Hem Securities is bullish on Vaibhav Global and has recommended buy rating on the stock with a target of Rs 400.
Hem Securities research report on Vaibhav Global :-
Stellar quarterly numbers posted by company makes the case for revision in our target price. We initiated Buy on stock at Rs 176 and achieved our previous target of Rs 240 .Currently at a CMP of Rs 288.45, company trades at 8.48x of FY14E EPS of Rs 33.98 & 7.25x of FY15E EPS of Rs 39.80. We are upgrading our price target to Rs 400 in the medium to long term investment horizon.
Company has posted growth of more than 300% in its bottomline at Rs 43.96 cr in Q2FY’14 which stood at Rs 6.91 cr in Q2FY13 .Also total debt (short term & long term borrowings) of company reduced to Rs 127.28 Cr as on 30th Sept’13 from Rs 143.18 cr as on 31st March’13.The Operating profit margin of company stood at 12.61%in Q2FY’14 from 6%in Q2FY’13 while Net Profit Margin of company stood at 13.67%in Q2FY’14 from 3.11% in Q2FY’13.
With over 1.2M registered customers, and approximately 350K-500K unique customers shopping with company , company is constantly adding 250K-350K new customers in any year . Currently, company is attracting upto 500K monthly unique visitors on its web portals.
Co is constantly increasing its product portfolio which consists of 65000 designs. Company is seeing increasing growth within Jewelry related accessories segment of its business, Gem Stone studded steel jewelry, Sun Glasses, Mens Jewelry & Mens Wallets. Additionally Hand bags, Hair Accessories, Scarves and Watch segments of company have seen expanded offerings.
VGL is the only company that offers a unique integrated discount business model within the Home shopping space. Co’s average price points are significantly different as well as very low and its value proposition is very high. Co has direct sourcing ability in deep micro markets and thereby company has the opportunity to retain superior margins even with its lower price points. Co’s customer repeat and retention ratio’s are some of the highest in the industry and its group wide operating costs is uniquely low. Company has international peers like QVC & HSN Inc.
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