Vaibhav Global Initiating Coverage Report By Nirmal Bang

Vaibhav Global Ltd (VGL) profitability got impacted during FY07 to FY10 as the company incurred losses on account of acquisitions at higher value and launch of TV Channels. This was further impacted by the global economic turmoil, resulting in global economic slowdown/recession. To combat the crisis, the company downsized its operation and changed its business model to full year discount retailing of artificial jewellery and fashion accessories through TV channel in US and UK. The discount model has differentiated VGL from giant global players like QVC and HSN and brought its recognition in the market. VGL is the only company operating in full year discount model. This has helped company to turnaround its operation in last two years. We feel the discounted sale retailing on TV channel in US and UK business is highly scalable and will help company to grow its revenue and PAT by 25.7% and 23.4% CAGR during FY12 to FY14E respectively without any big investment. We expect VGL to report EPS of Rs. 22.6 and 30.5 in FY13E and FY14E respectively. ROCE is expected to improve from 16.4% in FY12 to 22.8% in FY14E.

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