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    One stock idea I can’t take my eyes off in 2019

    Synopsis

    This company manufactures products in India and sells 100 per cent in developed economies.

    Vijay Kedia

    MD, Kedia Securities

    Kedia is a well-known value investor. He is better known on Dalal Street for having spotted many mul...Show more »

    Vaibhav Global is India’s only profitable and vertically-integrated electronic B2C fashion retailer with proprietary TV home shopping, e-commerce, mobile app platforms in the US and the UK.

    It’s counted among the rare companies which manufacture products in India and sell 100 per cent in developed economies such as the US and the UK. It competes with companies that generate billion dollars in revenue. This shows Vaibhav Global’s inherent quality and strength.

    The company has delivered deep value proposition to discount-seeking customers in fashion jewellery and lifestyle products. The company has expanded its portfolio, focusing on adjacent product categories such as lifestyle accessories, home textiles, kitchenware and cosmetics that target similar market segments.

    With decades of experience & a solid team to back up CFO Puru Aggarwal, the company through him has gained experience of multinational giants like Teva Pharmaceuticals, Coca-Cola and E&Y.

    In spite of two big falls in last 10 years due to market uncertainties, helping the management with new learning through this phase, Vaibhav Global still stands tall, a learning that will only help them move towards a better future.

    Market leader QVC holds a revenue amounting to $12 billion, Vaibhav Global is smaller in size that has generated a revenue of Rs 1,575 crore. Its B2B segment also supplies to QVC.

    The strength of Vaibhav Global lies in its supply chain that it has created over the years. The company has low cost of sourcing and supplies to competitors like QVC. In price competition, Vaibhav Global will have benefits over others. This also helps, as the company has access to grassroots-level understanding of trends that are existing and upcoming in the market.

    Vaibhav Global has capitalised on the opportunity presented by the US and the UK and grown its revenues in mid double digits in constant currency terms with decent Ebidta margin expansion. Vaibhav Global’s recent moves to launch budget pay, mobile app, re-branding of TV channels and focus on e-commerce have fetched desired results.

    E-commerce sales in the USA contributed 9 per cent of total retail sales, growing almost 17 per cent YoY in 2017. The company through its footing in strong e-commerce has captured immense market size and this should help it have a shot at continued growth in the years to come.

    Growth in revenue and margin expansion with tight control over working capital has resulted in sharp increase in free cash flow to the company. In FY18, free cash flow was worth Rs 18 crore whereas in H1FY19, it was Rs 85 Cr.

    Rising interest cost, even in countries like the USA, won’t impact financials of the company as it is debt free with a net cash flow of Rs 104 crore. Since most of the capex is over, operating leverage will kick in as the company increases its sales.

    Vaibhav Global is guiding for double-digit growth i.e. through a 12 %-plus growth, there are chances that its bottom line will grow at over 40 per cent. A Nasdaq listing would have led to a different valuation.

    (Disclaimer: This is not a stock recommendation. The author wrote about the company when requested to name one big investment idea for the New Year. It should not be considered a BUY/SELL recommendation in any manner whatsoever. The author has vested interest in the company as he holds its shares.)





    (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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    (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2024 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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