Thread by @SocInvestApp

(1/n) We had written about Vaibav Global last week. Stock jumped 10% yesterday. Is it good stock to buy? Let's dig deeper for insights in this thread.

Company is an online retailer of low cost fashion jewelry selling primarily through TV and the internet in the US & UK.

(2/n) Vaibhav Global has excellent direct sourcing network (30+ countries; esp from India, China, Thailand & Indonesia) that allows it to competitively price products. Company owns manufacturing facilities that helps in manufacturing high quality products at best possible prices.

(3/n) Teleshopping is an oligopolistic market with QVC controlling 93% of market. Company did about 5 lac+(0.5 million) unique customers in FY21 (compare this with QVC that has ~22 million active customers) shows that there is huge potential to increase consumer base.

(4/n) MOAT - Deep discounting model with ASP 50% of peers (USD25-30) leads to high inventory turnover and is less affected during financially stretched times.

(5/n) I believe the company is in a unique position where it can deliver 15%+ revenue CAGR for the next 5 years at 15%+ EBITDA margin. With these metrics the company will be able to sustainably deliver 30%+ ROCE and ROE going forward.

(6/n) Currently the stock is trading at TTM PE of 32x, which is at a huge discount to some of the Indian peers in similar space like Titan and Trent. Stock has increased more than 3x since March 2020 so could be accumulated on price 30-35% lower than the current level.

(7/n)
Key risk - Stickiness of lower EBITDA margin (Q2FY22) can drive down the PE multiple and stock price

Disclosure – Author (@ukumarbaja) holds this stock in his personal portfolio and this is also part of the Green Portfolio ESG Fund that he manages.

(n/n)

Article link - socinvest.app/post/vaibhav-g…

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This article is purely for educational purpose and not to be construed as an investment advice. Please consult your financial advisor before acting on it.

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