About the Company

Vaibhav Global is a company dealing in fashion jewellery and lifestyle products. They mainly source and assemble their products in India and South East Asia and sell these products in the US and UK primarily. They sell both to businesses and retail customers whom they reach through TV sales channels and shows through they reach more than 100 million TV homes in the US and UK.

Q1 2020 Updates

Financial Results & Highlights

Standalone Financials (In Crs)
Q1FY20 Q1FY19 YoY % Q4FY19 QoQ %
Sales 109.4 122 -10.33% 129.5 -15.52%
PBT 9.95 12.67 -21.47% 12.38 -19.63%
PAT 8.31 10.42 -20.25% 9.64 -13.80%

 

Consolidated Financials (In Crs)
Q1FY20 Q1FY19 YoY % Q4FY19 QoQ %
Sales 443.67 394 12.61% 466.63 -4.92%
PBT 45.16 36.84 22.58% 39.27 15.00%
PAT 36.01 30.04 19.87% 32.45 10.97%

 

Detailed Results

    1. The company had a good quarter with a consolidated revenue rise of more than 12% YoY.
    2. The profits for the company also rose 20% YoY showcasing a good quarter.
    3. The total sales volumes for Q1FY20 stood at 2.3 million products. Out of this, 1.36 million units were from home TV shopping while 0.93 million was from web shopping.
    4. TV sales revenues grew 11% YoY while web sales grew 43% YoY.
    5. The company’s reach came to 99.4 million TV homes.
    6. Average quantity sold per customer was at 31 items per customer.
    7. The revenue growth in the Shop LC was more than 20% YoY in dollar terms while TJC UK revenues grew around 15% YoY in pound terms.
    8. Sales volume growth for TV sales was 6.6% YoY while web sales volumes grew 33.7% YoY.
    9. Gross profit margins improved 2.5% YoY to 63.1% in Q1FY20 while EBITDA margin grew 1% YoY to 12.4% in Q1FY20.
    10. B2B sales are on a decline with revenues falling to Rs 28 Cr from Rs 48 Cr last year.
    11. The company has a negative net debt position of Rs 216 Cr implying a very strong cash position for the company.
    12. The company announced a share buyback program of a maximum buyback price of Rs 1000 and allotted Rs 72 Cr for this purpose in May ’19.

Investor Conference Call Highlights

  1. The company reported an average net worth of 22% and return on average capital employed of 39% in Q1.
  2. The percentage of non-jewelry sales in the quarter was at 18%. The management had guided that they do not have a specific target in mind but they expect the segment to grow from its current revenue contribution levels.
  3. The management has guided that this increase in non-jewelry item sales should not affect margins detrimentally.
  4. The management has refrained from providing any guidance on margins but they remain confident of revenue growth of 14-16% for FY20.
  5. The company is looking to keep prices with the band of +/- 5%. They will not restrict price increases according to seasonality.
  6. The company has seen good growth in sales through online market places like Amazon.
  7. The company is also looking to enter into new mediums of streaming services like AppleTV and Amazon Prime as a new sales channel.
  8. The customer retention rate in both UK and USA is around 50%.
  9. The company’s Budget Pay system has been very helpful in sales with around 35% of US sales and 40% of UK sales coming through this system.
  10. The mobile platform is also going strong and contributing to 27-28% of web sales numbers.
  11. The company also does online auctions in the mobile platform to sell the leftover inventory from TV sales which further contributes to 25-27% of web sales.
  12. The management is looking for 4 main metrics for their performance. They are:
    • Reach: Reach remains at 99.4 million TV homes.
    • Registration: Registration rate of new customers has grown 6% YoY.
    • Retention Rate: Retention rate has grown by 5.1% QoQ.
    • Repeat Purchase: Repeat purchase were up 3% for Q1.
  13. The company is encouraging its TV customers to try its web catalogs as they have found out that multi-channel customer lifetime value is much higher than any single-channel customer.
  14. Around 10-12% of sales are coming from online-only customers. The rest of the web sales are from multichannel customers with both TV and web access.
  15. The company is trying to acquire new customers from direct social media mechanism but they believe online marketplaces offer more robust customer acquisition rates.
  16. The management is confident of opening the buyback window from 20th
  17. The company added 36,499 new customers in Q1. This was up more than 100% YoY.

