In recent times, an increasing number of individuals are opting to put their money into the stock market. Despite the need for considerable knowledge before entering into the market, many see it as an excellent avenue for investment.

Among the notable figures in this field is Ashish Kacholia, often dubbed the “Big Whale” in market circles. Kacholia ventured into the stock market by establishing his own brokerage firm, Lucky Securities, back in 1995.

Afterward, he co-founded Hungama Digital in 1999 alongside renowned investor Rakesh Jhunjhunwala, also known as the Big Bull. By 2003, he shifted his focus to cultivating his personal investment portfolio. 

Presently, he’s gained attention for his investment in Brand Concepts Ltd., a firm specializing in the production of backpacks and fashion items.

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During the quarter ending in March, Kacholia boosted his ownership in the small-cap company Brand Concepts. He increased his stake in Brand Concepts by 12 basis points in the previous quarter, elevating it from 1.44% at the close of the December quarter to 1.56%.

Over the past year, Brand Concepts has been causing a stir in the share market, delivering impressive returns to investors. Within this timeframe, the stock has soared nearly 260%. Moreover, when examining its performance over a three-year period, the stock has experienced an astonishing surge of 3000%.

Given these remarkable numbers, it’s worth delving deeper into the article to uncover any potential investment opportunities within the company.

Industry Overview Of Brand Concepts

Despite facing a challenging high-base effect with a 40% growth in the last fiscal year (FY23), India’s luggage industry revenue is anticipated to witness a 15% increase this fiscal year (FY24). This growth is attributed to the rising adoption of hard luggage by the organized sector, alongside sustained expansion in tourism and business travels.

The estimated size of India’s luggage market stands at approximately INR 50,000 crore, with branded luggage contributing 25% to the total.

The Indian luggage and backpack market, valued at nearly INR 100 billion, demonstrated a robust 14.2% Compound Annual Growth Rate (CAGR) from FY15 to FY19, prior to the pandemic. Looking ahead, it is projected to maintain a growth rate of 15% in the foreseeable future.

Corporate Overview Of Brand Concepts

Brand Concepts has positioned itself as a prominent player in the realm of licensed fashion and lifestyle products, particularly emphasizing travel gear, bags, and accessories. 

Its portfolio boasts globally renowned brands like Tommy Hilfiger, United Colors of Benetton, and Aeropostale, alongside its own in-house labels, Sugarush and The Vertical. Over time, the company has demonstrated adaptability and a keen insight into market trends, continually enriching its offerings to cater to evolving consumer preferences.

The company adopts a multi-channel distribution strategy, utilizing both owned and franchised Exclusive Brand Outlets (EBOs) as well as Multi-Brand Outlets (MBOs). Additionally, it maintains a presence in major departmental stores and various e-commerce platforms.

This comprehensive approach enables the company to establish a broad domestic presence, supported by effective inventory management and agile speed-to-market capabilities.

Sales Channel Of Brand Concepts

The Company utilises a well-structured omni-channel sales network, which is organised into five primary sales channels:

Company-owned outlets: The Company operates eighteen (18) Company Owned Company Operated (COCO) outlets, each offering a varied range of products from luggage to small leather goods.

Franchisee stores: There are Fourteen (14) Franchisee Owned Company Operated (FOCO) stores that supplement the Company’s retail operations. These stores are solely dedicated to the Company’s products.

MBOs / Retail: As a strategy to enhance capital efficiency, the Company is in the process of transitioning to a master distributor model. This involves partnerships with various Multi-Brand Outlets (MBOs) across different cities and zones.

Third-Party online platforms: The Company maintains a digital footprint on E-commerce platforms such as Myntra and Amazon, broadening its customer base.

Proprietary online platform: The Company has initiated its own online selling platform, baglineindia.com, which aims to offer a seamless online-to-offline customer experience. This platform is fully integrated with the Company’s physical outlets, which also go by the name ‘BAGLINE’.

The following image shows the performance across channels:

Source: Annual Report

Financials Of Brand Concepts

FY2023FY2022FY2021FY2020
Revenue (in ₹crore)163.2286.1742.7971.28
Net Profit (in ₹crore)10.040.76-0.3-1.11
ROE43.29%4.22%-29.52%
ROCE31.10%10.95%-5.65%

In the fiscal year 2023, Brand Concepts saw a substantial increase in revenue, surging by 89% to reach ₹163.22 crore as opposed to ₹86.17 crore in FY2022. Analyzing a span of four years, encompassing FY2020 to FY2023, the company displayed a  Compound Annual Growth Rate (CAGR) of 32% in revenue.

Simultaneously, there was a noteworthy upturn in net profit, experiencing a 1221% increase from ₹0.76 crore in FY2022 to ₹10.04 crore in FY2023.

In FY23, Brand Concepts maintained favourable financial metrics with a Return on Equity (ROE) of 43.29% and Return on Capital Employed (ROCE) of 31.10%.

Future Plans Of Brand Concepts

Expanding Retail Footprint

Brand Concepts is actively pursuing an aggressive retail expansion strategy. In the next 24 months, the company aims to cross the milestone of 100 stores across the country, up from the current 40 stores. This rapid expansion plan is fueled by the encouraging response to their new brand rollouts, such as Benetton and Aeropostale. 

Furthermore, the company is witnessing a surge in franchisee enquiries, particularly after their successful World Cup advertisement campaign featuring Arjun Rampal. 

With a focus on capitalizing on this momentum, Brand Concepts is poised to establish a robust nationwide retail presence, catering to the growing demand for its diverse range of products.

Diversifying Brand Portfolio and Vertical Integration

While expanding its retail network, Brand Concepts is simultaneously diversifying its brand portfolio and vertically integrating its operations. The company is actively exploring opportunities to onboard new brands, leveraging its expertise in product design, sourcing, and distribution. 

Additionally, Brand Concepts is establishing its own manufacturing facility, which is expected to commence operations by FY 2025. This strategic move towards vertical integration aims to enhance operational efficiency, reduce dependency on third-party suppliers, and facilitate better quality control. 

With a strong emphasis on innovation and customer satisfaction, Brand Concepts is well-positioned to solidify its position as a leading player in the retail industry, offering a comprehensive range of products under various brand umbrellas.

Conclusion

In conclusion, Ashish Kacholia, the “Big Whale” of the stock market, has demonstrated his confidence in Brand Concepts Ltd. by increasing his stake. With its aggressive expansion plans, diversified brand portfolio, and vertical integration strategies, the company appears poised for remarkable growth.

As readers, what’s your assessment of Brand Concepts’ future prospects? Do you share Kacholia’s optimism about this small-cap company’s potential to make significant strides in the retail industry?

Written by Nalin Suriya 

By utilising the stock screenerstock heatmapportfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks, also get updated with stock market news, and make well-informed investments.


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