Palred Technologies is a turn around stroy.
It’s Ptron brand is doing extremely well. It has started manufacturing in India in order to reduce dependence on China. Please look at valuation of it’s bigger competitor Boat.
I think the upward journey of Palred has just Started.
3255e2df-b200-40e0-8993-a5a30bc28eaa (1).pdf (360.8 KB)
Point No 6 is interesting. Please also lok at valuation of Boat
Anyone spoken to management recently ?, I tried to connect with IR…nothing
Palred Technologies launched Fitness bands and smart watched exclusively on Flipkart.
Very good sign
super !
Most visible brand on Amazon in bluetooth earphones. very very interesting and exciting
Palred looks like to an interesting story to track. Here is what I like about the company:
(1) pTron has created a very decent niche brand in low cost mobile accessories. The products have quite a lot of traction on e-cormmerce platforms like Amazon. Product prices are almost 40-50% lower than other similar brands like boat and noise. Ratings are okay. Here is a tech radar article which mentions pTron as the lowest cost brand in the market:
(2) They are constantly trying to expand their product portfolio. Recently launched smart watches at a Rs 899 price point! If we go by their success in the earphones market, they should have a decent market share in the low cost smart watches segment too.
(3) Company is targeting 60L-80L annual product sales in the next 2-3 years. Even with Rs 500 ticket size that translates into Revenues of Rs 300-400cr. Current sales is just Rs 100cr!
(4) They are starting a few assembly lines and manufacturing some parts in india. Being a distribution brand is a very low margin business especially on e-commerce platforms. Therefore if they can do some part of the work in-house it can lead to a very good margin increase. Hence, this seems like a step in the right direction.
(5) Doing a quick back of the envelope calculation: Current PAT is just Rs 2cr! Assuming they reach Rs 400-500cr sales with in-house assembly and bigger scale (hence better deals from Chinese manufacturers) and hence manage net margins of 5-7%, the PAT can go upto ₹25-35cr. Current market cap is just Rs 140cr.
Things which I don’t like about the company i.e. points which need further research:
(1) Smartphone accessories is a hyper competitive market. There are players like boat, noise and Boult plus all the mobile phone brands which have started coming out with their own accessories.
(2) If we do a quick google search most articles on best earphones don’t mention pTron in their lists. The only article which I found has been shared above in the positive points. Are they really able to deliver good quality?
(2) They don’t have any sustainable competitive advantage.
(3) In a business like this, since they don’t manufacture in-house, other factors like Brand, design, digital marketing and technology become really important. A quick look at their linkedin page, the team lacks quality in all these departments compared to players like Boat and Noise. How will they compete remains to seen!
(4) Management has an insider trading case and a few other issues which have been highlighted in the past. This puts a question mark on the ethics of the team.
These are my inputs on the business. It will be great if more valuepickrs get involved to study this company further.
Disclosure: Not invested. Tracking with interest.
Lets look at their Press release of 14/04/2021, 25/05/2021 and recent one 14/06/2021. I m attaching screenshots as per date mentioned above
Why is so much inconsistency in units sold that too in millions and target for future?
Disc: No holding
I think the 7m number is the total number of products they have sold till FY21. Whereas 2.5m-3m is the sales volume only for FY20-21. Targets for future usually change month on month in a startup environment. However, I agree they can communicate better!
Found a few interesting insights on the manufacturing focus of the company.
The CEO of pTron has been consistently writing on linkedin about the manufacturing and make in India focus of the company.
https://www.linkedin.com/in/ameenkhwaja/detail/recent-activity/shares/
The recently launched Smart watches and smart bands have received good reception. One of the watches is Out of stock since the past 2 days and is already classified as a bestseller by Flipkart. These are good signs especially because it is a new segment and my view is that it shows that pTron is definitely growing it’s brand value and establishing itself in the economical segment.
If we go by the Press releases issued by the company issued on 14-04-21, the company sold about 3 million pcs in 2021 which means that FY 21 revenue should be about 150 Cr. (Taking average SKU price as 500, though recently their Newly launched products are of a higher range) Total revenue till Q3 is about 85 cr. So, if the actual QIV revenue comes above 50 Cr, this will be higher then the FY 20 whole year revenue.
They are also looking to appoint Investment advisors mostly to unlock value of the subsidiaries. The company has a good history of being able to sell it’s business at a good valuation and rewarding shareholders.
Disc : Invested & Biased.
The company declared it’s results on 26-06-2021 and it was way below what i wrote in the forum. The actual QIV revenue is 31.62 Cr and the yearly revenue is 117 cr. Still the highest ever in terms of the new business.
My assumption of Turnover was based on March 2020 Annual Report which mentioned on Page 69 that the company is in mid sized segment (Rs. 500 to 1200)
Link to the report :https://www.bseindia.com/bseplus/AnnualReport/532521/67196532521.pdf
Even if i took Rs. 500 as Average Sale price per unit, Sales should have been 150 Cr. The company has continuously mentioned in it’s press releases that they have sold at least 3 million units in 2020-21. This means that the actual Per unit Sale Price comes to about Rs. 384.
In the month of April and May, they have launched a few products which are definitely in the higher range. So, it will be interesting to see if the company can actually achieve its target of 6 million units in 2021-22 and more importantly what will be the Average per unit sales.
Mathew cyriac is investing 32 crores in Palred and will own more then 20% of the company after the preferential allotment.
d33b7108-67a9-4397-a134-5270a4b6061d.pdf (673.8 KB)
He is the former principal of Blackstone and a very successful investor. Here is what Mint says about him
This is exciting times for the company. They have been on a spree of launching new products in the earphones, smart watches and speakers categories and surely this new funding will help big time.
Though my one concern is that he invested in Palred earlier also but then sold his entire stake.
Disclosure : invested and biased.
Palred back into Profit. Let’s see whether it remains in profit or not.
The company is launching products left right and center.
The quality is improving definitely. My guess is that the top line will see a substantial increase in the coming quarters. Not so sure about the bottom-line though as most of the products are selling in the 999 category even though they look and feel more premium.
Surprised to see pTron doing better than Samsung in TWS market share. Compared to speculated BoAt IPO pricing, Palred trading at steep discount.
I believe Palred is a loser as it is trying to do it all (design, engineer & mfg) in an industry where the formula (see Apple, Samsung, boat, any decently ) is clear: contract mfg & build solid brand! What say?
It is doing another blunder as we speak - “new manufacturing set-up in Hyderabad”.
That seem to me herioic instead. TBH i wasnt interested in palred but your comment made me interested… Bcz now i know how they are diffrent.
I would agree on the doing it all part, but also looking at the changes which have happened in the past 8-9 months, they have actually focused a lot more on the brand building exercise. The number of products they have launched since changing the logo and the launches are all in the segment above the 500 Rs. category.
It used to be mostly a below Rs. 500 category brand but is definitely trying to position itself in higher categories. And if it is able to do it correctly and establish itself as a brand in the higher categories then other shortcomings will take care of themselves in my opinion.
