Personal opinion on the basis of recent conference calls [Q4FY21/FY22/FY23 and Q2FY24]:
Easy to understand business which makes value for money non-leather footwears for the masses with a decent brand recall. However, business performance in recent times has been below par due to the super relaxed attitude of the owner operator (OO) at the top. For lack of sales growth or lower OPM, the OO provides similar reasons in every interaction without any concrete mitigation plan: competition, market share protection, inflation, monsoon, war etc. It makes me feel as if every problem of the world is a hurdle to sell items that are mostly priced below Rs. 200.
An aspiring management can easily convert the business potential to sales/profits by:
- Opening more EBOs
- Launching exclusive ‘Sparx’ EBOs
- Enrolling additional retail touchpoints
- Selling bundles for the family on the eCom
- Utilizing the unused capacity [~35%]
- Stepping up the premiumization for the sparx brand
It seems all the above are evident to market participants. They also hope that the jockey will be changed sooner or later, resulting in numbers that reflect the true potential of the business. Hence, the super premium valuations.
Disc: No position.
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