Vijay Kedia, Ashish Kacholia portfolio stock declares final dividend, Q4 earnings struggles

Vaibhav Global is a small cap consumer discretionary company that recorded a market cap of ₹4,890.24 Cr during Friday's closing session. Vaibhav Global, the portfolio stock of prominent investors Vijay Kedia and Ashish Kacholia, fell 1.12% in Friday trading as the company struggled to generate solid financial results. The shares began trading on the NSE at ₹299.45 a share and fell to an intraday low of ₹295.05. 

The Board of Directors have “Recommended the Final Dividend of Rs. 1.50/- per Equity Share (on the face value of Rs. 2/- per Equity Share) for the financial year ended 31st March, 2023, subject to the approval/declaration by the shareholders at the ensuing Annual General Meeting (AGM) of the Company,” said Vaibhav Global in a stock exchange filing.

The firm recorded a 1.96 percent rise in standalone profit in the March quarter, at ₹31.77 crore, compared to ₹31.16 crore in the same period previous year. During Q4FY23, its revenue from operations grew by 13.57% year on year to ₹124.73 Cr, up from ₹109.82 Cr in Q4FY22, while PBIDT margin climbed to 29.37% from 23.94%. In the March quarter, EBITDA was ₹36.64 crore, up 39.37 percent from ₹26.29 crore in the year-ago quarter. Vaibhav Global's earnings per share (EPS) grew from ₹1.91 in March 2022 to ₹1.93 in March 2023.

Commenting on the performance for Q4 FY23 Mr. Sunil Agrawal, Managing Director, Vaibhav Global Limited said said “Revenue during last quarter was up by 1.1 YoY. While the quarterly numbers were modest, our growth over pre-COVID period is encouraging at 39.2% which is CAGR of 11.7%. The topline performance was in line with our guidance but could have been better given the continued macro environment weighing on the consumer sentiments.”

“Amidst current macro challenges, our continued market share gain across territories demonstrates our ability to adapt and navigate headwinds. YoY improvement in EBITDA is on account of operational efficiencies and cost rebase initiatives. Our outlook for the future remains positive. I would like to reiterate our earlier guidance and outlook for the business and are confident to deliver 8-10% revenue growth in FY24 and to deliver mid-teens revenue growth in subsequent periods with decent operating leverage,” Sunil Agrawal further added.

“Sales for the quarter were Rs. 693 crores, an increase of 1.1% from Rs. 685 crores in the fourth quarter of last year. However, our topline had a stronger growth of 39.2% over last pre-COVID period of Q4 FY20, which is CAGR of 11.7% during this period. The topline performance was in line with our guidance. This could have been better given the continued macro environment weighing on consumer sentiments. Our vertically integrated supply chain, combined with a strong global sourcing reach, provides us with a competitive advantage and allows us to maintain a robust gross profit margin at 61%. YoY improvement in EBITDA is on account of operational efficiencies and cost rebase activities, sequentially the margin is lower owing to relatively leaner season vis-à-vis Q3,” said Sunil Agrawal.

“In US and UK, the macro challenges are weighing down consumer sentiments and resultant demand, however, we are taking all mitigating measures like focus on lower ASP products, increased air-time allocation for under 10 & 20 $ products. Further, we are continuing to augment our reach by adding more TV cable and OTA households. Our strategic partnership with Vodafone Cable Network in Germany has enabled us to extend our reach to additional 13 million households, thus expanding our presence to approx. 90% of the total households in Germany. Our continued market share gain across territories demonstrates our ability to adapt and navigate headwinds,” he further added.

“Our 4Rs framework comprising of Reach, Registrations, Retention and Repeat purchases forms the basis for driving operating performance. The reach of our TV networks by the end of FY23 was 141 million TV homes, which was 124 million in FY22, i.e., ~14% higher YoY. New registrations during 12-month were 3.0 lakhs comp141ared to 3.18 lakhs in FY22. This is significantly higher by 69% over pre-COVID period. 57% of the new customers were acquired digitally in FY23 vs 56% in FY22,” Sunil Agrawal stated.

“On sustainability front, this quarter we distributed 100 additional e-scooters to employees free of cost for official commute purpose. With this, a total of 184 e-scooters have been distributed resulting in reduction of 12 buses from the fleet. Regarding our midday meal program, ‘Your Purchase Feeds....’, recently, we crossed a milestone of 75 million meals with run rate of approx. 50,000 meals donated every school day,” Sunil Agrawal commented.

“Despite the existing macroeconomic challenges and the ever-changing landscape, our outlook for the future remains positive. I would like to reiterate our earlier guidance and outlook for the business and are confident to deliver 8-10% revenue growth in FY24 and to deliver mid-teens revenue growth in subsequent periods with decent operating leverage. The board has recommended final dividend of Rs. 1.50 per share, which is subject to approval of shareholders. Including interim dividends, total dividend pay out against earnings of FY23 would be Rs.6.00 per equity share,” he further added.

Commented on the muted results, A R Ramachandran, Co-founder & Trainer-Tips2trades said “Below average Q4FY23 results with a significant drop in ROCE could lead to lower targets for Vaibhav Global in the coming days. Technically, a Daily close below support of 292 could lead to lower targets of 274-262 in the near term. Strong resistance will be at 310."

As per the shareholding pattern of Vaibhav Global for January to March 2023 quarter, ace investors Vijay Kedia held 32,20,000 shares or 1.95% equity stake and Ashish Kacholia held 20,00,000 shares or 1.21% fully-paid equity stake in the company.