Can your brand concept sustain performance? Insight into future growth

Recently, the number of individuals investing money in the stock market is increasing. Despite the fact that it requires considerable knowledge before entering the market, many people see it as a great investment vehicle.

Among the notable figures in the field is Ashish Kacholia, often referred to as the “big whale” in the market. Kacholia entered his stock market in 1995 by founding his own brokerage firm, Lucky Securities.

He then co-founded Hungama Digital in 1999 with renowned investor Rakesh Jhunjhunwala, also known as Big Bull. By 2003, he focused on building his personal investment portfolio.

Currently, he is attracting attention by investing in Brand Concepts Ltd., a specialized manufacturer of backpacks and fashion items.

During the quarter that ended in March, Kacholia increased its ownership of the smaller company, Brand Concepts. He increased his stake in Brand Concepts by 12 basis points last quarter, raising it to 1.56% from 1.44% at the end of the December quarter.

Over the past year, Brand Concepts has made waves in the stock market and delivered impressive returns for investors. The stock soared nearly 260% during this period. Moreover, looking at the performance over the past three years, the stock price has experienced an incredible surge of 3000%.

Given these impressive numbers, we recommend digging deeper into the article to find potential investment opportunities within the company.

Industry Overview of Brand Concepts

Despite facing a challenging high-low effect of 40% growth in the last financial year (FY23), India’s luggage industry revenue is expected to grow by 15% in the current financial year (FY24). This growth is attributed to the continued expansion of tourism and business travel along with increasing adoption of hard luggage by the organized sector.

The estimated size of the Indian luggage market is around INR 50,000 crore, with branded luggage accounting for 25% of the total market.

India’s luggage and backpack market, valued at around INR 100 billion, has recorded a robust compound annual growth rate (CAGR) of 14.2% from pre-pandemic FY15 to FY19. It is expected that the growth rate will be maintained at around 15% in the future.

Corporate Overview of Brand Concept

brand concept It has established itself as a prominent player in licensed fashion and lifestyle products, with a particular focus on travel gear, bags and accessories.

The company’s portfolio boasts world-renowned brands including Tommy Hilfiger, United Colors of Benetton and Aeropostale, along with its own brands Sugarush and The Vertical. Over time, the company has demonstrated adaptability and keen insight into market trends and has continuously enriched its products to cater to evolving consumer preferences.

The company adopts a multi-channel distribution strategy utilizing both owned and franchised exclusive brand outlets (EBOs) and multi-brand outlets (MBOs). We also maintain a presence in major department stores and various e-commerce platforms.

This comprehensive approach allows the company to build a broad national presence with effective inventory management and agile speed to market.

Brand concept sales channel

The company leverages a well-structured omnichannel sales network consisting of five major sales channels:

Company-owned stores: The company operates 18 company-owned and operated (COCO) stores, each selling a variety of products ranging from luggage to small leather goods.

Franchise stores: There are 14 franchise-owned, company-operated (FOCO) stores that complement the company’s retail operations. This store carries only the company’s products.

MBO/Retail: We are pursuing a transition to a master distributor model as a strategy to increase capital efficiency. This includes partnerships with various Multi-Brand Outlets (MBOs) across different cities and regions.

Third Party Online Platforms: The company maintains a digital footprint on e-commerce platforms such as Myntra and Amazon to expand its customer base.

Exclusive online platform: The company has launched its own online sales platform, baglineindia.com, with the aim of providing a seamless online to offline customer experience. The platform is fully integrated with the company’s physical stores, known by the name ‘BAGLINE’.

The following image shows performance by channel.

Finance of the brand concept

In FY 2023, Brand Concepts saw significant growth in its revenue, surging 89% to reach ₹163.22 crore compared to ₹86.17 crore in FY 2022. After analyzing four years from FY2020 to FY2023, the company recorded a compound annual growth rate (CAGR) of 32%.

At the same time, net profit showed a notable increase, growing by 1221% from Rs 7.6 billion in fiscal 2022 to Rs 10.04 billion in fiscal 2023.

In FY23, Brand Concepts maintained favorable financial metrics with return on equity (ROE) of 43.29% and return on invested capital (ROCE) of 31.10%.

Future plans for the brand concept

Expansion of retail store area

Brand Concepts is actively pursuing an aggressive retail expansion strategy. Over the next 24 months, the company aims to cross the milestone of 100 stores nationwide, up from the current 40. These rapid expansion plans have been driven by an encouraging response to the launch of new brands such as Benetton and Aeropostale.

Moreover, the company is witnessing a surge in franchise inquiries, especially after the successful World Cup advertising campaign featuring Arjun Rampal.

Focused on capitalizing on this momentum, Brand Concepts is poised to build a strong retail presence nationwide to meet the growing demand for its wide range of products.

Brand portfolio diversification and vertical integration

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

Brand Concepts is also building its own manufacturing facility, which is expected to begin operations by FY 2025. This strategic move towards vertical integration aims to improve operational efficiency, reduce dependence on third-party suppliers and promote better quality control.

With a strong emphasis on innovation and customer satisfaction, Brand Concepts is well positioned to solidify its position as a leader in the retail industry, offering a comprehensive range of products under a variety of brands.

conclusion

In conclusion, Ashish Kacholia, the ‘big whale’ of the stock market, has shown his confidence in Brand Concepts Ltd. by increasing his stake. The company is expected to achieve remarkable growth through aggressive expansion plans, brand portfolio diversification, and vertical integration strategies.

As a reader, what do you assess Brand Concepts’ future prospects? Do you agree with Kacholia’s optimism about this small company’s potential to make significant strides in the retail industry?

Written by Narine Surya

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