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Ladies and gentlemen, good day, and welcome to the Stanley Lifestyle Limited Earnings Conference Call hosted by Emkay Global Financial Services Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Devanshu Bansal, Emkay Global Financial Services Limited. Thank you, and over to you, sir.
Good afternoon, everyone. I would like to welcome the management and thank them for this opportunity. We have with us today Mr. Sunil Suresh, Managing Director; Ms. Shubha Sunil, Whole-Time Director; Mr. Pradeep Kumar Mishra, Group Chief Financial Officer; Mr. Sri Krishna, Chief Executive Officer, Retail Division.
I shall now hand over the call to the management team for the opening remarks. Over to you, gentlemen.
Yes. Good afternoon, everyone. Welcome to Stanley Lifestyles Limited Earnings Conference Call for the fourth quarter and financial year ended 31st March 2025. The earnings presentation has been uploaded on the stock exchange, and we trust you have had the opportunity to review it. The financial year gone by was an important milestone for the company, marked by the successful completion of our initial public offering in June 2024. The listing has strengthened our financial base, enabling us to drive our strategic priorities across the premium and luxury home interior market. In FY '25, Stanley Lifestyles Limited reported the revenue from operations of INR 4,262 million. The COCO retail business, which continues to be the key driver, grew by 12.7% quarter-on-quarter and 13.5% year-on-year for FY '25 Q4. The full year, the growth stood at 8.5%, supported by consistent demand for premium and luxury furniture in the key urban centers.
Among our brand portfolio, Stanley Lifestyles Limited led the performance with 15 -- sorry, Stanley Level Next led the performance with 15.5% year-on-year growth, while Stanley Boutique degrew by 9.2% year-on-year and our value premium line Sofas and More grew by 11.8% year-on-year. We have witnessed some rebound in the footfall traction in Q3 and Q4. Our distribution business vertical saw short-term disruption due to realignment in credit policies from credit to cash and carry model, impacting volumes. The vertical is now stabilizing, and we expect growth momentum to return by Q3 FY '26 as channel partners adjust to revised terms. Meanwhile, the B2B segment remained flat throughout the year. Although there's an encouraging volume of inquiries, the conversion cycle is elongated, and we are anticipating similar trends in FY '26. The business will continue to be nurtured with a focus on project-driven execution time line. On the profitability front, the localization efforts and manufacturing efficiency through in-house manufacturing has been progressing well, led by an improvement of 237 bps in gross margins. The gross margin expanded by -- to 56.3% in FY '25 compared to 53.9% in FY '24.
As of FY '25, we have 68 stores across India, comprising of 44 COCO stores and 24 FOFO stores. COCO stores contributed 61% of total revenue, reinforcing our control over brand presentation, customer engagement and service quality. That said, our retail expansion during the year was measured. Despite the availability of IPO funds, the rollout plan was moderated due to mismatch between expected rental terms and shortage of grade A retail location. Several high-traffic zones saw rental expectations that did not align with our business model, leading to delayed store launches.
On the demand front, while structural indicators remain favorable, footfall remained less than expected, primarily owing to lower-than-expected residential handover and some climatic conditions. We view this as a temporary lag rather than a demand deficit. The premium and luxury residential real estate sector is experiencing strong sales traction, and we continue to monitor housing handover schedules closely.
Looking ahead, we are on track to opening 5 stores, 3 COCO and FOFO in Q1 of FY '26 with a full year target of 15 new stores with 3 stores planned relocation. Our focus remains on expanding in high opportunity real estate clusters improving inventory efficiencies at the store level and enhancing customer engagement through curated offerings. Additionally, the entry of imported furniture, which is a major competition is poised for disruption with government emphasis on BIS certification coming into effect from March '26. With a strong presence of retail stores in major metros supported by well-established, fully integrated manufacturing capacity, Stanley Lifestyles Limited is well placed to capitalize on emerging opportunities in India's premium and luxury furniture landscape. Thank you.
We can open for questions, sir.
[Operator Instructions] The first question is from the line of Devanshu Bansal from Emkay.
This time around in FY '25, the growth has been a bit muted, though improvements have been seen on the gross margin front. But I wanted to check if you could just help us understand the growth prospects for the coming year, right, FY '26 and maybe for the next 2, 3 years, it would be very helpful.
So we are definitely going to go about in a fairly measured manner, keeping our eyes glued to the profitability and also availability of required real estate. So in our target, we have a trajectory to reach INR 1,000 crores revenues with about 12% to 15% PAT in the next 3 years. So this is going to happen in a measured manner. Most of the stores that we have set up last year are coming to maturity this year. This year, we are planning 15 new stores. Likewise, we also target similar number of stores in the next year. In some areas, we are also planning to have larger stores, which we believe that will do well for us because we have experimented with a couple of stores of such size in Bangalore and the proof of concept has already been established. So that is the way we are going to go forward.
