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In-line performance; higher A&P led margin contraction

Standalone performance

* Standalone net sales rose 8% YoY to INR25.5b (est. INR25b) in 1QFY26.

* Growth was driven by its re-entry into Andhra Pradesh, along with continued innovation, renovation, and revenue growth management initiatives.

* Excluding Andhra Pradesh, growth was impacted by a high base as the company had undertaken proactive measures to mitigate potential supply chain disruptions ahead of the union elections.

* Total volume grew 9%, with P&A volume up 9% YoY (9% in 4Q) to 12.6m cases (est. 12.1m cases) and Popular volume up 12% YoY to 2.4m cases (est. 2.3m cases).

* P&A revenue (90% revenue mix) was up 9% YoY and popular revenue grew by 14% YoY.

* Royal Challengers Sports Pvt. Ltd recorded revenue growth of 16% YoY.

* Gross margin contracted 50bp YoY to 44% (est. 44.5%).

* Excluding the one-off indirect tax impact of INR400m in 1Q, underlying gross profit rose 11% and gross margin expanded by 110bp YoY, supported by continued revenue growth management initiatives, productivity gains, and relatively stable COGS inflation.

* A&P spending was up 36% YoY, employee costs rose 2% YoY and other expenses grew 19% YoY.

* EBITDA margin contracted by 320bp YoY to 16.3% (est. 16.8%) due to higher A&P spends.

* EBITDA was down 9% YoY at INR4.2b (est. INR4.2b). Underlying EBITDA (excluding the one-off impact) was flat YoY (down 0.7%).

* PBT was down 11% YoY at INR3.6b (est. INR3.8b).

* APAT fell marginally by 1% YoY to INR3.0b (est. INR2.9b).

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