Mirza Intl. came out with a superlative set of December Qtr numbers. The basic investment thesis here is the growth in the branded business (Red Tape Ltd. post the demerger) & not the legacy business of leather, which has contributed 18% of sales but only 6% of profits, & thus bringing the overall profitability of the Co. down.
The branded business, is showing improving profitability with each successive qtr. As mentioned by @ayushmit after attending the AGM, the Co. is well on its way to becoming a fashion company. The garments business is doing exceptionally well with operating margins in excess of 17%, even higher than the footware business which itself is doing about 15% having increased its margins meaningfully. This bodes very well for the future as more products are added. As a pure marketing Co., Red Tape Ltd. can focus purely on profitable growth by opening more outlets across the country, a business model already working for the Co. How such an asset light model, pure marketing Co. is valued by the markets will be interesting to watch, but I feel the valuations for the Co. a year from now would surprise on the upside.
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