Thread by @sahil_vi

Vaibhav global performance in Q3 has been quite disappointing. In addition to the poor 3% YoY growth, their revenue growth guidance for entire year has been reduced from 15-17% for FY22 to 10% for FY22. In addition the growth guidance for fy23 has been reduced to 13-15%.

Reason for exiting is 4 fold:
1. Valuations look too stretched for 13% growth specially given that margins will be under pressure as well due to investments in Germany operations.

2. Better opportunities exist not just from growth but quality of cashflow perspective.

Evaluating: iifl finance, intellect design arena, schrodinger.

3. Management inability to walk the talk.

Management had guided to grow 15-17% on top of last year growth but that has not happened. Jewellery vs non jewellery mix has not improved.

Full marks for the disclosure & honesty. Poor marks for execution.

When numbers don't match narrative, i give management some quarters; oct-dec being their best Q still they are unable to show good growth, and since better opportunities exist, i don't mind switching even at a 25% loss.

We have seen in many many biz that when growth & margin go for a toss biz suffers. So does valuations. Will continue to evaluate & track for growth triggers. Fy24 or fy25 might be a good year to reevaluate this picture. Let's see.

4. Guidance being lowered drastically is the most important reason for me to sell. If the people running the biz don't see Good growth, operating leverage works against you.

Build your own conviction. Do your own research. I am only sharing this in the interest of full disclosure. 🙏🙏

Not a buy or sell reco. I am not an investment advisor.