And sir, these 15 new stores that we are planning to open, can you help us understand as in which format are they going to enter? How many of them will be FOFO, how many of them will be FOFO? And there are a few franchisee store closures, right? So maybe I don't know I'm not able to understand whether these have been converted to Stanley Level Next or there are some closures in Stanley Boutique and Sofas and More, right? So just your thoughts on that also.
Okay. So the legacy brand Stanley Boutique, which has now stood for almost 20 years, is going through a complete makeover. The first of the new format Stanley Boutiques is scheduled to open in the next 1 week. Just day before yesterday, we have opened the first store of this financial year in a city called Mangalore. That is a hybrid store, which houses Sofa and More and Stanley Boutique, the old format of Stanley Boutique. So the new format of Stanley Boutique is scheduled to open this year. Plus also, we have Surat, which is a franchisee store. Then we have Mount Road Chennai, which is a COCO store. And Pune Pisoli is also a COCO store. So what we have actually done is in the city of Pune, we have actually acquired our previous franchisee. Likewise, in Hyderabad also, we are in the process of acquiring our previous partnership firm and converting it into 100% COCO. That is why actually there are not any -- there is no franchisee store closure, but we have acquired the same. Yes, except one store in Bangalore where we decided that we will have the entire cluster to have COCO stores only.
Understood. Overall, sir, out of these 15 stores, can you help us understand how many would be COCO and how many would be COCO?
As of now, we are still in discussion with a few more franchisees, which are not yet signed up, but 3 franchisees have been signed up and 12 CCOs have been planned.
Understood. And this acquisition that we have done, on the balance sheet, if Pradeep can sort of help me understand this sits in the long-term investment, right? So that increase that we are seeing is because of that only?
So this investment -- so the company operates through subsidiaries in markets outside of Bangalore, like Bombay, Hyderabad, Delhi is all operating through subsidiaries. So when we open new stores in respective markets, the investment happens through the respective local legal entity. So there is an investment that the corporate or the group company does in the respective entity for it to do expansion in the respective…
Cluster.
So that is the investment in subsidiaries that you are seeing as which has gone up.
Okay. And you have acquired those stakes in those subsidiaries. So your investment must have gone up because of that, right? I'm talking about in stand-alone, this INR 33 crores has moved to INR 81 crores. This predominantly is because of stake acquisition or you have made further acquisitions in the -- further investments in the subsidiary?
So there is a further investment in subsidiaries. So SLL is the group [ consol ] entity where the IPO is done and the money was raised in IPO and say, SRL is a retail entity at Bangalore. So for example -- which is 100% subsidiary, 100% subsidiary. So for expanding in Bangalore, the funds have got transferred from the group entity to the local entity for further expansion. That is what has happened in all our 100% COCO entities.
Very clear, very clear. And lastly, sir, you indicated some BIS-related changes. I wanted to check how these changes can benefit us?
Currently, if you look at the value premium to premium furniture, probably even to luxury, I think there is a lot of furniture being imported from Asia Pacific region, primarily Malaysia, China and also a lot of furniture coming from Turkey and Europe. So there has been a gazette that has already been passed that furniture along with footwear and toys, which have already been under BIS certification for 3 years have a -- furniture also is going to be applied with this BIS norm. So if you really look at what has happened to the footwear and toys, the import has drastically reduced and the local players have significantly grown their business. So we hope that this is going to be a very good measure for made in India and a lot of furniture manufacturing companies such as ourselves who are focused in making and selling in India.
In terms of numbers, we don't want to hazard a guess, but I think it is going to be definitely, I would say, a very good way that the government will be aiding us to further enhance our manufacturing and retail opportunities in India.
Just a small follow-up. Do you also foresee B2B opportunities because of these implementations because import will be restricted, so all those brands may be sort of willing to invest or maybe get more work done on the contractual basis. So are you also exploring those opportunities?
We are in discussions and already started some business with Steelcase, which is an American major. They have clear plans to start their localization starting from this year itself. So we have already engaged with them in our B2B business. There are a lot of inquiries that are coming to us, but primarily, we are very focused on selecting only premium to luxury segments in the B2B also. So we are not rushing into it, though there are a lot of inquiries and those are low-value products and our manufacturing capabilities do not allow us to take on those kind of projects.
Understood. Sir, any guidance that you can provide on this business specifically as in how much it is currently and what scale it can achieve maybe over a 3, 4, 5 period?
You're talking about the B2B business?
B2B, B2B business opportunity, yes.
So our B2B business has been quite consistent with close to about… INR 100 crores?
