Thanks for the opportunity. I'm calling from my line of phone. Can you hear me now?
Yes.
Yes. So my query is regarding to the growth in the mature stores. whatever operating metrics you track it internally. So what has been the growth for stores which has been there in the system for at least one year or more?
Actually, as I mentioned, our stores come to what we call as full maturity around the fourth year. The trends we have been observing is that the store usually gives us about 60% of business the first year, about 70%, 75%. That's the second year and about 85% the third year. And then our fourth year, we call it as a full matured store. Also having said that, it depends if we are expanding in the vertical of cluster there will be some amount of cannibalization from older stores, but that doesn't matter because we actually take a larger market share.
So having said that, our challenge has been constant and we look at how do we expand our product portfolio. So 4 years ago, most of our stores only sold living rooms, Sofa sets or recliners. Today, most of our stores are selling a lot more. So we are actually focused on getting the average ticket size of the customers also bigger as we go forward. And that is how we have continued to expand.
I understand what you're saying is that the first year of a new store opening, you hit 60%, 70%, 90% subsequent over the subsequent quarters. So what subsequent years, so what I want to understand is, so if you can provide us, whether that 60% is being achieved by the newer stores, and because there's a 5%, 6% growth, which is the value growth. So what is the volume growth in this between Q1 last year and Q1 this year?
So what we do is we see more than 2-year store as a more matured store. And across all the 3 formats, Stanley Level Next, which is my luxury format store, this more than 2-year store format is showing an average growth of 20% to 25%. Again, to understand here, this growth is coming in mainly because we have pivoted from to a more complete home solution offering, where we are now catering to furniture for the entire room of the house, including kitchen, which is your modular kitchens, wardrobes, living room furniture, dining -- dining room, along with the existing seating solutions, which we already have.
So this offering right now, we've only started in Stanley Level Next, and hence, we are able to see this strong SSSG growth. In Stanley Boutique, FY '24, while it is -- it was the old legacy format, what we have seen is this store format currently is undergoing a renovation where last year, 2 stores -- major stores were down for renovation and a couple of stores got impacted. It was a onetime impact. So in this particular format, we are seeing a negative SSSG. The third format, which is Sofas & More, this format is again very promising. It's a value premium range. Again, in Stanley Boutique and Sofas and More, we are only selling loose furniture, which are more seating and very small dining table and other offerings that we have. It's still not a full home concept. So in Sofas and Mall also, we are seeing a moderate 5% to 7% SSSG.
Also, we have innovated and added a lot more SKUs, which are going to go to market from first of September in Stanley Boutique as well as in Sofas & more so we're expanding the product offering. Of course, we are not getting into kitchens and wardrobes just yet, because they are offering a lot more loose furniture such as cabinets, bedside tables and so on and so forth.
Are we doing anything which we are not adding value and they are imported and straightaway sold from our stores?
A small percentage of case goods, which are primarily coffee tables and dining tables in the sofas and more are imported and retail. while we have just commenced our case goods facility and added more equipment and machinery, the plan is to kind of completely be self-sufficient in terms of menu retail in the next 12 to 18 months. Until such time, there will be some components and some pieces of furniture that will be imported and retail.
As of now, Level, almost 95% of the furniture is fully made in-house, perhaps only the lighting and certain accessories we are importing. Stanley Boutique, almost about 85%, 90% is fully made. And again, maybe 10%, 15% is imported like carpets and accessories. So far and more, 65% is produced by us, about 35% is imported and sold. And that also, as we go forward, we plan to bring it into production. So we are actually -- whatever learning and success we have had in the luxury, we are slowly and steadily dropping it into the other 2 segments going forward.
And the format of the stores in terms of the size of the stores are likely to be around the average what we have now? Or is there a change in thought process of having a slightly larger format stores?
