Quickly looked at this business over the last couple of days and finding it difficult to understand the investment rationale here.
They don’t create brands. They don’t manufacture. The business is mostly running on the one exclusive partnership with Tommy hilfiger which they entered into in 2011. After 12 years tommy hilfiger still contributes 85% of the revenues for the company. Moreover this explains the low margins in the business as a big brand like Tommy will command the pricing and margins leaving almost close to nothing for Bagline.
Can you build a business in this segment on distribution alone when it has become much easier to distribute then it was 10 years ago? This explains only 3 exclusive brand tie-ups in 12 years with 2 of them in very nascent stages. For The in-house brands, branding and designs look poor and the products virtually non existent on online platforms.
Where do we see the PAT margins coming from 5 years down the line? All of this at a valuation of 60x PE!!! Maybe I am missing something. Would love to understand the investment thesis from fellow investors.
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