(10/40) 𝗧𝗵𝗲 𝗲𝗰𝗼𝗻𝗼𝗺𝗶𝗰𝘀 𝗼𝗳 𝗰𝗵𝗮𝗽𝗽𝗮𝗹𝘀 - how do you make footwear for a billion Indians! In a small town of Bahadurgarh in Eastern Haryana, a worker begins his shift in an unassuming manufacturing plant. But this is no ordinary plant - everything in it works like clockwork, to produce a high quality chappal at an unbelievable price for the ordinary Indian! We have all worn a pair of these rubber chappals - but how are they made, and more importantly how does a business that sells these for close to 125 rupees (US$1.6) make money? 1. Crush operating costs with efficiency: Every part of the production line is built for efficiency. They have dedicated production lines for their fast moving SKUs, Maynard Operations sequencing for optimizing worker productivity, and design and moulding techniques optimized to reduce wastage. This crushes the operating cost to produce the pairs of footwear. 2. Reduce material costs with procurement scale: Ethylene vinyl acetate, polyurethane and natural rubber are the primary raw materials that go into a pair of footwear, the first two being crude derivatives and the last being naturally found. The scale at which the leader operates allows it to order large volumes consistently, helping it get natural volume discounts on its procurement. The raw material cost per pair is consistently below Rs 58 (74c) - with no one in the industry coming even close! 3. Fast moving SKUs in multi-brand outlets: These chappals then make their way to 50,000+ multi-brand outlets, which are their primary channel for sale! Despite such a wide distribution network, the fast moving nature of the company's sales ensures that the receivable cycle is consistently below one month! 4. Targeted ad spend: Since demand generation is an integral cog of the whole machine, the firm has invested heavily into its brand. As early as the 90s - the firm had Dara Singh and Ashok Kumar associated with the brand, who have now made way for the likes of Akshay Kumar and Salman Khan. Despite spending north of 70cr on ads however, the scale of the business ensures that the ad intensity is sub 4%. These four drivers of brand, distribution, cost leadership and manufacturing efficiency feed into each other as a virtuous cycle, making the firm stronger every day. With more than half the market still unorganized, and India's per capita consumption materially below global average, the Indian footwear market appears to be poised for strong growth. How do you see the sector shaping up, and which players look most promising to you? #LICreatorAccelerator LinkedIn for Creators
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Most exit polls indicated a thumping victory for BJP for a third term! A good time to review key items the party has on its manifesto that could create opportunities in the market. We will be playing quality opportunities amongst these under Bharat Bet Research!💹 (Sign up: bit.ly/joingsnra) Agri & animal husbandry🌾: + Atmanirbhar in pulses and edible oil, new clusters for vegetables + Focus on high-yielding climate-resilient fortified seeds + Massive vaccination campaign for veterinary diseases + Pearl and seaweed farming to boost income Manufacturing⚙️: + Food processing: Fruit, vegetable, seafood, and dairy processing focus. Comprehensive monitoring of supply chain to ensure quality. + Pharma: Pharmacy of the world by focussing on pharma research and manufacturing, especially APIs. Research linked incentives for companies to invest in drug and chemical R&D. + Electronics: $100bn+ electronics manufacturing industry built over the last 10 years. Plan to scale this 3x. + Defence, shipbuilding, railways and aviation development focus. + Textiles: Focus on textiles, garments, and apparel manufacturing + Lab-grown diamonds: Will make India the world's largest producer of lab-grown diamonds. Infrastructure🌉: + Railway: Adding 5000km of new tracks every year + Kavach train protection system: Expanding coverage of indigenous kavach train protection system + Redevelopment of 1300+ railway stations to world class standards (railway lounge optionality?) Energy⚡️: + Energy independence by 2047: Reduced petro imports, renewable production, improved energy efficiency + PM Surya Ghar muft bijli for solar electricity in homes + Expanding nuclear energy via small modular reactors + Targetting 500GW renewable via massive solar parks Urban infra🏙️: + Piped gas: Provided to 1.1cr households, will further expand to all major cities and towns + Open landfill free cities: WIll continue elimination of open landwills to manage waste + Water secure cities: Waste water treatment, aquifer recharge and smart metering for bulk customers Tourism🛕: + New projects to develop religious and tourist sites inspired by the Kashi Vishwanath corridor + Holistic development of Ayodhya as it begins catering to millions of devotees every year + Restore and preserve ASI monuments + Thematic circuits: Border villages, island hubs, adventure tourism, sustainable ecotourism, riverine tourism