Yes, currently at about INR 100 crores. Yes.
We are at about INR 100 crores now. And I think we see it having an opportunity to grow by about 20%, 25%, 30% year-on-year going forward, very selectively choosing the right set of inquiries. We have just exported our first shipment to Germany, and that is also a new opening for us. This is the first time we exported one container of furniture as a sample to German market. I think that is also getting realigned. There are a lot of European as well as American players wanting to move from China. So some of the high-end people have started approaching us already.
[Operator Instructions] The next question is from the line of Deepak Malhotra from CapGrow Capital Advisors LLP.
My question -- first question is on one of your product lines, mattresses. I just wanted to know how much percentage of your turnover is that? Is it manufactured in-house? Or are you focusing on memory foam, latex, pocket springs or a combination of these kind of technologies? And how is it slotted against, say, a Sleepwell or a Kurlon? That's my first question.
Thank you. Currently, our mattress business is about 1% of our entire retail revenues. Our mattress again, is absolutely not competing or in the same level of either Kurlon or Sleepwell. Our mattress recipe has been obtained from Norway and the specialty of our mattress is it's an absolute luxury mattress, which has got close to 10,000 springs in the titanium springs in the King size mattress, which we retail in excess of INR 2 lakh a mattress. So these are only sold in our Level Next showrooms. And now we have also started opening the second line, which is basically the premium line under the name of Slumber Mate, which is again the recipe we have obtained from an American company, so which are also a lot more advanced. These are spring plus memory foam mattresses. We have just started selling them in our Sofas and More chain. So as we go forward, we do not have any plans to sell the mattress in the open markets. These mattresses have been developed at a very high-quality spec and will accompany Stanley f full-home solutions going forward.
I absolutely agree because if the pricing point is INR 2 lakh, I mean, that is honestly quite at the higher end of it. The other product, which, I mean, I'm sure is not in competition has been launched is the [ Pro Sofa HR ] range by the same company, which I just mentioned about, Sheela foam. So does that compete with you at all?
No, no, no. So unfortunately, where we are positioning ourselves is a lot more higher value product. Most of our mattresses are not sold as various different type of foam expositions. They are actually with various other materials such as latex, different types of memory foams, different types of latex also and different types of springs. So these are absolutely in the luxury segment. And currently, we do not have any local manufacturers offering something equivalent to what we are offering. It is mostly imported European mattresses such as Duxiana or Hastens, which are brands that have already come to India, where the mattresses are in excess of INR 10 lakhs.
Sure, sir. My second question is that while obviously you are focusing yourself as a premium and as a luxury player targeting at that segment -- so I have 2 parts to the question. One is when you're talking on your B2B business, I mean, you are talking of IKEA, for example. Now IKEA globally is basically a DIY budget targeted kind of a brand or market, whatever you want to say. So how do you marry that in India? And my second part of the question is on the furniture rentals. At the moment, like you are focusing largely on Tier 1 cities, but there is obviously a good market for it even in Tier 1 and Tier 2 and Tier 3. So have you looked at that market at all, sir?
So I will answer your second question first. Part of the plan to have a 3 segment [indiscernible] strategy was to penetrate the country with different, what you call is drop-down segments. For example, the Sofas and More is what you can call as a value line segment. That has the potential to probably go to about close to 100 different cities in the country in the next 5 years. Stanley Boutique, which is a premium brand, has a potential to probably grow to about 30 cities in the country.
And Stanley Level Next, which is a luxury brand, has a potential of about maximum 8 to 10 cities where we are already present. So coming back, IKEA, I strongly request and suggest that investors interested in our company to visit our company and manufacturing setups because for us, we are manu-retailers and manufacturing is a very crucial and very powerful, what you call as an advantage we have. While IKEA and other B2B business is done in a completely different plant. For us, it is all about our design development and how we customize bespoke manufacture under Stanley label. So there are 2 different manufacturing facilities. For Stanley, everything is done cellular. We have Italian and German designers. We have a very strong NPD team.
We develop close to 150 new products every year. And every custom order is a different order. And it is a cellular manufacturing plant, which can -- which has the capabilities of doing a complete home from kitchens to wardrobes to loose furniture like sofas, hot chairs, recliners, dining tables, coffee tables, dining chairs, beds and mattress. While our B2B facility is purely a sofa manufacturing plant where we have repetitive manufacturing capabilities and can do high-speed manufacturing for people like IKEA. So there are completely 2 different ways of manufacturing. That's how we are going about our business. I hope I've answered your question.
Just one more, if I may ask you, sir. How are you seeing the consumer behavior changing in the sense that earlier when we used to buy leather sofa or anything which is at that end, it will continue to adorn our house, say, for 20, 25 years even. Do you see any change in that behavior where people want to change that, especially when we are paying such a high amount?
