Buy Shringar House of Mangalsutra; target of Rs 400: Choice Institutional Equities
Moneycontrol • 1 day ago
Key Investment Pillars
- Volume growth: Shringar reported a 10% YoY volume growth, driven by stable demand and increasing capacity utilization.
- Bridal jewellery expansion: The company has achieved approximately 10% share of total manufacturing volume within six months of entering the bridal jewellery segment, with management targeting a scale comparable to the Mangalsutra business over the next 2-2.5 years.
- Entry into B2C and affordable jewellery: Shringar has set up a wholly-owned subsidiary to enter the affordable jewellery segment, targeting younger consumers with products priced below INR 50,000.
- Corporate client contribution: The management aims to increase the contribution of corporate customers from 51% currently to 65% over the coming period, given faster payment cycles and better cash-flow visibility.
Thesis Validation Checklist
- Revenue growth: Watch for continued revenue growth driven by increasing demand and capacity utilization.
- Bridal jewellery scale-up: Monitor the progress of bridal jewellery sales and its contribution to overall revenue.
- Margin expansion: Track the company's ability to maintain or expand its margins, driven by operating leverage and cost discipline.
- Subsidiary performance: Evaluate the performance of the newly established subsidiary in the affordable jewellery segment.