in Q1 results I dont think they lost much market to competition even when they were doing lots of restructuring both in their TV software & Web platform (Which is completely changed from home Grown platform to industry leading e-commerce platform provide by Hybris, a SAP company).
Company has released a presentation for Q1 results (I feel they are very-very good in communication & this shows by they are releasing a investor presentation for quarterly results, how many company do this of size of Vaibhav Global), link of same is
So, if you see the investor presentation they have given details of each & every small things, few key things to look from the investor presentation are:
- Number of household reach improved from 100 million (FTE) households to 105 million (FTE) households on TV shopping in the US, UK and Canada.
- In Q1FY16, Retail Volumes stable at 2.1 Million Units , 5% higher volumes on Home TV shopping, Volume growth driven by fashion jewellery, Gross Margin expansion to 67% from 62%
So, even with all these changes, actually TV volume increased by 5% (1422000 to 1499000 units) and ASP reduced by 1 USD to 22 USD/unit & reason for that also they have mentioned in the presentation, TV ASP decreased due to cessation of high-end products in both US and UK.
So, there is some impact on web sale,which promoter has already upfront informed promptly to everybody in his last concall in May-2015 & there is major change (Decrease) in B2B sales from 34 cr to 15 cr YoY w.r.t. Q1 FY 15 & that has improved the gross Margin further to 67% from 62% (Significant reduction in B2B sales of rough stones and addition of import duty to the end of quarter inventory resulted in higher gross margins).
Reduction in B2B sales is good sign, as that is LOW margin business (Selling rough stones to B2B players).
As this is High Fixed cost business (Almost 17-18% fixed cost goes into TV channel Airtime), so any impact on Topline will have severe impact or bottom line, So around 25 Cr of topline reduction has impact of around 14 cr in PAT & any increase in topline will have similar impact on bottomline…
and on Page # 17 you can see they have made around 14 cr investment in this Quarter for TV rights in UK & 3 CR spent in new Facility in SEZ in Jaipur (Free cash flow impacted by investments in improved channel positioning in UK (Sky652 Rs. 11 crore) and new SEZ facility (Rs. 3 crore).
So, All changes are done in TV & web software & all investment has been made on infrastructure, so I feel, as suggested by promoter himself Q2 might be flat or with no growth again, but Q3 should recover the lost growth, which is the strongest quarter of company due to festive season both in US & UK .
I am hopeful, that by dec we will see much improved performance of company & stock price will also follow the course with that & by this year end (FY2017 by March 2017) we will again see the price close to 1000 Rs or so (which will be almost 2 & 1/2 time of the current price), so I am buying it whenever I have free money available
Any questions related to Q1 performance are most welcome …