So 2 things here. One is India as a luxury consumption story, we are at what I call as a 9 a.m. moment in the sense we are just about moving from basic necessities to comforts and from comforts to lifestyle and from lifestyles to luxury. So that journey has just about commenced. So as we look at our retail business, almost 90% of our customers are new home makers. So we are not a matured market like Germany or Italy or London or U.K. where almost 90% of the high-end furniture buyers are actually refurbishing their house. But in India, the opportunity is completely different. As of now, 90% of our customer base is new home -- people who are buying new homes and moving into new home. So the premiumization has just about started. People are updating themselves. People who had maybe a smaller apartment are going for a larger apartment. A person who had a larger apartment is going for a better location, even a bigger apartment or in most of the country, they also have a lot of villas that they can buy other than Mumbai. So that is how this market is currently poised. So we truly believe that the value proposition what we offer at the luxury segment is something that has been -- there's been a lot of aspiration that we have created over the last 30 years, the brand has been present. And I think the future is going to be very bright for us.
The next question is from the line of [ Yug Jhaveri ] from Molecule Ventures LLP ].
So first question was on the side of the performance across all the 3 segments. So if you can provide the breakup, B2B, B2C and B2B2C on quarterly basis as well as yearly basis?
We'll start with B2C.
Yes. So I'm talking about quarterly numbers. Our quarterly growth over last year for COCO retail business is about 13.5%. The B2B2C business is degrown by 45% and my B2B business is almost flat with a very small negative growth of minus 2%.
Okay. So retail business grew 13% year-on-year for FY '25. But due to B2B2C slowdown, the overall revenue was flat. Am I correct?
Yes. So that's been the business vertical that we had to do some change there in credit policy. We moved from credit to cash and carry. And that had a business impact right from quarter 2 onwards, which is stabilizing now around the fringe, but then I think for the full year -- for the quarter and for the full year, this business vertical was severely impacted.
There was a large outstanding. I think we have successfully collected that. Almost 80% of the outstanding in the market has been collected, and we had to go to cash and carry. But now the vendors -- I mean, sorry, the buyers are -- the market is getting used to it, and we are starting to stabilize.
I just wanted to understand that B2C is growing actually 13%, 14%, but B2B and B2B2C the overall revenue is hitting up. So what is your outlook, like, in previous con call, you said by Q2 FY '26, B2B2C will be improving. Now you are saying that by Q3 FY '26, it is improving. So just wanted your words on this matter that how these other 2 segments will scale up? And are you intact on your guidance [indiscernible]?
See, our main focus is always going to be B2C. That has been our major focus constantly. And B2B2C and B2B are incidental businesses, legacy businesses that are there. We will continue to hold them well as long as they are profitable. That's how we are measured in our manner, and we continue to focus mostly on B2C. You want to add?
Yes. And all my investments in retail expansion of stores, all are contributing in my COCO and retail business growth.
Okay. So the issue which you were telling about in previous calls, that inventory handover issue, so there are articles which are saying that the sales -- luxury housing sales are growing up in Bangalore from last 3, 4 quarters as well as the inventory levels are going down. So what is the actual problem we are facing right now? Is it inventory handover or some approval issue? If you can explain how this works and what is the correct issue which I'm facing? Are you facing challenges from Chinese manufacturers, European manufacturers? What is the scenario right now?
Sorry. Can you repeat that question again, please?
Handover issue.
Yes, sure. Just wanted to understand that from previous quarters, you were saying that there are inventory handover issues, but there are many articles which are saying that housing sales in Bangalore are going up and also inventory levels are going down. So what actual issue you are facing right now? So is it inventory handover issue, approval challenges or competition from Chinese manufacturers? What is the actual problem we are facing right now?
So I think it is definitely, in my opinion, the #1 problem is still there is -- if you look at RERA, there has always been a constant delay in every single project across the country. And Bangalore probably is maybe slightly better in terms of handover. But if you look at cities like Hyderabad or Mumbai or for that matter, Delhi, including DLF, there has always been a constant delay of between 15 to 18 months as far as RERA is concerned. So while the properties have been sold, there has been -- we are expecting -- we are looking at certain delays in handover. So that I think there has been a bigger chunk of properties other than in Bangalore that are held, which are all going to come to the market due course of this year. That's what we are expecting.
So while there has been some amount of competition that has increased across various European brands coming into the country. But for that, we look at it as a positive competition because the pricing is a lot more, I think, much more higher than what we offer in all our 3 segments. The Chinese competition has been there and has been very strongly associated with the more under organized or unorganized kind of a sector where there has been always a problem of [ underinvising ] and stuff like that. That is hopefully getting cleared up with the new BIS. So that is something that we remain very positive. Chinese competition mostly affects us at the bottom end of the pyramid with our Sofas and More.
