I have written a brief summary on the company, lot of it has been written earlier. Happy to get some feedback or questions around any particular aspect.
The valuation remains rich at 50x earnings (even after a 20% correction from its peak). So at this price, doesn’t seem that it will yield supernormal returns. However, with the growth lined ahead, my expectation is for it could compound at 20-25% for next 3-5 years.
They opened ~39 stores in the last 12 months (up to 3Q24) and some rough estimates (mentioned in the link), these have a negligible contribution to their EBITDA in the LTM numbers. Once these 39 stores mature, they should contribute ~INR 50Cr EBIT (vs 133Cr LTM). While a similar calculation will be true for every retailer, the pace of store opening depresses the margins and just attempted to dissect that, since store openings have been quite high for AVL in last 12 months (compared it to EMIL).
The business derives 70% revenue from the home appliances segment which largely consists of ACs, fridge etc. The sales of these goods in summer depends on the temperature and climate. Due to the delayed summer in CY ‘23, the sales in April and May were up ~15% and when summer picked up in June ‘23, the sales were up ~70% in June ‘23. This year, based on meteorological forecasts, the summer is expected to be hotter than normal from April-June ‘24. So we can expect a good Q1 for AVL which contributes almost 40% of annual EBITDA. This could act as a short term trigger.
Disclosure : Invested
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