Forcas Studio Ltd (FORCAS) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator (Kirin Advisors Private Limited): Ladies and gentlemen, good day, and welcome to Forcas Studio Limited H1 FY '27 results conference call hosted by Kirin Advisors Private Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Karan Thakur from Kirin Advisors Private Limited. Thank you, and over to you, sir.
Karan Thakur (Kirin Advisors Private Limited): Good afternoon, everyone. On behalf of Kirin Advisors, I welcome you all to the H1 FY '27 earnings conference call of Forcas Studio Limited. We have with us senior management of company led by Mr. Sailesh Agarwal, Managing Director; and Mr. Saurav Agarwal, CFO and Whole-Time Director. We will begin with the opening remarks from the management, followed by a Q&A session. I would now like hand over the call to Mr. Sailesh Agarwal, Managing Director of Forcas Studio Limited. Over Over to you, sir.
Sailesh Agarwal (Forcas Studio Ltd): Yes, hello, good afternoon, everyone. And a warm welcome to all investors, analysts, and stakeholders joining us today for the H1 '27 earning conference call of Forcas Studio Limited. On behalf of the management team, I thank you for your continued trust and support. I hope you have had an opportunity to review our results and investor presentation. When we last spoke in May, I said that FY '26 was about building the foundation, and FY '27 would be about expansion. H1 FY '27 was the first test of that plan. Our total income grew 56.4% to be precise year-on-year, and net profit grew 72%. More importantly, we continued to widen the availability of our products across distribution, online marketplaces, and mostly importantly quick commerce. While scaling FTX and Tribe, and preparing for the launch of our new brand, Fitness Exchange. So, India's apparel retail market stood at approximately INR 10 lakh crores in FY '26 and is projected to reach INR 16 lakh crores by FY '30. Mass-priced apparel rep--
Sailesh Agarwal (Forcas Studio Ltd): is around 72% of the market. But it is way higher, you know, than these percentages. Highlighting a substantional opportunity for organized and branded players. The festive and winter period is an important season for the industry. And execution through the second half will be significant for the year. A few structural trends continue to support our strategy. Digitalization is changing how consumers discover fashion, while quick-commerce is emerging as a new route not just for, you know, the general industry, but also for the fashion industry and rapid fulfillment. At the same time, value-conscious consumers continue to look for fashion, quality and affordability at accessible price points. Our asset-light model, direct fabric sourcing and focused price positioning helps us respond to these needs while keeping capital allocation discipline. Our core focus during H1 FY '27 was to expand our product availability and strengthen our distribution network. We have built a network of distributors and semi-wholesalers, and we have 18,000-plus retail touch points. And a presence across 10 to 12 states. We remain focused on further expanding our reach. With FY '27 milestones of 700 to 800 distributors and more than 25,000 retail touch points by March 2027, we are firmly aligned with those targets. Our digital presence continues to play an important role in our growth strategy. We are present on more than 12 to 15 online marketplaces with our products available across over 21,000-plus PIN codes, reaching more than 8 million customers. In FY '26, online marketplaces generated revenue of INR 80.1 crores, representing year-on-year growth of 37%. Going forward, our priority is to strengthen product availability and discoverability across platforms while delivering a consistent customer experience. Quick-commerce was an important step forward. So, we went live on Zepto last year, then we went live on Myntra Now, that is M-Now. And FTX went live on Flipkart Minutes on July 29, 2026. And our products are now available across four platforms, those are four quick-commerce platforms: Zepto, Myntra M-Now, Flipkart Minutes and the fashion startup, fashion quick-com startup, Boon. On Zepto, the business scaled from initial launch of 1 SKU across 10 stores to 138 stores and more than 100 SKUs by the end of FY '26. Myntra M-Now launched with more than 100 SKUs with over 100 stores aligned, and approximately 1,000 additional stores are planned. Quick-commerce contributed around 4% of FY '26 revenue, and our near-term objective is to increase this contribution to around 15% of revenue as the channel matures. FTX remains our scale brand in the INR 199 to INR 599 price range focused on affordable, trend-led fashion. Tribe, our semi-premium bottomwear brand, is being scaled across distribution, marketplaces and quick-com. It grew approximately 2.1x in FY '26. And our FY '27 revenue target is anywhere between INR 30 to INR 35 crores. As Tribe increases its contribution, it can support blended realization while complementing FTX's reach and price proposition. For Fitness Exchange, our athleisure and sport accessories brand, product development and sourcing is half done and it is almost at the closing stage with a planned launch in Q4 FY '27 comprising around 100 opening SKUs split approximately equal between apparel and accessories.
