My first post on VP on this Co that conducted its 1st conf call in Feb. I had posted that here.
Co just did their 2nd conf call and transcript is now available
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I am going to try to summarize about the Co from the conf call introduction below and follow up with important highlights from conf calls.
Here’s the shareholding from screener
Co is run by Mr. Rajesh Mehra. My interest in the Co is because of 3 factors
1 Co has had major wins with US cos like Adidas, Puma last FY and is already a supplier to Levis
2 Co is expanding capacity by ~70% in the upcoming quarters and targeting consistent revenue growth as mentioned by promoter in conf call
3 Possibility of India US trade deal giving more traction to the co
Co is using internal accruals and has taken on debt to fund expansion - so that’s something to track about the Co. @vatsal10 has been discussing about the co with me over DM; so will ask him to post more discussion points here.
I have been investing in the co since the first conf call and have transactions in the past 3 months. I will provide snippets from the conf call in a follow up post.
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I started following the co post their Oct announcement of supplying to Puma and Adidas and the expansion announcement. They have a video of their facility on youtube as well.
The Feb conf call was quite useful to know their trajectory.
June 2025 conf call snippets…
They also did a QIP to the sons of a large stockholder Subhash Rathod in March but got cancelled in April most likely as QIP price was much higher than CMP at that point (need to verify)
Overall, the Feb conf call provided more insights; June conf call wish there were more questions about the timeline of capacity expansion coming online. A key monitorable would be how they can manage their debt since business is capital intensive. Mr. Mehra has mentioned 300 cr rev for FY25 which they achieved, 500 cr over next 2-3 FYs with the 70% planned capacity expansion which should be ready soon… Working capital is going to increase, so QIP+more debt will be needed…
If I could list pros and cons briefly
Pros
- Expanding Co with experienced promoter with tailwinds (US-India FTA, China+1)
- P/S < 1. Margins expected to increase if co can achieve 50:50 Domestic:international contribution in sales (current 75:25)
- Supplying to global brands and recent tie-ups and meetings with leading sportswears brands
Cons/Monitorable
- Long cash conversion cycle requiring high debt
- Susceptible to possible tariff tantrum (maybe less of a worry since DJT doesn’t want to make low end goods in the US)
- How quickly can capacity expansion come online to service debt
@vatsal10 had pointed to a couple of issues. I would ask him to add those to the discussion here.
I have been investing in the co since the 1st conf call. Suprised no one asked in detail about exact status and timeline of expansion in 2nd conf call. I will try to write to company IR to check. Would be happy to have more inputs on this co.
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