Let me try to add some context to this. Let’s go over the sourcing as a service(SAAS) business query first. So GMV is not reported as the topline for SAAS business. PDS earns a service fee for the volume of the business it manages and that service fee is reported in the topline. The Gross margins for SAAS business is 100% and EBIT margins are around 38%. Last year SAAS contributed 1% to the topline. Based on the numbers that the management was quoting on the Investor day, my guess is that the service fee is around 2% of the total order. Last year PDS managed around 700 million USD worth of sourcing for George and Asda. 2% of that comes to around 14 million which is around 116 Crores in Rs and that is around 1% of the total topline of 10500 crores. This year they would be handling around 1 Billion USD in SAAS for Asda and that lead to a meaningful topline of 20 million this year. They have also added Myntra in India for SAAS business. So I don’t think GMV is reported in the topline for SAAS business.
Coming to the 2nd question on PAT margins. The PAT margin is at 2% based on last year’s numbers. But management said that the actual PAT margin is actually 3% because they have reinvested 100 Cr back into the business to forge new partnerships in other businesses. They don’t want to raise debt and put load on their balance sheet. They are going to utilise money out of the bottom line every year and reinvest as and when needed. So it is debatable and depends on you how you want to perceive that. If you add 0.5% growth in the PAT margin every year then it will hit 5% in 4-5 years time if you consider 3% as the PAT margin for last year.
Overall I would say that the Investor day was very insightful and I got to learn a lot about the business and understand lot of things which I would have never figured out otherwise. MDs of Poetic Gem, Simple Approach and North America region gave a good detailed presentation on their businesses and vision going forward. Things look promising on the face atleast.We will have to see how things shape up.
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