Thomas Scott : Tech & Data Analytics Based D2C Retail Fashion Brand

[Nabendu]

@vinay_chauhan

Doesn’t this mean that they are making copies of the trending design which are cheap for the customer under the own/white label brands. Thus implying that they are not innovators but only trend followers, they are into fast fashion where zudio is also into. Can they protect their margins?

@vinay_chauhan absolutely they are targeting fast fashion and the fast fashion industry is here to stay. Reliance is opening a Yousta store every 10 days or so , Trent probably every 5 days says a lot that young and aspiring Indians across India are no longer looking for clothes as a yearly festival buying but wanting to buy the latest trending season collections at the earliest or wear a new cloth on every occasion , thanks to digitalization & social media consumption and influence of the Western World . Preference has changed to style and trends over fabric quality and durability of a product .

Selling premium brands does not mean it may not be fast fashion . It is merely that the fabric quality , variety of cotton or mix used any specific features of the fabric and most importantly marketing which will make a difference in the pricing and premium appeal of a product

@vinay_chauhan

To me business of Thomas Scott is inferior to PDS, the fast turn around time according to me is not an advantage, it is a restriction because of their small size, as they grow their own brands and offline stores sooner or later they are going to face the inventory issues.

In any business, the lower the lead time from idea to market ,the more will be the consumption / demand for the product .

Look at our personal examples : Why are people preferring 10 /15 minute Quick Commerce over Amazon / Flipkart ?

Their offline expansion is measured and like I mentioned being FOCO based , the initial investment on new stores is very low. E-Commerce is their primary channel of growth and offline is miniscule presently and till the time they expand in cities where they own the manufacturing or warehouses it makes sense . New collections are displayed in these offline stores for 15 days and fresh stock is delivered every 15 days . The stocks returned back are then sold on the online platform , so basically till now a part of the ecommerce inventory is itself on the offline stores for 15 days and then moved to their ecommerce platforms if there is no demand for it at the stores.

This means that their offline stores expansion must also be measured and tracked to ensure that the offline store growth does not exceed ecommerce growth .

@vinay_chauhan

And as per the time line of evolution of Thomas Scott shared they themself have turned to brand license based manufacturing and trend based manufacturing in the past year your so.
Thus the data analytics based manufacturing is a weak moat and is waiting to be destroyed.

The problem is everyone has access to data but only few are able to make meaningful information of such data . The problem interpreting data increases manifold as the number of variables increases . What you fail to realize is Vedant Bang professional credentials . Please read about Acturial Science , what do they excel at and then question why others are not able to make the same sense of data that this guy Vedant Bang is able to make ?

I work as a business process data mining consultant working with the largest software product company of Europe , and even biggest of MNCs across the globe are struggling making sense of their business data due to distributed systems , huge data generated from different systems / IOT devices working in silos and lack of visualization tools to make sense of the data .

Extracting information from data is not easy for MNCs , so expecting a traditional contract manufacturer to get the same quality of information would not be easy.

@vinay_chauhan

This can change anytime, PDS at present does not do lot of work for indian brands, their clients are mostly European and American brands and American supermarket chains, my logical understanding here it that because European and American clients offer higher margins PDS does not serve indian brands, but as they struggle in Europe they can turn to India Even for lower margins.

PDS operating profit margin has never been over 4% since 2014 as per screener data.

Not sure why but maybe you can highlight their inefficiencies as well which makes them earn meager operating profit margins even after working with top Europe and US retail giants .

PDS acquiring Thomas Scott while your wishful thinking, would mean they are doing something right which PDS has not been able to crack even after so many years

[vinay_chauhan]

@Nabendu

Not sure why but maybe you can highlight their inefficiencies as well which makes them earn meager operating profit margins even after working with top Europe and US retail giants .

Contract manufacturing of commodity goods have very less margin inherently, may it be PDS, dixon, amber , hindustan foods expect pharma and semiconductor.
Fluctuations in raw material cost plays a vital role here.

4% margin of PDS is on GMV. And they are regularly facing headwinds in European region in the recent past. Earlier than that the freshly acquired subsidiaries were loss making and integration and streamlining took time.

[vinay_chauhan]

@Nabendu

PDS acquiring Thomas Scott while your wishful thinking, would mean they are doing something right which PDS has not been able to crack even after so many years

PDS have an history of acquiring or forming a JV with a successful and growing manufacturing unit and letting the existing management run the JV/Subsidiary in return the acquired manufacturing facility get access to vast network and synergies among the group companies.

[vinay_chauhan]

@Nabendu

The stocks returned back are then sold on the online platform , so basically till now a part of the ecommerce inventory is itself on the offline stores for 15 days and then moved to their ecommerce platforms if there is no demand for it at the stores.

