Value investor- India mid & small caps

Bhaskar Chakraborty

Equity Bottom-Up

Shankara Building Products L / Equity Bottom-Up

<ul>
<li>Retail revenues have quadrupled over FY12-18 without virtually any spend in advertising and promotion. This despite company entering many new cities over the years.</li>
<li>Even though retail proportion of sales doubled over FY14-18, receivable days increased. Receivables bumped up sharply in FY18 even though revenue from non-retail channels was flat YoY.</li>
<li>Reported receivables &gt; 180 days past due increased 6x YoY to Rs419m in FY18. Company attributes this jump to the channel and enterprise segments. But interestingly, channel and enterprise revenues were flat YoY in FY18.</li>
<li>Inventory days jumped 40% YoY in FY18. Management explanation doesn’t cut ice.</li>
<li>Company opened as many new stores in FY18 as in FY16 and FY17 combined. It also saw Rs2.3bn YoY increase in sales of its in-house brands. Despite entering new cities and selling more of its own produce, the absolute Rupee value of freight costs incurred is flat YoY.</li>
<li>If stocking more brands with higher value-add under the same roof is the correct strategy then why is the average ticket size flat over FY13-18? Why aren’t its customers increasing the size of each purchase?</li>
</ul>


Retail revenues have quadrupled over FY12-18 without virtually any spend in advertising and promotion. This despite company entering many new cities over the years.
Even though retail proportion of sales doubled over FY14-18, receivable days increased. Receivables bumped up sharply in FY18 even though revenue from non-retail channels was flat YoY.
Reported receivables &gt; 180 days past due increased 6x YoY to Rs419m in FY18. Company attributes this jump to the channel and enterprise segments. But interestingly, channel and enterprise revenues were flat YoY in FY18.
Inventory days jumped 40% YoY in FY18. Management explanation doesn’t cut ice.
Company opened as many new stores in FY18 as in FY16 and FY17 combined. It also saw Rs2.3bn YoY increase in sales of its in-house brands. Despite entering new cities and selling more of its own produce, the absolute Rupee value of freight costs incurred is flat YoY.
If stocking more brands with higher value-add under the same roof is the correct strategy then why is the average ticket size flat over FY13-18? Why aren’t its customers increasing the size of each purchase?


Shankara Building Products: Annual Figures Riddled with Loose Ends

India

Shankara Building Products Limited retails home improvement and building products. The Company offers steel pipes and tubes, roofing sheets, hollow blocks, primers, tiles, plywood, kitchen sinks, and welding accessories. Shankara Building Products markets its products in India.

Shankara Building Products L (SHANKARA IN)

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52-week Range	0.00 - 0.00
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Dividend (Yield)	0.00

Shankara Building Products: Annual Figures Riddled with Loose Ends

Retail revenues have quadrupled over FY12-18 without virtually any spend in advertising and promotion. This despite company entering many new...

Bhaskar Chakraborty