Okay. Got it. So if you can please provide some light on the RERA, the RERA part which you said, how RERA -- what is the role of RERA in all of these? Does they give approval or what role they perform? And what is the reason?
RERA is body -- RERA is a body that actually tracks all the builders' association across the country. There are more than 16,000 builders that have enrolled with RERA and RERA tracks what is happening and it supports the customer -- if there is a more than expected delay, you can always approach RERA and RERA will support the customers by ensuring the builders who have enrolled with RERA deliver on time or give some penalties or things like that.
Okay. So there is a delay from the builders end and RERA is helping positively, right?
Yes, absolutely.
Okay. And just last question on the CWIP side. So the IP payment was to be completed by Q2 FY '26. So if I'm seeing, the CWIP amount is INR 38 crores previous year and currently is also INR 38 crores. So why -- so I might be mistaken, but why it is not transferred into intangible assets till now?
So this is towards transfer of trademark and copyright assets. While we have made the necessary application, it has not got fully transferred in our name. So pending that, it continues to be reported in CWIP. And as company gets the transfer of entire trademark and copyright asset, we will move it into intangible assets.
By what time are you expecting the same?
See, that's almost more than 50% we've already got. There is a small chunk which is under process. I hope we should get this by quarter 2 end. We'll keep everybody posted on this update.
Okay. And the last question is on the same-store sales growth side. So if you can provide for this quarter also and for the entire year across all the 3 formats?
Yes. So our same-store sales growth for the quarter has been positive, quarter 4. Level Next has been almost like -- all of these are in single-digit numbers. While we don't report SSSG anywhere, but then I think I would just comment that this is -- at least this quarter and quarter 3, quarter 4 is where we have seen like...
Was positive.
Yes. The sales has started rebounding is what we've seen. So we are in a positive territory. Stanley Boutique is where we need to have some fixes done. And I think that is a segment where we've already started relaunching the products and rebranding the format store itself, where we have launched new stores. So that is a segment that there is still some work to be done. But I think we are happy that in this quarter…
That segment probably will also be flat this year…
Yes.
But because it is going through a complete orbit change -- it's a very old format, and so that is going through orbit change. But Level Next and Sofas and More, both the segments have shown a good high single-digit same-store growth.
No, whole year.
Okay. And you expect B2B business to grow by 20% this year, along with B2C or this year would be also flat?
Flat. This year also, we are expecting B2B to be flat. Primarily, our growth will come mostly from the stores that are maturing. Many clusters we have also acquired in terms of now becoming more COCO or owned stores there and the new stores that we are planning to open.
So this year, entire bet is on B2C only because B2B2C will revive from Q3, while B2B will be flat, right?
Correct.
The next question is from the line of [ Shubham Biswal ] from [ Convergence Capital ].
Yes. So sir, I was doing some ground work and I was talking to some of the home buyers who are in the range of INR 50 crores plus, I think they are a segment. And so what they do is usually when they want luxury furniture, they reach out to these interior designers or contractors and these contractors usually point them towards Italian companies like Minotti, Giorgetti, right? So sir, are we trying to get to these interior designers and -- so these interior designers and contractors, I think so they take a commission for this referral in a way. So are we trying to get to these interior designers and contractors and we probably, like, as a distribution mechanism, this will work? Any work on that side, sir? That's my first question, sir.
Yes. So now you are talking about what we call as a super luxury segment, which is, in my opinion, also a very strongly growing segment in the past 5, 7 years. We have kept a close tab on that, and that is something that it's still going to grow further going forward. We are exploring some joint ventures of sorts with the European brands, which we'll basically highlight probably in the early stage of next year. But currently, we are not really present in that segment. Our customer base, you can say, when we say luxury for us, the customer base is between INR 5 crores to INR 25 crores, INR 30 crores kind of a customer base. The super luxury segment has a tendency to go to mostly European brands, which have a very long legacy and have a strong global presence. So that market is something that we have kept an eye on, but it is, I think we will kind of also look at a format where we will bring in some luxury brands if required as we go forward. But currently, yes, we also associate and work with close to 1,000 specifiers across the country, but we are not really able to reach out to the super luxury, which is like you said, INR 50 crores and above kind of homes. They have a tendency to go to more international brands.
My question was that on the side of are we trying to -- like in some industries, sir, so in paint industry, for example, they reach out to these painters or like in pipe industry, they reach out to the plumber. So like the decision makers are sometimes not the original customers, right? So in your industry, does it happen that these original customers are usually the decision makers or they influenced by someone else? I mean, how does it work in your industry, sir? I mean that's what I wanted to understand.
