Q3FY25 : Brainbees Solutions & Vishal Mega Mart

Summary

In this video, the presenter discusses the business models and recent performance of two fashion and retail companies: Brain Be Solutions and Vishal MegaMart. Brain Be Solutions operates through two segments: FirstCry, a brand for children's and maternity products, and AS Global, a startup platform. While FirstCry's India sales grew 15%, international sales lagged behind. Vishal MegaMart, a consumer discretionary retailer focused on affordable products, saw solid growth with a 19.5% increase in sales. Despite challenges, both companies show promise, with Brain Be narrowing its losses and Vishal MegaMart continuing its steady growth.

Takeaways

• 😀 BrainBees Solutions operates two main business segments: FirstCry and AS Global.
• 😀 FirstCry contributes 70% of BrainBees' revenue, focusing on children's products.
• 😀 BrainBees recorded a 14% growth in sales but experienced slower growth and a delayed winter season.
• 😀 BrainBees had to close 38 underperforming stores, reflecting challenges in certain regions.
• 😀 Vishal Mega Mart’s business model targets affordable apparel, general merchandise, and FMCG.
• 😀 Vishal Mega Mart posted a 19.5% growth in sales and a 28% rise in profit for Q3.
• 😀 Vishal Mega Mart's strong performance includes expanding stores and benefiting from operating leverage.
• 😀 The IPO valuation of Vishal Mega Mart is considered high, with a forward P/E of 80–85.
• 😀 Despite the high valuation, Vishal Mega Mart has sustained its growth and outpaced competitors like Avenue Supermart.
• 😀 The video hints at a potential recovery for FirstCry, with expectations for stronger performance in the coming quarters.

Q & A

What are the two primary segments of BrainBees' business?

The two primary segments of BrainBees' business are FirstCry, which caters to kids' apparel and products, and AS Global, which assists startups by providing a platform, guidance, and other resources.

What is the growth rate of BrainBees, and how has it evolved?

BrainBees has experienced a 25% growth rate, but in recent quarters, its losses have narrowed, even though the growth rate has slowed down to around 13%. The company is focusing on achieving growth while also reducing its losses.

What challenges did FirstCry India face in Q3?

FirstCry India faced challenges in Q3 due to two main reasons: the early timing of festivals in October and the delayed onset of winter, both of which affected sales, particularly in apparel for children.

What was the impact of store closures for FirstCry?

FirstCry closed 38 stores in Q3, marking the first time the company has done so. The closures were due to poor performance in certain locations where customer visits and revenue generation were below expectations.

How did FirstCry International perform in Q3?

FirstCry International saw a growth of 13% in sales, but the growth was slower compared to India. The sluggish performance was due to increased competition from both horizontal and vertical brands in international markets, especially in the Middle East.

What makes Vishal MegaMart different from stores like Avenue Supermarts?

Vishal MegaMart differs from Avenue Supermarts in terms of product mix. While Avenue Supermarts focuses more on FMCG goods and groceries, Vishal MegaMart leans more heavily into apparel, though both focus on providing affordable products.

What are the key revenue categories for Vishal MegaMart?

Vishal MegaMart's revenue is primarily derived from apparel (45%), general merchandise (27-29%), and FMCG products (27-28%). They focus significantly on private label products, with around 70% of their products coming from their own brands.

What has been the store expansion trend for Vishal MegaMart?

In Q3, Vishal MegaMart added 23 stores, bringing their total to around 668 stores. This marks a solid expansion, and they have been consistently growing their store count and revenue.

How did Vishal MegaMart perform in terms of sales growth and profitability in Q3?

Vishal MegaMart achieved a 19.5% sales growth and a 28% increase in profit after tax (PAT) in Q3. Their same-store sales growth (SSG) was 10.5%, which is considered strong in the retail sector.

What is the primary concern regarding Vishal MegaMart's valuation?

The primary concern about Vishal MegaMart's valuation is its high price-to-earnings (P/E) ratio, which stands at around 80-85 times earnings for the next year. This makes its valuation appear expensive compared to its expected growth of 20-25%.