A Detailed Equity Research Aditya Vision Ltd with the tagline Sambandh Bharose Ka

AVL

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Date: Oct 25, 2023, (Price: ₹ 2610) Call: Target Price: Like LinkedIn

ADITYA VISION LIMITED

Recommendation: Buy

CMP: Rs. 2600/- TARGET: Rs. 3100/-

SENSEX: 64571/- NIFTY: 19281/-

KEY STOCK STATISTICS:

Market Capitalization (crs): 3,128/-

Book Value: Rs.143 /-

Face Value: Rs.10 /-

52 week High/Low: 2878/1140

P/E Ratio: 32.90

P/BV: 18.10

Dividend Yield: 0.29/-

Company Background:

✓ Incorporated in 1999, Aditya Vision Limited is a retailchain that specialises in consumer electronicsproducts. It is a modern multi-brand retail chain withover two decades of industry experience andmaintains a strong market presence in the states ofBihar and Jharkhand. It has recently forayed into UttarPradesh where it has 8 operational showrooms.

✓ With a current presence through 117 outlets acrossnearly all districts of Bihar, major districts of Jharkhand and few districts of eastern UP, theCompany is aggressively expanding in Hindi heartlandof India.

✓ It is the first & only consumer electronic retail companyto be listed on BSE.The company sells more than 10,000 Products ranging

from Digital Gadgets like Mobile Phones, Laptops, andTablets to Entertainment Solutions like Televisions,Sound Bars, Home Theaters, Cameras, Accessories toHome Appliances like Air Conditioners, Refrigerators,etc.

Sharholding Pattern (%):

Returns (%):

	3 Months	6 Months	12 Months
SENSEX	-1.04	-10.42	2.8
AVL	14.44	21.11	142.38

INDUSTRY OUTLOOK:

India’s consumer electronics market is one of thefastest-growing globally, ranking fifth in terms of size.India’s consumer electronics industry is projected toexpand significantly, with a market size estimated toreach USD 34 billion by 2025.

This growth can be attributed to the rising disposableincome and technological advancements in thecountry, leading to an increased demand for variousconsumer durable goods. As a result, intensecompetition has emerged among the numerousconsumer durable brands operating in India.

Multinational organisations perceive India as a keymarket that is expected to drive future growth.

The Indian appliances and consumer electronicsindustry stood at USD 9.84 billion in 2021, and isexpected to more than double to reach H 1.48 LakhCr (USD 21.18 billion) by 2025.This growth will primarily be drivenby an increase inthe volume of consumer electronics sold. Betweenthe period of April 2000-June 2022, electronic goodsattracted FDI inflows of USD 3.68 billion.The consumer electronics sector is expected towitness significant growth due to the government’sdecision to bring the sector under the production

linked incentive (PLI) scheme and easy credit access.

Source:Company, KFO Research

FUTURE OUTLOOK:

The Company intends to increase stores across subdivisions of Bihar and almost all districts in Jharkhandand eastern UP. The Company will continue openingsmall format stores in sub-divisions of Bihar, where theCompany enjoys a superior recall and familiarity. The

Company will also increase stores in Eastern UttarPradesh in the first phase where the demographicprofile is familiar to that of Bihar. By deepening ourpenetration, we expect to reach consumers closer towhere they are, strengthening offtake. We foresee a sustained increase in revenues; besides, we expect to protect our profitability that should translate into asurplus available for reinvestment.

Our FY 2025 roadmap Reinvest our cash flows in store expansion Expand in sub-divisions of Bihar, and spreadacross almost all districts of Jharkhand and majordistricts of eastern Uttar Pradesh Expanding mid andpremium product categories Grow revenues 20-25%

CAGR.

Source: Company, KFO Research

Business Highlights & Analysis:

PROS:

• Company is expected to give good

quarter

• Company has delivered good profit

growth of 87.3% CAGR over last 5

years

• Company has a good return on

equity (ROE) track record: 3 Years

ROE 55.5%

• Company has been maintaining a

healthy dividend payout of 21.3%

• Company's median sales growth is

27.0% of last 10 years.

