For me the concern for investing in such stock:
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Intense competition in the space, both from ecommerce as well as big retailers. Even if they are not present significantly today, it will see them in the near future. What makes Reliance, Croma or Vijay sales kind of people not to enter these cities when there is an opportunity for growth? I am sure they will be tracking AVL through their financial numbers. IMO, these big fellows would eventually eye Tier-2 & 3 cities when the growth is saturated in Tier 1. Then they can easily wipe out AVL.
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As such business runs on low margin and further scope for reduction when the competition intensifies. So where is the room for improvement in margins?
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Seasonality in the business.
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Significant debt on the books. Debt for working capital, High inventories.
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Promoter/promoter group/KMPs selling at higher levels from the open market. In Aug, 2022 itself, they sold 4.64 lakh shares.
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