Sure. So basically, we have a very strong business development team. We reach out also, like I said, to our architects and specifiers. We normally also hold what is known as factory visits. We bring them in clusters from Bombay, Pune, Hyderabad and show them our facilities. That is an ongoing business development work what we do. At the same time, our brand building and our exposure to direct customer is also very high. So in many cases, it is such that the customer also definitely decides that we want to buy Stanley. And that's how we actually -- but at the moment -- what is the B2B specifier-driven business percentage currently?
20%.
So 20% of our Level Next business is currently coming from what we call a specifier-driven business, which is from architects and interior designers and 80% is coming from our direct customers in the Stanley Level Next. But in Sofas and More, it is almost 100% is a direct B2C. It's not a specifier-driven business.
That was really helpful. Just the last question, sir. Sir, so what I have understood is that this is a business where we have to nail the theme, right? Once we make a product, it should be in line with the current trend, right? And I've understood that there are some 10 to 12 themes that recently we have done, I think there is Japan, [ Century ] or Bohemian or those are some of the themes. So how do we understand which theme might work? Or does the theme keep changing a lot? Is the frequency of these theme keep changing a lot? How do we gain feedback from the market that which theme is probably running and accordingly, how do we try to nail on the execution? That was my last question, sir.
You seem to be exceptionally knowledgeable about my industry. If you are bored about investments, you can always come and work with us here. You're absolutely right. You're absolutely right. There have been various trends that have been coming and going and also staying, some trends stand. So basically, if you look at what Stanley offers in the Level Next, we call it as artisanal luxury, which is something which we arrive mostly from higher craft, an artisan workmanship. So we are not comparable with very ultra-luxury or ultramodern or mid-century modern or whatever it has been interpreted as from various different parts of the world. Our inspiration is completely international, but we do have a touch of India in our product, which is fine craftsmanship and fine material what we supply.
So I think we are in the process over the last 20, 25 years have been honing our skills. And we have developed a very new line, which I truly believe will have a great opportunity in the -- what you call a global market also. So my vision is to first ensure that we are able to be the absolute leaders in the country where this all started. So we are focusing mostly on domestic right now, while we are constantly keeping our eyes open to probably expand into the Middle East in the next couple of years or so. So that is how we are planning. And if you -- again, if you visit our facility, you will understand that we have very strong and established designers and makers who have been in European countries as well as in China in the past 15, 20 years. We have a German with almost 50 years of experience. So we use them to bring the international [ list ] in the products, but we also have our artisans where we kind of give it an Indian touch in terms of showing craftsmanship. I hope I've answered your question.
The next question is from the line of [ Shriram R ], an Individual Investor.
:I had the same question as the previous participant. So how much of Stanley brand is driven by referrals? You mentioned Sofas and More and Level Next, but how much of it is driven by referrals in Stanley?
What is the split between the 3 brands today? You're asking the split between the 3 brands…
:No, no. The specifier or what do you call, the specifier driven -- you mentioned 20% of the Level Next business is from architects and interiors, right? So how much is Stanley? You mentioned Level Next. So.
Sir, Stanley Level Next, it's about 20%, about 6% in Stanley Boutique. As an overall group, it is only 6% because Sofas and More, it is not specifier-driven business. It's a pure B2C business.
:Okay. And my second question is since you are targeting INR 5 crores to INR 25 crores ticket size, why not directly engage with the large developers? Have you thought about it? Or have you done some progress in that direction?
Yes, definitely. So basically, what it is, is we are very clear that we want to remain a B2C brand and thereby prefer to directly deal with the customers. The minute you try to have an association with the builders, they will look at you as their vendor and they ask for B2B pricing for the brand. So that is something that we are not willing to accept at this point in time. Having said that, many builders now have found the necessity to associate with luxury brands, especially if they are not luxury home constructors in the past and want to do something in a high-end project, they are approaching us. So we will -- I think there will come a time when they will approach us, then we will approach them. That is our policy, and that is how we have maintained throughout the years.
[Operator Instructions] The next question is from the line of [ Om Prakash ] from [ Lotus Capital ].
What is the strategy on having a sale in the company? Because off late, I see that many times your -- previously, the store never used to go on a sales so often. Is it [indiscernible] strategy?
