Multibagger Ashish Kacholia Stock which is an emerging consumer durables retailer with over 50 percent market share in Bihar, gets a ‘Buy’ tag on it from Edelweiss which is one of the leading and well-known investment banks, with an upside potential of 20 percent from its previous close price. 

Aditya Vision Limited 

Aditya Vision Limited is an emerging consumer durables retailer, it is engaged in the trading of electronic items and is a service-oriented electronic retail chain, having a dominant presence in India’s Bihar. It enjoys a 50 percent market share in Bihar. 

Its strong focus on customer service and shopping experience has helped AVL create strong brand equity and a loyal customer base, which in turn has helped it attract more than 100 leading durable brands. The company enjoys an enviable track record of zero store closures so far and 100 percent B2C sales. 

With a market capitalization of Rs. 4,025 Crores, on December 5, 2023, the shares of Aditya Vision Limited closed at Rs. 3,345 down 0.51 percent from its previous day’s close price of Rs. 3,362. 

As per the shareholding data available for September 2023, Ace Investor Ashish Kacholia took a fresh stake in this company in March 2023 by acquiring a 1.11 percent stake and he currently holds a 1.99 percent stake consisting of 2,39,506 equity shares of the company. 

Edelweiss, one of the well-known Investment Banks, has given a ‘Buy’ tag to the company’s stock with a target price of Rs. 4002 indicating a potential upside of 20 percent as compared to the closing stock price levels. 

The rationale behind providing such a recommendation pertains to various trigger points Comprising, 

Strong regional presence 

It has its operations in Bihar and Jharkhand. It has developed a network of 130 outlets in various locations in Bihar, Jharkhand, and Eastern UP. It is present in most of the districts of Bihar (37 districts out of 38) and 17 out of the 24 districts in Jharkhand. It expects to increase its store count by 25 per year in the next two years 

Aditya Vision’s management aims to establish its footprint in all districts in the Hindi heartland, primarily focusing on highly populated districts, with plans to invest in developing and enhancing its brand image through various brand-building efforts, communication, and promotional initiatives such as TV, media and many more and by organization and participation in industry events.

Income growth and penetration are the key demand drivers 

Due to the rise in incomes spending on consumer durables has increased in India. This trend is likely to continue as other factors such as expanding rural incomes, increasing urbanization, growing middle class, and changing lifestyles aid demand growth in the sector. 

The growth in online retail will provide a new channel for buyers, fuelling demand. In the medium term, demand from rural and semi-urban markets is likely to outpace that from urban markets and the low penetration of consumer durables in rural India is likely to act as a tailwind for Aditya Vision Limited(AVL) 

Through its dominant position across Bihar and Jharkhand, AVL is likely to be a major beneficiary of this trend. It intends to penetrate further into Bihar sub-districts/sub-divisions adjoining states of UP, Chhattisgarh, Madhya Pradesh, and West Bengal. 

Rise in electrification to boost demand for consumer durables 

The power situation in Bihar has improved considerably. Installed power capacity in Bihar has grown 4times over FY12–22. The boosted demand for electronic appliances and devices in Tier III and IV cities as well as villages, benefits players such as AVL. Moreover, increased smartphone usage and internet penetration in urban and rural areas aid growth. 

Valuation and view 

The over two-decade experience of the promoter in the electronics retail industry, strong understanding of market dynamics, its healthy relationships with branded partners, and the ability to connect with the local population have enabled a steady ramp-up in its scale of operations. 

Edelweiss expects a CAGR of 25 percent from Revenue, 24 percent from EBITDA, and 25 percent from Profit after tax over FY23–26E, with a steady EBITDA margin of 10 percent. 

In FY23 the company’s revenue from operations grew by 47.06 percent from Rs. 899.12 Crores in FY22 to Rs. 1,322 Crores in FY23, accompanied by increasing profits of Rs. 35.28 Crores to Rs. 64.14 Crores. 

It has reported a return on equity (ROE) of 59.86 percent and a return on capital employed (ROCE) of 35.98 percent, it is making good returns on its equity and capital employed. 

According to the latest shareholding data available for the September 2023 quarter, the company’s Promoters hold a 61.19 percent stake, Domestic Institutional Investors hold 4.60 percent and Foreign Institutional Investors hold 0.56 percent. 

Written by: Bharath K.S


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