Indian terrain—play on consumption

I hold the stock from 500 levels and track it actively. I went for the AGM here are notes

1. IT boys has been launched – targeting the teens and the sub 20s
2. e commerce is now 10% of the business from 10 % a couple of years back
3. they plan to work closely with myntra, jabong to launch SKU’s
4. they have an analytics team to work with e com
5. they will grow 10-15 % this year with a 200 bps increase in margins and hope to continue the same.

discl: I invested thinking the company has a moat but now realize the company does not have one, as yet looking at their WC cycle. Unlike other brands, they want to integrate forward to claw back margins of 150-200 bps by investing into WC, which with the benefit of hindsight I have realized is quite capital inefficient. Adding 30-40 lakhs of inventory to add about 200 bps on about Rs. 1 cr. of sales is only about an incremental ROCE of less than 10%. I raised this in the AGM but the management talked around it.

Discl: invested but avoiding confirmation bias by poking holes in the thesis myself.