Yes. Let me explain. Basically, since we are what you call as a display-led business and the customers do not have to buy what is there on the floor, this is our greatest USP because if you look at any traders, the traders get products in stock and they have inventory, warehouses and they kind of put the products on the floor and try to sell the same product. In our case, we are an inventory-light model. We do not have any warehouse inventory. Whatever we have inventory is in the form of display stocks in our store. And while our customers see the product and offer what they want, almost 85% of our orders in Stanley Level Next is bespoke orders in the sense the customer looks at a particular product, touches, feels it, understand, sits on it and then says, I want the same product, but in a different color or different configuration. So everything is custom made. So thereby, our products which are there on the floor constantly need to be changed because we are coming up with innovative new models, understanding the trend. So twice a year, off-season and season, we go on a sale. The sale is applicable mostly to what is on the floor, floor display stock only. So that is the need of the business. So twice a year for almost 45 days, each time we are very strongly present in the national market, and we try to dilute our floor stock and refresh our stores every year. I hope I've answered…
Okay. It's only twice a year because I think constant we see this ad. I was not concerned about you going on sale maybe because you're a very premium brand and your products are outstanding. So -- I have been a user of your Stanley so far. I think they're one of the best in all the local brands, what is there in India. So -- and whom do you think is your competition there in this -- in India?
Thank you very much for being our customers, and you can always reach out if you need any service, that is our constant endeavor. We are -- one thing we have always tried to maintain is to have a 100% CSR, 100% customer satisfaction report. That is what we have always strived. At this point in time, frankly, I might sound a bit cocky, but at a national level, I don't think we really have any serious competition from anyone manufacturing in India because they do not have the required know-how or the 30 years of established manufacturing capabilities. While there are various young brands which are trying to lure younger customers with a different design outlay, they are still very small and mostly local. So in the segments where we are playing, I think we really do not have any major competition from within the country. Our competition is mostly importers and traders who are basically importing a lot of products from China, Malaysia and Turkey. Turkey was a growing business, but I hopefully think that now they have started to stop buying from Turkey. When you start buying from Europe, either Germany, Spain or Italy, which are large manufacturing countries, we don't mind because the quality is much higher and the price is also much higher in each of the segments in what we are playing. So that's…
My concern is, the sales have been flat for the last 3 years. So obviously, it should be your concern as well. So you have been stuck in this INR 400 crores of sales for the last 3 years. Whereas your penetration is going up, the number of stores are going up, your visibility has improved. The number of houses coming in the country has gone up. The affordability has gone up with the people. The real estate prices, you have seen people are really affording large houses. So where is it that we have not been able to grow in the last 3 years? What is your internal?
If you, I think, deep dive into our business, I think probably if you look at with a different lens, our B2C business has constantly been growing. While we had in the first year, probably some consolidation where we had to take over some partners and correct ourselves in those clusters. But if you look at it, even now, I think our B2C business is definitely on a growth path. While our legacy business of B2B, which is automobile as well as to IKEA what we supply and also the trading business, which we are doing is something that we have not focused on. And those are the business -- not focused on is the wrong word. It's not that we have an opportunity to increase our profitability in those businesses. While there is a lot of business available, I could easily do INR 100 crores, INR 150 crores of business with IKEA because they have the requirement. But we realize that the profitability is extremely low and the ecosystem to supply to them globally with the kind of prices what they want is not ready in our country. So while -- yes, you are absolutely right. While we have been flattish for now the third year. But when you look at it, like I said, with a different lens, you'll see that we are expanding in the right clusters. We are establishing stronger market share, including in our home market, constantly being growing year-on-year for the last 3 years. I think about 5 years ago, the Bangalore market, we were doing only about INR 25 crores, INR 30 crores of business. And currently, last year, we closed at?
INR 135 crores, INR 140 crores.
INR 135 crores to INR 140 crores. So what we have also done -- it's an important question, and I'm trying to answer it to the best of my ability. We have done the proof of concept in Bangalore. We didn't want to rush into many cities. We wanted to complete our proof of concept with what I call as a hub-and-spoke model of business. So we have a very dominant what you call as positioning in Bangalore, exactly what we are now replicating in Hyderabad and probably also Delhi. Mumbai is continuing to be a big challenge only because of real estate. That is how we are planning to grow.
So there is more scope for your gross margin and your EBITDA margin to go up since you're increasing the share of B2C going ahead also?
Absolutely. So the target is very clear, INR 1,000 crores with a 15% to 20% PAT over the next 3 years. That is the target we are keep in mind, and we're working towards that.
[Operator Instructions] The next question is from the line of Avinash Nahata from Parami Financial Services.
So I have 2 questions. The first question is, when we were mentioning 18%, 6% of our sales for a particular brand of ours within the 3 level where we play, we were mentioning architects and interiors -- do we mean that we actually bill to architects and interiors?
No, no, no. We never bill to any architects and interiors. They bring us the customer, and we have a referral reward that we give them.
Okay. So I mean, it is literally 0%. There's nothing which goes to -- and they don't work as turnkey project providers to the end customers?