CONS:

• Stock is trading at 23.0 times its

book value

• Promoter holding has decreased

over last quarter: -6.40%.

PEER COMPARISON:

#	Company	CMP	M Cap	52W High	52W Low	PE	PB	ROCE Last Yr	ROE Last Yr	PAT TTM	Div Yield
1	Avenue Supermarts Ltd.	3661.8	238285	4348	3292.6	102	14.8	21	16	2332	0
2	Trent Ltd.	1991.4	70794	2185.3	1155.1	145.2	27.3	32.3	15.9	369	0.2
3	Metro Brands Ltd.	1192	32736	1298	737	95.3	21.1	39.2	26	341	0.5
4	Aditya Birla Fashion and Retail Ltd.	214.7	20378	359.4	184.4	-74.1	7.3	9.4	-2.2	-322	0
5	Bata India Ltd.	1574.5	20237	1867.3	1380.8	65.2	14.1	33.7	19.9	311	1
6	Shoppers Stop Ltd.	652.4	7172	889.8	574.8	75.9	37.1	125.6	87	94	0
7	Go Fashion (India) Ltd.	1308.8	7068	1450	876.2	83.5	13.6	29.2	17.3	85	0
8	Redtape Ltd.	496.5	6862	574.9	410.6	146.9	14.4	37.1	29.8	47	0
9	Vaibhav Global Ltd.	413.8	6861	469	268.6	59.3	5.8	11.8	9.1	115	2.2
10	Electronics Mart India Ltd.	158.8	6108	176.2	61.4	40.9	5.2	16.9	13.8	142	0

Source: www.sharescart.com

Growth Drivers:

✓ The company through its organized showrooms holds~50% market share in organized electronic retail in Bihar.

✓ The company is focused on scaling up mid and premiumpriced categories thereby improving per-store economics. It aims to scale beyond Bihar, Jharkhand & UP to adjoiningstates in the “Hindi Heartland” over the next 3-5 (FY26-FY28) years based on the “Creeping Cluster Approach”.

✓ In FY23, the company opened 26 showrooms: 11 (Bihar),12 (Jharkhand), and 3 (UP). In Q1FY24 the companyopened 12 showrooms taking the total count of showrooms to 117. [3] Revenues per sq ft increased fromRs. 34,000 in FY22 to Rs. 40,000 during FY23.

✓ Offline engagement continues to remain a trustedformat in the Company’s areas of presence for variousreasons.

✓ Buy and Win – a customer loyalty reward programmethat has gained immense popularity overtime.

✓ Engagement with direct OEM suppliers leading tosuperior margins.

✓ Customer after-sales and helpline service throughAditya Seva.

✓ Extended warranty service through Aditya Suraksha.

VALUATIONS:

✓ On the basis of EPS Multiple Method, we arerecommending ‘Buy’ for the stock. Since the stock offers

good opportunity, we initiate a ‘BUY’ signal on the stockwith 12-month price target of Rs 3100/- share an upside

of 19.32 % from current levels.

SWOT ANALYSIS:

Strengths:

1. Established brand.

2. Distribution networks are well developed in both rural and urban areas.

3. Easy availability of finance.

4. Rapid urbanisation.

5. Increasing share of organised retail.

Weaknesses:

1. Stringent FDI laws for retail sector.

2. Increase in raw material prices leading to higher prices .

3. Dependence on seasonal demand.

Opportunities:

1. Penetration of white goods is lower as compared to other developing countries Unexplored rural markets.

2. Increase in buying power.

3. Availability of electricity at remotest places.

4. Easy KYC norms for financing.

Threats:

1. Competition among major players.

2. Deterioration in electricity condition.

3. Change in government policies.

4. Sudden spurt in commodity prices.

Source: Company, KFO Research

Disclosure:

I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure:

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Stocx Research Club). I have no business relationship with any company whose stock is mentioned in this article.

Disclosure legality:

I am not a SEBI Registered individual/entity and the above research article is only for educational purpose and is never intended as trading/investment advice.

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