SG Mart- Can it successfully create a marketplace?

It’s a completely new business model which only time will tell, if the management is able to walk the talk. Although the management seems confident to fill the gap due to their decades of experience in the industry, but they are still being humble and confirming in the last con-call that this business model is yet to be proven (even after doing 85cr of EBITDA from just a 1-1.5 year old business). Below please see the humble lines underlined:

We all will have our opinions based on our past experience and mental models. I can see that the story of SG Mart can go either way as I can put up enough points supporting both bull and bear thesis. We are not helping this thread by simply sharing our one-line opinion without backing it with concrete facts and data. Story is currently half baked with lot to prove and huge execution risk ahead of it.

But I felt good after listening to the first concall and lean towards the bull camp to get my foot in the door. Current gaps that management shared on the concall seem to be big enough for a capable player to create a business and benefit out of it. Similar pitch has already gotten support from some of the respected investors and family offices (that doesn’t mean we don’t need to do our due diligence). While the company’s ambitious plans for a futuristic moat are intriguing, it remains to be seen whether decades of industry experience and Rs.1300cr kitty will yield a competitive advantage or simply become a costly folly.

I fully understand that we don’t need to have all the answers today (unless one is deploying 50% of their portfolio in SG Mart). Such stories with huge size of opportunity can have long run way of growth (many times very lumpy and bumpy along the way) and one can scale up along with the successful quarterly execution of the business and as confidence increases. In fact, I would feel much safer to average up at appropriate valuation in SG Mart 3 years down if they do Rs. 15000cr topline with 2.5-3% EBITDA.

Below I am sharing my understanding of each line of business and its “right to win” as shared by the management.

Disc: invested in last 7 days and managing execution risk with appropriate starting position size which will be kept on a very tight leash. Not a recommendation and do your own due diligence.