No, no, no, we don't do that. There are multiple non-branded B2B players who do that. As a branded company, we don't do that. We always bill directly to customers. So our entire databank is directly with our customers.
Okay. So one question just to understand the competitive intensity in this thing. So whenever we are working with luxury brands, there's a tendency for a consumer to use cash for their purchases. I mean, this has been -- therefore, that's the history of the country. And as and when the economy gets formalized and the cash in the system goes down, it is better for players like us. So just to understand this context because they want to work around with the GST, et cetera. So what kind of business we lose 1 out of every 20 customer or 1 out of 10 customers who just asked for this and we as a corporate are not able to do that? And maybe this business comes to us in future?
Absolutely right. I think you are very correct here. While we have seen across the last decade, 1.5 decades, the requirement to have no invoice or only cash sales have definitely started to reduce. And now thanks to GST introduction, many entrepreneurs actually buy it with the complete invoice and probably even if they're taking it to their homes, they might get it invoiced in their private firms or something like that. So that has been in favor of organized companies like ourselves. You're right, probably 1 in 20 customers or maybe -- depending on which city. Some cities, there is a little more demand and Level Next, I think -- not in Sofas and More. That is already now moving towards what you call as EMI and card payment. Almost 70% to 80% of our business is coming from card payment and about 20% coming from EMI payment. So that is a different segment. But in Level Next, probably in cities like Delhi and Hyderabad, we might lose 1 in 20 or 1 in 25 customers…
Depending on the city.
Yes, depending on the city. Bangalore is a lot more cleaner. Mumbai is also much better, but cities like – sorry?
Hyderabad.
Hyderabad and Delhi.
Hyderabad and Delhi.
Chennai is also very clean, yes. So this is the reality of the country today.
Okay. And if you want to answer this question, I mean, we do some INR 400-odd crores of business around the year. So what is that comes from net banking and your credit card, what percentage, if you want to answer this?
In the retail sales, what is coming from net banking and credit card?
Everything is from -- you want to split between net banking and credit card?
No, put together. I mean, put together, credit card, debit card, all formal channels, what percentage of business?
So 100% of my collection is through banks. Everything is collected in bank.
So even small purchases like a side table or a coffee table are not happening through cash? I mean, if the amount is INR 50,000 or INR 100,000, they don't happen in cash?
They do that. The limit is there up to, I think…
INR 2 lakhs.
INR 2 lakhs, yes whatever [indiscernible] as per that, we do some small sales in cash. But as of now, you are saying…
45% is through credit card and 55% through RTGS. And we are a -- please always remember, we are 100% cash and carry company, and we take 50% in advance and 50% before delivery. So this is the trade right now.
The next question is from the line of Devanshu Bansal from Emkay Global Financial Services Limited.
Sir, there was a big marketing push in Mumbai recently with large banners across the city. I just wanted to better understand the strategy or the key indicators that triggered such kind of a marketing campaign? And secondly, how has been the response to this marketing campaign?
So addressing your question, candidly, we have been at this for many, many years now, and we are still in the process of experimenting because the goalposts are constantly being changed. While we have constantly been using traditional marketing such as print and outdoor media, we are also now very meaningfully and very measuredly moving into social and digital media. And also, as we speak, there are new methods of marketing, which are experiential marketing and specifier marketing that we are embarking on. So I think to be candid, I think and honest, I think while we have successfully built the business so far, I think we really know only 50% of how to go about it in the future because there are always constant dynamic changes. So we are very -- keeping our ears to the ground and doubling up on whatever works for us. We have tried, as you said, a lot of outdoor. Outdoor did not give us the ROI. We have tried some airport marketing, that also did not give us the ROI. Currently, it is mostly print and through interior architect magazines and sometimes through national dailies that is working well for us. But having said that, we have also started digital and social media marketing that is also seeming to be working for us. We are very measured as a company, we have never gone beyond 9% as our marketing expense historically.
Can you call out as in what was the expense last year? And what are we targeting for the current year, FY '26?
For the marketing spend?
Yes, yes.
I think... 5%. Last year, in fact, we have also reduced compared to the previous year. Actually, we are at 5% last year. This year also, we are aiming to be between 5% to 6% maximum.
As there are no further questions from the participants, I now hand the conference over to management for closing comments.
Thank you all for taking the time to join us today and for your continued interest in Stanley Lifestyles Limited. As we continue to navigate opportunities ahead, we remain committed to delivering consistent growth and value in the coming quarters. As always, if you have any further questions, please feel free to reach out to our Investor Relations adviser, Churchgate Partners, and we'll be happy to address your queries. And thank you very much once again.
Thank you very much. On behalf of Emkay Global Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.