What happens to the merchandise not sold on the online channel as well? As the scale increases this issue will be faced frequently. Here the promoter and his acturial skills will be put to test in respect to the over inventory and under inventory.

[Souresh_Pal]

These type of uncertainties will bother you if you start you analysis at 50 pe type of valuation after a steep run up. No point of over analysing if you find it risky it’s better to look other opportunities. There is one more similar company named Bella Casa. Contract manufacturer of Trent. But it also trades at similar valuation to Thomas scott.

[Nabendu]

The PE shown on screener is incorrect.

The correct way of calculating PE is as per Weighted Average Shares - How to Calculate Weighted Average Shares? which can only be found as per the published results on the company through their filings as the company is increasing their share capital .

Google Finance shows the accurate PE which is 24 based on the EPS shared in their filings to the Stock Exchanges

Thomas Scott (India) Ltd (THOMASCOTT) Stock Price & News - Google Finance

[Rajneesh_Vashisht]

What’s wrong with Thomas Scott’s results causing lower circuits

[sharma6jan]

May be 20% fall in eps YoY and flat PAT YoY

[Rajneesh_Vashisht]

oh yeah, I see. I was too cursory looking at the results. by the way - sales has almost doubled, however PAT has not moved any bit since Ops Margin has gone down. urging those tracking it closely to throw some light..

[Aloysius_De_Sa]

See that’s the reason the share price is falling. Many, including you, are ignoring the fact that last year quarter, they had no tax, but this year they have incurred 27% tax. Thats why PAT growth looks optically bad. PBT has grown 42% which is very good in my opinion and should be considered. EBITDA has grown even higher at 54%. Margins are also great QoQ. According to me the results are very good.

[Souresh_Pal]

A lot of equity dilution took place plus lot of people entered seeing Ashis kacholia entering. They are exiting now seeing eps degrowth

[Aloysius_De_Sa]

I mean yeah, you can look at EPS but that is ignoring all the other positive in the script. But even then if you account for the lack of taxation last years quarter, this quarter has a better EPS. How you can get this figure is taking the same tax rate for last year quarter to get the results.

So for Q424, take 4.08*(1-26.76%) = 2.98 rs eps which is not as much as the 3.29 rs eps earned in Q4FY25. So even on this metric which mind you is not as important to me given my belief that they will grow well in the future, it is a 10.4% growth in EPS YoY

[Divyanshu_Kumar]

Does anyone know the current average selling price (ASP) for Thomas Scott? Based on past financials, they seem to be operating near full manufacturing capacity, which makes me wonder — are they currently capacity constrained, or are they outsourcing part of their production to meet demand?

[ha_the_meow]

Good results

• no announcement of concall
• there was fire, reported on last week of july. need clarification on that as well
• need their commentary on revenue targets and domestic demand

[Souresh_Pal]

@ha_the_meow

there was fire, reported on last week of july. need clarification on that as well

It was belt manufacturing plant. It Doesn’t contribute much to revenue

@ha_the_meow

need their commentary on revenue targets and domestic demand

they don’t give any guidance. Attended last year AGM to ask about it.

@ha_the_meow

no announcement of concall

don’t expect concall from microcaps

[Divyanshu_Kumar]

In the company’s FY25 Profit & Loss statement, ‘Other Expenses’ have surged from ₹8 cr to ₹31 crore approx. Can anyone explain what could drive such a sharp increase? Also, which specific heads under ‘Other Expenses’ generally account for the bulk of the spending?

The screenshot is the breakdown of Other expenses as per FY2024 Annual report.

[Aloysius_De_Sa]

From my understanding, they have invested quite a bit into warehousing, fulfillment centers, IT (their tech based designing) and manufacturing facilities (both owned and outsourced). All those expenses show up here.

[ha_the_meow]

Great set of numbers

Interview with a lot of insight
Valorem CXO Meet - Thomas Scott India Ltd

[Debojit_Kangsa_Banik]

Few insights:

• Trade receivables and inventories are quite high. Mgmt saying inventories high coz of anticipated high demand in H2. Will wait till then.
• Currently they are financing through share warrents. How will they finance next? debt? Mgmt saying they will generate cash from their growth. Will wait till then

[Aloysius_De_Sa]

I bought this company last year in November during the lows. Sold it recently for a few reasons,

1. Lot of share dilution. While revenue and profit growth has rightfully been commendable, this is on the back of a lot of dilution. EPS has not increased as fast as their Income statement.
2. P/E of 40+ is by no means cheap when companies like Mufti and the likes trade for much less although their financials are not strong. Will need continuous growth to keep P/E elevated.
3. While I did invest for their tech first approach, that was at a lower base. I feel there are many other companies that deploy such tech.
4. Share price ran up quite a lot with a 50% since 300 lows. Seemed like a good chance to cash out.