Analyst’s View

Vaibhav Global has established itself as an influential player in the jewelry exporting and telecommerce business. They have consistently delivered good revenue growth in recent years and continue to grow their business through newer selling mechanisms like through their website and app. The company has been very proactive with their 4Rs agenda for achieving their long term goals. The company has delivered good growth numbers on the back of their rapidly expanding web shopping business and have shown good market awareness by converting a lot of their TV only customers into multichannel customers who can be reached through the web as well. It remains to be seen how the company navigates the slow decline of traditional TV and the advent of streaming services. Nonetheless, on the back of their consistent success of the past few years and their proactive stance in following the 4Rs for sustained growth of the company, Vaibhav Global remains a good investment option for anyone banking on the jewelry or the telecommerce industry.

 

 


 

 

Q3 2019 Updates

Financial Results & Highlights

Consolidated Financials (In Lacs)

Q3FY19 Q3FY18 YoY % Q2FY19 QoQ % 9M FY19 9M FY18 9M% Change
Sales  51371.46 46363.97  10.8%  45375.84 13.21% 136151.94 115427.68  17.95%
PBT  6446.42  5520.15  16.77%  4757.8  35.49%  14888.54  9508.14  56.58%
PAT  5251.38  4553.11  15.34%  3915.48 34.13%  12171.53  8056.01  51.07%


Detailed Results

  1. Have sold more than 2.9 million products this quarter while accessing more than 100 million TV homes directly (75 million in US and 25 million in UK).
  2. Retail volumes were up 18% YoY at 2.9 million with home TV shopping volumes coming at 1.92 million and web shopping volumes coming at just less than 1 million units.
  3. Strong ROE and ROCE reported for 9M19 at 23% and 37% respectively.
  4. Gross margin increased to 64% this quarter vs 57.4% last year.
  5. EBITDA margin improved to 13.9% vs 13.4% last year.

Investor Conference Call Highlights

  1. First time quarterly revenues crossed 500 cr. Retail revenue grew faster than B2B.
  2. Retail growth was backed by high volume growth in both TV and web platform.
  3. Both web and TV platform are integrated resulting into satisfaction and enhanced consumer experience.
  4. B2B revenues were lower. B2B remains an opportunistic business option for the company
  5. Owned call center and in-house analytics to further enhance consumer experience.
  6. First time quarterly profit crossed 50 Cr.
  7. Strong operating cash flow and free cash flow demonstrating strength of the business model.
  8. Contribution from lifestyle products now stands at 15% of total revenue.
  9. Non-jewelry is a larger market than jewelry market.
  10. Several initiatives have been undertaken to increase enhanced
  11. One day flash sale of 75000 units during the quarter.
  12. Budget pay (instalment option) has helped the company increase its sales considerably. 38% of sales happen through this channel.
  13. Mobie app has been improved with better functionalities.
  14. Q3 59000 new customer registrations were added.  There are 3337000 unique customers for company’s products.
  15. Reduced B2B sales has led to high cash generation. No major capex plan, so free cash flow should be healthy going forward. Company has started distributing dividends.
  16. Company adopts 4R- Reach, Registrations, Repeat purchase and Retention.
  17. TV viewership granular data suggests that the company’s target audience (45-75 age) has not yet seen any decline in viewership. However, company is preparing for the change in consumption pattern and investing in digital and social media heavily. It is already being translated into increased sales through web.
  18. Storing products with Amazon helps company to contain shipping costs.
  19. Sourcing from USA and UK is 5-7%. 50% of the balance is from India and rest from China, Thailand & Indonesia. They do not think China USA tariff can be of a problem for them because they have a very fast turnaround time. Every month they ship 100 new products from China.

Analyst’s View

Vaibhav Global have established themselves as an influential player in the jewellery exporting and telecommerce business. They have consistently delivered good revenue growth in recent years and continue to grow their business through newer selling mechanisms like through their website and app. They are also proactive in terms of generating customer demand through the use of flash sales and other mechanisms to address customers outside their target audience of age 45-75. This has seen them lean heavily on online sales channels which is widely expected to open new doors for the company in the future. Thus, Vaibhav Global seems like a reliable bet as a good growth investment in the jewellery and lifestyle products segment.

Disclaimer

This is not an investment advice. Please read our terms and conditions.