More or less. And we have also piloted with our anchor store, the first store that started almost a year ago near the Bangalore Airport, houses all the 3 formats. So we are actually -- that has given us more success. because we are able to cater to a wider customer base and also to the same customer who wants a slightly less expensive item for different rooms of the house. So going forward, in certain mature cities where we already have a strong brand presence, for example, like Hyderabad, Chennai and Bombay, where we have identified locations closer to the airports, and we might put up these kind of anchor stores.
Our next question is Nishant Sharma from Nuvama.
Sir, you were referring on the B2B business. Sorry, I joined a little late, so you may not have the earlier update. While IPO meet you were also discussing about the B2B segment. So can you just update what is happening on the B2B side? Have we added any new clients? Or are we reducing our focus on that segment?
No, we are -- it's not that we are reducing our focus on that segment, but our full focus remains more on our B2C business. Having said that, yes, we have added a new customer in the form of steel case. which is an American company for the domestic manufacturing. We have signed up a contract with them. So we will start supplying to them as we go forward.
And our current business with certain traditional players, which we have already been associated for more than 5, 7 years continues. They are, in fact, facing some global headwinds and their business has been slightly more subdued in the last quarter. We are hoping that their business also improves so that we are able to export. We currently export to quite a few countries through those brands, including Europe and America and Middle East.
Sir, what is the share of B2B and B2C right now? And how do we foresee going forward?
Yes, 78% and 22%, that's been the trend for FY '24 as well. And as per what we anticipate is both the segments will continue growth, and we maintain a ratio of 80-20 between B2C and B2B going forward.
Okay. And lastly, on the domestic sourcing, what has been -- is there any update on the domestic sourcing, which can help margin improvement going forward? So that would be my last question, sir.
Definitely, sir, we have -- as I mentioned, we have already started the localization process almost 1.5 years ago. Currently, around 30%, 33% of our weather has been localized. My target is to get to a point of 75% localization in the next 18 to 24 months. Since we cannot manage to drop our quality and we will continue to depend on European JV partners to kind of give us the technical know-how. This process is going to be fairly organic, and we need to have patients because we need to invest in certain the panels we're supplying as in India need to invest in certain machines and equipment.
Right. So what kind of margin benefit we can get it through this over, say, next 18 to 24 months once we are able to expand our listing?
So 2 things. One is that we will be fairly protected from 2 things. One is from the most expensive, what you call as transportation costs that have actually skyrocketed in the last 3 to 4 months because of the Red Sea issue, that will give us a little bit of savings. Secondly, also from the ForEx that would also give us sufficiency. Our target is to get to about 20% to 22% overall savings as far as the localization is concerned.
The next question is from the line of Rohan Kalle from InCred Capital.
Yes. So just to follow up on the B2B side. We already service a large Swedish retailer. And we also, like you said, have the [indiscernible] now in pipeline so just assuming if we get another account on the B2B side, do we have enough capacity in our existing facility? Or would we need to maybe look at a new facility?
Absolutely. So yes, you're right. We are servicing a large Swedish retail chain now. And we have adequate capacity. Capacity as far as missionary as well as the plant is concerned, there is no challenge. We'll need to probably only include more manpower as we go forward.
Sure. And on the localization part, I understand that we're targeting a 75% localization over the next few years. Just to understand, will it largely be the case that for Stanley Level Next, we will still be importing and the localized sourcing will be used for the other two brands?
Yes. You're right. And even the entry level of Stanley Level next has been planned to localize. But the top end of Stanley Level Next will continue to be European independent.
Thank you. Ladies and gentlemen, we will take that as the last question. I would now like to hand the conference over to the management for closing comments.
Thank you, everyone, for joining our Q1 FY '25 earnings call. In summary, I want to thank you all for your time, and we reiterate our how excited we are about the future and look forward to continuing our post-IPO journey with your support. If you have any further questions, please feel free to contact our Investor Relations adviser, Churchgate Partners, and we'll be happy to address your queries. Thank you very much.
Thank you.
On behalf of JM Financial, that concludes this conference. Thank you for joining us, and you may now disconnect.