Sailesh Agarwal (Forcas Studio Ltd): So the number of SKUs probably will be higher, you know, in in the accessories. But, the number of styles will be lesser. But, the with the colors and other stuff, you know, the the apparel will be almost equal to accessories. We continue to follow a test and scale approach to product development. Around 100 new options are introduced each month, typically in batches of 80 to 100 units. And production is scaled after customer response becomes clear. Approximately 80% of inventory is allocated to proven products, and around 1 in 5 to 7 tested options becomes a hero product. Our blended product return rate is below 12%. The average marketplace rating is 4.3 out of 5, and inventory write-offs are below 2%. The white-label business contributed approximately 21% of FY26 revenue and a closing order book of 17.8 crores at the end of March 2026. We continue to target white-label revenue contribution to move around between 20 to 22% while maintaining focus on our branded portfolio. Coming to the financial performance for H1 FY27, total income stood at 1,310 million compared with 837 million in H1 FY26, representing year-on-year growth of 56.4%. EBITDA excluding other income was 153.06 million compared with 88.67 million, registering growth of 72.6%. EBITDA margin also improved to 11.74% from 10.6%, a year-on-year increase of 115 basis points. Net profit stood at 99.91 million compared to 58.08 million, registering year-on-year growth of 72%, while diluted earnings per share were 5.68 compared with 3.3 rupees per share, representing year-on-year growth of 72.1%. PAT margin improved to 7.63% from 6.93%, an increase of 69 basis points. Our focus remains on disciplined pricing, product mix, and scaling FTLX and TRIBE, TRIBE specially as a margin-led brand while FTLX continues to drive volumes. Looking ahead, the second half includes a lot of festivity and winter season, which is important for apparel demand. Our distribution reach has broadened. Our products are available through multiple quick commerce platforms now, and our seasonal assortment is also in place. We expect quick commerce and TRIBE to continue a larger share of growth in H2, while we prepare to launch Fitness Exchange in Q4. Our FY27 guidance indicates revenue growth of 25 to 30% with further improvement in EBITDA margins. We will continue to widen distribution, improve online execution, and monitor inventory and cash conversion as the new channels mature. Over the medium term, our priorities remain to scale FTLX and TRIBE, expand distribution in quick commerce, and launch Fitness Exchange with the right assortment. We continue to believe that consumers at our price points are moving from unbranded to branded apparel, and that this transition remains at an early stage. Our focus will be on disciplined execution, product availability, and sustainable growth while maintaining the asset light nature of our business. Before I conclude, I would like to thank our shareholders, customers, employees, channel partners, and manufacturing partners for their continued support. We remain committed to executing our plans and create long-term value for our stakeholders. Thank you. I would now request the moderator to open the floor for the question and answer session.
Sailesh Agarwal (Forcas Studio Ltd): Thank you very much.
Moderator (Kirin Advisors Private Limited): We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Priya Jain from Green Capital. Please go ahead.
Priya Jain (Green Capital): Yeah. Hi, sir. So, I have a few questions with me. Firstly on the income side, we grew around like 55, 56% Y-o-Y in H1. How much of this growth came from volume, pricing, and product mix? If you can give us a little bifurcation.
Sailesh Agarwal (Forcas Studio Ltd): So, the product selling prices have, you know, the product input cost, in fact, has increased by good 25, 30% because of the current, you know, global situation. But we were able to, you know, consolidate and increase our pricing by approximately 7 to 8%. So, I think, you know, the product overall range of the growth is 56%, the total volume growth should be around 40%.
Priya Jain (Green Capital): Okay. And sir, also about the quick commerce part. So, what was our revenue from quick commerce in first half?
Sailesh Agarwal (Forcas Studio Ltd): So, for, from quick commerce, our revenue stands around 10% this time.
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