KHADIM - Khadim India

📊 NSE: KHADIM 🏢 Leather / Leather Products 📅 Last Updated: 12/14/2025 8:54

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue from operations for FY25 was INR 4,180.33 million, a 1.93% decline from INR 4,262.52 million in FY24. Retail segment revenue stood at INR 418 crore in FY25, while the Distribution segment (now discontinued) contributed INR 205.71 crore. For Q2 FY26, revenue was INR 1,016 million.

Geographic Revenue Split

The company has a geographically concentrated presence, primarily in East India followed by South India, which exposes it to region-specific economic risks. Specific percentage splits per region are not disclosed in available documents.

Profitability Margins

Gross margin for Q2 FY26 was 47.1% (INR 478.7 million). The company targets a long-term gross margin of 50-52%. PAT margin for Q2 FY26 was 1.7% (INR 16.8 million). FY25 consolidated profit after tax was INR 50.60 million, down 19.4% from INR 62.78 million in FY24.

EBITDA Margin

EBITDA margin for Q2 FY26 was 13.6% (INR 137.9 million). For FY25, consolidated Profit before Depreciation, Interest, and Tax was INR 755.28 million, a 6.25% decrease from INR 805.66 million in FY24.

Capital Expenditure

The company was sanctioned a fresh term loan of INR 20 crore to fund the expansion of Company Owned Company Operated (COCO) stores. As of June 2025, INR 6.50 crore had been disbursed.

Credit Rating & Borrowing

Long-term bank facilities of INR 151.45 crore are rated CARE BBB (Rating Watch with Developing Implications). Short-term facilities of INR 31.50 crore are rated CARE A3+ (RWD). Interest coverage ratio was 2.27 times in FY24.

⚙️ Operational Drivers

Raw Materials

Lightweight EVA (Ethylene-vinyl acetate) soles are specifically mentioned as a key component for the Sharon brand. Specific percentage of total cost is not disclosed.

Capacity Expansion

The company operates 886 retail stores as of March 2025 (213 COCO and 673 franchise). Expansion is focused on COCO stores using a sanctioned INR 20 crore term loan and increasing product lines in sub-brands like Sharon and British Walker from 50-60 lines to higher numbers.

Raw Material Costs

Not disclosed as a specific percentage of revenue; however, the company noted that pricing reductions of 7-8% were implemented to push volume growth, which impacted operating margins.

Logistics & Distribution

Distribution business turnover was approximately INR 100 crore in the first two quarters of FY26. The segment was demerged into KSR Footwear Limited to improve operational focus.

📈 Strategic Growth

Expected Growth Rate

7-8%

Growth Strategy

Growth will be achieved through the demerger of the distribution business to focus on high-margin retail, expanding the COCO store network via a INR 20 crore term loan, and increasing product variety in premium sub-brands like British Walker and Sharon. The company is also arresting volume de-growth by reducing MRP in the retail segment.

Products & Services

Fashion footwear, comfort footwear with California construction, lightweight EVA sole footwear, and related accessories.

Brand Portfolio

Khadim, British Walker, Sharon.

New Products/Services

Expansion of product lines in Sharon and British Walker brands from the current 50-60 lines to a higher number to drive double-digit growth in premium segments.

Market Expansion

Expansion of the COCO store network and increasing the distributor base (781 as of March 2025) to serve multi-brand operators across India.

Strategic Alliances

Demerger of the distribution business into KSR Footwear Limited (KFL) via a Scheme of Arrangement sanctioned by NCLT, effective May 01, 2025.

🌍 External Factors

Industry Trends

The footwear industry is facing volume growth challenges, particularly in the mid-price segments (INR 500-1,500). Peers like Bata are facing similar issues. There is a shift toward localized marketing and improved visual merchandising.

Competitive Landscape

Key competitors include Bata and other distribution-heavy footwear players. Competition is most intense in the INR 500 to INR 1,500 price bracket.

Competitive Moat

The company's moat is its established brand presence and extensive retail/distribution network (886 stores and 781 distributors), particularly in East and South India. Sustainability depends on successfully transitioning to a higher-margin retail-focused model post-demerger.

Macro Economic Sensitivity

Sensitive to GST policy changes; a GST cut implemented in late Q2 FY26 is expected to improve gross margins in the second half of the year.

Consumer Behavior

Consumers are showing double-digit growth in the 'less than INR 500' and 'above INR 1,500' segments, while the mid-segment remains a pain point.

Geopolitical Risks

Geographic concentration in East and South India makes the company vulnerable to regional economic disruptions or localized events like floods, which previously led to store closures.

⚖️ Regulatory & Governance

Industry Regulations

Operations are affected by GST rate changes and NCLT regulations regarding the Scheme of Arrangement for the demerger of the distribution business.

Environmental Compliance

ESG risks are noted as 'Not Applicable' in the credit rating assessment for this manufacturing entity.

Taxation Policy Impact

The provision for taxation (current and deferred) for FY25 was INR 26.15 million on a profit before tax of INR 218.77 million from continuing operations.

Legal Contingencies

The company followed a Scheme of Arrangement sanctioned by the Hon’ble National Company Law Tribunal (NCLT), Kolkata Bench, for the demerger of its distribution business into KSR Footwear Limited. No other specific court case values were disclosed.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the impact of the demerger on the remaining retail business's credit profile and the ability to arrest volume de-growth in the mid-price segment.