Studds Accessories Ltd (STUDDS) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to Studds Accessories Limited Q2 and H1 FY '27 earnings conference call. 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. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements are not the guarantee of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr. Sidhartha Bhushan Khurana. Thank you and over to you, sir.
Sidhartha Bhushan Khurana (Studds Accessories Ltd): Thank you. Good morning, everyone, and thank you for joining Studds Accessories Limited's Q2 and H1 FY '27 earnings conference call. I hope you have had an opportunity to go through our financial results and investor presentation which are available on the company's website and the stock exchanges. I'm joined today by Mr. Bharat Bhushan Khurana, and SGA, our Investor Relations Advisor. The first half of FY '27 has been challenging from an input cost perspective, with geopolitical and trade-related uncertainties contributing to volatility in global markets. Significant increases in styrene-based raw material prices have impacted on our gross margins and EBITDA profitability. We have implemented calibrated price increases across our sales channels to partly offset the impact, although sustained recovery in margins will depend on raw material pricings stabilizing. However, I would like to emphasize this emphasize that this is a raw material-led cost challenge and does not change the underlying fundamentals of of our business or our long-term growth strategy. Premiumization. Moving towards higher-value products, one of our key priorities is to gradually strengthen our presence in the premium segment. We are consciously working towards increasing the contribution of premium products to our overall business with SMK playing an important role in this journey. Our efforts are focused on expanding our premium product portfolio, introducing new designs and features, and catering to the evolving preferences of consumers. We are encouraged by the progress so far with SMK's contribution to overall sales increasing from approximately 13% in Q2 FY '26 to 20% in Q2 FY '27. This reflects the growing acceptance of our premium offerings and the progress we are making in improving our product mix. Export growth. Alongside strengthening of our premium portfolio, expanding our international business remains an important growth priority for Studds. Today we have presence across more than 70 countries with SMK playing a significant role in our international expansion. We have made steady progress in scaling our export business with export revenue increasing from rupees 53.2 crores in FY '24 to rupees 137.6 crores in FY '26. In H1 FY '27, we recorded export revenue of rupees 79.4 crores, that's growth of nearly 50% over H1 FY '26 reflecting the growth growing scale of our international operations. Hence, our focus will be on deepening our presence in existing markets while expanding into newer geographies. We see meaningful opportunities across Europe,
Sidhartha Bhushan Khurana (Studds Accessories Ltd): the US and Latin America, supported by our established brands, wider product portfolio, and a stronger distribution capability. An important step in this direction has been the incorporation of our wholly-owned subsidiary in Italy, which will function as a warehousing and distribution hub for Europe. This will strengthen our international distribution infrastructure, improve supply responsiveness, and enable us to build closer relationships with customers and distributors across European markets. Through these initiatives, we aim to build a stronger and more scalable international distribution network, which will support the next phase of growth in our export business. Expanding manufacturing capabilities: Alongside strengthening our market presence, we are also investing in manufacturing capacity to support our growth ambitions. We commenced commercial production at our new plant on 30th October 2026, adding 1.5 million units of annual helmet and boxes manufacturing capacity. With this addition, our total installed capacity now stands at approximately 11.5 million units per annum. We are further planning an additional capacity of 1.5 million units over the next 18 to 24 months, taking our planned installed capacity to approximately 12.5 million units. The expansion is particularly important from a scale and headroom perspective. Our existing manufacturing capacity was operating at a relatively high utilization level of approximately 83% as of September 30, 2026. With increasing demand across our domestic and international markets, the additional capacity provides us with the necessary headroom to support future growth, cater to larger opportunities, and respond more effectively to customer requirements. Our capacity expansion is therefore not merely about increasing production; it is about preparing the organization for its next phase of growth and ensuring that manufacturing capacity does not become a constraint as demand scales up. Product innovation: Another important area of focus is expanding our product portfolio beyond helmets and entering adjacent categories within the broader rider safety ecosystem. One of the key initiatives in this direction is our entry into riding jackets under the