Vaibhav Global Limited Q2 FY22 : Quarterly Result Analysis

So, we were analyzing the business “Vaibhav Global Limited” in our previous post, it's time to go ahead with the analysis of the quarterly result of Vaibhav Global limited for Q2 FY22.

What will we look at here ?

We will figure out here the following important information as mentioned below.
Vaibhav Global Limited Q2 FY22 result analysis in a glance
Management comments on Q2 FY22 performance
Launching of new products/brands
Industry overview
Financial performance : Revenue comparison quarter on quarter and year on year
Financial performance : Gross profit, EBITDA, PAT and EPS comparison quarter on quarter and year on year
Retail performance trends
EBITDA margin analysis
Financial performance trends : Revenue over the years
Financial performance trends : Gross profit, EBITDA, PAT and EPS over the years
Financial performance trends : Balance sheet over the years
Financial performance trends : Cash flow over the years
Financial performance trends : Key ratios over the years

Vaibhav Global Limited established in 1980, Vaibhav Global Limited (VGL) is a vertically integrated electronic retailer of fashion jewellery, home, beauty, lifestyle, and essential products, offering a deep-discount proposition to customers in the US and the UK, and with prudent plans to expand to other geographies.

Vaibhav Global Limited Q2 FY22 performance

Following table shows the performance of Vaibhav global limited, in a glance, quarter on quarter and year on year.

Particulars	QoQ		YoY	Performance QVsQ	Performance YVsY
	30 September 2021	30 June 2021	30 September 2020
Total Income	64,070.74	68,861.70	60,184.43	-6.96%	6.46%
Expenses
Cost of material consumed	6,958.43	7,891.10	7,746.91
Purchase of traded goods	22,764.19	20,594.40	16,878.88
Changes in inventories of finished goods, work-in-progress and stock-in-trade	-8,571.56	-6,275.16	-3,899.11

COGS	21,151.06	22,210.34	20,726.68	-4.77%	2.05%
Gross Profit	42,919.68	46,651.36	39,457.75	-8.00%	8.77%
Gross Profit Margin	66.99%	67.75%	65.56%	-0.76%	1.43%

Employee benefits expense	11,994.18	13,209.54	10,310.98
Other expenses	21,929.70	22,012.15	17,792.98
Manufacturing cost	1,722.22	1,647.99	1,470.75
SG&A	35,646.10	36,869.68	29,574.71	-3.32%	20.53%
EBITDA	7,273.58	9,781.68	9,883.04	-25.64%	-26.40%
EBITDA Margin	11.35%	14.20%	16.42%	-2.85%	-5.07%

Depreciation and amortisation expense	1,289.24	1,096.39	828.88

EBIT	5,984.34	8,685.29	9,054.16	-31.10%	-33.91%
EBIT Margin (OPM)	9.34%	12.61%	15.04%	-3.27%	-5.70%

Finance costs	154.52	76.21	139.46
PBT	5,829.82	8,609.08	8,914.70	-32.28%	-34.60%
Tax	1616.8	2025.09	1859.2
Net Profit	4,213.02	6,583.99	7,055.50	-36.01%	-40.29%
Net Profit Margin	6.58%	9.56%	11.72%	-2.99%	-5.15%


Cost of material as % of sales	33.01%	32.25%	34.44%	0.76%	-1.43%

Vaibhav Global Limited sales or total revenue for Q2 FY22 is down by 6.96% as compared with previous quarter i.e. Q1 FY22. But if we see year on year, total revenue for Q2 FY22 is up by 6.46%.

Similarly, we can see here the performance of Vaibhav Global Limited quarter on quarter and year on year in terms of various key financial terms as mentioned in above table like COGS, Gross profit, Gross profit margin, SG&A, EBIDTA, EBITDA margin, EBIT, EBIT margin or operating profit margin, PBT, Net profit, Net profit margin and cost of material as % of sales.

Once we analyse the data mentioned in the above table, we can easily see that the result of Quarter Q2 FY22 is not as it should be.

Commenting on Q2 FY22 Performance

Let us see what Vaibhav Global Limited’s MD says about Q2 FY22 performance.

In Q2 we have seen our revenues at Rs. 635 crore an increase of 6% Y-o-Y and over Q2 FY20 we have seen a much stronger growth of 30.9%. Retail Revenues for us, grew by 3.3% Y-o-Y. After a massive jump last year, overall E-Commerce as a percentage of retail sales has dipped in both US and UK in recent months. We believe that these headwinds are transient and are well placed to continue our growth trajectory in coming years. We are committed to our original guidance of 16-18% constant currency revenue growth for the current financial year.

Gross margin continues to be strong, however, EBITDA margin were impacted due to several factors, including higher shipping costs owing to global supply chain constraints, initial operating costs in the recently launched German operations, increased airtime spend as we onboarded new TV channels and OTT platforms and stepped up our digital marketing investments.

These investments have already given us 5.3% increased new customers in Q2 compared to pandemic induced high new customer count in Q2 FY21.

Company continues with its investment in Products, Channels and enhancing its Digital Capabilities. We strengthened our warehouse operations digitally through investment in GEEK+ robots which would improve the picking productivity substantially. The Company launched ‘TAMSY’- a new fashion apparel brand for women in the USA, UK and Germany. During the quarter, we also acquired world-wide online brand rights of ‘RACHEL GALLEY’- a UK based multiple-award winning jewelry brand.

The 4R’s- widening Reach, new customer Registrations, customer Retention and Repeat purchases remain to be our key priorities for overall growth. Our vertically integrated model and a wider but robust supply chain network is the backbone of our business and a key differentiator vis-a-via peers.

So, management has guided the expected revenue growth for the current financial year and the reason of impact over EBITDA and the reason is completely self understood by reading the message of Vaibhav Global Limited’s MD.

Company is continuously focusing on adoption of new technology and launching of new products/brands.

Launching of new brands

Vaibhav Global Limited launched 2 new D2C brands: TAMSY (female apparel brand) and RACHEL GALLEY (jewelry brand) in Q2 FY22.

Launched ‘TAMSY’- new female fashion apparel brand
Targeting customers above 40 years in USA, UK and Germany
Higher focus on fit and value with ASP of ~$20

Acquired ‘Rachel Galley’ online brand- a multiple award-winning UK based contemporary jewelry brand
Initially launched in UK, to roll-out in USA
Exceptional jewellery at affordable prices

Industry Overview

The year 2020 was an extraordinary one for the e-commerce retail industry, with the COVID-19 pandemic accelerating the shift of retail consumption from brick and mortar to online channels. Worldwide, retail e-commerce sales registered a sharp spike of 27.6% to US$4.28 trillion during the year. Overall, retail websites are believed to have generated almost 22 billion visits in June 2020, up from 16.07 billion visits globally in January 2020.