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One of the reasons we share the most recent research report as a sample is that we want you to understand not only our research depth and report style but our timing and contrarian value approach as well! Our latest report is on a proxy to infra growth in India + Capacity doubled in FY24 + Margins ramp driven by improved efficiencies + Management guide of 30%+ volume growth in Q4 + Sub 15x valuation You can read it here: http://bit.ly/gsnsample
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PVR is the absolute boss of Indian movie distribution. It controls just 18% of the screens in India but has a 42% market share in Hindi box office collections and a whopping 59% in English box office collections! But instead of going on the aggressive like you would expect a market leader to do PVR is actively de-risking. Reducing Financial Leverage: PVR has been consistently reducing debt over the last year. They plan to further reduce net debt by 50% over the next 12-15 months with a mix of free cash from the business and 300-400cr asset monetization. Reducing Operating Leverage: PVR now plans to move towards a developer-fitted, company-operated model that will increase revenue share outflow to the developers but reduce capex per screen by 30-35% over the next few years. Slowing net screen growth: They have also brought net screen addition to just around 3%, with a 7% gross addition, and a 4% closure of old screens. The screen closures, typically theaters in older malls with lower footfalls have remained high after the Inox acquisition. Even this growth is going to be focussed on the South Indian market where single screens still dominate. More diversified business: The business is also partnering with Devyani Foods for food courts in malls, to get a more pre-ticketing F&B revenue which comes in irrespective of how movies do. They start this year with 5-6 food courts in FY25. Whether this move is a sign of the times to come in the physical movie distribution business, or PVR playing the waiting game as peers like Carnival struggle with debt and restructuring, only time will tell! But it certainly makes for an interesting case to track! Disc: This is not a recommendation, please consult a SEBI Reg professional or do your own diligence before taking any investment decision.
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The champs and duds of the Indian wedding proxy market👰 Gold, Silk Sarees, and Sherwanis are strong proxy plays to the flourishing wedding market in India. As the earnings season continues, we see how top players in this space have performed. Gold: Gold players continue to hit it out of the park with the continued growth of organized players. While Titan grew its jewellery business 18%, smaller players like Kalyan were able to grow at 34%. Caratlane, Titan's omnichannel jewellery platform continues to lead growth for Titan growing at a stellar 30%! Silk Sarees: While not quite hitting it out of the park, listed silk saree retailer Sai Silks reported a decent improvement in same-store sales growth to 6% and a topline growth of 11%. The business recently ventured into silver jewellery retailing and has a strong store growth trajectory lined up in the affluent Tamil Nadu market, making it a business to watch out for in the coming year. Sherwanis: Leading male wedding apparel player Manyavar continued to struggle, as competition in the space heats up, and it continues to operate at super-normal 65%+ gross margins. Same-store sales declined 3.3% in the quarter and 10.3% in the year. Notable the management attributed the slowdown to lower weddings and muted consumer sentiments. As organized competition begins to heat up in the space, the business will likely have to take an important call on the tradeoff between margins and growth. Disc: The post is for educational purposes and is NOT intended as investment advice. Please consult a SEBI Registered professional before taking any investment decision. May onboarding for my Investment Recommendation offering (SEBI Registered) has now begun. Links in the first comment.
Ex NIIF||Building Product Folks
1yI see the sector shaping up quite positively with a huge opportunity for growth and at the same time associated challenges. Trends can be :- a)Personalisation of choices becoming an essential part of footwear industry. As disposable income increases, and Indians move up the value chain, footwear will expand into various different segments for different use cases b)Increase in non-leather footwear segment products due to factors such as government policies banning animal slaughter in leather tanneries c)Regulatory improvements like 100 percent FDI through automatic route and nature of delicenced sector opens future routes of investment, expansion, growth and employment. d)Increased importance of B2B ecommerce marketplaces in unleashing the full capabilities of the sector. e)Omnichannel brand strategy which creates a surge in demand in Tier 2 and Tier 3 cities. Would need better clarity on the challenges though! Players I think would be Nike and Puma