I am still unable to find out why they have not expanded their product category till now and why should we believe management that they will be successful in expanding their product category to more non-steel products without a significant increase in working capital.
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Yes,you have a point for building material company to grow company should have significant increase in working capital
Same store sales growth has been 15% during 9MFY24.Company is focusing on VAP and non steel products.Furthermore,Non steel share improved to 11% in Q3 from 9% in Q2.Operating margin is at its lowest 3%.Company is consistently adding premium brands.Sanitary revenues and tiles revenues were up by 40% in 9MFY24.Fotia ceramica did well in kerala and is being expanded in karnataka,maharashtra and tamilnadu.states.Company has given 20%-25% sales growth guidance for next 5-6 years.It is obivious that company will have good OPM if it improves its non steel products share.However,how swiftly company does that will be key growth driver here.Company has not provided any targets for the share of non steel segment.Steel segment has EBITDA OF 3-3.5% whereas non steel segment has 5-5.5%.Company is targeting 3.5-4% EBITDA in near term.Capacity utilisation(Manufacturing vertical with low ROCE) was around 40% due to less focus on manufacturing but after demerger they will improve capacity utilisation and returns.Management is trying to squeeze highest returns from same store as much as it can then strategically adding new stores.Company has 4% to 5% private label share which they will increase in future.The key metrics to track here are same store sales growth,non steel share,margin expansion,inclusion of premium products,ROCE of manufacturing vertical and fotia’s perfomance in other states
Disc:Not invested still tracking
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Good update. Mgmt has been looking into working capital and getting into a proper agreement with suppliers to balance trade receivable/ payable.
Does anyone know whether they own thier retail stores or all leased?
As per this data,stores are on rent and leases.i think this is due to pursuance of asset light model
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They already have enough working capital. They don’t use it as fund based working capital, which is why you see low working capital in their balance sheet
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Ok,thanks for clarification
New stores opened in kartnataka and mahrastra while few closed in kerala.
Net stores count increased to 92 overall.
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