SMK brand through in-house manufacturing. We commenced production in September 2026. We are progressively scaling up this capability with the plan of producing 10,000 units by March '27 and 40,000 units by next fiscal year. Riding jackets are an important part of the overall rider safety ecosystem. They are designed to provide riders with an additional layer of protection while riding. We believe this category offers an opportunity to leverage our established brand and presence, and customer relationships while participating in a larger share of the rider's safety and riding gear requirements. In addition, we are preparing to launch our Bluetooth-based rider communication system in November 2026. This will allow riders to stay connected while riding and add another technology-led category to our product portfolio. These initiatives are strategically important as they create growth opportunities beyond our traditional helmet business. Our objective is to gradually develop a broader portfolio of products catering to the evolving needs of the rider community. Brand building and engagement: We are also strengthening our brand visibility and engagement with the global riding community. As part of our marketing and international expense expansion initiatives, we are participating in EICMA in Milan, Italy, one of the world's leading international motorcycle exhibitions, which brings together global manufacturers, distributors, industry participants, and group and motorcycle enthusiasts. This provides us with an important platform to showcase our STUDDS and SMK brands, demonstrate our expanding product portfolio, and strengthen relationships with international distributors and potential business partners. Similarly, our participation in India Bike Week at Panchgani will allow us to engage directly with India's growing motorcycling community, connect with riding enthusiasts, and strengthen brand awareness and product visibility in the domestic market. We view we view these platforms not merely as exhibition opportunities, but as important investments in brand building, customer engagement, and long-term market development. Looking ahead, we remain focused on growth prospects. Our medium-term aspiration is to scale our overall revenue to rupees 1,000 crore, with exports contributing approximately 25%. Thank you once again for your continued trust and support. I look forward to sharing more details on our performance and addressing your questions. Consolidated financial performance: Quarter 2, financial year '27 performance. Our two-wheeler helmet and boxes volume stood at 2.04 million. Consolidated revenue stood at rupees 183.1 crore, which grew by 18.6% year-on-year. EBITDA for the quarter stood at rupees 22.8 crore, decreased by about 23.7% year-on-year. EBITDA margin stood at 12.4% in Q2 FY27. PAT for the quarter stood at 14.
Sidhartha Bhushan Khurana (Studds Accessories Ltd): 7 crores, decreased by about 28% on year-on-year. PAT margins stood at 8.1% in Q2 FY '27. Capacity utilization for two-wheeler helmets and boxes, EPS and water decals stood at about 85%, 88% and 64%, respectively for Q2 FY '27. H1 FY '27 performance: our two-wheeler helmet and boxes volume stood at 3.99 million. Consolidated revenue stood at Rs. 352.8 crores, grew by 16.2% year-on-year. EBITDA stood at Rs. 42.3 crores which decreased by 29.6% year-on-year. EBITDA margin stood at 12% in H1 FY '27. PAT stood at 27 crores, decreased by 33.8% year-on-year. PAT margins stood at 7.7% H1. Capacity utilization for two-wheeler helmets and boxes, two-wheeler helmets and boxes, EPS and water decals stood at 83%, 87% and 65%, respectively for H1 FY '27. With this, I open the floor for the questions-and-answers session.
Moderator: Thank you very much. We will now begin with 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 Nishita from Safari Capital Limited. Please go ahead.
Nishita (Safari Capital Limited): Yes, hello. Good morning. So I had a few questions. My first question is on our capex. So since we're expanding our capacities also, what is our total capex spend going to be in FY '27?
Sidhartha Bhushan Khurana (Studds Accessories Ltd): Yeah, good morning Nishita. So, our capex spend for FY '27 is going to be 58.22 crores for the new plant, and including regular capex, the total capex is going to be 84.7 crores.
Nishita (Safari Capital Limited): Okay, okay, understood. And my next question is on our new products. So, like we are coming up with two new plants: jackets, we already started, and communication systems. So, are they both manufactured in-house only?
Sidhartha Bhushan Khurana (Studds Accessories Ltd): Yeah, so jackets are manufactured in-house. And the Bluetooth, we're launching three products and out of the three products, one is completely built inside and two are assembled inside.
Nishita (Safari Capital Limited): Okay, so what's the total capacity for these products?
Sidhartha Bhushan Khurana (Studds Accessories Ltd): For the jackets, for next year they said 40,000 is what we intend to sell and manufacture in the next financial year. And for the Bluetooth, the capacity is more than 2 lakhs a year and we'll see how the market goes, but ramping up the capacity of Bluetooth is not a very big challenge.
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