Yes, I’m still understanding why Mr.Vijay Kedia took position in falling market player.
Q2 FY25 Concall Summary
Business Updates
- In past six months the inventory has reduced by Rs 174 crores and market share has improved from 36% to 40%
- Volume growth was at 18% yoy for Q2 FY25
- Ecommerce continues to perform well with over 50% growth while traditional offline channel continues to under perform
- Hard luggage continues to be the fastest growing category with over 60% of overall revenues contributed from this category
- The Bangladesh factory is running well and should come in profit from Q3 onwards
Participants
Avendus SPARK
PL Capital
Centrum Broking
Investec
Sunidhi Sec
B&K Sec
QnA
- The inventory was liquidated at a lower cost because it was old inventory
- Going forward will focus disproportionately on brand VIP which has 800 bps higher gross margin than Aristocrat
- There are a lot of new D2C players entering the industry and they have a lot of money to burn which incumbents don’t have
- One more quarter of inventory woes remain post which will return back to normal
- For offline channels will give additional warranties and especially for VIP brand will keep pricing discipline even on online portals
- The quantum of slow moving inventory in soft luggage along with back packs and duffel bags is around 7 lakh units with value of around Rs 180 crores
- Modern trade has seen some de growth while ecommerce channel has grown much faster
- In H1 volume growth is 8% while value growth is 0% and this difference will narrow quite a lot in H2
- For FY25 clean up of the inventory is a must otherwise it will entail additional warehousing costs and also lead to a risk of inventory write off
- Once inventory liquidation is complete will focus more on profitability
- The BCG project is a 15-month project and two waves are over and currently in the third wave and the additional two waves will happen post the current one. This project should lead to a benefit of Rs 250 crore to the bottom line
- The insurance companies have not yet indicated anything much on the Bangladesh claim and small amounts are coming every quarter with Rs 5 crore expected in Q3 as well
2 Likes
When I see the result, everything looks perfect i.e. Their debt is reducing, they have been able to increase their market share. Moreover, as they predicted they reduced their inventory.
Finally, their Bangladesh Plant has also become profitable, however, the stock price has kept falling?
Can you state few reasons why you think it might be happening?
3 Likes
couple of reasons that i can think of:
- lack of clarity on who will lead the company into the future given that there has been a lot of management flux of late.
- impact of more irrational competition entering in the form of new startups since luggage is on the radar for disruption now.
1 Like
Q4 results yet to be declared . Sudden spurt in price… Any good news in the offing ? !
On D street chatter yesterday there was talk of some corporate development in the company, any idea what this could be?
Does anyone have a rationale for the stock uptick in the recent months?