I will try to summarise the minutes of Investor day meeting over the weekend.
As to which vertical will contribute how much out of the 5 Billion ambition, they said Manufacturing will be around 5%. They are betting big on Branding business and the goal is to make it a Billion dollar business so that would be 20% if they manage to grow it to 1 Billion USD. Rest 75% would be distributed between design led sourcing and SAAS. They did not give precise numbers around that and asked to connect offline for details.
For Branding, North America projections are very ambitious. They are not expecting any revenue from Branding from NA till 2025 and then 200 million in 2026, 400 million in 2027 and 800 million in 2028. So we will have to see how that plays out.
For SAAS, the more lucrative thing is the ROCE. ROCE is infinite because PDS does not invest a single penny in this business. So I don’t see this business as a margin game. It is more of a volume based game where the ROCE will be on a higher side and working capital will always be on the lower side.
Moreover they have PDS ventures through which they invest in early stage promising businesses. Right now I think 6-7% of the earnings go into this and some of their investments have already become 10x from the time they invested. So they would be strategically planning to take an exit as and when feasible. This would generate some cash in the books. The goal is to make PDS ventures self sufficient and stop feeding off the earnings of other verticals.
They are also expanding into homeware category and they already have some orders for that. So even with PAT margins stable at 5%, it is going to be a huge boost to the bottomline. Let them hit their target of 5-5-5 first and then we can see where things go beyond that.
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