It was interesting to read the evolution of this thread over the last 5 years 
I was interested in SRL due to Nature’s Basket and checked out their results today
Markets clearly didn’t like their results today. Stock fell ~7% after earnings release.
Clearly, all the projections over Spencers being a deep value play based on the fact that its market cap was only a fraction of its EV did not work out (unless you somehow timed the absolute bottom).
While Nature Basket is a nice business (with margins close to 30%), it is a very niche business and I say this as happy customer. I think its market is pretty much ex-NRIs like me who miss these types of brands so cannot expect it to be a growth driver.
Spencers unit closed 47 stores in Q2 and underwent “cost optimization” which improved their EBITDA margins to 4.1% from 2.1% last year but still their EBITDA profit of 17cr is less than their debt servicing costs of 33cr.
Similar story with Nature Basket - they had a healthy 7.1% EBITDA margin last year but their EBITDA profit of 6 cr last year was overshadowed with their debt servicing costs of 9 cr.
(EBITDA margin fell to 0.4% this quarter due to new store openings so we’ll ignore them)
Their quarterly reports include do not include their balance sheets and cash flow statements but looking at the increasing financial costs line item on their income statements, I cannot imagine they are cash flow positive or reducing their debt.
Additionally, for some weird reason their investor presentation reports standalone, not consolidated numbers (all the figures presented above are standalone).
To me, the most serious questions is how the hell are they going to actually become cash flow positive and start paying off their debt which is the only road to profitability right now.
They’ve already closed several of their Spencer stores but everything seems to indicate that neither the Spencers nor Nature Baskets arms are cashflow positive.
When a company is systematically unable to turn a profit, its value must be assumed to be its liquidation value and it could even be overvalued now considering that it bumped up on a minority consideration sale rumour in Dec 2023.
*Disc: Not invested, decided to not track after analyzing it today
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