Being sarcastic here. Why don’t we see the same comments for ciggerate companies?
Anyways…
Disclaimer: Not invested
Being sarcastic here. Why don’t we see the same comments for ciggerate companies?
Anyways…
Disclaimer: Not invested
I agree with ur concerns wrt the poor quality Website that the company has
However, let me share some insights from the Lighting Industry experience that I have ( my brother is a distributor of CG Consumer Lighting in Mohali. Plus he is also into retail of Philips Decorative lighting )
LED Lighting Industry is basically divided into 3 segments -
Luxury
Premium
Mass
Luxury sales only happen through the Architect channel. The cost per luminaire can vary between 5k - 5 lakh - depending on size and design. Per house bill for lighting comes to between 5 lakh - 1 cr … depending on the size of the house / client’s pocket. Even a rich client will never buy such products unless convinced by an architect. These architects do recommend foreign brands. But - here I am talking about very high profile Clients and Architects. Virtually no popular brand available in India caters to this segment.( Philips did it aggressively for some time but now has shifted to the premium segment as this is not a high volume segment ). So - if a company has made a name for itself in local markets of a few cities with a few architects … it’s completely believable. Architects also know, virtually no one in India is making these products. No big brand - for sure. Its an extremely niche but high margin segment
Premium and Mass segments - This is where all brands like - Philips, Havells, CG Lighting, Wipro Lighting etc operate. Here too, volumes in premium segment are limited. Mass segment is where the real volumes are
My two cents
@dm88 Can you make detailed summary of your learnings and insights you have got at Investor day presentation.
Also, i am aware, that SAAS part of business earns in commission rather than the GMV itself, what i wanted to get a sense is that, how much of that 5 Billion dollar GMV, translates to revenue, Let’s say SAAS GMV CONTRIBUTED 1% of the total revenue, in the next 5 years, what could be that number.
As per second, point if we take 5% PAT margin as target in next five years means, if they add .5 percent every year, then i guess the PAT margin gets stagnated after 2-3 years right ?
Since they are platform business, i was presuming that the margins will improve, even though not at the pace it used to, still 2002-250bps makes huges difference in bottom line given their huge volume in nature of revenue.
(Although I am happy if they just maintain the margin, if not expanding after 5% on a steady basis, bcoz market likes the stable margin business - like a consistent compounder)
From which website do we get this info, fundwise, monthwise
This exact scenario is also playing out in OYO. Earlier this year market prices were in the range of 65-80. This week they are raising funding by alloting equity to a group of investors of Incred Capital at 29 per share. Immediately unlisted market price has also corrected to 30-32 levels in a matter of few weeks.
Valuations / price discovery in the unlisted market is always a challenge and often determined by broking platforms. Waaree energies is presently going through a earnings explosion aided by US biz where giant Chinese companies are facing trade barriers, make in India / PLI push in the domestic market. FY23 earnings were strong and FY24 will also be a blockbuster year and this may continue into FY25 too (not sure when the party would end). Ever since they alloted shares to Madhusudhan Kela around 550 in Jun23 the price in the unlisted market is on a crazy spree (presently around 2200). No one knows what is likely to be the IPO price. It may well launch at 1500 but given the appetite for this stock in the market given the tailwinds, wont we surprised if the stock doubles from that level post listing.
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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