See the bright Sun: Aditya Vision

Aditya Vision - IC - 01-02-2024 - Systematix-1 (1).pdf (2.1 MB)

Aditya-Vision-11-12-2023-emkay.pdf (2.2 MB)
2 good reports for better understanding of sector n AVL WITH lot of granularity n data

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Excellent reports- increases the confidence in the stock even more.

Having worked in Sales in these geographies of India- can vouch for the rising consumer spends (due to lower bases, faster penetration growths, more govt. schemes etc) in these geographies.

AVL seems to be at the right place at the right time.

Discl- Invested

2 Likes

We all talk about patience but very few has it… too much pessimism all of a sudden as everyone expecting 50% annual growth in PAT

Systematix research report post results…
Systematix_Aditya_Vision_Ltd_Q3_FY24_Results_Review.pdf (526.3 KB)

I have written a brief summary on the company, lot of it has been written earlier. Happy to get some feedback or questions around any particular aspect.

The valuation remains rich at 50x earnings (even after a 20% correction from its peak). So at this price, doesn’t seem that it will yield supernormal returns. However, with the growth lined ahead, my expectation is for it could compound at 20-25% for next 3-5 years.

They opened ~39 stores in the last 12 months (up to 3Q24) and some rough estimates (mentioned in the link), these have a negligible contribution to their EBITDA in the LTM numbers. Once these 39 stores mature, they should contribute ~INR 50Cr EBIT (vs 133Cr LTM). While a similar calculation will be true for every retailer, the pace of store opening depresses the margins and just attempted to dissect that, since store openings have been quite high for AVL in last 12 months (compared it to EMIL).

The business derives 70% revenue from the home appliances segment which largely consists of ACs, fridge etc. The sales of these goods in summer depends on the temperature and climate. Due to the delayed summer in CY ‘23, the sales in April and May were up ~15% and when summer picked up in June ‘23, the sales were up ~70% in June ‘23. This year, based on meteorological forecasts, the summer is expected to be hotter than normal from April-June ‘24. So we can expect a good Q1 for AVL which contributes almost 40% of annual EBITDA. This could act as a short term trigger.

Disclosure : Invested

2 Likes

I initiated a small position in AVL when it was trading around 800 levels and recently exited. My primary concern with the company revolves around corporate governance and the ongoing trend of the Sinha family members selling their shares.
I believe this could be attributed to the rich valuations at which the stock is trading. However, it does shake my confidence in maintaining a long-term investment in this company.
Given that they operate in a fairly mature industry and in a region that may not attract the interest of giants like Reliance or Croma anytime soon, it is a decent bet in the near term.

3 Likes

d2cfb97c-d9ec-440a-8261-6755d1f900bb.pdf (313.4 KB)
Raid at their warehouses in UP

The Uttar Pradesh State GST has canceled its previous order to seize 7 temporary warehouses and prohibit 3 stores. Now, all showrooms and warehouses in Uttar Pradesh are back to normal operations.